Category Archives: Future of Online Video

Most Popular Online Video Sites (Nielsen/NetRatings)

online-video-sites.jpgHere’s a beefy Mercury News article about online video, with an emphasis on YouTube and its long journey toward profitability. It confirms that the YouTube folks are indeed thinking it would be good to make money, but are (in my opinion) way too paranoid about losing their cult-like appeal. Read my letter to YouTube’s founders to get more rants on this.

See the chart to the right for the latest visitor counts of the big video sites (which has YouTube’s unique visits higher than the combined share of the second two players- MySpace and MSN).

I don’t really count MySpace since it’s a zillion little sites, and MSN because we’re talking mostly about news. So the battle for viral videos really is between YouTube, Google, AOL and Yahoo. Second-tier sites (Break.com, Heavy.com, MetaCafe, iFilm and Atom) look small here, but 3-million unique visitors in a month is significant.

The smaller sites that pay video creators aren’t included in this Nielsen report, but to read about those, see this post.

Interesting quote from the Mercury News article: Tony Perkins, editor of the Always-On Network and founder of Red Herring magazine, believes YouTube critics are missing a massive behavioral shift:

“There is a new reality out there,” he said. “Consumers are voting very loudly that they enjoy content that is produced by amateurs and people they know.”

Online Video Ads Not Sustainable for the Long Term

eeyore.gifSome highlights of a rather skeptical view of online video ads (with my thoughts below in the circle bullets). Writted by Tom Hespos, president of Underscore Marketing, for a recent Mediapost.com article:

  • “I have a rather controversial stance on online video ads: I think a lot of people will make a lot of money in the short term on preroll and standalone online video, but I don’t think that trend is sustainable for the long haul. I believe this because at its core, the Internet is not a passive medium, so dispel any visions you might have of people leaning back in front of their PCs for significant lengths of time.
    • WillVideoForFood (WVFF): What about when the lines blur between passive and active viewing? Online video ads are here to stay… they’ll get better, more woven into the content, and interactive.
  • The “video outta nowhere.” Folks, it’s fairly well-established Netiquette to let people know if you’re linking directly to a video asset. I don’t know precisely when this guideline was abandoned, but I’ve been noticing a disturbing trend lately, particularly on news sites. A link spawns a video player with no advance warning, and I’m left thinking, “Hey, where’s the text? I didn’t want to watch a video now.” Back button ensues.

    • WVFF: Couldn’t agree more than auto-start video players will soon go the way of pop-up ads.
  • Contextless prerolls. Speaking of videos without warning, could we please provide some context for the people who click to see a video of, say, three guys smashing a network printer to bits with a sledgehammer, and end up seeing an Acme commercial…How about something along the lines of “The video you selected will begin in a moment, after a word from our sponsor”?

    • WVFF: Good point – especially for people new to online videos. It’s confusing to see an ad you didn’t expect- especially if it’s a funny one that might be confused with the video content you actually want to see.
  • Expectations of viral infection. Just because a video exists online doesn’t mean there should be an expectation that the video takes off virally like the next “All Your Base” or Jib Jab political spoof. Ads have to offer something of value before they’re passed back and forth in any volume. It might be humor value, informational value or something else entirely. There is no creative agency that can consistently induce a viral effect when their client has 100 percent control over the message. That’s just how it works. Sorry

    • WVFF: Copout. It’s the agencies job to get the client out of the way and create something that stops viewers dead in their tracks and compels them to share.
  • Online video will continue to be hot for at least a little while, so let’s try to keep these things in mind as we shape this ad offering.”

    • WFFF: Amen

Any Theories on Why More Online-Video Sites Aren’t Sharing Revenue With Content Owners?

I’m really perplexed about why more online video sites aren’t sharing revenue with creators. Revver has been around for 6 months or more, even if it hasn’t officially launched yet. If you had asked me in February, I would have told you there would be several imitations and at least one popular site (YouTube, Yahoo, Google) would start paying original content owners.confuseda.jpg

There has not been one person — not even one — that I’ve told about getting paid for my videos that already knew it. And yet almost everyone I know has heard of online videos and YouTube specifically. I did, however, get a funny voicemail from a friend of mine from a big-5 consulting firm a couple weeks ago that said “have you heard of YouTube- you should check it out.”

To ease my puzzled mind, I’m going to draw some theories. I haven’t thought of them yet, but this post will force the issue.

  • Theory 1: These sites are planning it, but it takes a while to implement.
  • Theory 2: People are uploading stuff for the joy of free video sharing. Why start paying them when the market hasn’t demanded it yet?
  • Theory 3: Networks with quality material should be paid, but not amateurs.
  • Theory 4: The income is too marginal yet to attract anyone that’s not an early adopter.
  • Theory 5: Video creators do it for fun not income. They either have day jobs or they make money shooting weddings and corporate videos, and do the rest to entertain themselves and friends.

monkeythrowfeces.jpgI’d ask you to propose additional theories, but I’ve found my loyal fan base is like zoo vititors. You don’t feed the animals. I just flung my feces at those of you reading without commenting.

