In a few weeks I’ll be launching a YouTube channel where you’ll be able to see lots of shows readers have been asking about including Startup America and even that lost second season of NerdTV. YouTube, as the largest video streaming service anywhere, is the absolute best place for me. But YouTube isn’t the future of TV.
I know this because TV is a business and this channel I’m launching is a business and I’ve spent the last several weeks talking to investors and running the numbers every which way. I’ve spent many hours with my friend Bob Peck looking at the economics of YouTube and my unequivocal conclusion is that while YouTube is great, it isn’t TV.
Television is a mass medium and it needs to be because professional content is expensive so you have to amortize it across a lot of viewers. YouTube certainly has moments when it functions as a mass medium, when millions or even tens of millions of viewers look at the same clip in a short period of time. But for most people YouTube is a smaller, more intimate viewing experience with comparably smaller production budgets.
Many YouTube videos have hundreds, not millions, of viewers.
And that works to a point for YouTube and parent Google because their cost of acquiring content has traditionally been nothing. YouTube is the casino, not the gambler in this model.
But as a casino, YouTube would really like to attract gamblers willing to place larger bets. As far as I can tell, though, such gamblers aren’t coming. Google’s current professional video initiative, which I have written about before, is a $100 million effort to attract real producers or real television, which it has done to a certain extent. But once that $100 million is spent, how many of those producers will stick around? Very few.
The problem is that nobody is willing to make the big bets required to move mainstream media to the Internet. Glenn Beck and Louis CK can do it, but their followers will go anywhere for their fix. Those two are outliers — outliers who would not be successful on the net had they not previously been successful on mainstream TV. Traditional TV and movies can’t or won’t follow their lead.
Even a modest cable series on, say, the Oprah Winfrey Network, is budgeted at about $190,000 per finished hour, so a 22-part series is about a $4 million commitment for the network.
If you do the math, turn the algorithms inside out, and parse the ratings data, the sweet spot for professional production costs (not cat videos) on YouTube is around $8000/hour — just over four percent of an Oprah.
This doesn’t mean there won’t be good original shows on YouTube. You can make a great show for $8000. But you can’t make a spectacle.
You can repurpose content you’ve already paid for, which is what happens on Hulu, for example, and to some extent on YouTube. But the nature of stardom has to be different — smaller — on YouTube than it is on more traditional media.
This is a large part of the reason why television has lately been in resurgence. Once viewed as being inevitably replaced by Internet viewing, both TV networks and audiences are concluding that for certain types of programming the Internet isn’t an acceptable substitute for the boob tube.
As a producer I can accept this but doing so puts very real bounds on my ambitions working solely within the YouTube ecosystem. As a video application platform, YouTube simply doesn’t scale the way Hollywood would like it to scale.
That is not to say YouTube and YouTube producers can’t or won’t be successful. I certainly expect to be successful. But in order to make that happen we have to embrace hybrid business models where we make our profits in different ways.
The kind of shows I like to do can be made for YouTube-scale money, they just can’t be made at a profit.
This isn’t such a foreign idea, by the way. PBS, where I worked for many years, tries to pay as little as it can for programming — hopefully nothing at all. And in a meeting I had a couple years ago at The Smithsonian Channel, they offered me $115,000 per hour for a show (their going rate) while simultaneously requiring that the production budget be $230,000 per hour. If I wanted to be on their channel it was my job to find half of the money.
And producers do. They presell foreign rights, sell product placements (Subway saved Chuck one season), or in the case of PBS they get foundation money to make up the difference.
With YouTube offering only one way for producers to make money, little in the way of co-marketing, and almost no network halo effect of being, for example, the show right after Seinfeld, it’s inevitably a smaller and more antiseptic medium.
I spent more than a year working with a major Hollywood studio trying to figure out how to make money doing shows for YouTube and I’ll tell you that it simply can’t be done, not with Hollywood overhead.
Hollywood can repackage content and maybe make a little margin, but that doesn’t buy Porsches.
I wonder if YouTube has figured this out?
For the sake of its own long term success, YouTube needs to either consistently deliver larger audiences or pay content producers more for their work.
None of this bothers me, though, because I finally have it figured out. I’ve come up with a lateral business solution that will turn YouTube — at least for me — into a money machine.
You didn’t mention “on demand,” but I’d suspect that’s a key differentiator between anything on TV and everything on YouTube.
Did you factor that into your value calculations?
What if the libtards that make content ( not so great at that ) have to take a cut in pay? Ever thought of that?
