Majority Of Independent Content Producers Will Never Make Money

With all the talk of online video advertising and the projections people are making, one of the biggest downsides to it is that just about every independent content producer thinks they should be making money. But the reality it, most of them are not making any money today and never will, even year’s from now when there are more eyeballs online.

Monetization is now the word that seems to be used in every discussion and in every article, yet rarely do we hear or read about any content producers who are making money from their content. We know of the success that some major broadcasters and those with very unique brands and content like MLB are having, but aside from those, there are very few content creators making any money.

One of the biggest reasons for this is that much of the content on the web today stinks. Not all content, but much of it is really bad, poorly produced and quite frankly, will never make any money no matter how much this industry grows. Content creators think that just because they can create content it must be worth something. When I speak to content creators I use the analogy of TV content. Lots and lots of shows are produced for TV yet many never make it. Only a small fraction of content on TV lasts and makes the networks any money. Now I know many will say that does not apply since the costs for TV style production is so much different than content produced for online, but the principle is still the same. Not all content is something people want to watch, let alone pay for.

Having a discussion with a content producer earlier in the week they said, “Media reviews of our site and customer feedback is very positive. Everyone thinks the idea is wonderful and they love the quality of the videos. We give website visitors two free views of the videos of their choice and then prompt them to sign up for a subscription. However, when it comes time to haul out the credit card to purchase a subscription the enthusiasm wanes.

The questions we need to be addressing are is the subscription-based approach working for anyone, or is sponsorship/ad-supported the only potential option for generating a reasonable ROI? Is the ad-supported model generating revenue for small
producers who don’t have tens of thousands of viewers per month? Does this revenue amount to anything more than pocket change? Must the small producer partner with a platform provider, e.g., Brightcove, in order to have a chance of success, or is it feasible to “roll your own” website realizing that most small players don’t have ad sales staffs and experience in selling ads?

In the long run, the small content producer is still going to struggle to make any money from their content. Viral marketing, syndication and other forms of promotion can help, but not for the majority of those making video. Putting all of the business models aside I still think the biggest problem facing the industry is that there is not enough quality content on the web today.

The comments section is open and I’m sure many have their own take on the subject, so feel free to get the conversation going.

  • You may want to add that even the TV programs that fail have large sums of dollars of production behind them… If something with production quality at that level can’t be profitable, “internet junk video” wont be either. The only people who benefit from gazillions of video snacks produced every year are the aggregators who, en masse, benefit from the traffic.
    I was never sure why every single video producer feels they are entitled to revenue just because they produce a product. I’ve seen generations and generations of indie video producers thinking that the web will make them rich. Business certainly aren’t entitled- there is no reason why producers should be either.
    In the words of one of my Columbia finance professors,
    “If you want to make money, make a product, go out, and sell it.”

  • Stinks? Then you must have seen some of our work 😉
    Dan, I wouldn’t too quickly criticize the content producers. Many of them are the “little guy” putting skin into the game with no guarantee of success. Theirs is that entrepreneurial spirit that will help us define the monetization rules and paths to profitability.
    There are content producers out there making money from distributing their content online. Content producers other than the adult sector…shame on you for thinking about them first.
    These are b2b applications of rich media and they don’t shout out their numbers to invite others into their space. Because they don’t exhibit at tradeshows or write articles for magazines doesn’t mean they don’t exist. But if and when you do find them, you will learn from them.

  • You say “There are content producers out there making money from distributing their content online.” Ok who? Making what kind of money? Everyone says that some are making money but no one wants to give real examples, with the amount they are making, how they are making it and say what percentage of the overall market are making anything. If 1% or less content producers are making money, that’s not my idea of a sustainable business model, yet. The number one question I get asked by content creators is “who is making money online?” No idea why you bring up the adult sector. I don’t track, look at, talk about, cover or care what the adult sector is doing.
    And I strongly disagree that “entrepreneurial spirit” will create paths to profitability. We all know those who are very entrepreneurial yet have been unsuccessful. It takes a lot more than that to have a viable, sustainable business.

  • Dan,
    We’ve emailed before. I have to disagree with your assessment of content producers not making money. eMarketer stats kind of lay out the video move to the Internet and just consider the needs of the 25 million small business in America (under 500 employees according to SBC) Their opportunity to advertise in a commercial type format will finally come with the video tech advancements on the Web today. TV commercials have been often cost prohibitive and the Internet now affords them a worldwide audience.
    Plenty will want their video ad (commercial) produced or many will use tools like http://www.animoto.com to get it done themselves.
    When they have the content (and we disagreed on this to) they will need a home for it. A home that’s less intrusive is a video ad directory. If people are facinated by the millions of the sometimes mindless videos on YouTube, why wouldn’t they want to create their own funny, viral or emotional video for the purpose of showcasing their products and services in a newer multi-media format.
    Case and point: wouldn’t you rather make a decision on what restrauant you will visit when searching the Internet based on watching a video ad that takes you through the front doors, shows the atmosphere, the crowd, a couple patron testominials and of course–a few of their best plates–steaming on a table?
    Thre is plenty of solid Interent research that shows the need for content producers and they will all need a home or 2 or 3, for their content.

