Dropout’s Playbook for Surviving an Unforgiving Internet

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Like so many other web 2.0 companies, CollegeHumor started as one thing (a site for posting memes, humorous essays, and short-form videos), then became something else (a home for scripted sketch, as well as the production company behind shows like Adam Ruins Everything), before devolving into a zombie shell of itself after Barry Diller and IAC decided a modest comedy audience wasn’t good enough for investors. But unlike so many other companies that ran aground on the shores of Facebook, CollegeHumor came back. In 2018 the brand launched Dropout, a subscription-based platform with original, mostly unscripted, mostly longform content. In 2020, IAC laid off all but seven employees at CollegeHumor, leaving now-CEO Sam Reich with control of the new, divested company. Since then, Dropout has had remarkable success with shows like Dimension 20, Game Changer, and Um, Actually. 

Steering through all this tumult has been the 40-year-old Reich, who had a front seat for the rise and fall (and rise again?) of digital comedy. In September 2023, to mark the fifth anniversary of Dropout, the company celebrated by fully dropping the CollegeHumor name. When we caught up with Reich to discuss the change, he proudly showed off his new media battle scars.

What can you tell me about Dropout’s success so far?
We’re not public-public about our numbers, but we’re in the mid-hundreds of thousands of subscribers. You can sort of guess what that means. We have between seven and ten shows on the platform, depending on how generous you are in terms of what you call a “show.� We have a huge amount in development. We started really kicking development into high gear in the middle of the year.

From a broad-strokes perspective, when we spun out of IAC, the question was “Can this sustain itself?� And we answered that affirmatively within a year. Then the question became, “Can we grow?� We’ve all been sort of amazed by the extent to which this has worked. Without putting too fine a point on it, this version of the company is the most successful one that there’s ever been, by just about every metric — except maybe for total audience, since it’s a subscriber audience and not a general YouTube audience. But the company is in better shape than it’s ever been before.

Let’s talk about a subscription model versus YouTube audience. How did you feel watching that model of ad-based revenues ebbing away?
What I bore witness to was basically the middle class of media business getting eaten away by social media. When CollegeHumor was fundamentally an ad-sales business, it was a pretty healthy one, and then Facebook and Instagram and YouTube started to take over the ad business. If you were an advertiser, why would you advertise on a smaller niche platform unless you had a really targeted audience to go after? And even in that case, social media might be able to help you better than we could.

Year by year, it just became more and more difficult to sell ads. What’s so hard about an ad-revenue business is you’re starting over every year; every year, you start from zero. One of the most terrific things about subscription is you’re starting every year from where you left off, so growth is easier. There’s an economic distinction between these business models, and I think people are scared to go subscription. I understand why: the thought of asking people to pay for your content instead of getting it for free, it’s easy to be cynical about that business model.

But with subscriptions, if you get a thousand customers to pay you five dollars a month, that’s sixty thousand dollars a year. The difference, of course, is that they have to be big fans of yours in order to be willing to pay five dollars a month. But appealing to those fans is a better creative exercise.

In what ways?
First, a huge amount of credit to anyone who is still playing the AVOD (advertisement-based video on demand) game. I’m not going to creatively insult it as much as I’m going to say I don’t think that we could hack it. AVOD-based creators are trying to appeal to the largest possible audience — not lowest-common denominator, necessarily, but they’re playing the game of Where in the denominator do I fall between niche and broad? Which is challenging. You want a video that appeals to a specific group of people, but hopefully a large group of those people.

Then there’s the censorship issue. We’re not producing “edgy� content in any sense of the word, but you’d be amazed at what qualifies for being censored on an AVOD platform like YouTube. It’s particularly true on TikTok: You could speak about a political issue or you could create content that is feminist, and it may get marked as not safe for advertisers. So editorially, not only does your voice need to be broad, but it also needs to be … even saying “noncontroversial� is too generous. It needs to be a little milquetoast.

But in our world of going direct-to-audience (SVOD, or subscription-based video on demand), there’s only you and the customer. All they need to do is think that your material is worth paying for.

It seems like Brennan Lee Mulligan, the original game master of your show Dimension 20, has become something of a folk hero. The Dungeons & Dragons folks have embraced him with open arms.
[Laughs.] Yeah.

What has it been like seeing that fandom emerge?
Everybody has a different relationship with that stuff. I’m lucky, because I was on The CollegeHumor Show on MTV in 2009. I had this brief and glimmering moment of popularity, and then it went away. So I’m grateful to have a second life, and for the way that the audience has developed and how passionate they are. Brennan’s gotten so much attention in a very brief period of time, and he’s handling it really well, to his credit. But it’s enough to give anyone the bends.

The number of embroideries I’ve seen of that quote, the “Laws are just threats of violence� quote … dozens of them.
Yeah. It’s wild.

