Changing Channels: YouTube Will Pull the Plug on at Least 60 Percent of Its Programming Deals 
 
 YouTube has helped fund about 160 “channels” as part of a new strategy to make the video site more TV-like. 
 
 And just like the TV world, YouTube isn’t going to renew all of last season’s programs. 
 
 This week, Google’s video site will start offering new contracts to some of the channel programmers/creators it signed up in the last year. But not all of them: YouTube figures it will end up re-investing in up to 40 percent of its original channels by the time the renewal process is done. 
 
 YouTube will handle renewals in batches, starting with the first set of channels that launched in January of this year. The new deals will largely mirror the ones YouTube set up last year, where the programmers got advances of up to $5 million to produce videos that would live exclusively on the site for more than a year. 
 
 Channels that don’t get new deals won’t get kicked off YouTube, and executives say they hope content makers will continue producing stuff for the site. In the cases where YouTube hasn’t recouped its initial programming outlay, the site will continue to collect 100 percent of any revenue generated by the videos it paid for. 
 
 What determines who makes the cut? Jamie Byrne, YouTube’s director of content strategy, says the site is most concerned about engagement — primarily the total “watch time” a channel has generated — and cost — how efficient programmers have been with their programming budget. 
 
 Which means you can get a good sense of the most likely renewal candidates by looking at rankings published by Advertising Age and Deadline. But since those lists only measure video views, it’s possible that some channels with relatively high ratings may not get new deals. 
 
 Byrne and his boss Robert Kyncl are also not paying much attention to the channels’ financial performance — a tacit acknowledgement that advertising for the channels remains a work in progress. 
 
 “We’ve had some really great response from the advertiser community. As we continue to talk to advertisers and marketers, there’s a real sense that they’re looking at YouTube differently,” Byrne says. “But as we look at this initiative, we are taking the long view here. It’s not necessarily about immediate results.” ||||| Nearly a year after YouTube sprinkled $100 million across the online video ecosystem to create more than a hundred new "channels," it's doubling down. 
 
 Google's video giant will provide a second round of funding to 30% to 40% of its original partners and will start notifying those getting more investment in the next few weeks. "Our biggest objective was to kick-start the ecosystem, to bring in great creators, to deepen our relationships with advertisers and to grow viewership," said Global Head of Content Strategy Jamie Byrne. 
 
 YouTube: Its top 25 channels now average more than a million views a week. 
 
 In the first round, YouTube took a scattershot approach, funding 100 concepts from a wide variety of producers as well as a lot of mainstream celebrities. A year later, YouTube has a better feel for what worked, namely programming that appeals to a young demographic in genres like humor, music, cars and sports. 
 
 What didn't work? A celebrity name attached wasn't enough. Nor was simply creating content--however good it might be--and posting it to a channel. While channels failed for a lot of reasons, the ones that are succeeding have one common characteristic: they make building the audience as big a priority as creating content. 
 
 "Celebrity alone isn't enough to drive it," said Courtney Holt, COO of Maker Studios, which launched Tutele, Mom's View and the coming Maker Music. "You need to have a commitment to the platform, to understand how to build your audience." 
 
 The top 25 new channels now average more than a million views a week and the top 33 have more than 100,000 subscribers, a key indicator of repeat viewing. 
 
 The new investments will be roughly equivalent to the first; most channels received funding in the $1 million to $5 million range in exchange for producing a year of content that YouTube could sell exclusively. That's in addition to the 60 new channels funded last month. 
 
 "We looked at viewership they've been able to achieve, the cost of the content, and from that we are able to determine the channels that are delivering the best return on our invesmtnent," Mr. Byrne said. 
 
 A condition of the deals is that the producers pay back YouTube's investment before they can sell their own ads. But that 's been tough for most producers—for every million invested, they'd have to rack up 50 million views at a healthy $20 CPM. Even successful programmers reached by Ad Age didn't seem to know if they'd recouped, since YouTube hasn't been communicating that information. 
 
 Those channels that don't get a second round will have to make the call whether to continue and recoup YouTube's first investment, or quietly go away. 
 
 But beyond the success of individual channels, YouTube's goal is to change perception among content creators and advertisers. "Everyone I talk to in the entertainment industry and a lot of people in the ad industry see YouTube in a different light than they did a year ago," said Allen Debevoise, CEO of Machinima. 
 
 A passel of big advertisers took a flier on YouTube's strategy at the outset, including Unilever, P&G;, Dodge, Gillette and Toyota, but it's hard to know how much additional revenue has resulted from the channels. 
 
 Geico did its first upfront deal with YouTube for WIGS, a channel targeting women 25 to 48. While Geico had spent on YouTube before, the existence of a serialized, TV-like show made an upfront investment appealing. "WIGS was an opportunity where it was valuable to buy it upfront and to consider it in that manner," said Mary Shirley, VP at Horizon Media, which represents Geico. 
 
 Ad deals that included the channels had a $3 million minimum, according to sources, but only a fraction of that was spent on the channels themselves, and the rest spread across YouTube. Packages could include video ads as well as the YouTube homepage. 
 
 "We believe in the strategy," said John McCarus, senior VP-branded entertainment at Digitas. "We have a handful of clients invested [in YouTube] and with this new round, we expect that to go up." 
 
 The bigger challenge for YouTube is to get people watching longer, which allows YouTube to compete for TV ad budgets. Overall time spent per viewer on YouTube has grown nearly 60% in the past year from just under three hours a month in September 2011 to four hours, according to Nielsen. Mr. Byrne said YouTube is averaging 4 billion hours of viewing time a month compared to 3 billion a year ago. 
 
 While YouTube is touching TV ad budgets, it has a long way to go to match that amount of time people spend in front of the tube. TV viewers watch more video in one day (4 hours, 38 minutes) than YouTube viewers do in a month. 
 
 Perhaps the biggest change is that of YouTube, and by extension Google, as a funding source for programming. 
 
 "A year ago I think the premium content conversation was about iTunes, Hulu, Netflix, MSN and Yahoo," said Brian Bedol, CEO of Bedrocket, which manages four funded channels: Network A, Official Comedy, Look and KickTV. "I don't think premium producers were thinking about producing original content for YouTube."
– YouTube channels are facing a reckoning: As it seeks to make the site more television-like, Google is launching a second round of investments in YouTube channels—but only 30% to 40% are likely to get a new installment of cash, an exec tells Advertising Age. At the moment, YouTube has 160 channels. But a year after beginning the funding process, the site now has a clearer sense of which ones are on the road to success. The new funding will be based on viewership hours, as opposed to number of views or how much cash a channel is generating, Fast Company notes. "Our biggest objective was to kick-start the ecosystem, to bring in great creators, to deepen our relationships with advertisers and to grow viewership," says content exec Jamie Byrne, who's helming the process. If channels don't get funding, it's not the end: They can stick around, and YouTube bosses are hoping content makers will keep at it, AllThingsD reports. Channels that do get funding are looking at similar figures to those in the first round of investment: between $1 million and $5 million. It's a tough gig for the channel's producers, notes Ad Age: Before they start selling their own ads, they have to pay back YouTube's investment.