If not advertising, what?

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.

14 replies on “If not advertising, what?”

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  1. Excellent post. Eventually these videos will attract advertising if they have enough of the right audience. It is just early and the market has not yet reached equillibrium. For many years the Internet failed to attract advertising dollars proportinate to its audience. Things are just now starting to reach a balance.

    Check out the Ad-Supported Music Central blog:
    http://ad-supported-music.blogspot.com/

  2. Great observation of the existing (impending?) problem yet, no solution. This has been a subject I have wrestled with for several years as not only a content creator but, one who helps facilitate other creators.

    One of the problems I think we face is an expectation that is set by high standards. Some assume that the content should generate large wealth – large enough to retire from and that is where these expectations need to be managed to a more realistic scale. Once you have the pie in the sky mentality brought closer to earth, you are able to maintain a better balance of creative freedom and financial recompense. To steal a phrase for a different context, “Freedom isn’t free”.

    The more probable solution is probably closer to a consumer-bearing structure. The keys here would be convenience and cost. If it is cheap and easy to access you may be able to sustain such a model. It is also possible that a hybrid will be called on where the production is subsidized by advertising and the profit is found in consumer acceptance.

    I am watching and pondering the various approaches to see which really makes the most sense and is the most sustainable It always comes down to “Cui Bono” though.

    -gl

  3. Without tipping my hat too far ahead, let’s just say that I’m not without thoughts on a solution. 18+ months of action behind the scenes too.

    The news will almost certainly come out here and on the Digital Production BuZZ first.

    And I think hybrid product placement, consumer contribution models will definitely feature in the future.

    Philip

  4. Webisodic Internet Series:

    Make it and they will come. We, my comrades, are the makers of the nickolodean one reelers, the silent filmmakers who started in New Jersey, fled west, escaped Edisons patent laws, where sunny weather 300 days a year meant more work for everyone. We are the Rebels, reincarnated anti-establishment early 20th century bohemians, shooting on revolving stages spinning to follow the sun and making it all up as we go along. No rules. No suits. No unions. No dressing rooms. No permits. No pay.

    We are the hi def, final cut, final draft, duct taped, Bowfingered pioneers of our generation. Like the great Athletes who played prior to big television contracts, we are playing for the love of the game. Our early labors of love will soon be able to provide a living for some of us, our crews and our actors. Now heed this:

    Have a business plan that works, and they will come. Build your libraries, tell worthy stories, capture it with style and honesty… and they will come! With promises of “The Big Time”… Studio deals… long term contracts. DO NOT leave those that helped get you there behind. If THEY had one creative spark, they wouldn’t come bearing gifts and singing your praises. They come to take your canvas’s and make YOU think THEY are doing YOU a favor. They need us.

    We make the rules. If they want to play on OUR field, crush their old business model and hit them over the head with the new one… Pay us, pay our crrws, pay our actors, but we will not be sold down the river. We own our work, You can license it… but we will own it. Thems our rules…

  5. Why moderate my comment? What are you afraid of… a little ultra regulation?

  6. All first-time posters are moderated as an anti-spam measure. Once you’ve had one post approved, all subsequent comments are posted without moderation.

    Otherwise we’d have several hundred spam posts a day.

    Philip

  7. i can’t see micropayments pay per view – even Jakob Nielsen seems to have backed off on that idea.

    The technology is there – see esnipe.com for an example.

  8. I don’t think anyone has done micropayments in a simple and easy way. Certainly not as easy as our patent holds. 🙂 esnipe is totally not suitable for media. Nor is peppercoin, click ‘n buy et al.

    Philip

  9. aha!

    well best of luck Philip! I think it’s a long shot – as unlikely as coming back from 15-6 to beat the All Blacks.

    Well maybe not quite that unlikely. 🙂

  10. Hello Philip,
    Very interesting post.
    I am amazed that podcasters are still so on the back foot. Especially with such trackable statistics in the number of views.

    One Podcast you appeared to leave out was, one I know you would know the numbers, and has more sponsors then any podcast I know.

    Whats the turn over and production costs of Digital Production Buzz?

    Its probably one of the leaders in sponsorship. So it would be interesting to know.

    Thanks,
    James

  11. It’s very hard to isolate figures just for the Digital Production BuZZ podcast, because our advertising revenue also comes from the weekly email blast NewBay sends out and the twice-a-month Tips and Tricks newsletters. Plus it also comes in part from the referrals through the syndicated news feed.

    Collectively they take about 20 hours a week, average, and after paying sales commissions last year (the bulk of the revenue goes in sales commission) we brought in a reasonable lower-middle class income for one person from the show, a net of about $50K. The show alone never bought in more than $2K a month.

    Cost out the 20 hours a week however you like, but at opportunity cost (not doing consulting for someone else) it’s not great money.

    Philip

  12. Thanks for the figures on DPB Phil,
    All I can say is that I am now considering advertising with you.
    It appears VERY cost effective and one of the best focused demographics available.

    Thanks,
    James

    (P.S. get back to me with the cost of a spot please.)

  13. I realize it’s only been six months, but has there been any known progress on this front, or at least any new ideas on how to handle this issue?

    It seems like a bleak future if the only hope a person has in making money on “new media” is to use it as a springboard to get a career in “old media”. The Old media empires seem to be shrinking, so there’s one incentive that’s rapidly fading. Except for short bursts, or for a few people that are extremely passionate about it, it’s too much work, too expensive and too time consuming to justify as just a hobby for the long term.

  14. Hi Jeff,

    Phase One is ready to launch in Mid december with a “soft” launch (to partners and those who’ve expressed an interest at OpenTelevisionNetwork.com aka klickTab.com. Not a lot on the site at the moment but more coming mid month.

    Philip

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