Did you know a tabletop-role-playing show would be this important? It’s huge and has only gotten huger.
We didn’t greenlight Dimension 20 until we were well into the production process for Dropout. We knew that we wanted a tier of less expensive, more personality-based programming, and at the time, there were two examples to look at in the TTRPG space. One was Critical Role, which had a huge fan base, and we’re huge fans of it. But it’s long, and we thought the barrier to entry was high because it’s serialized. Then there was HarmonQuest, which was Dan Harmon’s answer to this. Every episode stood alone, and it was about a half an hour long and close to a parody of the format. It really wasn’t taking it seriously. We thought there was room for something in between.

We only started to have this conversation, by the way, because Brennan was writing questions for Um, Actually. He had submitted to be a cast member. We liked his reel, but we had made other decisions that year. We were like, “We would love to work with this guy in some way, shape, or form. Let’s bring him into the fold in a peripheral way.� Then Brennan appeared in a sketch or two, and he started impressing us as a performer. I learned only after we had hired him that he was an experienced game master.

The first time I saw him GM-ing was on camera, and I knew immediately that it was something really special. There have been a small handful of times in the long history of our company where I’ve witnessed someone and gone, That’s a once-in-a-lifetime talent. Brennan is one of those times.

You said you wanted to make sure that the Dropout was sustainable, and now you’re finding out it can grow. Are those different goals? Does one take precedence?
Sustainability takes precedence. Not to rehash too much of our history, but when we broke away from IAC, it was not a victorious moment; it was a sad and terrifying moment, in which IAC laid off over a hundred employees. We rebooted the company as seven people. Our experience as a part of corporate America was always that we were a company that was trying to be turned into something ten times our size. Growth was the only objective.

The capitalist mandate.
That’s corporate America. IAC bought CollegeHumor for … the rumored price tag was, like, $30 million, and they were trying to turn it into a company worth $300 million. There was always a scheme to get us there, and believe it or not, subscription was invented as one of those schemes.

Our experience was we wouldn’t objectively fail, but we wouldn’t succeed beyond anyone’s expectations. In that middle space, our parent company would get bored and be like, “This isn’t worth it.� The first year of Dropout was the final instance of that. We had between 75 and a hundred thousand subscribers at the end of year one, which we thought was pretty good. They didn’t. Then they tried to quickly sell us, and that didn’t go well. Honestly, if they hadn’t been in such a rush, we would have never had this opportunity.

When we talk about growth, I really think there’s such a thing as being unhealthily ambitious. I don’t believe in unfettered capitalism. The question is, How can we do this in such a way that we honor the work of everyone involved, we create work that we’re really proud of, and we continue to appeal to our audience first? The strongest argument for growth is that it’s a hedge against shrinking. There’s something to that, but in a world that’s so defined by reckless spending and people feeling mistreated, the radical thing to do is to be slow and steady about it. We’re gonna be radically boring from a business perspective so that we can be as creative as possible onscreen.

I read that you’re working toward being a company that is able to pay residuals. What’s the strategy behind that?
We started having conversations earlier in the year about how we do better by our team and our talent. Really, anyone who’s in my position should be thinking this way, and it’s sort of wild that the major streamers don’t. The thinking is: How can we manifest spectacular goodwill, such that people feel we’re the best folks in town to work with? There’s a moral and ethical reason to do that; there’s also a very clear business reason to do that.

The world of new media is tricky. There aren’t even clear minimums in some of those contracts. Since we’re deciding a lot of this stuff for ourselves, we want to be as generous as possible. We want folks to work with us for a long time. We’ve seen talent outgrow other companies, especially new media companies. They do something exciting, they get a lot of attention, and then they want to move on and become Hollywood, so they leave their company behind. And we want to be a company that grows with its talent.

So what’s the process for getting these residuals to cast and crew?
From just a sheer math and an admin standpoint, residuals are tricky. What we’ll probably end up doing this year is more akin to profit sharing, which is a simple solution but not where we want to end up. We’ll do something a little simpler that allows us to share the wealth this year, and then next year, we’ll probably introduce something that can be a true residual. We’re going to figure out a way that allows us to pay residuals to everyone — not just talent, but crew as well. The idea is if you make a dollar at Dropout in some way, shape, or form, there will be residuals attached to that dollar.

CollegeHumor came up during the digital-comedy/new-media boom. For somebody just starting out, there were a lot of opportunities.
Sure.

And now it seems like those entry-level spots don’t exist as much. Do you have any advice for somebody trying to get into comedy as a job?
We are living in a strange moment in that way. When we came up, there was us, The Onion, and Funny or Die all duking it out in a comedy viral-video space race. And now all of us have abandoned those business models. The Onion is just the website, Funny or Die is just TV, and we’re subscription. There are a few middle-class media companies that are doing interesting work out there: Rooster Teeth has been around for a long time. I think what Mythical, Rhett and Link’s company, is doing is really interesting.