Two New Video Sites Pay for Content!

Revver has remained the prevailing platform by which people with video content can share their material (like YouTube) but also get paid based on the quantity of people that view it. The funds are generated through advertising dollars, and split 50/50 between Revver and the owner of the content.

Now Revver has two new potential competitors. Here are some highlights from CNET articles sourced below.
1) Eefoof.com is in beta mode, and will offer revenue via Paypal when an account reaches $25.

  • Some other highlights from this CNet article:
  • A new video-sharing site is offering videographers a share of the advertising dollars that their movies generate, at a time when most video-sharing sites are just trying to eke out a profit.
  • “The authors of Internet content should be paid for their work and not have it exploited for others’ gain,” said a note posted Monday at eefoof.com, a site that is still in test mode. “We will send you a percentage of our site revenue via an electronic transfer each month, depending on how well your content has performed.”
  • More than 150 such companies are trying to figure out how to make money by hosting homemade movies on the Web. (Do you suppose they count my CubeBreak.com in that figure? Cuz I aint figuring it out).
  • The offer goes like this: Once a month the company tallies the number of page views for each submission. The company then looks at overall traffic and calculates what percentage of the page views was generated by each submission. Ad revenue is divided accordingly.

2) Panjea: This site offers content owners to both benefit from ad revenue and sell content (audio and video) according to this recent CNET Blog Web 2.0 article. In an interesting move, Panjea also offers viewers “points” for simply browsing.

  • CEO of Panjea, Seth Alsbury, told CNet Author Rafe Needleman that his company offers a more robust content economy than the other services. Panjea pays its users for content in two ways: First, it operates an online store where content creators can sell downloads of the audio and video files (and eventually, tickets to events). Second, Panjea gives users a cut of advertising revenues. And not just from ads in the videos, like most other video sharing sites; Panjea also cuts its content-creating users in on ad revenues from their static Web content (like their profile pages).
  • To keep users on the site, Panjea also awards “points” for just browsing. These points can be used like money on Panjea to purchase content from other members.
  • From a business perspective, for Panjea itself as well as the artists on the site, it all depends on winning over the advertisers. Panjea is running Google AdWords on its member pages, which is a good way for the company to kickstart the advertising revenues. The video and audio advertising strategy has yet to reveal itself.
  • But Needleman still think artists should take a portfolio approach to community sites, and put their content on a bunch of them (YouTube, MySpace, iMeem, etc). You never know where the fans are going to end up.

Bottom line: It’s worth experimenting with the various models since most don’t yet require exclusivity of content. But don’t forget the non-paying sites are currently more popular, so they’re a good forum for “teasing” and “promoting” people to your Revver, Panjea, Eefoof or other pay-for-content site.

Now that there are several of these sites, I will conduct some experiments with some of my content and report back asap.

Creating the Perfect Online Video Site (Frankenstein Style)

I’m planning on doing a thorough review of the major online video sites, but here’s my first attempt at creating the perfect online video site:perfect-ovs-copy.jpg

  1. It would have the traffic and community of YouTube.
  2. It would have Revver’s advertising-sharing model
  3. It would have Metacafe’s ability to sift the best content
  4. It would have that cute little logo from EyeSpot
  5. It would have amazing indexed search that I haven’t found anywhere

Google Video: Advertisers Bid for Space on Select Videos

Well, I couldn't have seen this coming if I had a Deep Throat at Google… In a  test, Google Video will serve ads for about 2,000 videos from 8 providers. Advertisers will select the videos on which to advertise their products through a combination of banner ads and 15-second video ads (at the end of a video). Google will split advertising revenue with the content owners, but no percentage has been identified yet. For full details see this PCWorld story

So why do we care, and why don't we care?

  • We care because this is an interesting model. The way ads are served is interesting and non-intrusive. More importantly, the bidder's market (which is how Google sells keyword inventory) is very clever.
  • We don't care because amateur content is not included in the pilot. According to Adotas, the test will include videos including The Charlie Rose Show and Mr. Magoo. For the online video viewers that were born after 1960, these shows are both about a senile old man who can't see.

copy_of_mr-magoo1.gifHere's the thing that has me scratching my head like Magoo. Is the bidder's market sustainable (beyond a pilot) for the HUGE amount of content with rapidly changing viral video content? Imagine the media person working for the advertising agency that has to surf each day's content and decide whether to bid. Aside from the fact that I want that guy's job, that doesn't seem very practical. I would imagine Google Video would offer other solutions to advertise on sporadic, amateur content.  

Bidding prevents an advertiser from being associated with objectional content, but it's also a lot of work. 