Random access is both YouTube’s strength and its disadvantage as a mass medium. And understand here that this applies to all YouTube competitors, too.
The ability to watch programming on demand — whenever you like and as many times as you like — is key to YouTube’s success to this point. But the service doesn’t do a very good job of sharing the viewing experience (very little content is live, for example — the only sure way on the Internet to guarantee a substantial audience at a target moment) and there’s very little halo effect from scheduling because the scheduling, such as there is, comes from the viewer, not the channel. That’s why YouTube does such a lousy job of marketing and we talk of viewers “discovering” content, because they certainly aren’t led to it.
So yes, on demand is a key differentiator but not always a strength.
HBO, by running the latest Game of Thrones episode up to 25 times in a week on several parallel channels, achieves most of YouTube’s on demand advantages (and HBO does literal on demand, too, through HBOGO).
So the advantage you cite mainly exists for content not many people are interested in. Now there can be hundreds of millions of people watching millions of channels and YouTube can make money, but the chance to make a LOT of money from advertising comes down to delivering large audiences of premium viewers, which YouTube hasn’t figured out how to do.
“Game of Thrones” is a good example here, actually, because my household would *definitely* pay-on-demand for that show, but since we don’t have HBO, we can’t watch it. Hell, we don’t even have a TV in the house. We watch everything on our computers. But we subscribed to Season 2 of “Downton Abbey” through iTunes and would have done that with GoT if it had been an option. Since it wasn’t, we went through TV-Links. Seriously, we would have paid for that content if it had been available to us, but we couldn’t afford to buy a TV, then buy a cable service contract, then buy a Premium channel. When Season 2 is released on DVD, we’ll buy it just to try and contribute to the creators of the show. Content creators need to make their material easily available in as many places as possible.
With those owning the rights to the content abiding by Mr. Burns motto – “I’d trade it all for just a little more” – the free-wheeling nature of the internet will likely never be allowed to free content from their grasp. As a free-market capitalist, I support their right to force us to pay cable premiums for content even when those cable premiums are holdovers from a bygone era. So long as we don’t exercise our rights to not pay that premium and instead go for a hike in the woods we will continue to take it on the chin. It doesn’t really matter what kind of model someone comes up with (micro-payments, advertising, whatever), the financials are based on what they currently make, so they will want a model that maintains the same margin.
I dropped my satellite service years ago and never looked back; but, as I looked at how my money would get parceled out in order to match my old TV watching habits – Netflix, Fox Soccer TV, Hulu Plus, etc. – I realized I would be right back to $50+ per month, and still fall short. My provider is AT&T, so I get free ESPN3 streaming. If I had Xfinity, Comcast or FiOS I could get ESPN streaming for free. But I don’t think I can even pay for ESPN now. WTF?
We vote with our actions. I guess people just have to watch Dancing with the Stars “live” in order for their lives to have meaning.
I only have to look at my children (21 and 13) to know that this is only a temporary situation. By and large they do not watch TV. They get all of their entertainment from the internet in the form of Youtube, Netflix and the like, as well as online games. They are perfectly happy to time-shift their viewing, so live TV is largely irrelevant to them. The cost of this has been a fraction of what it costs me for the my somewhat modest cable TV (ymmv) (HBO and on-demand).
When you talk about ‘live’ or ‘realtime’ to them – they invariably see it in context to their networks of friends and associates; they aren’t going to tune in the TV to watch a breaking news story, or ‘Dancing with the Stars’ for that matter. They take action by listening to the pulse of their network – and usually end up having more relevant information faster than I do in the same situation.
Generally speaking, the demographics of advertisers is to target the 20 – 30 somethings – ostensibly this age group has the disposable income to spend on stuff prior to getting a mortgage or having a family to spend money on. As a result, I have to question how they are going to succeed in the next decade if these people are not watching commercial TV in large numbers.
So – I have to assume then, that TV will not be able to continue at the high levels – and that in itself will cause a change in what makes it into that venue – it will have to shrink beyond current shrinkage. When that happens you will see programming either crash from lack of funds, or innovate in ways we are just beginning to see today.
Even as this happens, technology will also continue to improve the ability of non-professionals to create high quality output (all considerations of the quality of the content itself aside) – and this will fuel the delivery of more and possibly better content on shoestring budgets. With crowd funding – maybe you’ll see even high production quality content arrive online for a profit without advertising.
