Who wants to pay for internet video?
To stream or to subscribe. iTunes vs. Hulu. The immortal question that faces you, the end-user. How content will be accessed by the masses will effect you the filmmaker as well. As more and more distributors, content providers and studios are moving towards an online business models the landscape of developing content for the internet has exploded. But the concepts behind monetizing that content is still a matter of contention.
There are roughly two models - advertising and subscriber-based revenue.
Advertising is simple. There are the ads on the site and those that are embedded within the video itself. These are tallied on a CPC (cost per click) and CPM (cost per milli, aka cost per 1000 impressions). There's also flat-rate advertising, which is the most like traditional print advertising - someone buys web real estate for their ad to run for a specified amount of time. No click measurements to track.
With subscriber-based revenue the focus is on charging customers to view content. I guess that's more simple than ad-based revenue. Hmm. Anyway, moving on!
OK, so what are the pros and cons and what's right for you?
Let me answer that last question first. Both. There is no right or wrong method for finding a solid revenue stream right now. But there are considerations to be made.
With advertising, you provide your content to your audience for free. In return you need to toss ads up, around, in and on your video to reach the desired goal. If you've ever been to Hulu you've seen the most recent logical step in ad placement, which is basically laying commercials in the video where the commercials would go if you were watching it on TV. You usually cannot skip these ads but clicking them will only open a new window, allowing you to stick with the action and buy something later.
As an independent filmmaker ads are the most widely usable forms of revenue. You have a very limited audience and your content needs to be stellar for people to want to pay to view it. You can team up with Google and lay ads around your site or seek out advertisers and offer them play within your videos.
Without a large audience share your choice of advertisers (and the money they might bring) is small, but it could keep you in business. It all boils down to views. The larger your audience, the more money you make with advertising. If you can show you get 10,000+ views per video you'll have a good shot at making decent money.
The main drawback to advertising is that too much is a bad thing. You want your audience to be able to navigate away from it if they desire, or at least make its impact as small as possible. Look for CPC and Flat-rate ads mainly. Unless you're averaging 10,000+ website hits a day stay away from CPM.
For further reading, check out Google AdSense which will help you ad relevant ads to your website. And eMarketer tends to talk about the industry as a whole, including new advertising models if the current ones just don't float your boat. I now open the floor to any questions and comments.
November 29th, 2008 - 13:46
Popular sites like YouTube and FunnyOrDie are sitting on a potential goldmine. As the predominance of ads increases – you now commonly see mini-ads at the bottom of user videos on both sites – they could make a killing by offering an ad-free, subscription-based option for a mere $5 a month. Strange that they aren’t doing this already. You’d think it would be as easy as finding out how much money to charge a user each month to balance or even outdo ad revenue, then leaving the choice up to each user.
November 29th, 2008 - 16:07
I remember seeing that South Park episode where internet stars were being paid in millions “theoretical dollars.” That episode always bothered me, because it was really only a matter of time before people figured out how to make money off of internet views (and when the episode aired it been a fact of life already), and this is how they’re doing it.
But people said TiVo was the future of television. I think it’s just a stepping stone, until either a new company (or an existing company) offers bona fide high definition streaming “on demand” programming…sort of Hulu with high definition…which will have both subscriptions and ad-based revenue (much like modern cable companies). I think everyone wins, then.
Then again, that’s just my uninformed opinion. Eventually, hopefully, lasers will just solve everything. I don’t know how…but that’s just the mystery of how lasers work…they fix EVERYTHING…
November 30th, 2008 - 10:42
Well, we have picked out path for the content owners and publishers — We are a VaaS (Video as a Service), and are subscription based with a base price of $49 per month. Our research indicates that that owner of the web site or blogging site should keep 100% of their ad revenue and that services like Veeple should view ourselves simply as an extensive service provider and charge a very modest monthly fee.
As we are not a destination or UGC site, we do not focus on the end user or viewer. With that caveat, we do not see end users paying a flat fee per month. Only if they are interested in long form content.
December 1st, 2008 - 12:19
My feeling is that with the multitude of video sites out there, many with shared content, the minute you as a provider begin charging for the service is the minute your audience goes away. Now if you offer content that can only be found on your site then you might have some luck… but take a look at the porn companies (those oft looked to bastions of new film technologies) and you’ll see with every pay site offering exclusive content there’s a user who is sharing that content over Torrent or on the multitude of free video aggregators.
I feel, like Tyler, that the best solution is a mix of advertising-based revenue and a limited subscription service that offers better quality content (HD, 5.1 sound, extra features not easily ported to free video services). For the majority of internet video there’s no reason to watch some dude biff on his skateboard in Dolby TrueHD sound. But for the growing market of web-series that might be a valuable commodity.
I’ll take a look at your service, Scott. It’s an interesting idea, which seems to be a managed system of adding advertising to one’s videos. Thanks for commenting!