Bubble Bursting for Video Creators Hoping to Monetize Content?

bubbleOnline-video creators are sobering up after an intoxicated 2007, as they realize that the “road to riches” via online video is fraught with challenges. Business Week proclaimed “amateur video hour” as over in December. Crackle and other sites migrated from UGC (user-generated content) some time ago. And here are some quite recent data points that, alone, aren’t really newsworthy but tell a sad story together:

  • Metacafe set a higher bar for revenue-sharing “Producer Rewards” program, much to the dismay of some creators who saw their popular videos drop from the program (see Metacafe forum).
  • Revver, the pioneer of online-video revenue sharing, was sold for pennies.
  • The initial participants of YouTube’s Partnership program (which shares revenue with creators) hit their one-year anniversary in March. Although YouTube and its creators are not permitted to disclose the specifics, I do have sources that reveal early participants received fixed fees that (in some cases) allowed them to quit their day jobs. The rest of us joined when YouTube had adjusted the program so that we’re paid a percentage of ad revenue, and I can’t disclose specifics. Compared to nothing, it’s welcomed cash. But it’s far from enough to live on.

For sure, some creators are doing well with sponsored gigs, DVD sales and rare television contracts. I’ve managed to augment my income by creating sponsored videos, and have done fairly well in the past 6 months. But it’s certainly not enough to quit the day job, and I’m not patient or risky enough to hold my breath for a lucrative television contract.

Solution 1: Pay for Content?

paytoilet5cents.gifWith few exceptions, viewers don’t yet pay for amateur content. This is especially true for early adopters of online-video, who have enjoyed free video, including amateur stuff, copyrighted material via YouTube, and free movies & music via P2P sharing. As the mainstream audience moves in, the market for paid content will increase, but mostly for professionally produced and well marketed video. Perhaps we’ll see a third-party aggregate some second-tier amateur content and develop a paid subscription model (especially if that content can be fed into PC, mobile and television). However an individual amateur would inarguably lose the vast majority of their audience if they required the audience to even move to an alternative channel (their own ad-supported site) or charged for it. Even Howard Stern lost most of his audience when he moved to Syrius. So it’s no surprise that I’ve sold only four copies of the “Best of Nalts” DVD.

Solution 2: Ad-Supported Content

spaceforrent.jpgAs much hype as we’ve seen about consumers avoiding ads, this is the most viable, sustainable model. Simply put, good content won’t sustain for free, and amateur content hasn’t a prayer unless it’s supported by ads. Currently, this model is rate-limited by two sad realities. First, advertisers have been slow to buy ads around amateur content — even YouTube doesn’t appear to be selling its full inventory of InVid (overlay) ads. Secondly, there’s not yet broad enough distribution of this content.

I’ll argue that good video content and consumer demand exists, but people there aren’t yet enough viewers of amateur content to warrant significant dollars from advertisers. And we’re in dire need of an easy vehicle to view UCG via our mobile and television boxes, which will increase both viewer demand and advertising inventory (my next post will explore web/TV devices, which I believe are the lynch pin here).

Author: Nalts

Hi. I'm Nalts.

26 thoughts on “Bubble Bursting for Video Creators Hoping to Monetize Content?”

  1. Well, I know one top Youtube user that will make 6 figures this year on another site. (mostly ad revenue, I believe…) He went from $0 to $20k+ per quarter last year and did 5 figure profit DVD sales.

    And honestly, as somebody who has known him for years this kind of thing only happens to people who don’t expect it and are genuine creators who love what they do. Kinda like how only old people win the lottery.

  2. I think the reality has always been that amateur content is a tiny market. The vast majority of the average viewer’s time is spent with pro content.

    It’s a tiny market and getting tinier and tinier, as more and more videomaking devices are manufactured and as the professionals start out-amateuring the amateurs.

    I feel the broadcast industry is more durable, more powerful, and even more creative than amateur creators give it credit for. So while we won’t be taking over the asylum, at least we can break out occasionally. I feel with enough work, anyone can earn an audience. Earning a living is another question, and it’s a much harder one.

  3. You missed Joost on your “chopping block” of Video sites…

    http://internettvblog.com/2008/02/14/whither-joost/

    Also… regarding “paid content”. IMO, online… you can (probably) get people to pay for Sports and Porn. But not much else.

    Regarding video advertising……. It is true that some advertisers are weary of putting their ads near UGC. But…. that only applies to advertisers who know and care where their ads appear.

    There are different types of advertisers. (And not all of them care.)