To put things further into perspective – before cable, there were only a few channels accessible – and nearly all of them, aside from public television, contained commercials inserted as breaks in the middle of and in between programming. When cable television first came onto the scene – circa 1981 or so – there were NO commercials. You paid for the service and that paid for the programming – there were more channels – but not by much – and that seemed worth the extra $$ cost to get the extra content (MTV anyone!?) and not have to watch commercials.
That slowly eroded over time even as the number of channels skyrocketed, and in more recent times has accelerated to the point where all non-premium content now comes with commercials (AMC – I’m looking at you and your god awful interminable commercial breaks). So there are more shows now than ever before, and they are all vying for our eyeballs to provide a platform for advertising dollars.
To me it is a letdown – because the value proposition is lost for me as a viewer – I am paying more today than I ever did before, AND I’m having to still pay even more with my time to watch even more unrelated or unwanted advertising than I used to have to watch on ‘free’ TV coming across the airwaves back in the day. So even at my advanced age, I’m looking for alternatives that are cheaper – particularly given the overall drop in quality of programming.
I wonder however, is there REALLY a viable market for THAT MUCH advertising – or that much programming? I have over 400 channels – yet I only really watch a small handful (probably about the same amount of channels as I watched in the pre-cable days – if not less given the alternatives I use today – such as online gaming and Youtube). So I really think the verdict is out on this.
Nice post, Mr. C.
Seems that our current model for buying recreational viewing is primarily thru ads, and to me they seem hopelessly inefficient: if I have to watch 20 minutes of ads to see 40 of content, my viewing has cost my $1 for every $2 of my after-tax hourly income. PC users might net $25/hour on average, so they’d be better off with a $8 pay-per-view 45-minute show.
But the producers don’t get that, because the advertisers won’t pay that because they can’t sell enough additional Budweiser, Toyotas and Prilosec to justify that level of cost.
Low-hourly-income viewers can make out OK, but these are not the people buying a new Prius every couple of years, and you will only drink so much additional beer just because every 5 minutes, you’re shown how you could actually be out having fun with your friends. So the math STILL doesn’t work out for advertisers.
As you say, Hollywood has managed to thread the needle, but internet-based TV has a much tinier viewer base over which to thread costs, and a much better ability to measure effectiveness of ads, which is likely to keep ad revenues very low.
Seems that some pay-to-view program is inevitable, even desirable for people who enjoy some downtime of entertainment.
The YouTube standard is an ad every six minutes, which is a lot less than you get on TV, where there are 16 minutes per hour.
That’s interesting… I see that Hulu aims for 6 commercials per hour? Do you think that will change, as adoption increases? For now, it seems like people need an incentive to put up with the caching and overall lower quality.
Hulu will add commercials over time but I suspect the nature of Hulu ads themselves might change.
I was wondering what happened to the Startup show you were doing a few years ago. Was it supposed to be shown on a regular network and something fell through?
I had a deal with a cable network but then Comcast bought NBCU and my show was stuck for months in limbo waiting for the deal to be approved. Collateral damage. If the contract had gone through a day before or a week after if wouldn’t have happened.
What about PVRs? The main reason I watch more TV now than before is that I have a PVR to skip the commercials and avoid shows that I don’t want to watch. I have heard the same thing from many others, including the seniors in my life. It effectively turns that live stream into an On Demand system, which is what you are saying won’t ever work.
I think On Demand programming is where its going to get interesting, but nobody wants to sit at their computer to watch a show. When it becomes as easy and cheap as having a PVR, youtube like services will flourish. Netflix can’t do it because the content is mostly old. I can’t get Hulu, but maybe its capable.
And yet PVR viewing represents less than five percent of the time Americans spend watching TV.
No doubt that’s why the advertising model still works. When enough people start avoiding commercials with the pvr/vcr model, the ad money will dry up until the content providers figure out to make advertising mandatory. Either that or they will make shows and market to people who would rather watch ads than plan their viewing ahead of time and watch it after it’s recorded.
Here’s the really interesting bit, according to TiVO, which knows everything about its users because those TiVO boxes watch what we do and report back to base, PVR users actually watch MORE commercials, not less. This is apparently because we don’t leave the room so much when we are watching a recorded show. And other research has shown viewers get as much data from a fast-forwarded commercial as from one that’s run at normal speed. That’s why TV people stopped bitching about TiVO. Now Charlie Ergen’s new Hopper PVR — that’s a different thing.
