Why the DEFY Media Scandal Matters

What a company’s bankruptcy means for entertainment


Photo courtesy of Magen McMillian

Nate Carr, Editor-in-Chief

On November 6, the multi-channel network (MCN), DEFY Media laid off all of their employees, froze their assets, and left over a million dollars in limbo. The money now sits in the possession of a bank called Ally Bank. Numerous other media outlets covered this ordeal, however, the end of DEFY brought numerous issues into the limelight which, hopefully means a better future for the entertainment industry.

DEFY Media obtained its wealth through YouTube and more specifically, by adding more and more YouTubers to their roster of creators. YouTubers joined the rosters of DEFY and other MCNs in order to make money from AdSense. In the early days of the YouTube Partnership Program, YouTube required a creator to join an MCN to get monetized (make profit from the advertising that plays alongside their videos). Nowadays, MCNs help creators build their audience and relationships with other creators, obtain brand deals, negotiate on the YouTuber’s behalf with other companies for sponsorships and protect them against copyright claims. The benefits that go along with taking part of a MCN’s roster just evolved, as businesses tend to do.

DEFY helped people accomplish their goals with their channels, but also withheld money to look more inflated to investors. Several investors gave DEFY a combined total of nearly a hundred million dollars. As for what happened to the large majority of money obtained from investors, not too many people know. Through the release of many videos from several creators that used to operate under DEFY, these dealings showed themselves.

YouTube intervened to protect the interests of their creators with those affected from the closure of DEFY. As for the future of the over 1.5 million dollars in Ally Bank’s possession, YouTuber Matthew Patrick released a statement in hopes of reaching those at Ally, and further ensuring the chances that the other YouTubers and himself receive their hard earned money.

Ally Bank responded to Patrick’s statement in the comment section of his video. The correspondent  “made a loan to Defy Media that it was unable to pay back… Defy is being liquidated by a professional hired by their Board of Directors, and ally stands to lose most of it’s loan. We are sympathetic to everyone caught up in this mess, and unfortunately Ally is experiencing a substantial loss as a result.”

Patrick later responded to their response, and while some of his audience initially viewed their comment on the matter as a sign of improvement, Patrick explained against otherwise.

Overall, it looks promising for the YouTubers affected as the videos together garnered nearly nine million views as of the publishing of this story, and might in turn, put the money in the hands of the YouTube creators. The fact that something like this managed to happen speaks for the future of entertainment industry. Thankfully, the way YouTube handled the situation yields a much more stable system for those that use AdSense checks as their means of supporting their families.

In today’s world, more and more kids wish to become YouTubers. More and more people start YouTube channels every day. Due to the increasing popularity of the digital media platform in general and number of personalities that find themselves on the trending page, YouTubers steadily overtakes astronaut and doctor as desired professions. This means that an increasing number of people look at vlogging, animating, lets-playing, or making tutorials as a means of making money.

DEFY rendered many in a sort of limbo for several months, and people continue to release information as it arises. At least the outcome of this ordeal brings the industry in the right direction for ensuring financial security for the plenty of people destined to make YouTube and other forms of digital media into a career.

Disclaimer: Information presented in this was gathered from YouTuber, Matthew Patrick (TheGameTheorist), and from the terms and conditions of YouTube’s Help page regarding MCNs.

Associated links are posted below

Matthew Patrick’s First Video: https://www.youtube.com/watch?v=ACNhHTqIVqk

Matthew Patrick’s Update Video: https://www.youtube.com/watch?v=9nbuZPhXW8c

Youtube MCN Help Page: http://support.google.com/youtube/answer/2737059?hl=en