We’re living in a moment where it’s easier to build your own audience than ever before. You can either try to monetize that audience — I know creators who are doing that successfully, whether with merch or with Patreon — and I also know folks who are using their online following to try to leverage that into more traditional opportunities in Hollywood. The combination of TikTok, Instagram Reels, and YouTube Shorts make it easier to grow one’s audience than ever before. So that would be my first piece of advice.

My second piece of advice, which I give all the time, comes from my high-school drama teacher. They said it’s not how much you want something, it’s how long you want it for. Granted, some piece of this might be a self-fulfilling prophecy, but the people who have stuck with it tend to get there. But you sort of need to be willing to put in a decade.

What’s Dropout’s strategy on TikTok and other vertical platforms?
That strategy has been huge as far as our growth is concerned. We do very little paid marketing. We did no paid marketing until the end of last year. Our organic awareness strategy is chiefly responsible for the growth of the platform. I think that largely with Dimension 20 and Game Changer, those were happy accidents. It turned out, especially with Game Changer, we were creating content that could be sliced up and shared really well.

Dimension 20 doesn’t slice up and shares as well, but the fandom is so ravenous that it doesn’t matter. Clips still often perform like gangbusters.

We are now creating content with those platforms in mind. We do have to satisfy our paying customers first, so we’re focused on creating shows that are going to be very entertaining. And secondarily, we’re thinking about what could thrive on social. But one piece of advice to anyone in our position is: We give away a lot of the programming for free on these platforms, and I don’t think that has any impact on our audience’s willingness to pay. At least half of our shows get put up on social media in some way, and that window-shopping experience is basically our marketing strategy.

You’re making longer shows that can be cut into smaller chunks. That’s a big departure from what CollegeHumor was originally known for, which was shortform sketch. Everyone goes longer now. Why?
A lot of our decision to go from short-form to long-form had everything to do with going from an AVOD to an SVOD business model, and feeling like we needed to offer something more meaningful. And “meaningful� generally means longer. It doesn’t always mean longer, but it often does.

I think something that’s happened on these platforms, period: As they’re fighting for our attention span, they want us sticking around for longer, so the algorithm is catering to content that’s longer. The first place we saw that is YouTube. There was this period when conventional wisdom with YouTube was you put anything up; you’re playing the lottery to win. Then folks started to recognize, “No, the algorithm is catering to certain types of content.� To play that game, you need to be creating that kind of content, too. And one of the tenets of that was your video needs to be ideally somewhere between 10 and 12 minutes long. Now we have content creators that are posting stuff that’s hours long. ContraPoints, one of my favorite channels, posts content that’s two hours long or more.

It’s clear that TikTok is now going through YouTube’s journey. The questions they’re asking themselves are “How can we capture more meaningful attention?� and “How can we monetize this platform?� So you’re seeing two things. First thing is, they’re catering to content that’s over a minute — which, when you think about what TikTok was, is really surprising. But it means that the sweet spot for a TikTok is now 80 seconds, whereas it was once 20 seconds. Secondly, every third or fifth video is trying to sell you something, because they’re trying to figure out how to monetize it.

As you were saying, Dropout fans are extremely devoted. Is the length of the videos part of that? Do you feel like fan interest is reflective of how long they spend looking at these people’s faces per episode?
[Laughs.] It’s for a few different reasons. I think that because it’s unscripted, there’s a way in. You can be a fan of the show, or in the case of Dimension 20, a fan of the character, and a fan of the player — and that’s not quite true of scripted content. In our case, there’s this element of the fandom — here I’m talking chiefly about Dimension 20 — where they’re like, “I’m into character, I’m into story, and I want to get swept away by the content.� And then there’s another element, which is more akin to a sports fan, and I say this as the least athletic person alive. They’re like, “I love that player, and I love that move, and I love following the journey of this thing.� We’ve got a little bit of both fandoms in our stable.

That’s kind of the reality-show fan, too: having love for story while also loving the moves individual players make.
Imagine a reality show that didn’t thrive on toxicity. Just laughs and good vibes.

The fact that Dropout is mostly unscripted content — is that just a reflection of the fact that you started with seven people and no one had time to write a series?
When we started Dropout, we very intentionally had two types of content: longer-form, less expensive, more personality-based stuff, and shorter-form, more premium scripted stuff. The idea was that scripted was going to be our acquisition tool and unscripted was going to be a retention tool. What we immediately found was that unscripted did both, while scripted did neither.

Will there ever be a place for more scripted material on Dropout?
I could imagine dipping our toe in scripted again, if budgets allow. I think as creative people, it’s inevitable. Like moths to the flame, we can’t resist it, and I know that some of the audience misses it. They’ve said so — they miss sketch on the platform. But it will be a very cautious move when we get there. Our experience has been that we put a lot of work into it and then if it doesn’t work, it can be really discouraging. So we’re going to do it carefully.