I suppose we represent an even smaller portion of TV viewers, but for those of us using MythTV (the open-source PVR package), commercials are completely absent. MythTV has the capability to flag commercials in an automated background process. When you watch the recorded show, it doesn’t fast-forward through the commercials, it literally just skips over them. When I first read about this (probably seven or more years ago), I was skeptical. But even then, it worked surprisingly well. These days, at least with the shows we watch and record (over-the-air broadcast TV in the USA), I’d say that the commercial detection algorithm works perfectly 95% of the time.
On the other hand, I would assume most MythTV users are more “under the radar”. They certainly aren’t being tracked TiVO-style, and presumably are less likely to show up in other kinds of research metrics (just speculating here). I suppose the number of Schedules Direct subscribers would give some kind of hint as to how widespread MythTV usage is.
It seems TV commercials are a popular source of conversation topics. (Is this a sad commentary on our society, that the most talked-about stuff is TV advertisements?) But whenever someone asks me, “Have you seen the commercial where…?” my answer is always no. Quite often, I get the follow-up remark, “How can you not have seen that? They’ve been playing it forever!” The answer is MythTV!
Additionally there are commercials that even if the option of skipping exists… I won’t. Many times the kids and I say to each other when a good commercial comes on… “Watch this… it’s great/funny…” Of course that never happens on the OxyClean lones.
TiVo may include “fast forwarding” through a commercial as “watching” it, but normal people don’t. I’m still using a vcr and as I fast forward I hear nothing and am only aware of such things as “food ad”, “car ad”, “iDevice ad”, etc. If that counts, then yes, I either hear all the ads when I’m not watching them, or I see all the ads when I’m not hearing them. Either way the purpose is to recognize when their over.
Don’t most Tivo viewers skip commercials at 30-seconds per click on their remote? I sure do…
Then they’ll double up on product placement (in the shows) so you’ll have to listen to 30 seconds of dialog about how Colgate gets you teeth whiter while watching the show. Consequently, more people will go to paid content and new network shows will be even more boom and bust than they are now since any show that isn’t consistently good will be damned near unwatchable.
Still puzzles me why people watch tv so much… when I do, I find it’s junk.
But I’m eagerly waiting to see the shows you put out, Bob!
I have no problem watching 2 hours of prime time and 2 hours of “background late night noise” each day. I do agree that most of TV is junk to me, but that doesn’t apply to the stuff I do watch, in my opinion. In your opinion, what I watch may be junk. But as Bob points out, it’s very expensive junk, whose value is in the eye of the beholder.
Through a variety of factors, some willing, some imposed, we’ve been watching most of our “tv” in the last two years on the internet. The visual quality is often poor, stuttering frequent (c.f the buffer bloat of Bob’s older stories), and yes some of it illegal. Consequently my hours per week of tv watching has gone waay down.
However when I travel for work and am stuck in a hotel room, or visit friends still on cable, and see what is on offer I am turned off, and turn off the device too if I can. I just can’t sit through the commercials anymore! Even when it’s a show I really want to see, as opposed to being just interested in, I am likely to try to figure out how to see it online or renting a disc at a later time, commercial free, rather than right now and suffer the constant and in opportune interruptions.
Quite honestly, I think TV’s compelling feature is the complete lack of control we have over it. Deciding what to watch in a world of infinite possibilities can be difficult, if not exactly work. It doesn’t help when so much of the content on Netflix and YouTube is garbage. I’m not a fan of network TV especially, but there are times when I’m simply too tired to make a choice more complicated than UP or DOWN. Yes, it bodes ill for the future of our species. Or at least the present of our species.
You’ve figured out a way to make money on Youtube? Does it involve porn?
I think YouTube has rules against that and my abs aren’t what they used to be. No, it’s not porn.
Youtube on your primary desktop on a 21″ LCD is not the future of TV. Youtube on Apple TV/Google TV/Windows 8/Mythbuntu could very well be. Why do you think traditional TV has a future either in the current state or online? It may well just disappear and get replaced with (a budget constrained) Youtube/Vimeo/etc. The public might be ok with that and not care that Lost/Dexter/Game of Thrones just disappear. It all relies on what the customer/ad companies are willing to pay and if that is $8000/hour of footage then that’s just how it is.
