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December 3, 2012 12:40 PM
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Are YouTube's Premium Partners the Studios of the Future? Behind the Scenes at Mahalo

On the set of 'MMA Surge,' shot in the Culver City Mahalo studios Mahalo
For a little over a year now, YouTube has tried to get behind original content, working with premium partners to produce original digital video on a wide variety of topics.  As we know well, they aren't alone; Amazon, Blip, Crackle, Hulu, and Netflix have all begun creating original series. 

Recently, YouTube renewed contracts with less than half of its original premium partners.  Successful channels (many of which get about one million views a week) were renewed, and channels that underperformed were phased out.  Individual channels are produced by larger studios that often have several channels with YouTube and simultaneously work on other productions for other venues.

Indiewire visited the Culver City studios of Mahalo, a burgeoning Internet/mobile production company that specializes in producing non-fiction videos.  Unlike other studios with YouTube premium contracts, Mahalo not only concentrates on producing videos but also develops mobile apps for many of its channels.  As channel apps develop audiences, they are built out and more interactive features like chats and enhanced content like explanatory charts and text are incorporated.  As opposed to some other other web video exhibition sites, YouTube is open to producing and encouraging nonfiction programming.  Mahalo's pre-established specialty of instructional videos has helped the company gain a contract for nine channels:  Being Fat Sucks, Food Deconstructed, MMA Surge, Recipe Wars, Inside My Kitchen, SuperFoods, WellCast, XFIT Daily and the just-launched Inside Cars.

Mahalo, a company headed up by CEO Jason Calacanis (formerly of Weblogs, Inc., which was sold to AOL in 2005 and is the home of Engadget), has been around since 2007.  The company has been working on its own projects for individual clients (Mahalo produces, for instance, the "Old Jews Telling Jokes" app and apps that help people play instruments like the violin as well as a series of videos and apps for the "For Dummies" book series).  Its YouTube contract is in its fourth month for eight of its channels, so in nine months, their contracts will be reevaluated.

A YouTube still from Mahalo's life improvement animated series "WellCast."
While YouTube contracts all look different, YouTube generally pays the cost of production and the production company and YouTube share the ad revenue.  According to Shawn Gold, Mahalo's Chief Marketing Officer, Mahalo owns the intellectual property to their content, but YouTube has exclusive exhibition rights for one or two years. After the production deal ends, the companies continue to receive revenue made off the platform into perpetuity. The upside for YouTube, of course, is that it can pre-sell these videos; if it has a deal with a production company, videos appear on YouTube on a set schedule and allow the site to have predictable content.

My visit to Mahalo was colored by a quote that had shown up while I was doing my morning social media reading rituals:  someone had posted Ben Decker's 2011 TechCrunch article "The Internet Is Not Just Another TV Pipe."  The Internet is different; people are more intimately networked and content need not be produced by people who never see or hear from their audience.  While things are still rapidly changing in the YouTube environment, Mahalo's marketing guru Gold has an interesting perspective on the company's role as a producer of Internet video.

READ MORE: Is Netflix Changing the Way TV Series Are Made With Its Use of Data Mining, Or Doing More of the Same Old Thing?

Gold, who comes from holding the same role at MySpace, has focused on making sure Mahalo's content is something more:  "We have our directors and hosts commenting back to people on YouTube," Gold told Indiewire.  "We need to concentrate on audience development and engaging.  We're trying to optimize YouTube algorithms to make sure we're giving people what they want it.  We're looking at all of our video analytics and figuring out how our video structures could be better.  For our MMA channel, we're responding immediately after fights.  It's important for us, also, to name our videos well, have good middle frames [thumbnail images of the videos that are the first to show up on YouTube searches and siderails], annotate our videos well with links to more content, and have good SEO [search engine optimization] strategies.

A shot from Mahalo's "RecipeWars."
"We are developing apps for certain series to enable people to chat live with the shows' hosts.  If you're not a production company building for mobile, then you're going to fail.  87% of people with smartphones say they bring them into the bathroom and 91% say they bring them into bed.  You can't ignore this."

Gold boasted about Mahalo's efficiency.  The company, he said, can produce content at about $500/minute.  In house, the Mahalo team has a team of director/editors on staff, often recent film school grad who are getting intense experience with quick-turnaround productions. Mahalo fills out its production staff as needed, hiring camera and sound people by the day.

For Dallas Morgan, the head of Mahalo's video team, himself a recent film school grad, working for a company like Mahalo is helpful for filmmakers gaining footing. "It's great to have the opportunity to be involved in productions seen by so many people.  Filmmakers are honing directing, producing, editing and shooting skills.  It's the benefit of having a smaller-scale production."

Mahalo and the other YouTube premium partners (among them Maker Studios and Machinima) must continue being nimble in order to continue on the path to tomorrow's studios.  As the day-to-day production work continues and some videos soar as others flop, it's hard for them not to be flexible and eager to innovate as they compete with the robust environment of amateur producers.

How this all will change the overall media landscape and the industries tied strongly to the network model, though, remains to be seen.

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