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"The studios were run on a factory basis. They had to have total control of their talent in order to assign them to projects, in order to make all of these films to keep their theaters filled," Balio says. "They could not negotiate with talent each time they decided to make a motion picture."
They met this challenge by adopting the "option" contract. A new star might be signed for a fixed term (typically seven years). Each year, the studio had the option to renew the contract — but the actors were unable to break it during its duration.
"It was bondage," Balio says. "It changed over time, but basically, when a performer signed an option contract, he or she was bound to the studio because no other major studio would hire that performer if he or she broke their option contract."
Beginning in the 1950s, though, the industry underwent a transformation. It moved away from producing as many films as possible and toward producing the best films possible.
That change was the result of two things, Balio says: the rise of television and the Paramount antitrust suit. The judgment in that case declared that studios could no longer own the theaters that showed their movies. The result was, in some ways, a transformation similar to the one YouTube is hoping for: a transition from short, low-budget films toward longer, professionally made content.
That was the idea behind YouTube's $100 million investment in 100 original-content channels, which included channels produced by Maker and Machinima, made in October 2011. In November 2012, YouTube doubled down on that bet, reinvesting in the top-performing 30 to 40 percent of those channels.
In November, YouTube also opened a production facility in Howard Hughes' former airplane hangar in Playa Vista, available to "partners" who want to up their game. YouTube's redesign, unveiled in December, also was a step in that direction. It is more about channels, less about individual videos, with the idea that YouTube will become a destination rather than a repository for video content.
Part of the problem, he says, is that YouTube networks initially adopted the language and practices of the entertainment industry, but technology is evolving quickly, and the law is struggling to keep up with it.
In the past, the talent needed Hollywood studios or record labels or book publishers in order to get their work distributed. Today, not so much.
And that, Lisi says, leaves a lot of video creators asking, "What do these guys do for me?"
"From the standpoint of people who grew up with the Internet, many of these young artists — and I call them artists because I do think they are in the truest sense of the word: They are doing what they are doing out of a creative impulse — for them, it's like, 'Why do I need a middleman?'"
YouTube, after all, was founded on the idea of cutting out the middleman, of making it possible for a filmmaker to post a film and for anyone with an Internet connection to access that film instantly.
Video makers, Lisi says, can easily reach out to each other, unlike actors or recording artists of the past. "Because these are creatures of the Internet, not only do they broadcast to their audience, they consume each other's content, they are fans of each other, and they communicate," Lisi says.
"What you have are the benefits of a union without the burdens of a union — all of the talent sharing information almost instantaneously," Lisi says. And "much like a union, they can threaten group action."
"It's a very interesting power dynamic, and I think that the industry is still trying to work out how to deal with this genie that is newly out of the bottle. [YouTube] provides a lot for a lot of people, but it is a genie, and you don't want to piss it off."
No one from the company would confirm whether the change was due to the onslaught of bad publicity.
As for Vacas, he finally settled his dispute with the company in October and parted ways with Machinima. Today, he's represented by a new organization called Union for Gamers.
Union for Gamers is the brainchild of Donovan Duncan, who's also the vice president for marketing at Curse Gaming, a company that has specialized in video game add-ons and industry news.
"There's a lot of ridiculous contracts out there," Duncan says. "Gaming is something we should support, not hinder by locking people into these really bad contracts, so I came up with the idea of, well, let's build a union for gamers, by gamers."
Everyone in Union for Gamers, Duncan says, would be entitled to the same cost per mille, which would be raised every year. Gamers no longer would be forced into restrictive contracts — union members would have the right to leave whenever they saw fit.