Rage Against the Machinima

The video “Thank you, I will miss you guys” is barely a minute long—just one shaky, handheld shot trained on the face of then-21-year-old Ben Vacas. Vacas, known online as Braindeadly, has brown eyes, a faux-hawk, and a British accent that makes his farewell to his 40,000 YouTube subscribers a little bit sadder, somehow.

“I went into a call with Machinima this evening, and they said that my contract is completely enforceable,” Vacas tells the camera. “I can’t get out of it. They said I am with them for the rest of my life—that I am with them forever.

“If I’m locked down to Machinima for the rest of my life, and I’ve got no freedom, then I don’t want to make videos anymore,” he says. The screen fades to black, then a written message appears: “If this is the last thing I say, please don’t make the same mistake as I did and always read before you sign something.”

Vacas gained prominence online as a top-ranked hunter in World of Warcraft, a video game he has played for more than seven years. He began making YouTube videos last year, mostly of him joking around with other players and talking about games.

It wasn’t long before Machinima, a multichannel YouTube network that specializes in gaming content, came calling. The network offered him a partnership: It would put ads on his videos, and he would get a cut of the revenue; in November 2011, Vacas signed on.

But the devil was in the details: After signing with Machinima, he learned the company would own the rights to any videos he posted online for the rest of his life—or, in the famously eerie formulation of contract law, “in perpetuity, throughout the universe, in all forms of media now known or hereafter devised.” And then there was the fact that Vacas’s contract with the network was open-ended. There was no expiration date. He probably should have taken that as a sign.

Over the last two years, YouTube has evolved from a chaotic showcase for amateur video into an increasingly cutthroat ecosystem where everyone—stars, networks, and advertisers—is competing for views, viewers, and view time.
Big money is at stake. That’s because YouTube, with the backing of its parent company, Google, is pouring hundreds of millions of dollars into a strategy to compete with traditional television—and it’s betting on multichannel networks like Machinima to crack open the market. These networks offer young creatives a modest slice of the pie in return for the right to sell ads on their videos; the more channels a network brings under its umbrella, the more eyeballs it can promise to advertisers, and the richer it becomes.

But a recent string of high-profile disputes is prompting comparisons between YouTube networks and the exploitative Hollywood studios of the 1930s and ’40s: Both used the lure of fame and cash to convince naive talent to sign contracts that left them at a disadvantage.

Internet and intellectual-property lawyers say these disputes suggest a serious problem in the emerging industry. But while Machinima and it’s closest rival, Maker Studios—both based in L.A. and heavily backed by venture capitalists—have been accused of some of the worst practices, investors remain undeterred. In November, while Maker Studios was in the middle of a fight with its highest-profile star, Time Warner was raising $36 million in venture-capital funds on the network’s behalf. And in May, just weeks after Ben Vacas posted his emotional sayonara, Machinima closed a round of fundraising, led by Google, worth $35 million.

Among native YouTube companies, Machinima and Maker Studios have been savviest about their growth, earning a place in the market that rivals Time Warner and Sony-owned VEVO. But on the Web, the faintest tremor of unrest can turn into a riot in no time. Faced with a nascent revolt among the talent they’ve built their empires on, these massive networks claim not to be worried about their stability. But maybe they should be.

“I’d always wanted to be a filmmaker,” says Hugh Hancock, the generally acknowledged godfather of the art form “machinima.” Reached by phone at his home in Edinburgh, Scotland, Hancock recalls that “the issue, back then in 1996, before the digital video revolution, [was that] it was before 3-D animation was in any way affordable, so I’d always given it up as a pipe dream.”

Everything changed with the release of Quake in June 1996.
The 28-level, first-person-shooter was one of the first games in which developers opened up the code to players—saying, in effect, ‘Create with this technology.’ Players could repurpose Quake’s characters and settings to script original stories, then render them in 3-D animation.

A small, devoted community developed around these “Quake movies.” When it expanded to other games like the Sims or World of Warcraft, the result was dubbed “machinima”—a portmanteau of “machine” and “cinema.”

“Back in ’97, ’98, there were probably 50 of us who were really serious about it and another 200 who dabbled,” Hancock says.

In 2000, Hancock registered Machinima.com as a hub where people would watch and upload videos. As their numbers grew, however, the cost of hosting all that video increased and, six years in, Hancock sold the site to an enigmatic pair of serial entrepreneurs, half-brothers Allen and Philip DeBevoise. (Hancock declines to state the purchase price.)

Before buying Machinima.com, the DeBevoises ran Creative Planet, a collection of digital tools and film-industry-related web properties, including Directors Net, Editors Net and VFX Pro. That company grew fast—then imploded. “Ultimately, it crashed and burned,” one former employee says.

When the DeBevoise brothers bought Machinima.com in 2006 (the same year, incidentally, Google purchased YouTube), one of their first innovations was to migrate their video hosting to YouTube. Not only did it significantly cut down on the server costs, but the move also came at a time when YouTube was hungry for content and, in 2007, just beginning to pay video creators for their work. The brothers began to cut deals with video game companies to advertise alongside the videos that used their games as source materials. And a business model was born.

