Oct

20

Making Money from Online Video

October 20, 2006 |

http://www.partnershipsonline.org.uk/mt/archives/blog_14/scoble.JPEG-1.jpgRobert Scoble talks about the problems with monetizing online video:

Here’s the trouble. Most people I know are getting advertising revenues of between $10 and $40 CPM. That means that for every 1,000 people who visit a Web site, an advertiser is paying somewhere around $10 usually (often less, and in some cases, far less — Jeremy Wright told me he was only getting about $.50 CPM when he runs Google’s ad bar).

Now, that sounds great, particularly if you can get a big audience and when you write a blog that has minimum creation costs (yeah, some posts take hours, but others can be done in minutes and you don’t need anything but a computer to do this). That low cost of production is why Jason Calacanis was able to create $25 million in value by lashing together 100 bloggers. But, let’s look deeper at video.

First, the videos I’m putting up are around 200MB a piece. The bandwidth distributors I know are charging $.14 or more PER GIGABYTE to distribute those videos. So, that comes to $28, or more for 1,000 downloads (if my math is right).

That math, of course, isn’t going to work out. I think for video, $10 CPM is a bit too low to begin with, but his post does cut to heart of the problem: Bandwith and labor are expensive, especially when you are dealing with video. Podcasting can work, because, given they are just as long, an audio file takes less than a tenth of the size of a video file. Also, most podcasts are very, very cheap to produce in term of labor and hardware.

The costs of the technology will eventually come down, bandwith will get cheaper, but at the same time, real talent, whether in front or behind the camera is going to get more expensive.

But not all is doom, online video is still in its very early stages and advertisiser are probably still cautious when it comes to spending money on it. Interestingly, I think Scoble’s show would attract more attention if it were also available as a podcast. A lot of people listen to podcasts while working or driving - things that can’t be done with online video/vidcasts/ScobleShows.

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