My kids — especially my 10 year-old — watch a lot of YouTube. He’s crazy about fishing. But he doesn’t watch them on our big TV even though he could. What we have here is a clash of content styles. I have to say, too, that your claim of transitional TV disappearing simply isn’t borne out by the data. Yes, viewing is down from years ago. Part of that is alternate sources of entertainment like the Internet and games, but the last couple years have shown some leveling-off of this trend. Ad rates negotiated by traditional networks in the upfront meetings have been producing year-over-year rate increases at most networks. They couldn’t raise their rates if they weren’t delivering audiences.
Speaking of the Startups tour, the link to the right of your column (Cringely’s (NOT in Silicon Valley) Startup Tour) is dead, you might want to replace it with a link to your new Youtube goodness…
I suppose I should…
Too bad you couldn’t get the deal done with Smithsonian – I’d rather watch you there than YouTube. There’s still something appealing to programmed tv, as in having someone else pick and schedule shows to choose.
Smithsonian has (or had — this was a couple years ago) an interesting business model. They had no ads so all revenue came from carriage fees paid by cable companies — enough so they could pay producers $115,000 per hour and still show a profit.
When I gave up TV several years ago, I was surprised to find how much I missed the passive nature of it. Yeah, it’s great to be able to go to Netflix or Hulu or my DVD collection and watch what I want, but that also puts pressure on me as a viewer. It’s not “what is there to watch right now?” but, “what’s the best thing I could watch right now?” When it’s up to me, I feel like I have to look through everything available and pick out the best show. I watched a lot of mediocre-to-good stuff on TV that I’d never choose to watch otherwise, and enjoyed quite a bit of it. There’s just something relaxing about flopping down on the couch and seeing what’s on. I’ve noticed the same thing with music and radio: when you can download your 100 favorite songs and listen to them over and over, they get boring fast, and it’s nice to turn on the radio and let someone else play some things for you that you wouldn’t have specifically picked out.
I suspect that’s a major reason why only 5% of people use DVRs. If we hated ads and wanted to control our viewing as much as we claimed, practically everyone would have one by now.
There’s the social aspect of TV too. If I watch a sitcom on Netflix from a year or a couple decades ago, no one will be talking about it at the office the next day, and even the Internet forums about it will have mostly dried up and moved on. If you want to talk about a show the next day, you need to watch it when everyone else is watching it for the first time.
@Aaron B – I’ve noticed a similar situation. I use MythTV, and have a rather large media collection. But it always puts the impetus on me to decide what I want to watch.
But, given that MythTV is open source, if I had more time, I would develop a fake “program guide” for it. Basically, I would develop an algorithm that took my media collection, and created “channels” and a “program guide”. So I would call up this program guide—it would look just like the program guides that cable and satellite TVs have—but it would be all “fake”, in that, none of those things were actually being broadcast at the moment. But I could still change “channels” and start watching something in my collection, possibly even starting in the middle.
The effect would be the same as having a subscription TV service, but the only stuff that plays is from my personal media collection (or broadcast TV that I recorded). Furthermore, it’s all commercial free (MythTV does background commercial flagging, and automatically skips commercials when you watch, and does a surprisingly good job of it).
I don’t think it would be too hard to come up with something like that. And if I put the time into adding metadata (director, actors, genre, vintage, etc), it would be pretty easy to make it semi-smart (e.g. the “action channel”, the “sitcom channel”, etc).
Matt and Aaron B – you have described our idea perfectly – TV watching is passive and you want TV to entertain YOU while you relax, not have to pick and click and choose – that’s the idea – to make the Television viewing experience move to the online world of content choices with intelligence… coming soon!
bradwww
Matt, what you describe has already been done for another program — XBMC has an add-on called, PsuedoTV. Both are open-source freeware that will work on Linux, Windows & MAC.
Essentially, you configure it for the number of channels you want and the type of material on each channel. Each time you use the add-on, it goes through your library and builds a schedule. You can browse the schedule and select a show or movie to view. Usually the show is in progress, but it also shows you what played before and what will play next. Selecting the previous or next show will start the show from the beginning. Our family buys a LOT of TV and movie DVDs and we use MythTV for our PVR (Ubuntu computer + HDHomeRun Dual tuner). We transcode the best shows and rip the DVDs (using DVD43 & Handbrake) and save them to our NAS. We also save video podcasts we like (cooking, computer, etc.) So, with hundreds of shows and hundreds of movies, it’s nice to have the computer help you choose what to watch — It’s very TV-like, just without the commercials! One last point — All of our shows, movies, music and pictures are available in every room on multiple TVs, computers and hand-helds. It took some money and months to get everything working, but it was worth it. We turned off our TIVOs (and the associated bill), cut the cable bill to the cheapest basic and we cut out the commercials. If there are things we want to watch from HBO or any other pay channel, we buy the DVDs when they are available, rip them and store them in a box (not the massive shelving they used to require). For network programming, we’re up to date.
