Sourcefed is Closing, What the Hell Happened?

Sourcefed is Closing, What the Hell Happened?

Lots of people are getting laid off, including the current hosts.

Sourcefed is a long-standing YouTube channel that came out of YouTube’s funding experiment where they essentially funded a bunch of channels in an attempt to bring more high-quality content to the platform. Sourcefed outlasted most of its siblings in this experiment.

And yet, despite having a 7 figure subscriber count and getting hundreds of thousands of views every day, Group Nine Media, a Discovery (the TV channel)-backed holding company that owns Sourcefed and its related show People Be Like, cancelled Sourcefed, SourcefedNerd, and People Be Like.

Before I go further, I feel it’s worth mentioning that I am not an expert in the field of video content, but I was an avid fan of Sourcefed and felt compelled to put some time into trying to determine what happened.

Prepare to learn. About YouTube and why it’s almost impossible to be profitable on the platform.

The reason this happened seems mostly apparent with some research. Sourcefed has been losing monthly views (and thus revenue) consistently for a long time (Source). Sourcefed’s sister NERD channel has seen more steady numbers, but generally less impressive numbers (Source): Sourcefed peaked at 35M views in May, 2012 and maintained ~20M monthly views through most of 2013; in comparison, NERD’s best month was 10.6M views in July, 2013 and they kept that up till mid-2016 at which point their views started plummeting (coincidentally that’s when Maude Garrett left the show, more on that later).

“Even if you get 1M views in a month, if you’re getting a $5 CPM (which seems to be on the high-end), that’s about $5,000/month in revenue, minus YouTube obscene (in my opinion) 45% cut, and you’re left with a little over $2,500/month or a paltry $30,000 salary.”

So why did Sourcefed get shut down? YouTube is a hard place to make money, and it just couldn’t keep up, largely, in my opinion, due to hosts leaving and taking a portion of the audience with them. But it’s important to note that YouTube networks like this are really more like TV shows than traditional businesses. They really fuse the two. Just like on TV, Sourcefed was cancelled, seemingly, because it wasn’t making money anymore.

Before I get into the business-side of this article, ponder Sourcefed’s situation for a second. Sourcefed became popular largely on the backs of the personalities of its various eclectic and entertaining hosts, but it seems that Sourcefed (or its owning companies) didn’t do enough to retain that talent. And when the hosts left, it made a sizeable dent in the viewership. That is likely the principle reason for Sourcefed’s sagging ratings and eventual cancellation.

Pardon the pixels.

If you know anything about the business end of YouTube, you know that it’s VERY difficult to be profitable on the platform. The CPMs (or the amount of money per 1,000 views a video’s creator gets) are anywhere from an abysmal $0.25 to $7 or so, depending on who you ask (Google it). That means even if you get 1M views in a month, if you’re getting a $5 CPM (which seems to be on the high-end), that’s about $5,000/month in revenue, minus YouTube obscene (in my opinion) 45% cut, and you’re left with a little over $2,500/month or a paltry $30,000 salary. And that’s with 1 million views per month.

Now, think about Sourcefed. Between the main channel and NERD, it was probably netting around 11M views/month by now. That’s an annual revenue (after YouTube’s cut) of ~$363,000. Between the two channels, there was a significant staff, and obviously that $363K in yearly revenue was not even close to enough to break even. There’s no way to know for sure, since we don’t know how many people Sourcefed and NERD employed and what their salaries were, but it’s likely that between Sourcefed and NERD, they would have needed at least 30M monthly views and significant revenue from merchandising and external advertising. And that’s just to break even.

Again, I’m no expert, but next time you read about a YouTuber making lots of money, think twice. And even though YouTube says it has a commitment to high-quality YouTube content, it’s uncertain just how far they’re willing to go to protect that content. Remember, producing quality video content is EXPENSIVE, and the fact that YouTube is mostly ad-supported means that content creators have little consistent revenue. Don’t go into the YouTube ecosystem expecting to make any money.

I’ll miss SourceFed and NERD. Hundreds of thousands of others will too. RIP.

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