Sixty-five years’ worth of footage is uploaded to YouTube every day. Creators are dealing with a classic problem of oversupply. Increasing YouTube revenue per view may seem like a daunting endeavor, but saturated markets are not impenetrable. Lessons from the business world show how strategic alliances can offer struggling channels leverage over their competitors.
Strategic Channel Alliances isn’t a buzzword yet, but it may be soon. The recent partnership between the big YouTube stars Rhett, Link, and Smosh shows how this replaces the dying YouTube multichannel channel network, business model. This kind of alliance isn’t just for successful channels, though. A look at Starbucks and Barnes and Noble’s strategic business alliance shows how struggling media can overcome market saturation and increase YouTube revenue per view.
The Strategic Business Alliance Of Starbucks and Barnes & Noble
Brick and mortar bookstores have encountered many obstacles over the past few decades. The American shopping experience is moving away from malls and shopping centers and increasingly becoming digital. Bookstores now have to compete with ebooks and Amazon, just as small creators have to compete with big channels that dominate their niche. They feel the same pressure to increase profit margins on each sale that creators feel to increase YouTube revenue per view.
Barnes & Noble is one of the few chains that has endured all of these market changes. In 1993 they saw an opportunity for exponential growth. For the first time in history, a coffee shop went public on NASDAQ. Barnes and Noble looked to develop a cafe ambiance in their stores, and Starbucks was looking to expand its business. They decided to form a strategic alliance in which Starbucks would license its brand to Barnes and Noble. This decision to license instead of franchise explains how the partnership avoided failure and benefited both parties.
The Difference Between Licensing and Franchise Agreements
A license is a relationship where the Licensor grants the Licensee the right to use a trademark, technology, or other patented products. This agreement is more hands-off than a franchise agreement because the rules are limited to using what is licensed. The deal does not have control over the procedure of the business.
Licensing agreements are prevalent in the entertainment industry. Movie franchises like Star Wars use these agreements to license their characters to merchandise companies like Hasbro. This licensing offers small and large creator’s hands-off revenue streams. Instead of having to manage an entire merchandising store, they can lease their brand to existing companies.
A franchise agreement grants another party the right to duplicate and establish all of their business’s procedural operations and elements. This agreement goes beyond the scope of a license agreement because it dictates control over all operations.
Why Starbucks Choose to License Instead of Franchise
Starbucks does not allow entities to franchise its business model because they are obsessed with consistency. So instead of using a franchise model as McDonald’s does, they own all of their stores.
Starbucks decided to structure its strategic alliance with Barnes and Noble around a license agreement because they would rather have a reliable partner manage their brand, instead of trusting them to duplicate their entire business.
Finding the right partner wasn’t the only important factor in this strategic alliance, though. Developing the business model and setting the right terms to their agreement was essential to its success.
This strategic decision reduced management costs, provided Starbucks more brand recognition, and added a hands-off revenue stream. Barnes and Noble increased foot traffic to their stores and increased revenue through their Cafe.
Most importantly, Barnes and Noble evolved their brand through this partnership. Their strategic alliance allowed them to offer a unique experience that other box book stores could not provide. Customers could now sip a cup of their favorite coffee while sampling new reading material to purchase. This added value most likely helped Barnes and Noble compete with the lower prices and convenience that Ebooks and Amazon would offer in the mid-2000s.
How The Starbucks and Barnes & Noble Model Can Increase YouTube Revenue Per View
This model worked because books and coffee go so well together, and both companies found compatible partners that were not direct competitors. YouTubers need to use the same template to form a strategic alliance that benefits both parties successfully. They need to find channels that don’t compete for the same view and will not broaden their audience.
Advertisers care more about a creator’s audience than the creator. They want to know how much data exists on their audience, how narrow it is, and how likely the audience is to buy the advertiser’s product. Advertisers pay more per view when creators have a higher percentage of viewers that match their target audience. A strategic channel allegiance helps creators build content for an audience that advertisers will pay more for.
STEP 1: Build an Audience Profile
The first step is creating an audience profile that helps inform the interests and needs of an audience. For example, through their audience profile, Barnes & Noble discovered that customers interested in their books also enjoy Starbucks coffee. YouTubers with a specific niche can find similar niches that interest their audience profile. The key is to find niches that don’t broaden the audience profile and aren’t competing for the same view.
STEP 2: Develop a Business Model
The second step is in building a business model that helps both parties. This process begins by listing the goals of each channel. We can help creators develop a model that works.
Since this is a law firm, we need to restate that this does not constitute legal advice, and we are not liable for any business decisions that are made as a result of this content.
For example, say that an independent journalist is struggling to produce consistent content and brand loyalty with her audience. These two objectives set a road map for structuring a business model. In this scenario, the journalist has a notable brand and a successful template for discussing US politics. Through her audience profile, she discovers that a large percentage of her audience is also interested in global economics. After searching for other creators in this niche, the journalist finds a partner whom she can trust. Since the partner is in a different niche, she does not compete for views. Sharing a brand wouldn’t broaden the journalists’ audience profile because it is a shared interest for both audiences. This partnership would offer the labor needed to produce more content and build brand loyalty.
STEP 3: Set Terms of Agreement
The last step in forming a strategic channel alliance is creating the terms of the agreement. This agreement needs to align with the existing business model. We can create the right partnership agreement to set up this partnership for success.
The two channels could use a license agreement to satisfy their business model’s goals in the example listed above. Like Starbucks, the independent journalist could license her brand and production template to the lesser-known creator. The license agreement would set ad revenue royalties for using the brand. This agreement would provide a hands-off revenue stream for the independent journalist and exposure and promotion for the global economics creator.
How This Overcomes Market Saturation and Increases the Bottom Line
Creators entering a niche YouTube market aren’t competing with millions of small channels; they compete with a handful of very successful ones. These channels have a finely tuned production machine that understands the algorithm and knows the analytics. Finding an unoccupied niche is no longer a viable strategy.
Strategic channel alliances allow creators to compete with these established channels. Even though one was only listed in this article, the list of potential arrangements is endless. The key to creative entrepreneurship is in using previous models of growth to create new ones.
Innovating new business models is our passion. We are a law firm for creative entrepreneurs by creative entrepreneurs. Contact us if you would like counsel on this subject or a template for creative partnership arrangements.