    The advertisers that know and care if their ads are near UGC are generally the advertisers that buy advertising on a CPM basis. That typically use display advertisements and rich media advertisements. (I.e., image ads and flash ads.) These are the advertisers that are doing “branding” campaigns.

    Often… these are fortune 500 companies… and they do collectively represent alot of revenue for publishers. But they are not the only advertisers out there.

    (Sales people love fortune 500 companies, because (these sales people) are paid on commission and they end up doing less work when they “get” a fortune 500 company.)

    To me…. it looks like what we need to do to bring in more revenue to the UGC video creators is to attract the so called “long tail” advertisers. The ones which individually spend small amounts on advertising….. but which collectively represent a huge revenue stream.

    — Charles Iliya Krempeaux
    http://changelog.ca/

  4. 1. The economy is in bad shape, you’re buck is worth 68 cents. So the first to go is always entertainment. The TV cable companies are feeling the pinch, but someone is buying in this depressed market and they’re getting some pretty good deals. You have to be a Behemoth like Yahoo to say no right now.

    2. One word, ebay-tube. Well, one hyphenated word. What armature content creators need are paypal buttons. The big established guys are always going to block revenue any way they can especially, if they aren’t getting their slice. Places like You Tube actually cut some of their people costs. No more scanning shabby street corners in bad neighborhoods, no more back ally theatres or cheap diners to find new talent, just click on the tubes and follow the numbers. The field is going to get very very crowded.

    3. I’ll say it again, dust off Cubebreak, create and sell nitches to pay for it’s overhead. Not everyone that is good wants to be partnered-up, but they also wouldn’t mind making a few $ through a paypal button and some ad revenue to help pay for the space and the good feeling they get by not having to support the man. (more on this)

    4. Zefrank. I have nothing to add to that, just wanted to get your attention 😉

    But imagine if he cut a deal with You Tube instead of revver or blip? Though he mine as well, bunches of his stuff is up on You Tube again filling the pockets of Google lawyers. (Ironic when you think about it). That’s not to say a little content here and there isn’t good for PR, however, more than a little without some form of compensation is petty larceny. What bothers me is it’s not like people are adding to or changing the content for artistic or political purposes either. Same goes for all these web sites that mock You Tube, grab their feed and put their own advertising dollars around the content. You Tube isn’t the only one making money off your work. Since there is no real or legal way to stop this, I think creators need to tap in to this scheme, get some applause in the way of direct cash, but this also takes a little knowhow, time and interest.

    Psychomelody: Who, and can I get a grant?

  5. jischinger: The details are a private matter, but you can rest assured that their money is already well spent.

    As far as everything else, people are looking too much into quick trends. Originality is still king, people should be less “Me next!” and more “Me first!”

    If well planned out no matter where your venture is started it will do well. I’ve seen it happen in mainstream and online firsthand.

  6. Here’s an informative article (linked) on just how impossible it has become to earn an actual payment from Youtube in the new and improved (for them!) Partners Program.

  7. Marquis great article, but my eyes see lines now. Why do people use black backgrounds with white, red or yellow text? I can’t stay long on these sort of sites, my eyes mean too much to me.

    Anyway, good article, it seems I’ll have to start counting the clock when watching Renetto, least on principle.

    So the Partner’s Program isn’t what many thought it was cracked up to be, unless you’re bringing in the masses, and if you’re bringing in the masses why not start your own Tube?

    Perhaps, this is Renetto’s thinking for his glorious new venture? But IMO, Renetto isn’t worth watching unless he’s bitching about youtube or a youtuber. Renetto IS You Tube. Mull that over 😉

    It sounds like, for baby partners at least, the ability to snaz-up your channel, play with a few banners and have access to that annoying auto video start is what you get for all your efforts, well yawn!

    But then Partners are a lot cheaper than court costs and endless lawyer fees. How many of these new Partners do you think will actually hit that $100 mark before they run out things to say or do? My guess, 1% to 2% tops. And what happens to the $3 or $25 or $80 if Partners shove off and leave?

    All this extra junk seems like something You Tube should offer anyway, to all users, like MySpace and isn’t that what all these added features are anyway?

    Why is You Tube limiting creativity and entrepreneurship in this area?

    The Partner’s Payment Program doesn’t sound like it’s worth all the attention especially, since it cuts deep into the idea of fair use and muzzles artistic creativity and sensibility.

    How many Partners have alternative channels to avoid this copyright infringement and the potential loss of their channel?

    How much better would so many Partner’s videos be with a fair use agreement?

    The Partner’s Program looks and sounds more and more like a BS LEGAL MANEUVER to cover Googles ass in court.

