Why So Many Major YouTube Channel Hosts Are Quitting And What It Says About Media

All of media is in a transition phase, which is a nice way of saying that it’s FUBAR. The concept of the web was that the people who make the things, by gaining access to massive distribution, would avoid the centralization that made old media kind of bad and boring.

That’s not exactly what happened. Yes, many people can self-publish and that’s a good thing, but we’ve somehow wound up in a situation wherein we’ve eroded the faith in large media organizations to the point where Big Media no longer serves the important role it once did in our complicated democracy and instead replaced it with, I don’t know, Danica Patrick talking about how Justin Beiber is a lizard person and the moon landing is fake.

This issue is even more acute for video and, in particular, for automotive video media due to the still high production costs associated with doing anything with cars. There was a period of time in between /DRIVE and MotorTrend becoming a part of the original Google/YouTube content creators program and roughly the start of the pandemic that saw a lot of great talents and individuals flourish.

Then there was a period in all sorts of media (podcasts, newspapers, et cetera) where the original owners got out/sold, new money came in, and everything got briefly more interesting and then suddenly much worse. If you were on the outside you maybe didn’t recognize this, but creators did, which is why there’s been months of the biggest creators bolting the channels that made them.

What’s going on here?

Spilling Some Auto Tea

A few days ago this video popped up from a creator named Tiernan, who was a longtime contributor to Donut Media and there during the channel’s successful rise. Rather than explain only why he was quitting, he pointed out why it seemed like everyone was leaving (and teased more departures at Donut Media).

It’s a good video and I even like some of the little asides where he jumps in and says he’s been encouraged to not talk about this like he’s some sort of automotive whistleblower. I don’t know Tiernan, but he clearly understands how YouTube measures attention and optimizes for it.

It’s not that long of a video and you should watch it (link here if it’s blocked at work) because the points are valid and it explains, quickly, why there’s been a lot of this lately:

While some of the individual situations between CarThrottle, Hoongian, and Donut Media are a little different, they all follow a pattern that Tiernan describes quite succinctly:

• Passionate creatives build company, experience huge growth in YouTube/Insta expansion era.
• Original owners sell for reasons, new money comes in.
• Company gets resold or restructured, cuts costs, squeezes creative, and loses sight of what makes content good in the first place.
• Lacking any true “moat” people leave to start something new.

Here’s a video from Top Dead Center (Will and Edwin from CarThrottle) that follows that pattern almost perfectly:

All of this makes sense and is also similar to our experience here when David and Jason left the old lighting site to join forces with Beau and Galpin to create a new website.

Recurrent/Drive/The Drive/Donut And The Problem

While I don’t love the way private equity and media tend to mix, I’m going to start by saying that my experience with most media companies is that rarely does someone get into this business without some sort of Charles Foster Kane-like interest in media itself, which is to say I’ll give people the benefit of the doubt that no one who ruined these channels set out to ruin channels/lives/blogs/media.

So why does this keep happening? Let’s look at /DRIVE, now The /DRIVE, which is owned by Recurrent Ventures, which also bought Donut Media. I’ve got a lot of background here because I was friends with the /DRIVE crew when they started, did a couple of shows with them, and eventually worked for the company that sold /DRIVE under bad circumstances.

I’m not going to do a whole history of /DRIVE, but it essentially came to exist when YouTube was purchased by Google and decided it wanted to be more than cat videos. Google put in around $100 million into its Content Creators Program and gave that money to various companies to produce better content.

On the car side, they offered money to MotorTrend, TopGear, and Car And Driver (Hearst). Top Gear famously declined the money, so instead, a new group was formed with media exec Emil Rensing and a production company called TangentVector (my former employer). They teamed up with a group of creators that included Chris Harris and Matt Farah.

The channel was a huge success, immediately, boosted by the winning combo of the collection of generational talent (in front of and behind the camera) and the support of Google itself. Did it make a ton of money? Not really, and eventually, Google started pulling back its support and told the channel it would have to survive on its own. Around this time, it was discovered that Emil Rensing stole millions from another company he worked for and, likely, misled the people involved with /DRIVE who co-owned the channel.

Conveniently, Time Inc. decided it wanted to be a part of this new media universe as there was an assumption that there was a ton of money to be made in media (including with a site devoted to… breakfast). Everyone wanted to be Vice or Buzzfeed or Business Insider (the only one of those companies to sell early enough to make real money). The rapidly rising valuations of these companies, primarily propped up by traffic granted by social media sites like Facebook, made this an attractive proposition.

Time spent maybe a billion dollars building a new media space called The Foundry in an old dock space in New York City and bought /DRIVE, rebranded it The /DRIVE, and hired a bunch of writers. The channel itself lost its biggest voices, including Farah and Harris, as well as a lot of the video staff. Quickly the channel lost its mojo and, in short order, Time itself realized spending all this money had netted it very little and the company (along with The /DRIVE) was sold to Meredith, Inc.

