Every social media platform has its own approach to supporting influencers, from TikTok’s creator fund to YouTube’s advertising revenue. But there’s one growing company outside these platforms that’s quietly fueling the creator economy before creators even get big.
Spotter is like a VC for YouTubers. The company gives YouTube creators up-front cash to help them pay for expenses like travel and video equipment in exchange for licensing their back catalog. It’s given $600 million total to creators as of late September and hopes to eventually dole out $1 billion by the first half of 2023.
“It's amazing to see the evolution of a creator going to the place of, ‘This capital is going to allow me to realize my dreams and goals way faster than me doing it myself,’” Spotter chief operating officer Nic Paul told Protocol.
Homing in on YouTube
The concept for Spotter isn’t particularly novel; it’s essentially giving creators cash to help build a brand, or in this case a platform. Think of the business like music licensing, where an artist gives permission to use their music for different commercial projects in exchange for a licensing fee. Spotter acquires the rights to a creator’s catalog of existing and future YouTube videos in exchange for cash. Its portfolio of licensed content has generated over 40 billion minutes of watch time per month and reached over 1.2 billion subscribers as of February.
But getting a platform up and running — especially while working a separate job — is time-consuming and challenging, creators say. Spotter fast-tracks the process of growing big enough to run a platform full time.
Unlike a social media manager or brand agent, who would help creators make money from brand partnerships across platforms, Spotter focuses on supporting those on YouTube specifically. Paul and Spotter founder and CEO Aaron DeBevoise said the company only supports YouTube creators right now because it has a predictive cash flow stream — largely from ad revenue — that allows Spotter to understand how much more money a creator needs to scale their platform.
“YouTubers also have a lot more potential as they grow,” DeBevoise told Protocol. “Think of it as, ‘Hey, I know as a creator if I did these five things, I can grow faster by hiring editors, building studios, and so forth.’ These are all things that the YouTube reward system doesn't or hasn't yet figured out how to help creators do.”
DeBevoise added that the company would help creators on other platforms, such as TikTok and Instagram, if those sites shared revenue in a way similar to YouTube. Creators have called on TikTok to develop a payment system based on ad revenue in the past, and YouTube just recently began sharing ad revenue from its TikTok clone, Shorts.
“If other platforms like TikTok started to share their revenue or reward their creators in a way that helped us provide capital to the creators, we would be there,” he said. “YouTube is just the main place at this point.”
Building Spotter’s team
Since its launch a few years ago, Spotter has landed deals with MrBeast, Like Nastya, Dude Perfect, and other top creators. And internally, it’s poached talent from social media companies including Meta and Netflix, has more than doubled its staff over the past year, and is building a 40,000-square-foot office in Los Angeles, where the company is based.
Spotter is increasing its investments in creators, too. The company dished out about $65 million by the end of 2020; distributed over $600 million since the company was founded; and hopes to have deployed close to $1 billion by the first half of next year. DeBevoise doesn’t expect that growth to stop because creators continue to return for second and third opportunities for investment.
“We're seeing people come back because the value of their new content is much greater than what they previously created,” he said.
YouTuber Lizzy Capri, who’s been working with Spotter for about two years, said the company has given her platform enough funding to help build a production team and pay for the live content she produces. Capri said the company also alleviates some of the burnout and isolation creators often feel by continually reaching out to her and others.
“Spotter is totally on another level of what they can provide financially,” Capri told Protocol, referring to other services that help creators make money like brand managers and funds. “And then on top of that, they're pushing for a more intangible value of creating a community.”
Fueling the creator economy
Spotter is part of a quietly growing contingent of startups that license back catalogs for creators.
Karat Financial, for example, launched in 2019 as a credit card for creators. A former Instagram product manager and a Lucky Capital investor started the company after noticing that traditional banks weren’t particularly interested in supporting creators, whose businesses are often seen as illegitimate. Jellysmack, launched in 2016, and Creative Juice, which began in early 2021, are also among Spotter’s competitors.
DeBevoise said Spotter stands out over its competitors because it’s been able to offer more than mere capital to creators. The company is planning a summit, for example, where creators can get together and learn from one another, and Spotter hosts regular dinners with influencers. The company can coexist with its competitors as well; Spotter and Jellysmack, for example, have both landed deals with MrBeast.
“I think we kind of nailed it, personally, the hyperfocus on an ecosystem that rewards its creators for their work, and then trying to enhance that, has really become a great formula for success,” he said. “Other businesses had been more like, ‘Hey, can we provide credit cards to creators?’ They have had a hard time really making a significant impact on a creator's life.”
Companies like Spotter and Jellysmack are relatively new, but Scott Sanchez, who previously led global marketing at AWS and is now the chief marketing officer of software delivery firm Harness, doesn’t see them losing steam anytime soon. He said a company like Spotter would only fade in the long run if the creator community begins to matter less. “I don't know if you're paying attention, but that doesn't seem to be the way the trend is going,” he told Protocol.
Sanchez said Spotter and other companies that license content are bringing an old model — seen in music and film — to a new medium, which in this case would be the creator space. The business model for creators may be even stronger than the ones for musicians because creators want every video to be a hit, whereas artists may only get a hit on one or two of their songs, he said.
“Your hits are your catalog,” he said. “They pay the bills. When you give those up, it’s really hard to have another hit taking a real gamble. Whereas with someone like MrBeast, his goal is that every single video he puts out is better and bigger and more successful than the last … so the risk of licensing your back content when you build the hit machine is much lower.”
He added that these companies shouldn’t try to replace the relationship between brands and creators; instead, they can offer a bridge between both sides where the brand can better understand the creator’s metrics and vice versa. “A lot of brands are going to want that and [a] relationship with the creator,” he said. “Getting that balance right is going to be important.”