How to Monetize Online Video Based on Audience Size
There are many ways to segment online video. One simple and unambiguous way is to break it up by the volume of potential viewers. When you break it up that way, it becomes easier to think about how each of them should be monetized, which may be inconsistent with general market expectations.Large Viewership = Advertising
For video with audiences in the millions, advertising is an effective and attractive medium. It is attractive to many companies that spend a lot of money on "branding", and are in fields that are mainstream but essentially commoditized, like wireless phone carriers, automotive companies, and all other companies and ads you'd see during an NFL game, which gets over 15 million viewers per game.
For video with audiences in the millions, advertising is an effective and attractive medium. It is attractive to many companies that spend a lot of money on "branding", and are in fields that are mainstream but essentially commoditized, like wireless phone carriers, automotive companies, and all other companies and ads you'd see during an NFL game, which gets over 15 million viewers per game.
Of course, this argument is predicated on the fact that online video will or even should reach millions of simultaneous viewers, a position that Mark Cuban in particular opposes, most recently claiming that the Internet will not replace cable.
Medium Viewership = Subscription and Sponsorships
For medium sized audiences, say between tens of thousands and millions, subscriptions and sponsorships make the most sense. This might be popular TV shows, whether purchased as a season (e.g. iTunes), or as part of a subscription like the rumored Hulu subscription fee. Other medium scale videos might be sponsored, such as Mike Langford's NomX3, which had their trip and video production in SXSW sponsored by Kodak.
Niche Audiences and Content = Paid Consumption
Finally, for smaller audiences, there is a higher likelihood to be able to sell the video directly for the audience. Specialized and niche content is likely more valuable to the audience that is actually interested, and therefore they are more likely to be willing to pay. This type of content can be high school sporting events that parents need to watch, detailed instructional or tutorial videos, or expensive conference keynotes. For these videos, the loyal audience will likely be willing to pay to watch the video, which in turn supports the creation and production of more videos that they are interested in. Advertising doesn't work the that type of volume, and the niche audience makes sponsorship hit or miss, depending on the target demographic.
Eric Schmidt generally agreed with these segmentations, though tends to skew the viewership volumes way up, thinking more about total lifetime views versus live or short term views. Here are his comments from an interview with Charlie Rose:
For things which are going to be viewed by 2 billion people, you’re going to use advertisements. . . In a smaller audience, say, you know, 20 million audience, 2 million audience, you can imagine that you’ll have micropayments. . . . For highly, highly specialized, they’ll pay big bucks . . .
Eric Schmidt - via TechCrunch
He foresees micropayments for medium volume videos, though I have a hard time seeing people paying a few cents to watch a funny video on FAILblog, but I could see someone paying a few dollars a month for an aggregator of similar videos.
Now granted there are and will continue to be examples that cross their respective category (e.g. high volume pay-per-view UFC fights, direct paid TV shows on iTunes), but generally it provides a solid framework to understand how best to earn money based on the type of content being created and the likely potential audience.
Too often video producers and creators try to force the advertising model, when their content would likely be more suited to a subscription, sponsored, or even paid model. At YouCastr, we are focusing on enabling the small and niche audiences, which are underserved in today's market. Making it easy for smaller video producers to sell their videos online will go a long way to supporting their art and expanding that market.
Posted by Ariel Diaz
