Reading in the Business of Online Video blog earlier in the week (the blog of StreamingMedia.com) I came across an entry Video Content Creators Like Rocketboom Can’t Survive On Advertising, which kind of reflected some of my own thinking.

Rocketboom should serve as a wake-up call to those who think that simply having traffic equals revenue and a sustainable, growing business model. Or to those that think online video advertising alone is going to generate a lot of revenue in today’s market.

Rocketboom I should point out is one of the “success stories” of Internet video, with an average of around 250-300,000 downloads per show and revenue from advertising of $210,000 in 2006 according to co-founder Andrew Baron. Recently they’ve introduced a $3000 per episode sponsorship deal, with YouTube taking up the first sponsorship. Now, frankly $210,000 a year, spread over the co-founder, presenter and presumably cameraman/editor (the latter two probably part time) is a reasonable middle-class income, but according to Dan Rayburn that isn’t enough.

Well, if Rocketboom is a success story, what about the other headline shows in this consumer generated video world? Goodnight Burbank is still without a major sponsor, although it has been a useful platform for its participants to be noticed and get “better” offers. (Rumor is that creator Hayden Black is working with HBO on a project not yet officially announced). This is a pretty common trend, where similarly Mr Deitycreator Brian Dalton is in negotiations with “a big company” for the second season of 10 episodes.

That’s one benefit of getting exposure, but how have some other high profile projects faired? Well Scott Kirsner gave some interesting statistics in a presentation at the Apple Store in San Francisco last Tuesday (during WWDC week).

Evolution of Dance has had 50 million views to date and generated no revenue for its creator.

Extreme Coke and Mentos Experiments has had 7.5 million views and generated $35,000 in shared revenue from the time they’ve had the videos on Revver. That’s well under half a cent per viewer.

The very clever Matrix for Real has managed 5.25 million views and made $26,000 from advertising revenue share at Metacafe. That’s about the same half-cent-per-viewer.

405 The Movie was before the modern video sharing era and the 5.3 million views of that short got the young men involved started in a visual effects career, but no direct revenue.

The ever-funny and ever-baffling Ask an Ninja made just $20,000 in shared advertising revenue from Revver in 2006 across the more than 20 episodes they created.

Scott mentions The Landlord, a program I’m not familiar with, that has amassed an incredible 34 million views with no apparent revenue.

And so it goes. Now these are short pieces, all under 10 minutes so the “35c per viewer” guideline that network likes to work on for advertising revenue doesn’t apply, but surely they’re worth something? If it’s worth watching isn’t it worth a penny to the creator? If it’s not, why would you bother to watch it?

Of course, we don’t currently have a mechanism for that type of micropayment and attempts in the past have been anything but easy (RIP BitPass). But if we are to make a business out of new media then revenue has to flow to the creators. Let’s run those shows again, at just a penny a view:

Evolution of Dance                               $500,000

Extreme Coke and Mentos Experiments     $75,000

Matrix for Real                                     $52,500

405 The Movie                                      $53,000

Mr Deity with an average of 500,000 viewers per episode would bring in $5,000 per episode for what takes Brian Dalton “four days work” (according to an Interview on the Digital Production BuZZ). Of course his co-stars deserve a share of that, but it’s still likely to be a reasonable return on the time invested. Frankly, I’d be happy to pay 5c or 10c per episode to download and own (they’re worth watching more than once). Extrapolate the revenue accordingly and a decent income is possible. (At 5c, $250,000 gross for 40 days work is decent.)

But it’s not happening and great talent has to either lose control of their career by turning their fame into a traditional media deal, or continue to have creative freedom and control and make a living doing something else.

If producers and performers can’t get a return on their effort, that at least affords them a living wage, there is no revolution here folks. There a just a lot of very talented people with a very public hobby.

One of the currently popular memes is the “wisdom of the crowds” and if by crowd we mean a lot of people then there’s a lot of wisdom at CreativeCOW.net. Trouble is, it’s spread across a whole bunch of their forums so it takes a smart writer to take that wisdom and filter it down into something much more useful.

Well, the Cow’s Tim Wilson has done just that in two excellent articles:

Apple’s ProRes 4:2:2 Codec, Part 1 and
Apple’s ProRes 4:2;2 Codec, with a splash of Color, Part 2.

Highly recommended and well worth the read.

One of the best (i.e. I agree with) statements on the future of Media Distribution comes from Steve Kalifowitz on Venture Capitalist, Noah Brier’s blog on A Vision for the Future of Media Distribution. Money quote:

In this altered universe I’ve imagined, consumers will have ultimate reign, and artists will have way more freedom. The portals will at once offer two-way access from content creators to the smallest niche audiences, and the largest mass-markets. There will no longer be a studio boss, or book publisher who instructs an artist to change their art in order to distribute it. If an artist can afford to make something on their own, they can, and won’t need a distributor to reach their desired market. Artists will be free to display their work, and get paid fairly for it. The most successful artists will be picked by mass appeal, rather than by “payola” systems which enable the distribution companies to shove whatever they want down our throats.

Maybe it’s because the article strongly resonates with my own thinking, but it’s closest to the model I have in mind for the future from all the reading I’ve done so far. In the optimistic future, we have an Open Television Network, which is an open marketplace between producers and viewers (without hard distinctions between the two).

In an article at Ars Technica today , Nina Tassler, the president of CBS Entertainment, told the New York Times

“…that if fans want the show to live, they need to watch the broadcast because that’s how the money gets made. Stressing that live viewing is “of primary importance,” Tassler said that “We want them to watch on Wednesday at 8 o’clock… and we need them to recruit new viewers who are going to watch the broadcast.”

If CBS believes that only “appointment television” matters my best advice is to short sell Viacom. Appointment Television is dying. Every single trend points to the move away from Television of the 50′s and 60′s with limited channels where the family sat down together to watch.

But since then, Television has moved on to place more and more choice and control in the hands of the viewers. If CBS and it’s cousins at the other networks don’t see that as their future, they are dead. Short them!

Adobe have opened AIR to public beta. Formerly known as Apollo, AIR basically takes those Rich Internet Applications (RIA) from the browser and runs them in a cross-platform desktop environment. The biggest advantage of Adobe Integrated Runtime (AIR), over a browser, is that it allows developers to do things in their application that are “forbidden” (for security reasons) for a browser to do, like have local data storage. (AIR includes a SQLite-like database for this purpose.)

Development is basically the same as for RIA as browser deployment. AIR is the basis for Adobe’s upcoming Adobe Media Player. At least Adobe are “eating their own dog food” or more politely, proving their own technology is at least good enough for themselves!

AIR, like Microsoft’s Silverlight, is unlikely to directly affect many video professionals except that it will probably spawn a dozen players.

With Sony appearing to have a format for any market segment, DV User in the UK have done a great job in bringing it all together in a comprehensive article.