BBTV resolves dispute with Ethan Klein as YouTube creators raise concerns over revenue payouts

Feature image courtesy H3 Podcast.
Prominent YouTubers Kavos and Yo Mama have also taken issue with BBTV’s policies.

Vancouver-based media tech firm BBTV Holdings and popular content creator Ethan Klein have resolved their dispute over the company’s revenue-splitting terms and payout practices.

The public quarrel, which has now been settled, began after Klein claimed earlier this month that BBTV violated its contract with his H3 Podcast by taking a 30 percent cut of its YouTube channel membership revenue, documenting the disagreement in a flurry of Twitter posts and YouTube videos.

Other YouTube creators have also recently expressed concerns regarding BBTV’s revenue splits and approach to paying out creators, including Yo Mama co-creator and producer Zack James—who said he faces the same situation as Klein—and Pierce Alexander Kavanagh, who goes by Kavos. These complaints come as BBTV’s business has struggled amid shifting consumer behaviour.

Klein announced that the conflict has been resolved as BBTV has paid back the full amount of H3 Podcast revenue that it withheld.

The H3 Podcast is a comedy and reaction show with nearly three million subscribers co-created and co-hosted by Klein and his wife Hila. In a YouTube video posted to his personal channel on April 8, Klein argued that BBTV improperly withheld nearly $620,000 from his podcast dating back to December 2020. BBTV denied this claim in a statement provided to BetaKit earlier last week.

However, BBTV and Klein have since resolved the dispute. Klein announced in another YouTube video that BBTV has agreed to pay back the full amount of H3 Podcast revenue that the company had withheld, later confirming that BBTV had done so. Klein did not respond to requests for comment from BetaKit.

Klein’s disagreement with BBTV centred on how the firm classifies channel memberships, and whether BBTV’s current contract with Klein permits the company to take a 30 percent cut of the H3 Podcast’s membership revenue. Klein claimed it did not, noting his agreement with BBTV “clearly states that 100 percent of all revenue would go to the H3 Podcast.” Per Klein, the only exception was if BBTV brought the show third-party sponsorship. After BBTV initially refused to pay him back, Klein threatened legal action.

When Klein first began posting and speaking about his dispute with BBTV publicly, other YouTube creators expressed that they had experienced issues with BBTV, including James and Kavos.

Founded in 2005 and also known as BroadbandTV, BBTV is a multi-channel network that helps YouTube creators like Klein, James, and Kavanagh manage, distribute, and monetize their content.

BBTV’s dispute with Klein, and the backlash that the company has seen from fans and other creators, comes as BBTV’s revenue has fallen and its losses have mounted. In 2022, BBTV’s revenue dropped nearly 16 percent year-over-year to $402 million, down from almost $477 million the year prior. The firm also posted a loss of nearly $198 million, six times the $33 million the company lost in 2021.

RELATED: BBTV secures $21.6 million CAD loan to pay off overdraft facility

Over the past year, BBTV’s stock price on the TSX has dropped 79 percent from $2.01 to $0.42 at time of publication. BBTV cut 14 percent of its staff last June, brought on a new chief financial officer this January, and secured a $21.6 million term loan from MEP Capital Holdings III in February to use as working capital, pay off its overdraft facility, and support the company’s efforts to reach profitability.

In its initial, April 11 statement to BetaKit regarding Klein’s dispute with BBTV, and his online commentary regarding the matter, BBTV asserted that the company’s business remains healthy. “Despite what Mr. Klein has falsely claimed BBTV is alive and well, having recently closed over $21M CAD of new funding,” stated BBTV.

BBTV acknowledged to BetaKit in an April 13 statement that the company had reached a resolution with Klein. “As we said from the start, the recent situation with Ethan Klein was based on a simple misunderstanding—and it is one that we were glad to be able to clear up,” said BBTV. “BBTV has acted ethically and responsibly at all times, and we are extremely pleased that the matter has now been fully resolved.”

Notably, this comment differs from the statement that BBTV provided to BetaKit earlier last week, which denied Klein’s allegations, claimed that the firm has “at all times followed [its] contractual obligations to the letter,” and expressed that BBTV was “prepared to defend ourselves against these allegations.”

RELATED: BBTV reduces workforce by 14 percent following revenue decline in Q1

“In the 18 years that we have been in business supporting thousands of creators across the world, we have never commented on situations with individual creators,” reads BBTV’s April 11 statement on the matter. “That said, we feel the need to set the record straight in the face of Ethan Klein’s numerous factually incorrect statements, egregious and untrue allegations, and defamatory comments about BBTV.”

BBTV and the company’s founder, chair, and CEO, Shahrzad Rafati, have both made their Twitter accounts private, and the firm has limited comments on posts from its Facebook page. Though BBTV did not disclose when or why these changes took place to BetaKit, they appear to come in response to the backlash that the company and its leader have received from online creators and their fans on its social media accounts. For his part, Klein has asked his fans to refrain from contacting BBTV and its employees.

While Klein’s dispute appears to have met a happy ending, it remains unclear how other BBTV clients with this issue will be treated by the company. When asked by BetaKit whether the firm intends to pay back other creator clients in the same situation as Klein, a BBTV spokesperson declined to comment, noting that the company has nothing to add to its official statement on its resolution with Klein.

For his part, Kavos has expressed frustration regarding BBTV’s recent payment schedule changes. Kavos claimed in a March 14 Twitter thread that one day before payout day, BBTV clients received an email from the company informing them that payments would be delayed by up to three weeks.

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Per the email, which Kavos shared, BBTV pointed to banking institutions and affiliated payments solutions impacted by the collapse of Silicon Valley Bank, attributing its updated payout schedule to “an effort to avoid potential processing delays associated with these impacts across a range of partner payment vendors.”

“BBTV is a huge network and now a lot of creators are going to be scrambling for rent, bills because they got ONE DAYS notice that they aren’t getting paid this month,” wrote Kavos. “Lost for words. I should of left ages ago but goes without saying after I have settled this I will be leaving BBTV without hesitation and I encourage many other creators to do the same.” Kavos did not respond to a request for comment from BetaKit.

BBTV did not respond directly to specific questions posed by BetaKit about why the company delayed payouts last month, nor did the firm address a question regarding concerns from other content creators about this delay, or the terms of their deals with BBTV.

Per James, Yo Mama has the same contract with BBTV as Klein, and BBTV is also taking a 30 percent cut of Yo Mama’s membership revenue. While BBTV has provided opportunities for Yo Mama in the past, James told BetaKit that this discovery “does make me question our relationship.”

Asked whether the firm intends to pay back other creator clients in the same situation, BBTV declined to comment.

James said that he was “mostly confused” by the discovery that BBTV has been taking a 30 percent cut of Yo Mama’s channel membership revenue. Per James, Google defines memberships as “subscriptions” on its informational pages and payment receipts, while BBTV lists them as “sponsorships” on the monthly payment reports it provides to creators. “There’s clearly a disconnect,” he added.

James first began working with BBTV in 2017, the same year as Klein. As to how he plans to respond, James credited Klein for doing “a great job leading the charge,” noting that he intends to seek “repayment and an understanding that [BBTV] won’t take 30% from memberships in the future.”

“Memberships would be a great revenue stream to promote and grow,” said James. “However, BBTV doesn’t provide any value on this to justify a 30% cut, nor were they transparent about their decision.”

As to whether he intends to continue working with BBTV going forward, James said it depends how the company responds to this issue.

Feature image courtesy H3 Podcast. Photo from YouTube.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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