> Nebula the streaming video service (which controls the streaming revenue) is Watch Nebula LLC, which is about 83% owned by Standard Broadcast LLC, with the rest held by Curiosity Stream. All control and all board seats belong to Standard Broadcast LLC.
> We use shadow equity for platform creators because assigning LLC-level equity would make signing new creators logistically impractical, and would have complex tax implications for every creator we bring in. US securities laws also are skewed in favor of the wealthy: it would be very expensive or potentially impossible for us to comply with them if we were issuing securities to small creators who aren’t accredited investors.
> If substantial control of the streaming service ever changes hands, we are contractually required to split the proceeds 50/50 with the creators on the platform. 50% of streaming profits are distributed to creators based on watch time. Additionally, 1/3 of the revenue from any subscriber is allocated to the creator responsible for bringing in that subscriber.
> Weird that he didn’t just ask.
— Dave Wiskus, CEO of Nebula https://www.reddit.com/r/Nebula/comments/1ffnaza/comment/lmx...
For the record, Nebula is primarily owned and operated by creators. Those creators are:
* Dave Wiskus
* Brian McManus (Real Engineering)
* Alex (LowSpecGamer)
* Devin Stone (Legal Eagle)
* Thomas Frank
* Sam Denby (Wendover Productions)
The other creators are getting scammed.
This is not an uncommon model. This is almost identical to how edX was structured and the marketing literature is nearly identical too. It was owned and run by universities. Just not the universities who made up the "consortium."
If there were no scam, there would absolutely no reason for the non-public non-answers. If Nebula weren't scamming, they would disclose the "financial and legal wizardry."
None of this prevented me from giving Nebula money. As I said, this kind of issues comes up literally every time I do due diligence. I am disappointed in specifically Brian McManus for being involved in a scam, but this kind of scam is omnipresent with quite literally every organization I've done due diligence on, and usually much worse.
I find it funny that the author writes
> It’s equally possible, however, that the system was set up in order to keep any meaningful power away from the creators.
Does the author really think that the chance that all of these creators are lying to their audiences is just as likely as them all telling the truth?
Also, the author even admits
> As I mentioned previously, some ownership of Standard has since been offered to other creators through stock options, but it’s unclear how much or what type of stock those options represent.
Owning equity (and thus voting power) in Standard also means that the creator has the ability to vote on how Standard operates Nebula. So the conclusion that the creators have no control over Nebula literally cannot be true. So the statement that "the creators own 0 percent of Nebula" is just misleading, and yet this is somehow the important conclusion that the author wants readers to know...?
I very much suspect the latter. Otherwise why be so circuitous and secretive about it.
I've never heard of shadow equity before. But clearly it isn't equity, ie it isn't ownership. So it almost certainly has no governance rights. Now it may entitle the creators to 50% in the event of a sale, but who's to say it's Nebula that's sold, vs Standard, and who's to say it's sold at all. Rather the standard (excuse the pun) approach of selling off the assets without selling the company.
To my untrained eye, this just seems like owning stock without voting privileges, which seems okay? Is the fear that the voters will eventually just change the creator profit sharing to zero and milk the company dry rather than selling it?
Surely this must be 6 million USD. I first thought this is a typo, but it is like that in the original SEC filing. Is this some convention I am just oblivious about?
Nebula is a streaming service.
It has a parent company (Standard Broadcast) which owns $83% of the service and has 3 out of 4 board seats.
An external public company (Curiosity Stream) owns the remaining 17% and 1 board seat.
Standard Broadcast is owned by 6 individuals, some of them popular YouTubers.
Content creators who post on Nebula get 50% of the service's total profits (based on watch time).
Content creators (other than the 6 mentioned above) don't own any shares in Nebula, but if the service is ever sold, they get 50% of the proceeds from the sale. This doesn't, however, apply to Standard Broadcast or Curiosity Stream, which can and are sold/traded independently.
Whether Nebula is "creator-owned" or not, as they proudly proclaim front and center on their website and marketing materials, is left as an exercise for the reader.
Essentially, all the money collected by subscriptions is paid to creators based on the number of views on their videos.
[0] https://nebula.tv/videos/tldrbusiness-how-does-tldr-really-m...