As a full time youtube content producer with a relatively niche audience (10K views/video vs 1M views/video for the popular channels), I can testify that it’s impossible to make a living from Youtube/Adsense’s advertising model unless you have those 1M views/video levels.
I have to make the majority of my money on direct third party blog site advertising and community forum sponsorship.
Even if you are lucky to be at the 1M views/video level, Youtube’s advertising model isn’t going to make you rich, but you can indeed live comfortably from it.
Provided of course that you keep your production costs per video low enough (mine border on zero).
But remarkably is it possible to make a full time living from the 10K views/video level if you seek alternative advertising ad income streams.
It’s a brave new world. Good luck with your new channel, I’ll be watching.
Dave.
Thanks for the corroboration. My business plan requires an average of 17K views per video, so I guess I’ll have to work 1.7 times harder than you do. I hope I’m up to it!
A lousy 17K? You’ll get that EASILY with your content, practically guaranteed.
Dave.
Cringe:
If your son likes watching videos about fishing, he probably subscribes to my channel on YouTube.
Over 500 fishing videos in 3 years.
At first it was a miracle to have even 10 views for a newly uploaded video after one week. Mostly people I knew.
Now it can be 200-300 views in the first 24 hours. This is for videos running 20-30 minutes. Like a half-hour tv program, but no commercials. :^)
The last-30-days analytics chart shows 101,000+ views (from all of my videos).
My most viewed video of all time: just under 18,000 views (it’s been up just 12 months … do not at all know why that particular one has so many hits).
I usually upload during the night; within minutes there are views recorded! Why? Over 1600 world-wide subscribers, adding *now* “spontaneously” 5-10 a day.
Irrespective of the search engine, just a certain three word phrase (one of the words is ‘fishing’) brings up pages of links to my videos.
I am grateful to Google and YouTube for the “free” opportunity to achieve this, though the continuing intent is just to record my fishing “adventures” in video form on a no-budget basis (a couple of PCs, an inexpensive pocket video camera, a clip-on voice recorder, and open source editing software).
The above fits right where you said: “…Many YouTube videos have hundreds, not millions, of viewers….”
I hope that you succeed on YouTube (millions of viewers) and your “lateral” business model works (millions of bucks). I will be watching. :^)
You are living the dream, fella.
Dear Mr. Cringely,
There will always be a higher risk with creativity, but what you might not appreciate is that the business-model of the funding/financing itself will need to evolve.
At peak-time, there is an exceptional choice of good viewing on broadcast television; at the moment, the industry is set up to provide financiers with a single hit of income in one-shot to cover most of the cost/profit/viewers/advertisers, but what if we move to a more creative approach of securitisation and longer-term returns so that the costs aren’t just covered by an initial broadcast, but where break-even can be measured down to the individual personal viewing!
It may take 1 week, say a Justin Bieber video or Koni2012, or 18 months upto some years after first release for a TED-like video or more esoteric content, not all of which would be for profit-generation, but could be brand-building or ancillary-marketing, and the financing could be like the Factoring that other manufacturers utilise, or the advertising being more selective like Conde Nast, then people magazine.
There is a future for everything, and Online-Video just needs ambition and creativity…….
Yours kindly,
Shakir Razak
I’ve heard this story (and written about it) for at least 15 years and it hasn’t happened yet. Maybe it will, but my experience is that democratization leads to lower prices and therefore lower production values We may see something like you describe but it will be only one of several ways to finance entertainment.
[...] Cringely as a different take on this. He just put up a post saying that internet media (he refers to Youtube) cannot deliver consistent mass audiences to attract Hollywood level production. So Hollywood level production will not migrate to YouTube and TV will remain what it has been — a major source of living room entertainment. [...]
You can’t have YouTube by itself be the business.
Sheesh… get some product, man !
So…..Ask a Ninja has its own merchandize shop. I could do it better. Yes, of course you have teeshirts, hoodies, tote bags, put out a book, have some dvd’s.
But, you can also have foam fake ninja weapons… sure…. obviously.. and also, Ninja Dragon repellant spray, Ninja Kleenex (it’s black), and Ninja diet candy (it appears to be an empty box…….).
