• by P.J. Bednarski , Staff Writer @pjbtweet, December 2, 2014

Follow the money is always good advice, and frustrating too. Because for as long as I’ve followed it, I’ve never come close to catching hardly any of it. 

Still, it’s interesting to read that according to the British research firm Enders Analysis, investors have plunked down $1.65 billion on multichannel networks and—get this—the aggregate value has tripled in just one year.

The big bubble there, Tubefilter points out, was Disney’s acquisition of Maker Studios for $500 million, plus incentives, which really is not just a bubble but an entire bubble machine that would make Lawrence Welk drool, if, of course, Lawrence Welk was alive. (I’m sorry for the telltale old reference. Lawrence Welk, as we older people know, invented the soap bubble wand kids like to use.*)

Back to the story.

Enders itself doesn’t believe that the valuation of MCNs has gone too far. There’s no bubble to burst, in other words, because in its analysis, the valuation of these haphazard YouTube networks is appropriate to their real value. Which would mean when StyleHaul sold off most itself to German media giant RTL for $107 million a month ago, each of them got just about what they deserved.

Still, YouTube is, comparatively, an infant, if you compare it to the great big media world out there. Financial Times estimates the US TV market brought in $66 billion last year, while YouTube globally gathered in around $6 billion.

This big (and great) FT story is one of those pieces that comes around every so often that on one hand convinces you of the coming world domination of video by online sources, and on the other, argues that YouTube and a lot of other short form online video is much more like MTV near its beginning. And that it is destined to become something as irrelevant as MTV is today as users grow up and find fewer reasons to spend time on YouTube learning how to put on makeup, or watch other people play video games.

"YouTube may account for an extraordinary 57%  of online viewing and 55% of digital video advertising worldwide, but eking a living from all this activity is surprisingly difficult," Financial Times points out. "The biggest problem is that the 'pre-roll' advertising it sells — the short film that its AdSense software plonks before the main clip — is both skippable and unpopular with the mainly young audience."

So the best advertisement are the hosts themselves, who sell with a kind of naive honesty the advertisers don't have. Fashion maven Zoella, the object of the article, has 6.5 million subscribers. She sells stuff, not the pre-roll. But how long does that trick last?

The fact is, who the heck knows? It’s been going so good so far, and if it’s a young audience an advertiser is looking for—and all of them except for Polident maybe, are—then YouTube is where the action is, and the right now-based future is.  

The investors, evidently, got the memo.

*That story is a lie. Lawrence Welk actually hosted a big band show and bubbles drifted around as musicians played songs you'd hate. Does that sound more plausible?

pj@mediapost.com