YouTube food network Tastemade raises another $10MAugust 15, 2013: 9:00 AM ET
The venture capital dollars are flowing on YouTube.
FORTUNE -- The rise of the YouTube studio shows no sign of abating.
On Thursday, Tastemade, a year-old YouTube studio focused on food and cooking shows, said it raised $10 million in its second major financing round from venture capitalists. The funding is the latest in a string of investments and acquisitions of digital channels or networks dedicated to creating professional video content primarily for YouTube's massive audience -- a trend that was the subject of my recent cover story in Fortune, How YouTube Changes Everything.
Like many YouTube-focused studios, Tastemade is challenging established cable networks for audiences and hopes to emerge as a digital counterpart to brands like Food Network and Cooking Channel. In about a year, Tastemade has attracted 200,000 subscribers on YouTube, and its shows have been viewed 18 million times. In a strategy adopted by other YouTube creators like Maker Studios and Machinima, Tastemade also runs a network of affiliated channels, which collectively have some 4 million subscribers and whose shows are viewed 50 million times a month on aggregate. (Food shows are among the most popular content categories on YouTube, and a recent headline in The Independent of London asked "Are YouTube food channels killing TV chefs?")
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Tastemade, which is based in Los Angeles, was founded by a trio of former executives at Demand Media. Its headquarters are in a warehouse space that once housed MTV and more recently TOMS shoes. The 7,000 square-foot space is equipped with test kitchens where producers can create shows for a fraction of the cost that similar cable shows are produced in.
On a recent afternoon, a group of fans of a show called My Cupcake Addiction watched its creator, an Australian chef that goes by her first name, Elise, as she prepared her sugary treats. As we observed the demonstration, which was being filmed, Larry Fitzgibbon, a Tastemade founder told me: "We are trying to make the Food Network for digital platforms, globally."
Like other successful YouTube creators, Tastemade is also quickly trying to diversify its audience away from the Google-owned video sharing site. Along with its announcement of the new financing, Tastemade is promoting a new iOS app that allows users to easily create their own shows. By connecting with its audience directly, outside of YouTube, the company hopes to establish a more direct relationship with its customers and find new opportunities to cash in on the popularity of its shows.
Some creators have griped recently that monetization on YouTube (GOOG) has not been commensurate with the huge audiences they're able to attract on the site. Tastemade's Fitzgibbon was more diplomatic. "We are enthusiastic about the YouTube platform," he said during an interview this week. "We see the mobile app as an opportunity to own our own distribution and to have more control over advertising." Fitzgibbon said an Android version of the app would be available later this year.
YouTube typically pockets 45% of the revenue from ads that appear on or alongside the clips of its content partners. The company said the revenue split is justified by the high cost of streaming video to a billion people around the world. Several content partners have suggested YouTube's cut is too high, and some have sought to bring their content to other platforms, including cable television, which may offer more favorable economics.
Tastemade's financing was led by Raine Ventures, the venture capital arm of The Raine Group, which focuses on digital, media, entertainment, and sports. Redpoint Ventures, which led a $5.3 million investment in the company last summer, also invested.