The YouTube ecosystem, while more and more sophisticated every day, has grown up with murky, if not loose, contracts between creators and companies shaping the business. The situation between Grace Helbig and MyDamnChannel, for instance, called into question whether ownership of a channel is creator or company-driven when Helbig was cast as the host of “DailyGrace.”
On Friday, April 1, another dispute regarding channel ownership and rights reached a sizeable verdict — $20 million in damages awarded to the plaintiffs, as well as controling interest for the YouTube channel VideoGames (www.youtube.com/videogames). The case, originally filed in 2014 by David Tyler Moss (known as Ty Moss) and former Maker Studios shareholder Brandon Keating and YouTubers Marko Princip and Brian Martin, the defendants, alleged that Keating and Moss shared ownership in any businesses or channels established under the holding company name GameGuide. The deal was struck on the basis of a small investment made by both Keating and Moss into the development of the channel(s), namely “VideoGames.” Martin and Princip were accused of violating the contact terms and defrauding Keating and Moss from profits for “VideoGames,” to which they held rights.
Currently, “VideoGames” has over 3.4 million subscribers and is estimated to generate $55K/month in ad-based revenue at the top end, according to SocialBlade. This estimate does not include brand deals or other forms of revenue. Both Keating and Moss invested $1500 to support “VideoGames” in exchange for 30% of the business.
A seven-person jury in the North Texas Federal district found Principe and Martin in violation of the original agreement and the various charges presented by the plaintiffs including fraud, breach of fiduciary duty, conspiracy and breach of contract.
“I am pleased that a jury has awarded me and Ty Moss our rightful ownership in the VideoGames YouTube channel,” said Keating (pictured left) in a statement. “With the YouTube industry still being in it’s infancy, it is my hope that this verdict sends a powerful message to the community that we should always operate in the most transparent and honest way possible. A contract is a contract, and we creators should always honor our agreements.”
This case, alongside Helbig’s situation with MyDamnChannel and the recent settlement by Ray William Johnson in the case against Jukin Media prove that the online video business is growing up. And the rites of adult hood assume responsibility for not only one’s actions but the potential outcomes of those actions.
“This 20 million dollar verdict represents the ‘big business’ YouTube has become. I strongly encourage all creators, owners of channels, and networks to obtain experienced legal advice prior to entering into any oral or written agreements,” said former Judge Dan Wyde of Wyde and Associates, who served as co-counsel to Keating and Moss.
The case brings to light the reality that shady deals have been and continue to be made, verbally and in writing. Various YouTubers have been said to send fraudulent contract terms for licensing rights and ownership of individual videos, according to an insider at a well-known MCN.
From the case details and evidence, it appears Princip, who has had various YouTube channels shut down over the years including primary channel TeamNoble, and Martin, who still operates his YouTube channel Futuristichub, have both had a history of deception in the YouTube world.
“An unfortunate byproduct of the maturing YouTube economy is to offer openings for the con men and crooks, as evidenced by this case,” said Jody Simon, a contract lawyer and Partner at Fox Rothschild.
While Martin and Princip may be anomalies to the industry as a whole, the ruling will undoubtedly cause future and current independent creators to think twice about deal terms. The alternative could be a heavy price-tag payout for damages similar to this outcome.
“We dealmakers have been referring to the digital content world as the Wild West. As that economy matures, the West is becoming tamed,” added Simon. “As buyers can look back at a longer history of deals, their parameters are becoming more predictable. Likewise, the lawyers, agents and managers in the space are more sophisticated, as are their clients.”