Controversial and Unfounded Predictions of Online Video

When I was in college, I had the weekend early morning shift at the campus radio station. I used to try experiments to find out if anyone was listening (like offering a free car to the first caller). That's the way this blog is going, so I've decided to stir things up with some totally unfounded 2007 predictions for the online video space.crystal-ball.jpg

  • Feb. 2007: YouTube gets bought by a large media house, who later decide to sell it for 25% of the purchase price.  
  • June 2007: Flash becomes the only prevailing standard for online video streaming, and Quicktime and others become like Lotus Notes. A startup develops a more elegant solution that streams 30% faster and for a fraction of the cost. It wins 65% market share before 2008.
  • Dec. 2006: The "pay for content" space heats up with several new entrants. Models that don't share ad revenue become "Alta Vista'd." Asta la Alta Vista.
  • March 2007: A major news event is captured on video event by a highschool kid with a cell phone. He provides it exclusively via Revver, and the networks are forced to serve it via Revver or not have the footage. The kid makes $250,000 in a week.
  • July 2007:  Verizon buys Break.com and Atom Films in a fierce, overvalued deal in which Comcast competest.
  • August 2007: Disney buys Revver.com.
  • September 2007: CubeBreak buys Disney

A Message to Online Video Sites- What Do You Need?

Dear online video sites. Thanks for giving us free access to online videos, as well as absorbing the costs of hosting and serving the videos. Unfortunately, that's become a commodity. I think you know this, but in case you don't… what attributes do you need to ensure that you're not a "Pets.com" of the online video space? Don't read ahead… name a few. Now scroll down.

If you want to succeed in this space, you need most of the following attributes:

  • Lots of traffic and viewer loyalty
  • Nice organization of content, and community/social networking doesn't hurt
  • Partnerships with content creators- content is still king
  • Relationships with large media players- they're going to eventually buy you
  • Transparent revenue sharing with content owners- amateurs or media houses
  • An attractive offering to advertisers (who will demand traffic)
  • Something to differentiate from the increasingly crowded space
  • Distribution channels beyond your site (like cable, networks or cell providers)
  • Deep pockets (venture capital) to get out of the Catch 22 most won't escape: you need visitors for ad revenue, and ad revenue to support visitor generation

You know what I just realized? Some jackass consultant is going to rip this off and make money on a white paper about this rapidly growing industry. Oh well. At least I'm not making any money from this blog.

Another Way to Get Ad Revenue on Your Videos

Revver until now has cornered the market on pay-for-content. Two firms have offered similar models, though. And a new entrant has arrived.

1) Jeukersz (aka www.MillionDollarVideoJukeBox.com)

2) Motion.tv

home_bliptv.gif3) Now Blip.tv is getting into the revenue-sharing space according to this article from CNet. Here's what CNet says, and if you register you can read more about Blip's advertising policy.

"Blip.tv does not brand the videos with its logo, so users can take full advantage of the service without confusing their viewers about whose site they are watching. What's in it for Blip.tv, then? It's not fully rolled out yet, but the service will be advertising-supported. If users will accept ads on their videos, Blip.tv will share the revenues from the ads 50/50. Blip, for its part, will run the ad network and host the videos, and give users a lot of control over the ads they'll take."

What does this mean to content creators? More options, and difficult decisions. Currently, it's a free market- post where you like. Eventually, however, it's possible that the highest financial opportunity will be available to those willing to sign exclusive deals.  

Here's the thing I can't explain. With the exception of Revver and Jeukersz (both who currently have very low traffic), online video sites are being hush-hush about the details of revenue sharing. It perplexes me.

How Will Amateurs Make Money from Online Videos in 2007?

Right now there are only two ways for an amateur to make money on short online videos, but this will soon change.

  1. Provide a website or network exclusive rights and get a one-time payment. We've seen certain amateur content creators already stop producing content for YouTube because they've been presumably approached by "content scouts." Remember MadV? He said good-bye and I would expect to see him appear somewhere else. I've seen celebrity YouTube stars also vanish with ambiguous plans about entering into a different arrangement. money-large.jpgI've been contacted by such content scouts, but the financial transparency isn't clear so I haven't done anything.
  2. Serve videos through a revenue-sharing site (usually non-exclusive that allows for ongoing income based on view volume). Eepy Bird's $15K plus income on their Coke/Mentos is a good example of this. They opted to run their videos through Revver and opted to post them exclusively even though Revver doens't require that.

As 2006 continues, we're going to see some new models emerge, providing more options to amateur artists. These will require some serious trade-offs for content owners because we'll have to weigh options without knowing exactly which will be most profitable.

For instance, some online video sites are developing "exclusive revenue-sharing models" whereby you'd turn over exclusive rights to your video for ongoing revenue based on views. This only makes sense if you expect to get dramatically more views in exchange for giving up your video forever.

But if you apply proven media models to the online space, it makes sense that this will be an option. A website can't sell its content upstream (to cell phone providers, for instance) if most of their content is non exclusive and violating copyrights. So the future for a value-added intermediary depends on garnering traffic, getting good content, and then distributing that more broadly.

In any event, there are three things that are critical. 1) Good content (defined as funny, sexy, short and viral). 2) Traffic (there's no advertising revenue without traffic), and 3) Distribution and promotion (someone has to market the videos… more on that soon).