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These YouTubers are owed $1.7 million, and they’re probably never going to get it

These YouTubers are owed $1.7 million, and they’re probably never going to get it

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Ally Bank responds to concerns from creators

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A group of approximately 50 YouTube creators allegedly owed more than $1.7 million following the collapse of network Defy Media are unlikely to see that money.

Ally Bank, one of Defy Media’s financial backers, tweeted a statement on January 25th following a video from popular YouTube creator Matthew “MatPat” Patrick asking Ally to give him and other YouTube creators the money they’re owed by Defy.

“Ally made a loan to Defy Media that [Defy] was unable to pay back after experiencing excessive losses and the owners refused to continue to support the company,” reads the tweet. “Defy is being liquidated by a professional hired by their Board of Directors, and Ally stands to lose most of its loan. We are sympathetic to everyone caught up in this mess, and unfortunately Ally is also experiencing a substantial loss as a result.”

Patrick isn’t the first creator to speak out against Defy — a multi-channel network that worked with popular YouTube creators to secure advertising deals and sponsorships from major companies — but his video was the first to prompt a response from Ally Bank. Ryland Adams, one of the biggest vloggers on YouTube, also reached out to Ally on Twitter about the situation before posting his own video testimonial about the situation in December.

Defy Media shut down in November, but stories from YouTube creators affected by the closure — including popular channels like Smosh and Adams — have continued to come out in the past few months. There are also multiple lawsuits currently filed against Defy Media, from both employees and investors, for numerous reasons, including deception.

“This is what we all can do to help ensure no other creator, large or small, has their money stolen from them ever again.”

Defy Media’s executives allegedly asked creators like Patrick if the company could delay handing out paychecks, according to the video above. Patrick later found out the move was allegedly done “to make their books look better for the investors.”

“After trying other methods of solving the situation, nothing has worked, so at this point we have no choice but to make our fight public,” Patrick wrote in the video’s description. “Steph [Patrick’s wife and business partner] and I have personally been going out of pocket to try and get everyone’s money back. This is my story of what happened. And this is what we all can do to help ensure no other creator, large or small, has their money stolen from them ever again.”

Between ongoing issues with Defy Media, made extremely public by creators affected, and other multichannel networks like Machinima going under, the value of partnering with a multichannel network has come under scrutiny, especially as YouTube has made it significantly easier since 2010 and 2011 to earn AdSense revenue for independent creators. While creators like Felix “PewDiePie” Kjellberg have spoken at length about why networks were necessary back in the day — especially for gaming creators — there are still significant costs and burdens associated with running a channel that networks can help with.

“Nowadays, it’s required for copyright protection,” Patrick said. “If creators want to have copyright protection for their videos to prevent wrongful reuploads or false claims from movie studios or music labels, you have to be a part of an MCN. Based on the system that YouTube has set up, those companies are the only ones with the tools that can offer those protections.”

The Verge has reached out to Ally Bank for more information about the situation.