  • Hi Brett, no one is arguing that content producers are needed, I never said we don’t need content producers. But again, you are saying you disagree with my statement that content owners are not making money, yet provide no examples of who is making money today. That is my point. Many are saying content producers can make money with advertising, yet no one I see is giving an examples of who has been successful, what they are making and what potential they have for revenue.
    I think we need less general statements made about our industry and need a lot more in the way of real examples, with real numbers of what is taking place today.

  • Dan,
    I believe you are right, what is the number of content providers making money with the delivery of their content over the net, i don’t even have one name in my mind.
    As a cdn reseller, i have the feeling that everybody is looking
    for a monetisation model that doesn’t exist yet.
    Everybody think advertisement will do it, i don’t think so, it’s
    so easy to zap or not to look at ads and one man sitting in front
    of a computer is not as disposed to watch ads as a couch potatoe.
    the subscription model seems more realistic for me, but i think that we need a payment platform that doesn’t exist yet,i would like to buy things as simply as with one click and safely, that’s not the case right now.

  • Dan – I’m not sure but it seems you are implying that several of the large content are indeed making money with online video or are pretty close. I wonder if any of the larger players (MLB,HULU,ABC,etc) have determined a way forward where they can 1)produce content strictly for online distribution 2)promote it 3)deliver it cost effectively via downloads or streaming 4)attract a large audience of advertisement-receptive viewers and 5)persuade advertisers to purchase enough spots at an adequate CPM. For even the biggest, the fixed and variable costs of 1,2 and 3 are larger than 4*5. But maybe I’m wrong.

  • “I think we need less general statements made about our industry and need a lot more in the way of real examples, with real numbers of what is taking place today.”
    hey dan – i can be a “real example” for you. my name’s dylan and i make money online with my videos. i created a series called Dylan’s Couch and it was just recognized as an “Official Honoree” by the Webby Awards in the Viral Video and Comedy Series categories.
    as far as what i earn, i can tell you that most of it comes from my youtube partnership and a little comes from making videos for brands and some comes from ads on my site, t-shirt sales, etc. i can’t tell you how much i make from youtube, because i signed a confidentiality agreement – sorry.
    if you want to check out the series you can see it at http://www.dylanscouch.com then you can decide for yourself if it stinks. 😉

  • Much of the content on cable stinks too. Remember that internet television is still in it’s infancy. I think the real success will be with niche content providers reaching their audience. For example, where can you find shows about such specialties as weddings (The Knot), shoes (ShoeTube) or even live surgeries (OR Live)? I would venture to guess that a shoe fanatic would click on a Zappos ad.
    As internet television grows look for more and more specialty content. I watch Starfish Television – a non-profit that broadcasts quality shows on many charitable organizations.
    There’s an easy way to find and watch lots of great internet television: http://zipityzap.com . And for you couch potatoes, it also works with a wireless remote control!

  • Whose making $? Producers that create content for mass use – selling it as royalty-free and unlimited use; for cheap – in droves to many editors – and sticking with high quality content only, pre-edited – that’s what I do. I also use this stock content to create video ads for SMB (small medium business) and that I also do in droves on behalf of large IYP companies that have large sales forces. That’s how I make money as a producer! But I agree, one sale at a time is VERY painful and not sustainable.

  • Jeff

    Now this is very interesting, well done.

  • justin weily

    IT’S NOT THE QUALITY OF THE VIDEOS IT’S THE AD AGENCIES RUNNING SCARED !
    3 years ago we spent $50 000 making a tv series about British Gap year students visiting Australia. We were happy doing that, it was a lot of fun ! It aired on TV in the UK, we sold 2000 DVD’s, viral videos flow here there and everywhere. BTW 200,000 UK kids do this particular trip (Syndey to Cairns) EVERY YEAR so there’s quite a market for this little TV series.
    This TV series (13 x 23 mkinds) is now sitting (in part) on a WEBTV platform. The idea now is to get an airline or tourism body to sponsor the site so we can offer the videos FREE giving all those information starved potential travellers something they want.
    FREE VIDEO CONTENT
    Were not asking a fortune by the way. Not really rocket science! One would think this project has potential for a ‘neat little tie in’ with an airline heading from the UK to Australia, maybe Tourism Australia, or even a travel insurance company. These folks would gain lots of publicity from pre-roll video ads playing before the TV episodes play. Again…not really rocket science ! BUT do you think we can get ONE ad agency that represents an airline, tourism marketing body or ad server interested in meeting or replying to emails and phone calls ?
    You’ve got to be kidding! Until the ad agencies (or governments, airlines, enter brand here) realise that ideas come from outside the agencies as well, online video is going nowhere for independant producers.
    It’s the brands that are missing out on cheap (but not nasty) online video advertising opportunites. I guess it’s easier and more expensive and fun (for agencies) to buy newspaper ads, or banner ads that no one clicks on!

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