Niche Video Networks: Can Content Owners Make Money?

I get a lot of calls and e-mails from content owners of all sizes. Aside from the major broadcasters, many of those who contact me are smaller content owners producing their own online content and are trying to figure out their distribution, syndication and advertising strategy. In the past 12-18 months, niche video networks or micro video networks as some call them, such as For Your Imagination and Next New Networks have ramped up their offerings for small content producers trying to gain their business. At the same time, video platforms like Babelgum and Brightcove are also competing for these same content owners and the differences between a network and a platform continue to confuse people.

These types of aggregators and networks offer content creators a promising new vehicle for syndicating and monetizing content that would be hard to do on their own, but many of those content owners keep asking what exactly the niche video networks offer and how the business relationship works? Much more info is needed on how these services actually operate and whether they might be good partners for content owners looking for an effective channel for distribution and monetization. As an industry, we talk about the value the networks provide, but from a very high-level with few details. As a result, content owners don't know where to start and I get the same frequently asked questions all the time.

To try and shed some light on this for content owners, I asked Revision3, Next New Networks and For Your Imagination amongst other, on how they explain their business model to content owners and how they set customers expectation properly on licensing, syndication and ad revenue.

The first question I am always asked is are these networks looking to license content, or are they primarily interested in acquiring and owning content? From those I spoke with, the consensus was that most networks look for a non-exclusive licensing type agreement that is based upon an advertising rev share, which is what most of the video sharing networks offer today. Some destination type sites may ask for an exclusive license for a fee upfront with no rev share, but those are less common. Another model might be the opportunity for a content owner to produce exclusive new content for a destination type site which works as a work for hire type of relationship.

Of course, content owners also want to know how is ad revenue generated and shared with content owners? Generally, rev share is some kind of a split of net revenues, maybe as much as 50/50 for on network and some three way split if it is on a publisher network. Net revenue is calculated by taking gross revenue minus any network costs for your content and the ad campaign, such as operations, management and hosting. Those costs usually amount to about 25% of the gross, with the remaining balance split with the content creator. While it sounds easy enough, the problem is that there is no "average" split of net revenues. The only true way for a content owner to know how much their split would be is to get an actual quote from the network.

Another question often asked is what demographics are networks interested in reaching? Only 18 - 30 yr. old males, or a wider audience? Each network has a different focus and target vertical, but for the most part, the wider and more generic the network the more broad the demographic reach is. The niche networks can get more specific and as a result should be able to offer better rev share models, but it may end up content owners get less revenue because the traffic is smaller. Targeted should mean better CPMs, but that's not always the case and it's nearly impossible to get the networks to tell you their CPM average across a certain type of content or niche vertical.

With all the talk in the industry of the costs to deliver video online, many content owners also ask if the networks pay for the bandwidth of delivering content from the website, or does the content owner foot the bill? If you are using a platform, like Brigthcove, the content owner foots the bill. If you are using a network, it can go both ways. For Your Imagination says that when they embed a video with blip.tv, Viddler or Revver player for example, those companies cover the delivery costs of the video in return for the right to sell ads on the videos and to share the revenue with For Your Imagination. For Your Imagination says this is super important because even though a show may not make a lot of money, at least they are no video delivery fees which for some shows can be expensive, easily over $1000 a month.

As for the question of what's the duration of and standard provisions offered in a typical contract? All of those I spoke with said their is no "typical" contract as so many variables are taken into account. That being the case, I have yet to see any niche video network publish a list of all the factors that are taken into account that determine their contract terms with a content owner. I understand if you don't want to publish your rates, but wouldn't it be nice if content owners had some idea of what factors affect the revenue share numbers?

A lot more work is needed by the nice video networks and video platform providers to make their pricing and business terms easier to understand for content owners. If it was made easier to understand, content owners wouldn't be so confused and the market would grow faster. We'd see more adoption and more usage of online video and we'd have a better chance of content owners not having to struggle to figure out what the pricing is, how it works and what their cost would be. And it's just not the networks that have this problem, the platform providers as worse. Last week I was trying to help a content owner review pricing from both Brightcove and thePlatform and trying to decipher what the terms are that they use is confusing even for me. On one hand, many of these video platform providers say you pay one price to use the platform, but then charge you for "software platform fees", bandwidth, the number of media clips you have, storage, use of APIs and the number of "user accounts" you have. Come on guys, this needs to get easier.

See Hands-On Demos Of New Advertising Platforms and Networks

At the Streaming Media East show on Wednesday May 21st, Evan Berg, formerly of Brightcove and now with Visible Measures, will be leading a demo session entitled "New Advertising Platforms and Networks". Despite all the talk about how well online video advertising works and the projections that it will be a billion-dollar business this year, the fact remains that many video advertising platforms still leave a lot to be desired.