Obviously, I can come up with as many nerd products as you might need. Obviously, it would be a cooperative venture with my site. I have my own legal, supply chain and design people.
It’s a hybrid business model as you suggest (not just ads), but not t-shirts, either.
So Bob, are you going to tell us (eventually) exactly how this “lateral business solution” works?
Will it be obvious once your channel is up?
Or is it all secret squirrel behind the scenes, it’s not what you know but who you know stuff?
Dave.
It’s a three-stage process. We’ll start with just the channel, probably in August or September.
Sounds like Gnomes:
1. Collect underpants
2. ???
3. Profit!
Parrot Secrets!
Had to think about that one: http://www.cringely.com/2009/03/14/parrot-secrets/
The cable (and Satellite) providers have a strangle hold on live sports. That is why internet TV is not taking off. They know if they loose that connection they are dead. Apple and/or Google need to pony up and buy a few years of NFL and they will be king. It IS big business and you have to pay the price to buy in.
I don’t think so. The major sports leagues, at least those in the US, enjoy a pretty large degree of control over their product. When Fox buys football or Cablevision writes a mammoth check to the Yankees those networks are playing a tune called by the league. In most cases local MLB announcers are chosen by the teams. The NFL has a million rules about how their games are broadcast. You don’t like the blackout rules? Too bad.
In general the big sports leagues are too aware of their branding to allow simple dollars up front to damage the product in the long run. That’s why CBS waited so long before moving the NCAA basketball off free TV: maybe an extra half a billion is good news this year, but if the American public can’t watch every moment of it because it’s on Spike or some other weird network then over the next five years the ratings might suffer beyond that dollar value. (They were finally able to relent when the online option became viable for anyone who wasn’t able to view Spike.)
Forgive me: Cablevision was Mets before SNY, and YES is Yankees, but my point stands even if it’s a greater distance into the weeds than I intended.
I spent the last nine years working for a Canadian TV network obsessed with this exact issue. Bob is right, YouTube is not the future for professional content. The industry is getting really smart about how they release video content in the best way to maximize returns. This is called “windowing”, the movie folks nailed this decades ago. The problem with YouTube is that it gets really low advertising rates, so therefore it makes more sense for broadcasters to release their content on their own video sites because advertisers will pay a premium to be associated with “good stuff” and not “cats on surfboards”. Ultimately this is capitalism, the studios and networks will release and hold back content in the best way to maximize revenue. If networks cap on-demand streaming at only the most recent two episodes it helps drive up the value of releasing it on Netflix. As long as there’s always somewhere for the consumer to get the content, even at inflated prices on iTunes, the vast majority do not have the time and energy to try and get this stuff illegally. The good news is consumers will win and get access to anything they want whenever they want, but it will happen in ecosystem of varying price points, business models, hold backs and manufactured scarcity. It has to, this stuff is really expensive to make.
The beauty of YouTube is that someone like you Robert, could make a million dollars a year through advertisements attached to your videos. And since you already have experience making some great video productions, you should have no problem acheiving this. Just beware, if you get a big following of subscribers, they will want frequent new content to feed their addiction to your channel.
To generate a million dollars at a CPM of $1 – $2 means Bob would have to get somewhere between half a billion to a billion video views in a year… possible but not likely.
I’m not that greedy. We’ll do 250 hours the first year and more after that plus of course some residual income from the long tail.
you make some very good points here about the difference between youtube and tv, but you also undermine your argument at nearly every turn. traditional TV delivered via cable is dying, notwithstanding content quality. so it doesn’t matter what the online economics are at the moment, someone will figure it out, and my money is on youtube. literally. here’s why – http://lve.st/MGdqbV.
and here’s a great analysis of the future collapse of traditional TV by none other than henry blodget – http://lve.st/LAswhm.
I don’t disagree with Henry Blodget. But if, as he says, most of the TV they watch is on Netflix, iTunes and HBO then how are the networks losing? They get paid no matter which way you watch it… sometimes more. Traditional TV may die as the primary mean of consuming content but that doesn’t necessarily mean the business won’t continue to thrive, just depends on what you define as TV.
YouTube isn’t even the future (or present) of online video, at least for me.
Maybe it’s that bufferbloat you’ve mentioned, but I get very annoyed every time I try to watch something on YouTube, because it stutters and stalls all the way through to re-buffer. I have a 15 mbps connection and have NEVER seen Hulu or Netflix pause to re-buffer, but with YouTube I’m lucky to get a full uninterrupted minute at a time. This has gone on for years. Using the Google Chrome browser doesn’t help. I just can’t believe how bad the experience is, considering everything else Google does on the web is lightning-fast responsive.
