Zach Kornfeld and Keith Habersberger of the Try Guys
JD RENES
The Try Guys, one of YouTube's most established groups, have successfully broken free from Google's algorithms and advertising revenue by launching a standalone streaming service called 2nd Try. And it's already paying off.
Brand partnerships, sponsored content and advertising have long been important sources of revenue for creators, but some are turning away from the unpredictable world of algorithm-driven platforms and turning to subscription services for more stable revenue.
“Having a business that depends on advertising is very unstable and unpredictable,” Try Guys co-founder Zach Kornfeld said in an interview with CNBC. “There's just so much that's out of your control, and we've certainly experienced the worst of it. It's unsafe at best. Corrosive and explosive at worst. And it also forces you to creatively constantly tweak things that aren't always in the best interest of your audience.”
With a potential TikTok ban threatening to wipe out nearly $15 billion in annual revenue for small and medium-sized businesses and YouTube's ad revenue growth also slowing, creators are looking for more reliable revenue streams in an increasingly volatile advertising market.
The Try Guys now have over 8 million subscribers and 2.7 billion views on YouTube. In May, they announced the launch of their streaming service 2nd Try, where most of their new videos are behind a paywall and subscribers can access exclusive content without ads for about $5 a month. In the three months since 2nd Try launched, the company says it is on track to break even.
Other developers are also trying to replicate Netflix's subscription model. Watcher Entertainment and Dropout are two other popular YouTube channels that have launched subscription-based streaming services to escape the volatility of social media algorithms.
Social media platforms rely on algorithms to decide what content to show users based on past interactions and preferences. The algorithms analyze user behavior to create personalized content feeds that often prioritize posts that are likely to generate engagement, such as likes or shares. As a result, many creators feel pressured to create content that takes the algorithm into account, even if they believe it will lower the quality of their work, just to remain visible.
“We're really happy with how it's going so far. It's more than we probably expected at this point,” said co-founder Keith Habersberger. “We have a long way to go. The goal is not to get to that number. The goal is to keep growing and also keep learning, and we're going to make mistakes.”
Subscription platforms like Patreon allow creators to bypass the algorithm entirely and connect directly with their most loyal fans who are willing to pay for exclusive content.
“It's just not a reliable source of income for creative people and I think creatives have learned that over the years and are looking for something more stable,” said Jack Conte, founder and CEO of Patreon, in an interview with CNBC.
Try Guys initially found success with BuzzFeed before launching their independent creative company in 2018. However, in 2022, they experienced a career-defining internet scandal when one of their co-founders and key talent was caught having an affair with another employee. This damaged brand relations and the company lost money on producing new YouTube videos.
“Our company was essentially losing money for two years. We got to the point where it was costing us more money to produce the shows our audience loved than we were making from YouTube,” Kornfeld said.
Revenue from 2nd Try accounts for about 20% of the company's total revenue. The Try Guys will continue to publish content on YouTube. The platform's advertising payments remain an important part of their business model. However, Kornfeld and Habersberger stress that their main focus is on growing 2nd Try into their largest source of income, alongside merchandise sales and live tours.
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