    If I’m right, I want to meet the person who came up and/or approved this plan, I really do! I have a little something for him/her. (click)

  8. Marquisdejolie: Oh no, they’re not getting it from Youtube. They’re not even a partner on Youtube.

    jischinger: Ask in e-mail.

    Trust me, originality is still somewhat rewarded somehow. And random treatments/scripts are still bought in Hollywood for $50k and then never used. Seen it happen.

    It’s all about who you know and who wants to know you. I know everybody, but I have an average industry job and a bigger debt than nalts 🙂 You also have to be at the right place at the right time with the right idea.

    Until proven otherwise I still think that for the average person compensation through video online will never be a real source of income. But then again, for definition for “average person” is a larger group than you think.

  9. Oh. I hadn’t known that you were talking about Youtuber Oprah, PsychoM. Yeah. 6 figures. Ad revenue. Script options. All very Hollywood. Not for Joe Average. The right place at the right time with the right idea = lottery.

  10. OMG I love this. A three-way dialogue. I don’t care if nobody but you three read this blog. It’s worth it to see how you talk to each other via it! 🙂

  11. anyone know why “subscriber new videos” are filling up with a bunch of random videos and people I do not subscribe to? I don’t have any tags set, is someone hacking You Tube or did something new just break?

    “Ask in e-mail.”
    and just how do I get that?

  12. jischinger: psychoTEFLONmelody @ psychoTEFLONmelody . com
    minus the no-spam stick surface!

    marquisdejolie: Well… as somebody who went to film school and spent time in college with people who were Academy Award nominated and Grammy Award winners, and future industry swingers, I guess I’m just around a lot of them lottery folk and this was the industry I was trained to be in.

    If I wanted to I could be all bitter about how “Joe Average” is making popular video content when I went to school for this stuff. “I know what I’m doing! WATCH ME! PAY ME! THIS IS MY JOB! THIS IS WHAT I WENT TO SCHOOL FOR!”

    Trust me, I’m not at all biased but I could be a bit clueless as to what it’s like to not constantly be around industry people. I take it for granted sometimes.

    Normal people can win the lottery… you may not hit the jackpot but you’ll at least get a few right numbers. I didn’t make it that way… the internet did.

    🙂

  13. you tube sprinkle: these videos are loud, many offensive and now I’m blocking their whole channel.

    BTW: anyone interested in the WikiLeak shut down [click].
    There’s a brief story, link to the court docs, and an updated link sites.

    note: IPs keep closing these sites because of the US Court Order, so if you spread the link send the updated site link as well.

    If you don’t know what wikileak.org is it’s a safe site for whistleblowers.

  14. PsychoM:
    I went to journalism school. Now everyone’s a journalist (blogger).

    I was a typesetter, which used to be a craft. Now typsetting is a low pay secretarial function.

    I was a camera operator (the 700 pound room sized cameras). Replaced by $30 desktop scanners.

    I was a graphic artist. Now anyone with access to a $600 computer is a graphic artist.

    Pasteup artist. Web designer. Copyeditor. Proofreader. Filmstripper. Lithographer. All these trades have been “blacksmithed” by computers and the internet. What makes you think film school training will keep your craft from being “democratized”? Why should corporations pay professionals professional fees when they can get the milk free/near free from amateurs?

    I’ve been around industry swingers in the Hollywood Hills, Bel Air, Pacific Palisades and Westwood when I was delivering call girls to them. Don’t count on them when the chips are down (see link). The only constant is change. Spare some change, buddy?

  15. I love the witty repartee on this site. Just glad none of you have pistols. Or know where each other live.

    The link that mdj put up on the partnership program was the most informative reportage on the program I’ve seen since the whole thing started. Thanks for linking it.

  16. I’m not mad at anybody….except whoever’s selling drugs to Judge Jeffrey White. And at whatever corporate weasel came up with the new Youtube Adcents Faux Partner Program. And Metacafe. Metacafe always finds some petty way to piss me off. And Revver, who zigged when they should’ve zagged. And eefoof for all their “we’re gonna be the Youtube killer” hype. And Motion.tv. And MediaTipper.com. And Blinxtv. And especially that Grouper phony contest that wasted so much of my time.

    Come to think of it, I’m mad at a lot of people. Well, I can’t really say “people.” Hollywood type corporate weasels. I’m mad at all the HTCWs, all those creatures who make big fat salaries lying to video creators.

    Have I left anybody out?

  17. I’m not a corporate weasel yet, but when I grow up… maybe.

    You know the best way to get back at these guys is to start your own company and then gobble them up!

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