Today, Machinima describes its content as being about not just video games but anything that appeals to men ages 13 to 34. CEO Allen DeBevoise calls them the “lost boys”: males largely unreached by traditional advertising. They don’t watch TV; they don’t read magazines. But they do play video games and Machinima’s channels have become the place for advertisers to find them. Machinima’s network today has 180.5 million subscribers to 5,621 channels hosting 1.3 million videos, for a total of 43.7 billion network views. That’s 392 times the number who tuned in to last year’s Super Bowl.

Anyone who studies the growth of digital companies can tell you that their ability to adapt to the challenges of mega-scale, and whether they are able to keep the original mission and ethos intact, can determine whether they survive. Just as at Creative Planet, where former employees say the DeBevoise brothers lost focus in buying up too many properties, there is a sense that the rapid expansion of Machinima could be its undoing.

Decisions such as offering partnership deals to loathed, view-trolling “reply girls,” whose ability to earn pageviews is based mostly on their cleavage, have exposed the company’s management to a lot of second guessing. More than anything, though, Machinima’s detractors are worked up by the fact that the network has asked for rights in perpetuity to the content created by its talent—and, in some cases, by the fear that Machinima might claim any content they create in the future as well.

Vacas certainly isn’t the only producer who has taken a public stand against his (former) network. Dozens of others have written blog posts or created videos complaining about the contracts—videos that often show a pretty evolved understanding of digital-age PR.

Take YouTube user KSIOlajidebt. In March, a few weeks after Vacas posted his goodbye video, KSIOlajidebt released an anti-Machinima screed of his own. “ENOUGH IS ENOUGH,” he says. “We as a people can stand up to the control freak that is Machinima.” He ticks off the names of tech reporters at Wired, TechCrunch, and Kotaku.com, telling fans to tweet his link to them.

But after subscribers succeeded in getting the attention of Kotaku’s Stephen Totilo, KSIOlajidebt went silent. He did not respond to calls for comment.

Not surprisingly, a representative for Machinima downplays the contract disputes.

“Machinima’s network is now comprised of over 6,000 creators. Even with our large network, we find disputes are rare. In these rare cases, Machinima engages and focuses on mutual success for the company and our network partners,” Sanjay Sharma, executive vice president for strategy and business development, says in a statement. “Today, Machinima’s agreements are consistent with developing norms for multichannel networks.”

Ben Vacas’s video was posted to YouTube on May 8. Within hours, it appeared on Reddit’s front page—the Internet equivalent of getting on Good Morning America.

Thousands of users wrote messages of support; the publicity from Reddit even helped Vacas to connect with a lawyer.

The same day, back at Machinima’s Hollywood headquarters, an employee uploaded a trailer for the video game Primal Carnage to the network’s home page.

Angry Reddit readers “nuked” it: Within minutes, the clip received more than 500 dislikes and hundreds of comments decrying the company’s shady practices. The video was hastily wiped from the site.

Also that same day, the YouTube star Athene (YouTube ID: AtheneWins; real ID: Bachir Boumaaza, a 32-year-old Belgian) made his own video featuring the same soft, sad piano music as Vacas’s. In it, Boumaaza—the self-proclaimed “Best Gamer in the World”—makes a shocking announcement.

“This is a very hard decision and I’ve been thinking about it,” he says, gazing earnestly at the camera, head cocked, a shock of shiny black hair falling over his face. “But the only thing that I can do—the only thing that feels right, right now—is to leave Machinima.”

The news that Athene, a bona fide YouTube celebrity with 589,798 subscribers and 382 million video views, was leaving Machinima reverberated across YouTube. Reached by e-mail, a representative for Boumaaza said, “We’ve regularly talked to several people from Machinima about complaints we have been hearing from partners about how they felt intimidated by their business and contract practices.

“Every time that we brought this to Machinima’s attention . . . we were assured that they had started taking a different approach. But when the situation with Braindeadly occurred, it was clear to us that nothing had changed.”

At the time, Athene had made no decision regarding which network he would join, the spokesman added. The star would be open to joining a network that “wants to make YouTube a better place for content producers or wants to give gamers more freedom and resources.”

Shortly after the controversy blew up on Reddit, Vacas said in a Skype interview, “It was really amazing to see how many people took the time to support me. It just shows how much the community can do when they all group together and help others out.”

He added that Machinima had since offered him another deal, but with terms no better than his previous contract’s. He said he would be working with a lawyer to settle the matter.

Taken together, these fights constitute a bigger issue, one not unlike those that developed when the film industry was first finding its feet.

Like Maker Studios and Machinima, the film studios of the ’30s and ’40s didn’t just produce content, they distributed it, says Tino Balio, professor emeritus of communication arts at the University of Wisconsin at Madison and an expert on the history of the American film industry.

At the time, studios produced shorter, lower-budget films on a tight schedule because theatrical runs were only about a week. Studios churned out one major movie every week, plus a few B films, to meet demand.