I usually enjoy an unnecessarily inflammatory hit piece on something uncontroversial because it's the investigation along the way that makes things interesting but there's none of that.
I was always suspicious of the "50:50 SB/Ceator" deal. The real way to do something like this imho is via a cooperative, with investors like CuriosityStream and SB providing capital loans.
That said, the "ownership" claim is apparently provably false and I've been lied to. The company has operated dishonestly, and frankly the biggest reason I had a subscription was because of what I thought was an equitable ownership structure for creators.
1) a group of content creators created a company
2) that company runs a streaming platform where they also allow outside content creators to use with (at least) a profit sharing agreement that includes ongoing profit as well as profit from the a sale of the company, should they sell it.
3) that platform also took in a single minority investor at some point
4) some rando on Medium is getting wrapped around the axle because they think the outside creators are calling this "ownership."
I love Nebula. But it's obvious that there is a shady component to their structure that prevents transparency that senior leadership knows about and knowingly obfuscates. I'm not arguing for a creator-owned co-operative; that would render the equity worthless, and they want (and should) retain the option to sell. But Nebula et al made a big fuss about refusing VC because of the incentives that creates while legally creating a two-tier structure that mimics those same incentives.
[1] https://nebula.tv/videos/realengineering-how-nebula-works
1- Bulk Purchase, like Nebula (Sam from Wendover and other fellow youtubers); One subscription buys you access to ALL the channels in the network.
Pros:
* Single payment for users
* gets better as more creators join
* usually discounted if you consider per-channel cost
Cons:
* requires trust between the creators
* can cause clash between creators on division of funds
* requires a certain minimum output to maintain basic service
* one cancelled creator can sink the service
____
2-Per-channel subscription, like Floatplane (Made by Linus from the LinusTechTips channel); You have to pay seperately for each channel you want to get access to.
Pros:
* Can be cheaper if you only want access to a couple of specific creators
* creators are not dependent on each other to maintain the service
* you are seperate from other creator drama somewhat
Cons:
* Can become costly quickly if you want to subscribe to multiple creators
* not that competitive with youtube premium
* can cause comparison strife between creators for difference in subscription fee
* can't take advantage of the synergist effect.
_____
Basically Nebula has the advantage of having many high profile creators, and if you have a smaller following, you can take advantage of the rising tide and get a boost from them by joining the service.
Also, Nebula seems to have ~ 50-ish creators from some pretty diverse set of topics, so it's not pigeonholed as Floatplane.
Buuuuut...it's unsustainable I feel. As the number of creators increase, the disparity of what each creator brings and what they are owed will be unteneble.
--
Floatplane, OTOH, has half the number of channels as Nebula, and they are mostly tech friends of Linus, so it's not only pigeonholed, but overshadowed by the anchor store that is LTT.
By having seperate silos, you are unlikely to catch the wake of a rising ship to boost yourself.
However, I feel that by cutting money out of the equation (Floatplane gets a fixed cut, rest, you earn of your own merits) it is in theory more sustainable; you have your own silo, and if one is sinking, you are not concerned.
Also, there is a gun channel on the website, and they are there because they are tired of the censorship from Youtube. Being free from drama is a plus...don't subcribe if you don't want to watch!
but not that free; they are still bound to the whims of payment processors, so if VISA/MASTERCARD/Whatever block them, they are SoL.
They are not Only Fans level of free.
___
TBH, it's a pain to get people to pay, the friction is just too high. Nebula makes it easier than Floatplane, on the onset, even if it's not the best choice. But since when have people used logic where money is concerned?
Give dave an award for being awesome and running a successful company with a single investor.
This would match what Standard have said about the setup, would match the Wendover documentary and its reference to "wizardwry" making it all work, and provide for input from creators and revenue to creators. Combining this with the phantom stock and how a sale would be handled, I think calling this "ownership" when summing it up in a single word for the purposes of a YouTube advert is... uncontroversial?
The alternative would be having each creator on the cap table, and my understanding is that is actually quite tricky to do at scale, and brings significant legal and tax implications for the creators and Nebula.
While this is all very interesting, and I appreciate the blog post, I do wonder if the answer here just boring.