Monetizing Video Content Online: Part I
The first wave of monetizing video online had a ground swell centered on ad supported revenue models such as YouTube, Metacafe, Vimeo, Revver etc. In 2008, thought leaders in the publishing and venture capitalist business had strong opinions on the subject of video sharing/publishing sites. If the revenue model was not an ad supported model, they felt it would never survive.
I will use the once popular site, Metacafe, as an example of how the ad supported online video business has evolved. In 2007, the Metacafe producer program would pay a video owner $100 if a video achieved 20,000 views. If you convert this figure into an advertising CPM, it comes out to $5 per 1000 views. During this time, Metacafe was getting paid from advertisers an average CPM of $15 for user generated video content and more for professionally produced content (overall average online video CPM $43). In October 2008, Metacafe lowered their producer program compensation to $2 per 1000 views. They also implemented criteria that the 20,000 views had to occur within 6 months and the 20,000 views had to come from within the U.S. On June 30th 2009, Metacafe announced that they were terminating their producer program and discontinuing payment immediately. Metacafe stated that the producer program always had to be subsidized and that the company was shifting their efforts towards business activities that were actually profitable.
Another example is YouTube. With over 120 million unique visitors and 10 billion videos watched per month, they have not yet reached profitability. On August 29th, 2009 YouTube extended revenue sharing to anyone with a viral video and as of February 17th, 2010 only 42% of YouTube’s top 100 videos were being monetized (i.e. ads placed against them). This could be great news for the 58% of the top 100 videos that are being monetized but we don’t know to what extent due to the lack of published information by YouTube.
Considering the Metacafe example and the fact that YouTube is not yet profitable (even though they dominate the online video market with 40% market share) and not capable of monetizing their top 100 videos, the ad supported revenue model does not seem like a strong candidate for most content owners and distributors to monetize online video assets. I realize that there are some content owners making what they self describe as “tens of thousands of dollars” from ad revenue from sites like YouTube; however, in this article, I am referring to the rest of us.
If ad supported revenue models don’t make sense financially for most content owners, let’s consider going back to basics and actually selling video content like folks did in the good old days. Stay tuned for the Part II which will discuss options for selling videos online.