Paying Publishers for their (Video) Content
Risk versus rewards not yet adding up for the average publisher of video content challenging the Web 2.0 model.

By: Bruce Bahlmann - Contributing Author (your feedback is important to us!)

Created: May 7, 2007

You Tube announced today that it will begin paying its top performing content contributors some type of revenue split of its advertising made off individual contributions. This program, which sounds a lot like AdSense, is to be trialed on 20-40 top content contributors. In this article we take a closer look at Web 2.0 from the perspective of content publishers to determine does it really make money for them or is this just another way to attract more users to contribute their works to these social networking sites.

In Table 1.0 we investigated some recent compensation plans in attempt to draw some comparisons between them. Interestingly, there really isn't much to compare as each plan is devised a different way and content aggregators have yet to develop any consensus around a workable business model. With that in mind, the following trends are either evident or are beginning to appear as far as content sharing web sites are concerned:

• Publishers must be paid to sustain this business - The greatest weakness of Web 2.0 is that it assumes individuals will continue to offer up their time and creative effort for the benefit of the "Internet". Such movements are what made Wikipedia what it is today. All these millions of tiny contributions quietly made content sharing sites a small fortune in advertising revenue. However, Google buying You Tube for billions has provided content publishers with new unforeseen leverage over content aggregators to the point where publishers are now seeking their fair share of the revenue.
• Advertising revenue share is a given - Gross proceeds made directly off published content must be returned to the rightful content owner. How much is clearly the question as 50% seems too heavily weighted to the content aggregators as they calculate these proceeds minus their costs but don't take into account the much higher costs of time and money in producing quality video content. A much more realistic model for the content publisher is 80/20 as they don't benefit from cost savings created by aggregators huge volume.

Interestingly, if you look at publishers as content generators you assume that they will continue to risk their investment in time and money in exchange for the opportunity to make money. Obviously, if making money is NOT an objective of publishers, than any money they receive is a pleasant surprise. However the costs of producing user generating content varies widely depending on the overall quality of the endeavor. The following are some general rules of thumb one can think of in terms of time and money invested by publishers to produce videos of different quality:

• Home Video - Typical 5-60 second clip. Requires the forethought of operator to have camera operating at just the right moment. Minimum investment of 1 hour for filming, transferring to computer, and pushing to shared website. Assumes no fees are paid to video subjects.
• User News Cast - 30-60 second clip. Requires minimum of 25 hours of heavy up front planning, research, scripting, setup, filming, and complex editing with voice over and multiple external sources. Each story may take days to pull together the right location, weather, and information to film the event.
• User Rock Video  - 3-5 minute clip. Requires a minimum of 30 hours of planning, setup, filming, and editing for 3 minute of video (each additional minute requires a minimum of 6 hours additional planning, setup, filming, and editing). Advanced videos such as those of the infamous choreographed treadmill video would represent a large multiple on these minimum figures. Assumes no fees are paid to video subjects.
• User Documentary - 1-20 minute clip. Requires a minimum of 40 hours of research, planning, setup, filming, and editing. Potential transportation costs of filming at various locations and since filming could span multiple days these costs could be significant. Assumes no fees are paid to video subjects.

For the sake of discussion, lets say a video publisher produces two entry level fairly decent quality 2 minute videos and publishes them on a sharing website.

• The first video required 25 hours to make. It was an instant success and pulled in 3.5 million views on Revver.
• The second video, which was much higher quality required 30 hours to make but wasn't as popular and generated only 1000 views on Revver.

The total earned for the two videos was $35k. Other facts must also be considered such as the publisher invested 55 hours making two films only 50% of which were successful - in the film industry a 20% success ratio is considered very good. The publisher likely invested a fair amount on the front side to create these videos. For example, this publisher probably owns an above average video camera, video editing software, and spends a lot of time planning shots and story boarding projects. All this advanced time and any money spent on software and equipment is placed at risk for the publisher.

The publisher may also have to grapple with the fact that perhaps their first film could be the "one hit wonder" - or more appropriately labeled "fluke". Meanwhile, if the content aggregator can successfully lure publishers in to share their one hits wonders with them or alternatively perhaps enough of their mediocre or outright flops this is enough to sustain their business which only pays if the content is good enough to make their home page, gallery, or earn 1,000 views. So, "long tail" content is just sparse enough to still make money for content aggregators while starving content publishers. Clearly this is factored into the "minimums" and then covered up with the brilliant one hit wonders.

Summary

The Web 2.0 movement is showing some cracks and up through those cracks are publishers crying bloody murder. Web 2.0 highly leverages things that it shouldn't (user content) - all at the expense of publishers so aggregators can profit. Unless publishers can get a fair share of all the gross proceeds (not less operating costs), it really doesn't pay for them shoulder all the risk in exchange for just wider exposure. In my mind, the answer lies in what I call the Wiki video sharing model. Meaning, I believe that in the same way Wiki made a web tool for content publishers to mange their own content, so too will someone build a tool for video publishers to manage their own content. In this way, there will still be videos shared all over the Internet. Its just that, when these videos are actually played, the owner of that content will be in total control of advertising and see all the traffic. This new video sharing Wiki would contain a simple API to allow video aggregators and search engines to access their archive so as to still provide wider exposure.

So as Web 2.0 seeks to consolidate the collective works of user published content, the economy (buyouts) and natural greediness of publishers will move them to seek to cut out the middle man. Problem is, I don't think You Tube, Revver, Metacafe, and Break.com can survive if they share 80% of their gross proceeds with content publishers, but the next generation of user published video sites probably will. However, until such sites come about, investments in user published video has got to be on shaky ground.

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