Can revenue from online video ever match those for normal TV? It could come down to professional video overcoming UGC as flavour of the month.
And the debate rages on. The idea of making money from Web television and video seems to be the hot topic of the month, with everyone having their own views on whether it’s possible or not.
Arguing The Case
Each side has argued its case, and we have seen that while it is possible to make money out of Web video, the methods used, as well as the type of content being offered, makes a huge difference to the profit margins.
YouTube UGC
The big question is whether video sites such as YouTube, which rely heavily on UGC (User Generated Content) will ever make the sort of money that their levels of traffic would seem to indicate is achievable.
The big problem for Google, which paid $1.65 billion for YouTube, is that advertising on the UGC on the site isn’t possible due to possible copyright violations. Basically, the Viacom lawsuit has made them cautious.
At the moment, the Web video advertising market is worth an estimated $1 billion. This compares rather unfavourably to the traditional television advertising market of around $50 billion.
RBC Capital Conference
CNET reported from the RBC Capital conference, where executive from video sites and advertising companies gave their views on UGC, YouTube, and the prospects for Web video.
Thomas Wilde, CEO of Everyzing actually think UGC will never make any money. He said:
“It will be like instant messaging. It’s ubiquitous but no one makes money on it,”
The big problem is that advertisers need to be in control of their brand, and giving that brand over to amateur efforts is never really going to be an option.
Traffic = Money?
This means that despite YouTube being the fifth most visited website on the Internet, the high costs of bandwidth and the high proportion of UGC videos mean it’ll never really be the cash cow that Google must have imagined it would be.
A survey by TubeMogul recently found that most video producers receive a CPM of around $12 per video, and the CNET report backs up this figure with an average set between $10 and $20.
Conclusions
So there is money in Web video, but it requires a very focussed advertising effort, and is only really viable on professionally made content.
Will it ever reach the dizzying heights of the traditional TV sector? Probably not, or at least any time soon. But as advertisers and video producers both get wiser to what’s needed to succeed, it is at least sure to rise substantially.
