YouTubers cash in on their back catalogs

The Future. YouTubers are cashing in on their old videos with startups such as Jellysmack and Spotter, which offer upfront money in exchange for future ad revenue. It could be a great tradeoff for creators looking for capital to expand (as long as they know they’ll be in the YouTube game for the long haul). It could also soon make YouTube channels a bonafide asset class.

Replay revenue
Are YouTubers’ old videos the new investment library?

• WSJ reports that companies such as Spotter and Jellysmack are offering creators millions of dollars in exchange for the ad revenue from their past videos and future videos for up to five years.
• The companies derive the value of each creator’s back catalog using proprietary algorithms and “other data points.”
• That gives creators the opportunity for an immediate cash infusion so they can expand their business, update their equipment, and branch out into new markets (everyone wants to be a MrBeast).

But they’ll need to make a set amount of videos each month (calculated by their current output),  or they’ll face penalties — though both Spotter and Jellysmack say they haven’t really had to enforce that.

Viral quotient
Spotter has already made $740 million in deals since 2019 and plans on spending another $1 billion by the middle of next year. Jellysmack plans to spend $500 million during a similar time frame. Both companies already have billion-dollar-plus valuations, thanks to backing from Softbank’s Vision Fund.

Despite the current ad downturn, a report from Credit Suisse estimates that advertisers are spending $29.5 billion on YouTube this year. With creators taking an average of 55% of the ad revenue generated on their videos, Spotter and Jellysmack are expecting some top-notch returns… as long as engagement stays high.