In the past year, new ad platforms and networks have come to the market looking to solve problems like targeting, analytics, syndication, and inventory management amongst others. This special session will feature demos from some of those new companies—including Yume, VideoEgg and FreeWheel.tv—who will give you an insight into how they are looking to take content monetization to the next level.

Confirmed presenters include:

• Moderator: Evan Berg, VP, Corporate and Business Development, Visible Measures
• Bob Bahramipour, VP, Ad Operations, YuMe
• Matt Sanchez, CEO, VideoEgg
• Douglas Knopper, Co-Founder, Co-CEO, FreeWheel

Have a topic or question for any of the speakers you want to see addressed? Submit it in the comments section and we'll add it to the Q&A portion of the session.

Registration is still open and you can see all the various pricing packages, including a one-day ticket on our website. Six years since we took over the StreamingMedia.com business and we've still managed to keep the conference very affordable for everyone to attend. A full two-day conference ticket is only $895.

Ad Networks Vs. Branded Video Sites

At the Streaming Media East show on Wednesday May 21st, Joe Mandese, Editor In Chief at MediaPost will be leading a session entitled "Ad Networks Vs. Branded Video Sites". In the increasingly disaggregated world of online video, who will win share of video advertising budgets?

Branded sites like YouTube, Heavy, Daily Motion (etc.), or the burgeoning market of advertising network players. Buyers and sellers face off on the impact of branding vs. audience reach and the implications for media planning, advertising budgets, and CPMs.

Confirmed speakers include:

• Moderator: Joe Mandese, Editor In Chief, MediaPost
• Fred McIntyre, SVP, AOL Video
• Aleck Schleider, VP, Marketing, Advertising.com
• John Lumpkin, SVP, Sales Strategy and Partnerships, Heavy.com
• Garrett Albanese, Media Supervisor, Carat

Have a topic or question for any of the speakers you want to see addressed? Submit it in the comments section and we'll add it to the Q&A portion of the session.

Registration is still open and you can see all the various pricing packages, including a one-day ticket on our website. Six years since we took over the StreamingMedia.com business and we've still managed to keep the conference very affordable for everyone to attend. A full two-day conference ticket is only $895.

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.

"Streaming Content to Generate $70 Billion By 2013" - An Unrealistic Claim

Insight Research is forcasting that streaming content will generate almost $70 billion in the U.S. by 2013. I don't know how they come up with that number as I have not seen the full report, but $70 billion? They say the revenue prediction comes from audio and video files transmitted over the Internet, via an IPTV network or to mobile phones. They say that advertising revenue will fuel this growth and that "Questions surrounding consumers’ willingness to pay for content have been dispelled by the popularity of satellite radio and iTunes." I would disagree. Customers are willing to pay for music via iTunes, but so far, not videos on a mass-market scale. Over time, yes, more video specific content via iTunes will be purchased but you have to  back up the $70 billion number with more than just iTunes as an example. And what does satellite radio have to do with streaming?

They also say that if pre-stream costs drop faster than expected, or IPTV or 3G takes off faster than expected "it could blow the doors off of our forecasts, propelling this industry into explosive growth." I am all up for reports that show growth and make predication based on accurate data, but $70 billion is just so far away from reality. If someone has a copy of the full report, I'd love to see how the $70 billion number is calculated.

Webinar: Online Video 2.0, Best Practices You Can Use Today

StreamingMedia.com is hosting a free live webinar today at 11amPST/2pm EST on the subject of "Setting the Bar for Online Video 2.0: Best Practices You Can Use Today". Sponsored by PermissionTV, join online video experts as they discuss the top trends in online video and review real-world examples of how companies are setting the bar for the next phase – Video 2.0. Whether a brand marketer, an advertising agency or a media company, this Webcast will arm you with the information you need to execute your own Video 2.0 strategy.

The webinar is free and you can sign up online.

Conference Session Preview: Streaming Media East Show Agenda

I've been a little slow in blogging as of late as I'm hard at work on finalizing the advance program for the Streaming Media East show taking place in May. We will have 36 sessions at the show and the first third are now confirmed with moderators.

This year I have decided to use the blog to post the conference agenda before the advance program is even printed so everyone can see the kinds of topics and subjects that are going to be discussed and the kind of demos that will be shown. Please keep in mind, this is just the first 1/3 of the program, there is a lot more to come.

