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Zach Kornfeld and Keith Habersberger of the Try Guys

JD RENES

The Try Guys, one of YouTube’s most established creator groups, have successfully abandoned their reliance on Google’s algorithms and advertiser revenue by launching a standalone streaming service called 2nd Try. And it’s already starting to pay off.

Brand partnerships, sponsored content and advertising have long been key revenue channels for creators, but some are turning away from the unpredictable world of algorithm-driven platforms to subscription services for more stable income.

“Having a business that is reliant on ads is very unstable and very unpredictable,” Try Guys co-founder Zach Kornfeld told CNBC in an interview. “There’s just so much that’s out of your control, and we certainly experienced the worst of that. It’s tenuous at best. Corrosive and explosive at worst. And it also forces you creatively to constantly optimize for things that are not always in your audience’s best interest.”

With a potential TikTok ban threatening to wipe out nearly $15 billion in annual revenue for small and medium businesses, and YouTube’s ad revenue growth slowing, creators are seeking more reliable income sources in an increasingly volatile advertising market.

The Try Guys now have over 8 million subscribers and 2.7 billion views on YouTube. They announced in May the launch of their streaming service, 2nd Try, where most of their new videos are behind a paywall and subscribers can access exclusive content for around $5 a month without ads. In the three months since launching 2nd Try, the company says it is on track to reach profitability.

Other creators are trying to recreate the Netflix subscription model, too. Watcher Entertainment and Dropout are two other popular YouTube channels that launched subscription-based streaming services to avoid the volatility of social media algorithms.

Social media platforms rely on algorithms to decide what content users see, based on their past interactions and preferences. The algorithms analyze user behavior to create personalized content feeds, which often prioritize posts that are likely to generate engagement, like likes or shares. As a result, many creators feel pressured to make content that caters to the algorithm, even if they believe it lowers the quality of their work, just to stay visible.

“We are really happy with how it’s going so far. It’s more than we probably thought we’d have at this point,” said co-founder Keith Habersberger. “We have a long road ahead. The goal isn’t to get to this number. The goal is to keep growing and also to keep learning, and we’re going to be making mistakes.”

Subscription platforms like Patreon allow creators to bypass the algorithm entirely, connecting 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 so I think over the years, creators have learned that, and they’re seeking something more stable,” said Patreon founder and CEO Jack Coyne in an interview with CNBC.

Try Guys found early success with BuzzFeed before starting their independent creative venture in 2018. However, they faced a career-defining internet scandal in 2022 when one of their co-founders and main talent was caught having an affair with another employee. It damaged brand relationships and the company hemorrhaged money making new YouTube videos.

“Our company was operating at a loss for essentially two years. We got to a point where it cost more money for us to make the shows our audience loved than we got in from YouTube,” said Kornfeld. 

Revenue from 2nd Try makes up about 20% of the company’s total sales. The Try Guys will continue posting content on YouTube. The platform’s ad payments remain an important part of its business model. However, Kornfeld and Habersberger emphasize that their main focus is growing 2nd Try to be their biggest income stream, alongside merchandise sales and live touring.

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Michael Dell says ‘at some point there’ll be too many’ AI data centers, but not yet

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Michael Dell says 'at some point there'll be too many' AI data centers, but not yet

Dell CEO Michael Dell: AI demand is very solid

Dell Technologies CEO Michael Dell said Tuesday that while demand for computing power is “tremendous,” the production of artificial intelligence data centers will eventually top out.

“I’m sure at some point there’ll be too many of these things built, but we don’t see any signs of that,” Dell said on “Closing Bell: Overtime.”

The hardware maker’s server networking business grew 58% last year and was up 69% last quarter, Dell said. As large language models have evolved to more multimodal and multi-agent systems, the demand for AI processing power and capacity has continued to be strong.

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Dell’s AI servers are powered by Nvidia‘s Blackwell Ultra chips. The company then sells its devices to customers like cloud service provider CoreWeave and xAI, Elon Musk’s startup.

Dell shares rose over 3% Tuesday after increasing its expected long-term revenue and profit growth in an analyst meeting.

The computer maker raised its expected annual revenue growth to 7% to 9%, up from its previous target of 3% to 4%, with diluted earnings per share now expected to be 15% higher, up from its previous 8% target.

