It's interesting to watch the frustration and struggles of those producing online TV. While the number of people watching some Web TV breakout hits can be significant - and in the more popular shows receive larger numbers than some of the cable TV shows - it's still about impossible for most creating the online shows to make money.
To me it shouldn't be that difficult: at least for those wanting to make a living while retaining creative control.
The problem is, creative types struggle with the business side of the equation, and only want to focus on creating their work. If you don't think this isn't a problem in the industry, you'd be wrong. Just look at the many struggles of DreamWorks and Steven Spielberg to get an idea of how hard it is for those with great creativity to understand financial discipline in a project; let alone how to make money doing it.
Having run Web businesses myself, I think it's a mistake to think of video as any different than another business online. The key to success online is making your own product or service, and then multiplying it through affilate programs. There's other ways to make money online, but this is the most tried and true.
For Internet video, creators of content need to think in terms of developing their own product or service they can then use as a sponsor of their work. The money generated from the sponsorship would be the key way to generate revenue. If you create good video content, it'll eventually draw a sizable crowd across the Web, ensuring your success as a business.
The challenge is to put together a team or partnership where each participant has skills the other doesn't. If you have someone that can create good content, but no one to build out the business, you'll just be an anomaly on YouTube (Nasdaq:GOOG) at best.
You need someone who can completely focus on the business side of things, which means they will either develop a significant product to sponsor the video production, or they'll find the product or service where they could make a deal to get a piece of the sponsorship; meaning a percentage of the views, or whatever seems the best for you and your business.
State of advertising
The current economic conditions underscore how cyclical the advertising industry is, and how many business are at the mercy and decisions of ad agencies or ad departments. Developing your own product takes away that uncertainty, and gives you a potential predictable source of revenue.
Even big companies like News Corp. (NYSE:NWS-A) are looking more at models that don't rely on advertising of others solely to combat the endless cycles of that business model.
At this time most companies are sitting on the sidelines waiting to see how things shake out in the business. They don't know if video developed for the Internet will be more of a supportive role, or end up dominating the industry. The lack of reliable metrics and different ways of measuring adds to their fickleness and unsurety as well. As we say in the sales industry: a confused mind doesn't buy. That's where the overall ad industry is at this time concerning the Internet and video.
So unless you want to wait around for years, the best way at this time to make money with Web video would be to either develop your own product and sponsor the production, or enter into a partnership with someone else to get a piece of their product sponsorship.
I'm saying this in the context of making a decent living online, not trying to reproduce the major entertainment industry model. While this could work for them, it's just another form of advertising from their point of view, although you could make a case for Disney (NYSE:DIS) sponsoring or licensing their characters through a variety of means.
But for the individual or small business video producer, this is definitely one of the things that would work best. Of course it's all predicated upon having the ability to create the type of video content people want to watch.
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