Things have gotten ugly in the contract dispute between YouTuber (s GOOG) Ray William Johnson and his former production company Maker Studios. Recall that Johnson said in October he was leaving Maker Studios — a move the company attributed to declining viewership. Now, Johnson has hit back with a different explanation on Newmediarockstars.com, stating that this was all about Maker Studios trying to force him into a new and much less favorable contract.
The dispute took further ugly turns this week, with both sides firing off personal insults (like “low-life ego-maniac”), references to criminal records and swear-word-laden late-night text messages reposted on Twitter. But behind the theatrics, the conflict provided a unique window into the financial workings of these type of studio contracts.
Is it all about IP?
Here’s what both sides are saying: Maker Studios declared in October that “with the decline in viewership… it made sense for him to go back to producing the show himself.” The company continued to say that it would help Johnson through the transition.
Johnson on the other hand has been insisting that this is a disagreement over contract terms. In this week’s article, he said that Maker approached him in September with a request to renegotiate their existing contract. The new term sheets, which Johnson shared as part of his article, include a requirement to sign over some intellectual property. Johnson refused to agree to these terms, and says that Maker Studios responded by shutting down the production of an album he was working on as well as his show. We have reached out to Maker Studios to get their side of the story on these allegations, but haven’t heard back.
Regardless of the he-said-she-said, the episode offers some interesting insights into how YouTube studios like Maker Studios operate: YouTube studios are essentially third-party studios that use YouTube as a distribution and monetization platform. Details of revenue splits are usually safely guarded by non-disclosure agreements, but the contract posted by Johnson suggests that Maker wanted 40 percent of the revenue after production costs, leaving the artist with a 60 percent cut.
Not everyone is unhappy
There have in the past been a lot of rumblings about YouTube studios trapping talent in contracts with perpetuity clauses and taking over all of their intellectual property. The term sheets published by Johnson don’t suggest a contract length or any termination clauses, but go into a lot of detail about IP ownership. In essence, the studio wanted to own 50 percent of what Johnson produced for them, as well have exclusive rights to exploit that content in perpetuity. The contract also includes exclusive representation rights for some content Johnson produced before signing up with Maker.
It’s worth noting that not all contracts are created equal. In fact, some YouTubers have come out in response to this conflict praising their own studio. EpicMealTime’s Harley Morenstein tweeted Tuesday:
In other news, I'm satisfied with my relationship with The Collective.
— Harley Morenstein (@HarleyPlays) December 11, 2012
If anything, the whole episode may lead YouTube performers to take a closer look at the fine print before they’re signing a contract – in which case, all the mud-slinging wasn’t for nothing, after all.