Is there any money in web video? That question has been forefront on my mind of late. I think the short answer is: some people are. We’ve all heard the stories of people like Michael Buckley making a living from YouTube. But let’s face it, Mr. Buckley’s YouTube success story is the exception, not the rule. Plus he’s an acquired taste. As I played the video while writing this, my wife said: “make it stop or I’m going to come over there and smash your computer.”
Frankly, I’m more interested in people and companies who have created sustainable business models in this ecosystem – networks with a portfolio of successful web shows. As two leaders in the world of web video startups celebrate notable milestones – Next New Networks, its one billionth video view and Revision3, its 5 year anniversary – the economic infrastructure of web TV seems to be maturing.
Can I Really Make Money Doing This?
In terms of how one makes money from web TV, the simplest answer is advertising/sponsorship. Regardless of what people say about “dialogue with community”, “marketing is a conversation”, “unmarketing” and other web 2.0 platitudes – the money transaction in video is audience for dollars. Trouble is, on the web, those dollars just aren’t adding up. In this interview with Paid Content’s David Kaplan, Next New Networks CEO Lance Podell bemoans the disparate valuation of web vs. TV video viewing audiences.
We’re constantly being asked to educate and consult advertisers. And we’re more than happy to do it. Ultimately, advertisers have to put their money where their mouth is. The only way they’re going to find out what really works is to start trying new things. While we have brave advertisers, who have come back time and again—Warner Bros., Samsung, Frito Lay, Unilever—but we haven’t seen the number of advertisers that is commensurate with the pace of the viewers we are attracting.
– Lance Podell, CEO Next New Networks via PaidContent
That said, I think the key is to balance targeted, niche content (you’re not going to win on the commodities of generalized content) with a desirable level scale, demonstrating those key elements to potential customers (advertisers), and creating a price point that sustains your efforts and satisfies your customers.
In my mind, you need to create a sustainable competitive advantage in order to be successful. TV is tricky in that regard. There are always new shows nipping at your heels and audience taste is mercurial. But part of being competitive in media is anticipating those challenges and creating new offerings. While big media relies on celebrity, the web often derives value from social currency or trust. Many successful web shows are hosted by trusted sources in their topic or niche. A few years ago it would’ve been simple enough to just start creating video awesomeness and aggregate a sustainable audience. Now there are just too many players. So, if you’re thinking of creating web video for profit, I would say to you:
- refine, with laser focus, what your show would be and who you would want to reach
- define how it is differentiated from competitors
- look where advertisers are spending now and create an offering that appeals to them (baby boomers?)
- do market research
- create a concept statement about your show and shop it around to potential customers
- from positive feedback, I’d write a business plan and take a hard look at costs/revenue projections
Thinking it Through
It is a complex ecosystem with a lot of moving parts – giving the prospective media entrepreneur a lot to think about. But such is the life of a micro-media-mogul. As you think about your show idea, you’ll need to really define why people need to watch your show. You’ll also need to consider the expectation for higher production value in web TV. Many people are watching video “over the top”, via devices connected to big screen TV’s. It takes a few more steps to “tune in” to a web video show. How are you making it worth the extra effort? Why do people need to come back to your show?
These are just some thoughts that I’ve been kicking around. Do you have a web show idea? Are you thinking of launching one? Have you thought it through? What have I missed here?