The company reported strong second-quarter earnings in August, and said it planned to ship $20 billion worth of AI servers in fiscal 2026. That is double what it sold last year.

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OpenAI’s Sora 2 must stop allowing copyright infringement, Motion Picture Association says

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OpenAI's Sora 2 must stop allowing copyright infringement, Motion Picture Association says

Cfoto | Future Publishing | Getty Images

The Motion Picture Association on Monday urged OpenAI to “take immediate and decisive action” against its new video creation model Sora 2, which is being used to produce content that it says is infringing on copyrighted media.

Following the Sora app’s rollout last week, users have been swarming the platform with AI-generated clips featuring characters from popular shows and brands.

“Since Sora 2’s release, videos that infringe our members’ films, shows, and characters have proliferated on OpenAI’s service and across social media,” MPA CEO Charles Rivkin said in a statement.

OpenAI CEO Sam Altman clarified in a blog post that the company will give rightsholders “more granular control” over how their characters are used.

But Rivkin said that OpenAI “must acknowledge it remains their responsibility – not rightsholders’ – to prevent infringement on the Sora 2 service,” and that “well-established copyright law safeguards the rights of creators and applies here.”

OpenAI did not respond to a request for comment.

Concerns erupted immediately after Sora videos were created last week featuring everything from James Bond playing poker with Altman to body cam footage of cartoon character Mario evading the police.

Although OpenAI previously held an opt-out system, which placed the burden on studios to request that characters not appear on Sora, Altman’s follow-up blog post said the platform was changing to an opt-in model, suggesting that Sora would not allow the usage of copyrighted characters without permission.

However, Altman noted that the company may not be able to prevent all IP from being misused.

“There may be some edge cases of generations that get through that shouldn’t, and getting our stack to work well will take some iteration,” Altman wrote.

Copyright concerns have emerged as a major issue during the generative AI boom.

Disney and Universal sued AI image creator Midjourney in June, alleging that the company used and distributed AI-generated characters from their films and disregarded requests to stop. Disney also sent a cease-and-desist letter to AI startup Character.AI in September, warning the company to stop using its copyrighted characters without authorization.

WATCH: OpenAI’s Sora 2 sparks AI ‘slop’ backlash

OpenAI's Sora 2 sparks AI 'slop' backlash

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Billionaire tech investor Orlando Bravo says ‘valuations in AI are at a bubble’

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Billionaire tech investor Orlando Bravo says 'valuations in AI are at a bubble'

Orlando Bravo: AI valuations are in a bubble

Thoma Bravo co-founder Orlando Bravo said that valuations for artificial intelligence companies are “at a bubble,” comparing it to the dotcom era.

But one key difference in the market now, he said, is that large companies with “healthy balance sheets” are financing AI businesses.

Bravo’s private equity firm boasts more than $181 billion in assets under management as of June, and focuses on buying and selling enterprise tech companies, with a significant chunk of its portfolio invested in cybersecurity.

Bravo told CNBC’s “Squawk on the Street” on Tuesday that investors can’t value a $50 million annual recurring revenue company at $10 billion.

“That company is going to have to produce a billion dollars in free cash flow to double an investor’s money, ultimately,” he said. “Even if the product is right, even if the market’s right, that’s a tall order, managerially.”

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OpenAI recently finalized a secondary share sale that would value the ChatGPT-maker at $500 billion. The company is projected to make $13 billion in revenue for 2025.

Nvidia recently said it would invest up to $100 billion in OpenAI, in part, to help the ChatGPT maker lease its chips and build out supercomputing facilities in the coming years.

Other public companies have soared on AI promises, with Palantir’s market cap climbing to $437 billion, putting it among the 20 most valuable publicly traded companies in the U.S., and AppLovin now worth $213 billion.

Even early-stage valuations are massive in AI, with Thinking Machines Lab notching a $12 billion valuation on a $2 billion seed round.

Despite the inflated numbers, Bravo emphasized that there’s a “big difference” between the dotcom collapse and the current landscape of AI.

“Now you have some really big companies and some big balance sheets and healthy balance sheets financing this activity, which is different than what happened roughly 25 years ago,” he said.

Oracle shares fall on report the company is struggling to make money renting out Nvidia chips

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