What did Meredith, which seems to have bought Time for its food/lifestyle/wellness brands, want with a car website? Nothing, apparently, and it sold to a group called North Equity (since rebranded Recurrent Ventures), which also bought Popular Science, Field & Stream, Outdoor Life, and created The War Zone from the bones of Foxtrot Alpha. I did a small amount of work for Recurrent and have interacted with its boss, Andrew Perlman, who has a taste in weird cars that seemingly makes him a decent person to be in charge of a car website.

My sense of Perlman and North Equity/Recurrent Ventures is that the company seems to have wanted to bundle enough sites together to be extremely profitable from gaining some economies of scale and either go public or sell, which is where the real payouts are in this business (no one seems content to make healthy margins year-after-year and employ people who love to do what they do).

From day one, the overwhelming emphasis at Recurrent Ventures was on e-commerce—specifically, referral links where websites get commissions if you buy a product listed in its “reviews,” which were less hands-on tests and more aggregations of existing Amazon reviews. A lot of publishers in recent years have played that game; Google, the primary driver of traffic to such “reviews,” responded by bringing the hammer down hard on them. Those changes have been apocalyptic for media companies like Recurrent, leaving them scrambling to find another way to pay the bills until the next algorithmic change comes along and nukes them from orbit yet again.

In spite of owning one of the original great YouTube channels, Recurrent bought Donut Media from co-founders Matt Levin, Ben Conrad, and Nick Moceri to boost the company’s video presence. That aggressive e-commerce focus is what made the Donut Media purchase, Recurrent’s largest-ever acquisition at the time, so strange. After all, product reviews were never really Donut Media’s game.

Again, I have no reason to believe that there was anything here but a desire to make great stuff and make a lot of money doing so. Unfortunately, around this time Recurrent itself made a deal with large private equity firm Blackstone to access about $300 million to finance more deals. I say unfortunately because that deal went south fast as the overall environment (including Google changes), overhiring, and attempts to squeeze more money out of product reviews of questionable value made the economic upside less obvious. Recurrent bled staff and shut down properties.

According to Tiernan, this turmoil seemed to have landed in Donut Media’s world as well, and the company (even if it was profitable, and I’ve heard that it was) did what companies in these positions tend to do and tried to MBA their way to efficiency by cutting costs, thus ruining the very thing that made the brand valuable.

Again, the individual circumstances vary, but you can apply a variation of this timeline to Univision/GO Media/Deadspin, CarThrottle, and Hoonigan.

Who Should You Be Mad At?

I’ve seen these deals go bad. I’ve been a part of these bad deals. I’ve seen so many people suffer. It would be easy to say that there’s an obvious enemy here, like private equity, but it’s not quite that simple.

Should you be mad at the founders who sold? I don’t think so. People are allowed to build businesses and sell them and often, as with Hoonigan, that was part of the original plan. I was talking to another publisher recently and they were sharing how hard this business is and how much work they were putting into just breaking even, which I can relate to. After all that hard work people are allowed to recoup some of the value they put into their projects. They may regret it later, but selling either to get some value or to expand a business is completely understandable.

Should you be mad at the people who buy these companies? Not necessarily. This is a little bit more case-by-case, but I’ve never met anyone who buys one of these companies with the stated goal of making them suck. They’re buying companies that are typically profitable with the hope that they can make them more profitable. It’s just a side effect of our economic system that, even in times of low interest rates, borrowing a lot of money isn’t easy, and the people who have the money to give out expect massive and quick returns of the type that are difficult to achieve in this business.

Should you be mad at the employees who quit? Absolutely not. In most of these situations, the creators who are involved don’t own a piece of the business and it’s their right and duty in a free market to take their labor where it’s most beneficial to them, which is what they’re doing. This also makes the acquisition of these companies so weird. I talk about “moats” all the time around here, which is the idea in business that what you do has to be protected in some way from other people taking or copying what you do. If your creators are your business and the money you make is from YouTube, which is free to use, then what are you really buying other than a brand and some subscribers?

Should you be mad at Facebook and Google? Maybe. All of us, including this website, rely on the major players on the web to keep ourselves alive. We rely on Google search and other traffic and we use Google’s ad network and Google’s ad management software to control our ads. We rely less on Facebook, but I know plenty of other sites that are reeling from the lack of Facebook traffic.

With a switch to AI-produced results, Google could absolutely wipe out more sites, including us.

What Can You Do About This?

Subscribe to your favorite channels, follow these creators when they leave, but also give to their Patreon accounts, and buy their merch, as well as watch their stuff. If I can put in a plug, become a member of this site if you enjoy reading it. The more we can rely on our readers and members, the less worried we have to be about changes in the larger ecosystem.

My belief is that we can continue to build a great site, that you love, that employs great people, and makes enough money to keep us happy.