I love that you’re going to make your content available. I’ll have to download everything before I watch it, though, or I’ll end up getting annoyed and clicking it off, missing it.
“I have a 15 mbps connection and have NEVER seen Hulu or Netflix pause to re-buffer.” That’s very interesting. Can anyone else confirm? Why are we talking so much about buffer bloat if it doesn’t exist and all you need is a fast download speed?
What I meant was that bufferbloat affects all internet traffic, so YouTube’s problem would be different, perhaps caused by insufficient capacity of the YouTube servers.
The only way YouTube, or for that matter any web exclusive content to really viable is more advertising dollars! And I don’t mean more ads, I mean more dollars per ad. A newspaper could live quite comfortably on the web, if it could command the ad sales it does in print.
So until companies actually start paying proper sums to advertise on the internet (not comparing numbers to TV or radio, since the web is way more direct line to a customer, than the scatter shot of TV), it’s content will only be successful for people moving over to it- like Bob himself. OR you get discovered on internet and than actually making a living on TV or Radio.
Hollywood-level TV-like content can be profitable through DVD sales and paid on-demand distribution such as iTunes and perhaps Netflix. But only if it’s already popular. That’s why you still need the ad-supported TV: to allow large numbers of people to discover new stuff without having to pay for the privilege.
It’s too bad that iTunes has such ridiculous pricing, where 21-minute shows cost exactly the same as 42-minute shows. And of course you have to reside in the right place to get access in the first place.
Apple-Gate comes to Reno
http://www.youtube.com/watch?v=3_PCKOUWv5A
Many people commenting about the economics of production for TV –never– discuss certain facts which pertain to incumbents such as the over-the-air broadcasting oligopolists whose business models are crumbling like old mortar.
Rome was once an incumbent so to speak and Rome wasn’t built in a day but as I understand it Rome did burn in an afternoon.
I think it is too early to count out YouTube and others who are using the WWW to provide film, media and music distribution (syndication) software services.
[...] Why YouTube isn’t the future of TV (cringely.com) [...]
Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter updates.
I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.
Thanks for the Startup America update, Bob. It would be interesting to see how many of your Finalists are still around and what progress they may have made. Any likelihood you’ll do an update with current status? Any news on the investment fund that was going to be looking at your Finalists?
I posted my comment on https://plus.google.com/106075758531242552855/posts/jZEQJvupxZY
YouTube is the future of TV. People think YouTube is huge, it is the worlds biggest website (in terms of storage and bandwidth), but it isn’t even 100/th the size it’s going to be in 5 years.
2 billion views per day today? That is only 15 million hours of SD viewing per day (if each view is 30 seconds SD in average).
Expect YouTube to be 450 million hours of HD viewing per day within a couple years. That’s a potential 60x growth in bandwidth from YouTube in 2 years.
How can Google make it?
Subscription. Make 100 million people pay $10 per month for “unlimited video” on YouTube. Advertising free. Yup. YouTube without ads, for money.
That’s $12 Billion per year that YouTube can spend on video content production. YouTube quickly becomes the worlds biggest producer of TV and movies. All the worlds biggest and best TV shows and movies can be fully financed directly on YouTube. Monetization of all video content on YouTube goes up 10x per year. YouTube quickly becomes Google’s single biggest source of revenue, expenses and profits.
All of YouTube’s content by rule must be available for everyone worldwide. Thus no country limitations, any content producer on YouTube targets a worldwide audience instantly.
Within 5 years, most of Europe and the USA are going to spend more time watching YouTube each day than regular TV channels/networks/cable/satellite. That’s going to happen through Google TV, and Android, and the web.
Sounds painful since I’m only getting 1.5 mbps. Glad cable TV is still around for entertainment.
[...] dominant in distribution of music video. But more generally, that means becoming more like TV. Cringely noted a while back that this will not happen as long as YouTube relies on smaller production budgets and smaller [...]
For these same reasons, mobile gaming will never replace console gaming and all the dumb VC money that think it will, will mostly go to waste.
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[...] Questions on the completed first season of Legend of Korra (with lots of spoilers) and Cringely on Youtube as not the greatest means of producing great [...]
[...] On I Cringely today, Bob makes the statement today that YouTube will never be tv, because the mass viewing afforded by tv, can’t be matched by Youtube, using a view by view by view approach. [...]