If you see a session in particular you are interested in possibly speaking on you can send in a speaking request, but since the deadline passed more than two weeks ago, those who sent in speaking requests on time get first priority.

Effective Business Models For Short-form Video Marketing
Some advertisers see user-generated video sites as a free way to distribute their message, however this has rapidly evolved into a significant paid business, where sites charge based on video placement and search keywords. Learn the relative ROI of going to a major site (i.e. YouTube) vs. a smaller site (i.e. Metacafe) vs. a plethora of tiny sites. Learn what methods are successful for getting viewers and the importance of content vs. placement. This panel will discuss and show video examples of effective business models for both advertisers and publishers.

LifeCasting: How Fast and How Real Can We Get?
How did lifecasting videos get so hot? In the early days of television, live was the second choice, because of potential pitfalls, cost of production and a host of other problems. And yet, in the world of Internet video, lifecasting - using Internet video to share moments of our lives or to broadcast events and happenings - is the new hot thing. With platforms like Kyte.tv, Zannel, Mogulus, Stickcam and many others now available on the market, lots of new options and opportunities exist. Come see some of the hot and upcoming mobile lifecasting options in action and discuss is lifecasting will be become just a fad or the next big thing.

Best Practices in Enterprise Streaming for Communications and Learning
Use of online video in the enterprise has evolved well beyond the special occasion of rudimentary talking head videos that characterized early adoption. Today, innovative organizations take a holistic view of all their online communications, seeking to extract as much value as possible from any infrastructure that involves video. Whether webcasting executive briefings across the globe, or capturing and archiving rich media presentations for training, marketing, sales, and compliance, a growing number of organizations are capitalizing on the ability of Web 2.0 technologies. This session will show firsthand examples from Fortune 500 organizations of best practices in integrated online video for communications and learning.

CDN Pricing: The Going Rate For Video Delivery
With more CDN players in the market than ever before, trying to figure out what you should pay for delivering video can still be quite complex. This presentation will offer real pricing numbers from large, globally focused content delivery networks and show you the average going rate when you outsource delivery to a third party. The session will also cover some of the variables that determine the final price, how you should accurately compare the delivery services of one CDN to another and gives you a list of providers in the market today.

Monetizing And Aggregating Niche Video Content
This panel will discuss the new ways content owners and site developers are aggregating content and distributing it on the 2.0 web. We will give examples of ways to develop niche vertical sites without having to hire tons of new personnel and discuss how to reach audiences on social networking sites like Facebook. Learn about some of the new emerging platforms for niche video distribution and learn best practices of ways to increase your changes of making money with your content.

Focus Group: Young People's Attitudes Towards Online Video
This special session, a panel of high school and college students will discuss their online video consumption habits. Learn what types of online video content they like, what sites they get their content from, the devices they are playing it back on and how they interact with video advertising. Find out what their perspective is on pay media, portable content and what they think the future holds for the next generation of viewers on the web. Bring your own questions for a lively Q&A session with the students at the end of the session.

Live Broadcasting Over Mobile And WiFi Networks
While big media tests the waters of mobile broadcasting, many web video producers are already out there doing it live from the street, with a cell phone. Others are joining in and experimenting with two-way broadcasts via streaming video over cellphone networks and via WiFi, wherever they are. Viewers can chat while the broadcast is going on and affect and sometimes even direct the coverage of the content being produced. Come to this session to hear Steve Garfield talk with other pioneers in the live broadcasting space about their experiences on the forefront of this new technology for sharing their stories over the web.

The H.264 Convergence
Over the past year, more and more streaming media players are utilizing H.264 and providing support for the technology. Adobe's recent support for H.264 in their Flash player has sparked industry discussions amongst major broadcasters and online video producers about the role H.264 will play. This session will explain why H.264 is getting so much exposure, what recent announcements have put it into the spotlight and whether it can really be the one codec that the industry can all converge on. Attendees will also see real-world examples of sites and services that are utilizing H.264 today.

User-Generated Video in Education
The online video revolution has been embraced by students, teachers, instructors and researchers, many of whom are producing video for class assignments, teaching purposes and other uses. Learn what kind of content is being produced, where is it being posted and how user-generated content fits into the overall strategy of educational institutions. This panel of experienced educational media professionals will discuss the many ways your school, college or university can maximize the value of your user-generated video, and how you can assist faculty and students in making it better.

How Old Media Is Embracing Online Video and New Media
Led by the National Academy of Television Arts and Sciences, this session will discuss how converging media technologies are redefining traditional distribution methods; how interactive and on-demand services are changing and how entertainment and news video is being consumed. Come hear from some of the leading publishers, broadcasters and advertisers about the impact that video and new media is having upon their business models.

