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Humanizing Tech

"How To Make Money with Video" in Humanizing Tech

It’s not as easy as people would have you believe

I. Overview

As I’ve written previously, at the low end of the market, Facebook, Twitter, and Snapchat are all fighting over UGC table scraps. YouTube is still the only place normal people can make a dime with video. OVPs are all losing money and either need to get acquired or go out of business.

OTT is also trending towards free with new startups commoditizing the space. Video ads aren’t your savior, so says the king. Want to make money? Create niche content for niche geographies and charge a $4.99 subscription.

Forget DRM. Unless you’re a broadcaster dealing with metadata issues or C3/C7 windows. Then give Piksel a call.

II. Market Segmentation

There are three layers in the online video market:

  1. User Generated Content (UGC): Facebook
  2. Multi-Channel Networks (MCNs): YouTube
  3. Premium Movies & TV: Netflix

Each one cares about something different. UGC is all about virality; the more it gets shared, the more valuable it is. The middle MCN market cares about getting credit for their work (Content ID in YouTube terms) and sponsorship dollars. The high end cares about making the absolute highest quality content, protecting it with Hollywood-grade DRM, and staying compliant with rights windows.

In each case, these social networks have built their own video platforms and their own audiences. But in only one case do they allow you to make money from your own video content, and that’s YouTube. Unfortunately, YouTube takes 45% of your revenue before they even cut you a check.

Why? Because online video is expensive.

Someone has to pay for the CDN bandwidth. Depending on volume, that cost could be anywhere from below a penny at Akamai scale to $0.12 per GB for Fastly startups. And someone has to pay for building and maintaining the software and hardware it runs on. That is not easy nor cheap.

Facebook has ruined the general population into believing a massively scalable consumer app is easy to build and free to use. Similarly, YouTube has ruined the same population into believing a massively distributed video system is easy because all you have to do is push a play button for it to work.

Video is hard. Live video is even harder. Monetizing it? Fogiddaboudit.

III. Get Yourself A Video Platform

As you can see, using an existing social network to make money with video is essentially a non-starter. Most of them don’t pay you for your content or your audience used to make their platform more valuable. Even if they do share some of that money with you (YouTube), they still take half off the top. It doesn’t make for any sort of business. In fact, sounds more like a Mafia tax to me.

That’s why you need a video platform of your own.

What we’re seeing, based on Akamai customer surveys, our own conversations with customers in the market, and even The Information reporting on the state of the industry, is everyone thinks they can build it themselves.

And that’s true. You can build it yourself. We did when we built our next generation video platform from scratch. It just took us a few years and tens of millions of dollars plus decades of experience in online video. But yah, give it a go.

What you will quickly find when using off-the-shelf components like those found on AWS is that Transcode sounds good on paper, but it’s the most basic form of transcode. It doesn’t offer every single file format for every device or operating system, it doesn’t offer speedier preferred pipelines for high value or timely news content, and it doesn’t offer the scale needed to do UHD 4K VR while simultaneously transcoding audio-only podcasts.

If you haven’t ever heard of the word Transmuxing, I don’t suggest you DIY.

IV. Formula For Making Money

Finally, we get to the good stuff you’ve been waiting for. Here’s the high-level formula for making money with online video.

1. Make compelling content.

  • Sometimes less is more when you’re trying to connect with an audience. Much like Jenna Marbles’s weekly videos show her unvarnished self, you too can show your authenticity by being yourself and recording your genuine interest in something. But don’t forget to make it entertaining.
  • On the higher end side, take a page out of Stranger Things. Combine a few mechanics that have worked in the past (Goonies + Super8), hire a great story artist, title card illustrator and actors, and spend the time editing. You only get one shot.
  • Finally, if you’re in between the two, like our customer Mago.tv with middle eastern soap operas, Dr. Oz’s Jungo TV for Vietnamese expats, or our very own Streaming Faith with christian content, then make sure you’re targeting a niche audience with your niche content.

2. Market it appropriately.

You’re going to need an audience. You can do it using features like Clip & Syndicate, building your own Facebook fan page with 45,000 followers in 2.5 months, or by including fun interactive features inside your player.

3. Monetize it.

You’ve only got three options to make money once you have compelling content and an audience to watch it:

  1. Advertising (AVOD): using VAST compliant players and VMAP compatible cue points, use video ads before, during, and after your program. The CPMs are higher with video ads than with display, but you might find it hard to get enough relevant inventory. Have a look at ColorTV for more novel options inside Apple TV channels. If you’re looking for an ad network for your specific niche or geography, the best search engine around is Thalamus.
  2. Subscription (SVOD): like Netflix, you can charge people a monthly fee to get access to your library of content. I suggest something like $4.99 per month for unknown content up to $7.99 for more premium, well-known content. Obviously your market’s willingness to pay and access to that content from other sources will determine how much of a premium you can add. If you’re going into a small terrirtory in Sub-Saharan Africa, you might not be able to charge a premium even though you’re the only content provider simply because of the disposable income of your audience. You can also charge on an individual show basis (TVOD). If you’re looking to charge on a one-off basis, give InPlayer a look. We know their new CEO and have a great relationship with them. Let me know if you’d like an intro.
  3. Donations: if you’re in the faith community, it’s likely that you accept donations to keep the operations running. It seems there are more donation providers than churches these days, but embedding a widget on a webpage is easy enough.

Any video platform worth its salt should be able to let you do any of the above. Leave a comment or give me a shout if you have specific questions or are running into roadblocks trying to monetize your own content.

— Sean

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Stop Splitting Your Headphones With Friends

How To Make Money with Video was originally published in Humanizing Tech on Medium, where people are continuing the conversation by highlighting and responding to this story.

Read the responses to this story on Medium.

from Stories by Sean Everett on Medium http://ift.tt/2bPuWjC