You know, there might be a business here

So, I’m reading Time Magazine this week and stumble upon Joel Stein’s Totally Uncorked article.

Gary Vaynerchuk’s daily 15-min. video blog has 25,000 viewers who click onto his site each day to hear him describe–as he did a few weeks ago–a New World–style Spanish wine as “not obnoxiously over the top and fake as many of these types of wines are. Instead of a full face-lift and boob job and suction and all of that, maybe this just got a nose job.”

It’s clear that he’s doing the blog as promotion for his wine store business, which is at the same site as the video blog, so he doesn’t needcompensation for the blog. It’s also clear that Gary Vaynerchuck is that rare combination of expert (self taught so he retains the common touch) and a great on-air personality. Maybe a little over-the-top for some but very hard to look away from (perhaps for the same reason it’s hard not to stare at a train wreck).

But let’s say this guy just did the video blog and wanted to make a buck. The TV Wine Library vlog is daily and, according to Time Magazine, has 25,000 viewers per day (site visitors). Grant me the one indulgence: the technology to charge for individual items in a feed, as is suggested in this model, hasn’t been released yet, but it is coming.

Let’s say he could get some proportion, 20% maybe, of that audience to sign up for the feed even with a small charge associated with viewing the episodes. With incentives you might get a more than 20% to subscribe. Make the charge per episode low: a no-brainer decision level. For argument and easy math let’s say 10c per show, charged when it’s downloaded.

I think it’s reasonable to argue that if 15 minutes of programming isn’t worth a nickel then why are you wasting your time watching it? Your time to watch it is worth way more than that. (If you earn $10 an hour, that 15 minutes is equivalent to $2.50 of your time; scale your time’s value up to know how much it would cost you to watch 15 minutes of programming!)

Once the subscriber is on board, then the default in software like iTunes, is to download every show. (I prefer people to set it to manual download.) If you’re interested in wine then you’re probably not going to quibble over a dime a day. Make all the inevitable comparisons: “about the cost of one cup of coffee for a month’s wine entertainment and knowledge building.” (BTW, that’s the type of programming that has the most potential growth over all.)

Whichever way you put it, it is not a lot of money for a viewer. In an RSS feed it’s not a lot of effort, either: at most it requires a single click on the download button, if the aggregator is set to manual. All libraried in the same software (if using Apple’s iTunes). The show could then be sent to the Television via an Apple TV.

Ok, given that this is currently not possible, but will be in the near future, then our wine guy, with his smaller “for pay” audience over his the larger audience who watches for free, could pull in $1000 a day. That’s $5,000 a week, $20,000 a month, $240,000 a year. That’s a decent, middle class income.

His $5 million-a-year wine business is probably more worthwhile for him, but that doesn’t mean there aren’t a hundred (or more) niche knowledge areas that would attract 5,000 or 10,000 people for a daily does of entertaining enlightenment. But I’ll bet that there are more than a few people for whom $150,000 plus a year would be a decent income.

2 thoughts on “You know, there might be a business here”

  1. Hey Philip,

    Nice to see you’ve noticed Gary Vaynerchuk. I’ve watched his daily podcast (mostly via iTunes) since he had but a few hundred daily viewers. BTW he’s pretty open about discussing his inherent conflict in reviewing wines and also making his living selling it. He tries to be candid about it including reviewing wines he does not sell and also not being afraid to completely shred a wine his store sells a lot of. So at least in my mind he’s earned his credibility as a reviewer.

    Whatever the case, while this example might not be the greatest since in this case the podcast supports a $50 million (not $5m) a year wine business, rather than being a podcaster/entertainer where your product IS the podcast itself.

    Having said that…I’m wondering about the economics of bandwidth. Gary’s show runs about 120MB of data for a 20 minute Quicktime delivered daily. Forget production costs for now…what is the cost of delivering 120MB per user, per episode, of a video podcast, especially those popular enough to require the use of a CDN (content delivery network). I have heard bandwidth is getting cheaper, but don’t have a sense of the current costs associated with such a venture. I’m wondering how much, if any, of that 10 cents per episode would be eaten away by the cost of delivering it?

    Carey

  2. More that I read about Gary Vaynerchuck in Time and watched a single incidence of the podcast to check it out. Thanks for the $50 million, not $5 million correction. I must have misread.

    AS for the cost of bandwidth… good question. If we take a typical, long term deal with a CDN like Limelight or Akami and you’ll pay about 50c (or less) per GB on volumes of 24 TB/month (based on 10,000 subscribers) or about 6c per download. That would eat a hole in the profitability of the enterprise. However, it may be that a better deal can be negotiated. If he went with Amazon’s S3 and some custom programming, then the cost of bandwidth is 15c/GB not 50c/GB and the CDN capability is built in. That would drop the cost per show delivered to about 2.5c Including some allowance for the storage charges at Amazon.

    So the take would net to $750 a day, $3750 a week, $15,000 a month and only $180,000 a year.

    It wasn’t so much that Gary should do this, but that the sorts of numbers that a show can achieve *are* enough to fund a “comfortable middle class income”.

    Philip

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