Codec Comparison: VP6, H.264 and Windows Media
Choosing the right codec involves lots of factors, including quality, player install base, costs, and server related features. This session will compare the video quality of the big three codecs; VP6, H.264 and Windows Media. It will also include a comparison of the primary H.264 codecs including Apple, Sorenson, Main Concept and Dicas. The session will present attendees with the latest published penetration figures for the H.264 compatible Flash 9 player and Microsoft's Silverlight player and provide usage statistics among major broadcasters and corporations. Attendees will also learn how to compare relevant server and player related features, and costs associated with adapting and using each platform.

Delivering Media For Microsoft Silverlight With Windows Server 2008
This session will cover how to take advantage of the new Silverlight media serving features in Windows Server 2008. Attendees will learn about the new capabilities of IIS7 Media Pack including bit-rate throttling and playlist options for progressive download content. The session will also demonstrate the enhanced capabilities in Windows Media Services 2008, including scalability doubling and appliance-like cache/proxy deployment for edge networks specific to streaming.

NBC Direct To Use P2P Video Delivery From Pando Networks

In September, NBC announced that come this fall they would launch a new service, named NBC Direct, that would enable viewers to watch some of NBC's top TV shows as ad-supported downloads. While NBC plans to use many platforms to make their content available including iTunes, the move by NBC is essentially driven by the desire to cut out the middle man and deal directly with the viewer.

While most details surrounding the service have not yet been disclosed, three companies have been working together to build the NBC Direct service. ExtendMedia is doing the interface, YuMe is providing the advertising platform and Pando Networks has been chosen as the P2P technology of choice. When contacted last night, executives at Pando Networks would not comment for me on their involvement, but others I have spoken to have confirmed that after a long evaluation of various P2P networks by NBC, Pando has won the business.

When NBC Direct launches out of Beta, this will be the first major TV network in the U.S. to adopt P2P and make it such a crucial part of their distribution strategy. I know some will say Joost is already doing this and the BBC has been doing it for awhile but they don't count in my eyes, for obvious reasons. The NBC Direct service will bring a lot of exposure to P2P and will help to legitimize P2P as a solution for some, not all, kinds of video delivery. NBC won't be using P2P exclusively and as anyone who truly understands the value of P2P will tell you, it's not a replacement for other distribution platforms but rather a compliment or enhancement.

For Pando Network's it's a big win and should lead to other major broadcasters and content companies giving them and other P2P platforms a legitimate shot at solving their video distribution needs. 2008 is shaping up to be the "perfect storm" for the video delivery segment of this industry.

Two weeks ago, I interviewed Yaron Samid, the Co-Founder and CMO of Pando Networks from the Streaming Media West show and discussed the current hurdles in the P2P industry and what role Pando Networks is looking to play in the market. (apologies on my audio levels as I was battling a cold)

New Book: Hands-On Guide To Creating Flash Advertising

Last month, the latest book in my series came out entitled "Hands-On Guide To Creating Flash Advertising", written by Jason Fincanon. Amazon has the book the cheapest for $23.

The book covers how to create awe-inspiring, mind-blowing Flash ads and microsites that engage consumers and demonstrate their worth to clients and delivers the nuts and bolts of the development process from initial design conception to ad completion. You can views the table of contents on the Amazon website and see more details about what the book covers.

Anyone who posts a review of the book on Amazon will get a free copy of the next edition of the book when it comes out. This goes for bad reviews of the book as well, as all reviews are welcomed.

Beyond Pre-Roll: What's Next for Online Video Advertising?

That's the question we're looking to have Yahoo!, BlackArrow, Revision3 and CNNMoney.com give us their insights on at the Streaming Media West show in two weeks. I'll be moderating a session on this subject and looking to get answers on which type of advertising works best online: pre-roll, post-roll, in-stream, sponsorship, or all of the above?

We will also discuss if revenue automatically comes with the audience, or will a sudden spike in popularity sink your production under a mountain of bandwidth costs before you ever get a chance to swim? It's a hot topic and one we'll have a lot of debate over. The panelists include:

• Dan Rayburn, Executive Vice President, StreamingMedia.com (Moderator)
• Cheryl Kellond, Sr. Director, Global Ad Product Strategy, Yahoo!
• Jason Schafer, VP, Business Development, CNNMoney.com
• Brad Murphy, VP, Business Development, Revision3
• Chris Hock, VP, Product Management, BlackArrow

It's not too late to register. While the early registration discount period has now passed, if you have not yet registered and want a discount code, let me know.