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Screen capture from Mondo’s web series Happy Tree Friends.
Screen capture from Mondo’s web series Happy Tree Friends.

How to make money on YouTube Add to ...

Viral videos are the one-hit wonders of the Internet Age: Their creators blow up, then usually disappear just as quickly. But John Evershed, who left Toronto in 1983, has built his San Francisco-based Mondo Media into one of the most popular—albeit puerile—original channels on YouTube by figuring out how to manufacture lightning in a bottle.

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Mondo Media has about 1.6-billion views on YouTube so far. How does it dependably create hits?
We’re almost like a music label. We work with dozens of production companies all over the world. It’s a whole relationship we have, everything from financing production to distributing content. They create the content, we take care of the business.

And then you take a cut of the revenue. So, walk me through how it works: If you’re commissioning 500 videos a year, how does that break down if you’re paying $1,000 to $10,000 for each one?
It’s a hits-driven business, like any entertainment business. So the guys at the very top of the pile actually do quite well. They make good livings. And they’re the 20%. YouTube is really Darwinian: If you’ve got a hit, you’ve got a hit; and if you don’t, you don’t. You can tell fairly quickly. And it’s very hard to fake audiences, to build scale around a show that doesn’t have what it takes. Whereas in TV and cable, you can draft on the momentum of other shows and really almost kind of stake your way into it.

But your popular shows like Happy Tree Friends—which is basically a series of 90-second cartoons featuring adorable animals meeting bloody demises—also end up on TV.
Our strategy in the short-term is to actually straddle online and traditional, while online matures. Here’s an example: Happy Tree Friends. We probably invested about $7 million in that property overall, and we’ve done $15 million in business. And that property, just to give you an idea, has a full-on merch line in Japan, it’s got a TV series that’s licensed into multiple markets, it’s aired a few times here in the U.S. In Canada, it’s on BITE.

Happy Tree Friends has been going since 2000. I’m not saying $15 million isn’t a lot, but over 13 years...
Yeah, it’s not huge, but it’s just early, and honestly we think in the next three years, you can have $500-million franchises on the scale of a South Park or a Family Guy. The next property we’ve got coming up is Dick Figures. It’s approaching 300-million views on YouTube; we have a Kickstarter-financed movie off of that, which is in production as we speak. It could be a $50-million franchise for us.

Primarily from an online audience, you mean? Because there seems to be a whole segment of the audience that’s not even watching TV.
Think about the cultural shift. I have a 14-year-old daughter whose phone is more central to her life than anything. Over 50% of our views on YouTube are consumed on mobile devices. I would never have called that this quickly.

As more companies and creators migrate to YouTube, are you concerned about the growing competition?
Yes and no. YouTube is not an environment where you can just post something and walk away from it. It’s a whole culture, and you have to be sophisticated about that culture. That takes time. We really push the talent forward. We have a series called Baman Piderman that’s created by a couple on the East Coast. They’re online celebrities, and they turn the camera on themselves once every couple of weeks and talk directly to their audience about what they’re creating. They’re sitting there in their living room, and it provides a different experience than you’d get on television.

Let’s say I want to make a video that blows up on YouTube. What elements are good to include?
Music is a good one. I would say less spoken dialogue is a good one because you’ve got this very international audience. Only 30% of my audience is from the U.S., right? That’s why Happy Tree Friends works so well, because there’s no spoken dialogue in it. And anything to do with video games on YouTube just rages.

Yeah, the 12-year-olds I know watch anything they can about that video game Minecraft.
I’m too old to get that.

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