“The studios were run on a factory basis. They had to have total control of their talent in order to assign them to projects, in order to make all of these films to keep their theaters filled,” Balio says. “They could not negotiate with talent each time they decided to make a motion picture.”

They met this challenge by adopting the “option” contract. A new star might be signed for a fixed term (typically seven years); each year, the studio had the option to renew the contract—but the actors couldn’t break it during its duration.

“It was bondage,” Balio says. “It changed over time, but basically, when a performer signed an option contract, he or she was bound to the studio because no other major studio would hire that performer if he or she broke their option contract.”
Beginning in the 1950s, though, the industry underwent a transformation. It moved away from producing as many films as possible and toward producing the best films possible.

That change was the result of two things, Balio says: the rise of television and the Paramount antitrust suit. The judgment in that case declared that studios could no longer own the theaters that showed their movies. The result was, in some ways, a transformation similar to the one YouTube is hoping for: a transition from short, low-budget films toward longer, professionally made content that’s worth a premium.

That was the idea behind YouTube’s $100 million investment in October 2011 in 100 original-content channels, which included channels produced by Maker and Machinima. In November 2012, YouTube doubled down on that bet, reinvesting in the top-performing 30 to 40 percent of those channels.
In November, YouTube also opened a production facility in Howard Hughes’ former airplane hangar in Playa Vista, California, and made it available to “partners” who want to up their game. YouTube’s redesign, unveiled in December, also was a step in that direction. It is more about channels, less about individual videos, the hope being that YouTube will become a destination with high production values rather than a dumping ground for videos of wildly varying quality.

David Lisi is an attorney with DLA Piper, a law firm in Silicon Valley. He has worked on both sides of these contract disputes—on behalf of both talent (YouTube stars) and distributors (their networks).

Part of the problem, he says, is that YouTube networks initially adopted the language and practices of the entertainment industry, but technology is evolving quickly, and the law is struggling to keep up with it.

In the past, the talent needed Hollywood studios or record labels or book publishers in order to get their work distributed. Today, Lisi says, a lot of video creators are asking, “What do these guys do for me?”

“From the standpoint of people who grew up with the Internet, many of these young artists—and I call them artists because I do think they are doing what they are doing out of a creative impulse—for them, it’s like, ‘Why do I need a middleman?’”

YouTube, after all, was founded on the idea of cutting out the middleman, of making it possible for a filmmaker to post a film that anyone with an Internet connection could access instantly. Video makers, Lisi says, can easily reach out to each other, unlike actors or recording artists of the past. “Because these are creatures of the Internet, not only do they broadcast to their audience, they consume each other’s content, they are fans of each other, and they communicate,” he says. “What you have are the benefits of a union without the burdens of a union—all of the talent sharing information almost instantaneously.” And, he adds, “like a union, they can threaten group action.”

“It’s a very interesting power dynamic, and I think that the industry is still trying to work out how to deal with this genie that is newly out of the bottle. [YouTube] provides a lot for a lot of people, but it is a genie, and you don’t want to piss it off.”
Machinima is in the process of changing its terms of use, its partners say, walking its existing talent from open-ended contracts to contracts with three-year terms. All 6,000-plus partners were asked to agree by January 1, 2013, to updated terms.

No one from the company would confirm whether the change was due to the onslaught of bad publicity—or how many partners signed the new contracts.

As for Vacas, he finally settled his dispute with the company in October and parted ways with Machinima. Today, he’s represented by a new organization called Union for Gamers.
Union for Gamers is the brainchild of Donovan Duncan, who’s also the vice president for marketing at Curse Gaming, a company that has specialized in video game add-ons and industry news.

“There’s a lot of ridiculous contracts out there,” Duncan says. “Gaming is something we should support, not hinder by locking people into these really bad contracts, so I came up with the idea of, well, let’s build a union for gamers, by gamers.”

Everyone in Union for Gamers, Duncan says, would be entitled to the same pay rate, which would be raised every year. Gamers no longer would be forced into restrictive contracts—union members would have the right to leave whenever they saw fit.

He promises “resources to help people create better videos,” adding, “we’ll do the labor, the administration, and ad-serving side, allowing them to monetize their content.”

But labor, administration, and ad service are essentially what networks like Machinima do. When asked, Duncan admits that this new “union” is really more like a new network—with high-minded intentions—and that it will compete with Machinima. Perhaps not coincidentally, Union for Gamers counts several former Machinima creators as partners. Its public face, in fact, is none other than Bachir Boumaaza, better known as Athene.

The roots of that partnership go back even before Boumaaza’s video denouncing Machinima—suggesting a bit of PR savvy that wasn’t readily apparent at the time. Boumaaza actually made a video about Union for Gamers two months before his very public break with Machinima.

In another video, posted four months after that, Boumaaza formally announced his new role with the Union.

“I can talk, make videos about how the landscape on YouTube should be,” he says, sitting in the same spot, shot with the same black-and-white filter used in his video supporting Vacas. “But unless I come with a real alternative, why would other networks listen to what I say?”