Preetham asks some relevant follow-on questions in the comments:
+<JA> "after revenue shares to ad networks, video platform operators, and then to the producer it is really a bit of a joke"</JA>
>> maybe we need to re-think this value chain as well? (ad networks > platform operators > producer) seems to skip out end users(distributors). Plus, do platform operators(folks like Brightcove and Marcellus, not the YouTubes or Veohs) really need to have a piece of ad revenue? How could publishers and platforms compete for the same prize, and hope that the relationship proves symbiotic?
Several key points here. First, yes, you should often include 'distributors', who for top-tier brands only command a 10% revenue share, but for small niche publishers command 30%+, so this makes the economics even MORE dismal for producers.
I include video platform operatros, who are either a) the distributor, or b) a software service, and the reality is that you are either paying the distributor or the software service or both. For example, many of our publishers pay us for usage, and in turn leverage our platform for embedded distribution inside of sites like VEOH, MetaCafe, Bebo, Slide, etc. They're having to pay for our usage (which is reasonable) and pay a revenue share, in most instances, to the distributor.
At the end of the day, their our sales agents and sales costs, their are technology and service operating costs, their are marketing and promotion costs, their is labor to operate a publisher's site, and their is the cost of content creation. Right now, based on the revenue shares and the different participants and notwithstanding the cost of content creation, it just doesn't add up for the small producer.
+<JA> "even break away smash hits are generating tiny revenue streams" </JA>
- what's wrong with that? perhaps, over 25 years, the smash hit would generate more revenue online, than it might in its first two years at the box office through Netflix. We don't know...
In other words, if we wait long enough, there might be a business. You will always have the anomalies but today those are few and far between.
+<JA> "hard to find an example of an online show that went to broadcast that actually created sustainable value for the creator" </JA>
has online video had enough time to even demonstrate 'sustainable' value?...wasn't that the whole point of Umair Haque's BubbleGen? I recall one of his PPTs on this blog a long time ago, which talked about the snowball effect and how value addition in new media follows the same principles as that of a snowball rolling down a hill......the value IS aggregated over time and it is up to the publisher/platform operator to help extract value from that snowball.
Maybe all we gotta do is wait..! :)
Well, there is no doubt that this is a young industry, and that the trends are moving in the right direction. However, I would caution those that are waiting and hoping to at the same time find a business model that does pay the bills while those that can't go bankrupt.