Cocomelon’s cartoon empire


February 11, 2020

Monday was a bruising day for a few ecommerce companies. Casper’s share price is sliding, the Harry’s takeover is done for, and the Brandless bubble officially burst. No wonder investors are having doubts about D2C. Today:

  • YouTube cartoons are worth lots of dough
  • A new breed of packaging steals the show
  • Surgical patients want that Instagram glow
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Content

Kids’ content kingpins are making merch to keep the YouTube cash coming

The YouTube channel Cocomelon, which features an animated cast of colorful creatures dancing along to the delight of content-craving kids, racks up 2.5B views a month, making it the 2nd most watched YouTube channel (after T-Series, which features Indian music).

And although Cocomelon rakes in as much as $11.3m per month, the couple-owned company is expanding beyond the screen to sell merchandise and toys to diversify its revenue beyond the all-determining algorithm of YouTube.

The kids want content 

Although YouTube technically bars children under 13 from having their own YouTube accounts, the platform has still become popular among kids who crave YouTube’s kitschy content. And their parents, who can’t get enough of its convenience.

With 72.5m subscribers, Cocomelon is the biggest kids’ channel in the biz. But it’s far from the only large colossal cartoon on the ’Tube. 

There are 5 other kids’ channels with more than 30m subscribers:

  • Like Nastya Vlog: 47.2m
  • Kids Diana Show: 46m
  • Vlad and Nikita: 33.9m
  • ChuChu TV: 31.4m
  • El Reino Infantil: 30.1m

But there was a crackdown on kid-tent 

In January, YouTube was fined $170m and banned from targeting kids with specialized ads (which violates the Children’s Online Privacy Awareness Act).

The law provided kids with new security protections online… and also ate into revenue for big YouTube channels like Cocomelon.

The ad sales of several kid-focused YouTubers fell by 50% to 60%. Cocomelon’s revenue also declined, but its founders wouldn’t say by how much. 

And now, Cocomelon is betting on the magic of merch

To keep the cash coming, Cocomelon plans to start selling toys and musical albums later this year. 

And, further down the road, the company plans to release a full feature-length film.

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On This Day
You may think you’re a prolific innovator, but you’ve got nothing on Thomas Edison. He racked up 1,093 patents during his lifetime. So depending on your perspective, he’s one of the greatest inventors of all time, or the OG patent troll. And he was born on this day in Milan, Ohio, way back in 1847.
 
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Packaging

Thanks to buy-in from big brands, reusable packaging is becoming a big business

Loop, a company that makes stainless steel canisters and other reusable vessels for giant companies like Nestlé and Procter & Gamble, will soon roll out in retail stores.

It’s a system designed to end disposability

It works like this: Loop ships products — ranging from Häagen-Dazs ice cream to Tide laundry detergent — in tote bags and then asks customers (who have already paid deposits) to schedule pickup times to ship the containers back in those provided bags.

Loop has already conducted trials in New Jersey, Pennsylvania, and Paris. 

Current customers choose from a catalog of 150+ items, and Loop expects that number to continue growing.

It’s a ‘modern milkman model’

But unfortunately it’s a model that’s more expensive than most modern methods.

So, to pay for its early tests, Loop partnered with several of the biggest food and consumer packaged goods brands — several of which had previously pledged to reduce their packaging waste.

According to Inc., “Unilever, Procter & Gamble, Clorox, Nestlé, Mars, Coca-Cola, and PepsiCo all redesigned their packaging to participate in a pilot program.” 

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Sponsored

“In 2020, I’ll have 6 kids, 13 cocker spaniels, and an anti-grav Porsche to transport ‘em all” 

Yep, I sure got a lot wrong about what the future would hold for ol’ Bob. 

The one thing I did get right? Life insurance

Since I clearly have no idea what’s going to happen in my future (*cries while Googling pictures of cocker spaniel puppies*), I figured I might as well be prepared — and protected — for anything. 

I can’t afford a Panamera Sport, but I can afford Policygenius

That’s because Policygenius compares tons of insurers to make sure you’re always getting the best price. Plus, they handle all the hard stuff (like paperwork) for you. Better hurry, though — life insurance rates are at a decades-long low, so protect yourself with a policy while the prices are in a dip. 

We might always get the future wrong. Especially if it involves me, kids, dogs, and cars I can’t afford. 

But we can get one thing right: Life insurance.

Get your policy →
D2C

Brandless, the anti-brand that challenged the name brands, goes bust

Maybe selling everything under the sun for $3 a pop isn’t such a great idea after all.

The D2C upstart Brandless, which rose to fame peddling generic home goods and personal-care products, is shutting down, according to Protocol. It’s the first SoftBank Vision Fund-backed startup to close its doors entirely.

In the early days, the Brandless pitch was pretty simple

Most everything sold for $3 — coffee, hand soap, boxes of mac and cheese. Even cooking utensils.

Trouble is, that price point wasn’t always cheaper than the lowest-priced options at the biggest retailers. So Brandless was betting that its anti-brand could convince consumers to switch soap allegiances, whether or not it actually sold the cheapest suds.

The company became a SoftBank darling, riding a $240m investment to a $500m+ valuation.

But there was a problem: You get what you pay for

The Information reported that quality-control issues plagued the company from the start.

  • Customers complained about items in glass jars — like salsa and pasta sauce — arriving broken. 
  • The company tried to solve the problem by… wrapping the jars in paper.

Rising competition eventually forced the company to abandon the $3-for-everything approach. It tried to regain its footing by selling more high-ticket items and pivoting to CBD.

In the end, the Brandless board said the D2C market was “fiercely competitive and ultimately proved unsustainable.”

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The Hustle Says

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plastic surgery

Instagram-inspired plastic surgery is still on the rise

Last fall, Instagram banned filters that let users see what they might look like with a little nip and tuck — or a major face-lift.

It’s not hard to see why people thought the digital effects were sketchy — one of the filters was literally called FixMe. It mimicked how a surgeon might draw lines on a person’s face before they go under the knife.

Instagram removed the filters out of concern that they promoted poor body-image stereotypes.

But that hasn’t stopped people from getting a little work done

CNN found that people are still seeking out plastic surgery inspired by their social-media feeds. Patients used to ask for the nose or the chin of a certain celebrity — now they’re asking to look like filter-perfect versions of themselves.

Health experts call the trend “Snapchat Dysmorphia” — it’s related to a condition known as body dysmorphic disorder, which affects 1 in 50 Americans.

The trend is fueling a plastic-surgery boom

The American Society of Plastic Surgeons says ~$16.5B was spent on plastic surgery last year — a record high.

Much of that growth involves minimally invasive procedures like Botox treatments and soft-tissue fillers. There were >5m of those procedures in 2000, compared with 16m in 2018.

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Snippets

✈️ The science and secrets of airplane food.

🆎 How a family built a blood-plasma business into a $3.8B fortune.

📬 Some popular email apps scrape their users’ inboxes and sell the data they collect to corporate clients.

🥤 Foam food and drink containers are going out of fashion. A company that makes millions of them is fighting for survival.

🚘 A parking spot in downtown San Francisco is on sale for $100k. It’s advertised as “a nice place to park your money.”

 
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