Media execs size up video's future on the Web

Media executives from YouTube, FastCompany.TV, and Revision3 talk about the economics of selling video to users and advertisers. The future is fuzzy.

LOS ANGELES--Video may be the next content revolution on the Internet after text and photos, but it's still unclear how to sell it best to advertisers and Web surfers. And that's even for a Google executive.

"The challenge in the future of video is how to find video...and maintaining that sense of discovery," said Jordan Hoffner, head of content partnerships at YouTube, which is owned by Google. "Sharing and tagging video is a start."

Hoffner was speaking on a panel here Tuesday at the Economics of Social Media 2008 conference, along with executives from online media outfits FastCompany.TV, Seesmic, Revision3, and Veoh Networks.

Later in the morning on a separate panel, an executive from MTV, whose parent company Viacom is suing Google for copyright infringement, mirrored Hoffner's sentiments, saying it can be difficult to help people find relevant video among archives on sites like Comedy Central, for example. That's why MTV is tagging video in a way that helps build a recommendation system, according to Erik Flannigan, digital media vice president at MTV.

As to the question of making money from video, Hoffner said he couldn't predict how successful Google's new advertising service for video would be. But he highlighted an inherent challenge for media companies when it comes to video advertising online. With major TV networks, advertisers have a sense of scarcity in inventory, and that drives pricing up. But online, they have thousands of choices to advertise, and that produces the opposite effect.

YouTube also must cherry pick among its user-generated videos for the content that's legal (for instance, it doesn't use a copyrighted music clip) as well as popular among visitors.

"The format is great for users, but I'm not sure it's great for advertisers," Hoffner said.

When it comes to editorially produced video, the picture gets clearer--at least for the executives behind new ventures like Revision3.

Jim Louderback, CEO of the Internet TV network, is bullish about online video advertising. He said his company is building smaller, but loyal, audiences for its online programming, including shows like Diggnation and GigaOm.

Rather than focusing on building a "hit" show with millions of viewers in the broadcast model, Louderback said he's happy with a bunch of shows that have half a million people watching online regularly. Advertisers are willing to pay as much as $80 per thousand impressions (CPM) to reach those loyal audiences, he said. (In contrast, ads on social networks can run at about 20 cents per CPM.)

Revision3 also produces programming at a 10th the cost of what traditional broadcasters spend, he said. "This new model is viable," Louderback said.

Hoffner echoed that sentiment by giving an example of what the Associated Press has done with video. He said that the AP has posted tons of video online--and each of its clips gets roughly a few thousand views. Rolled up together, however, the advertising dollars amount to a "nice chunk of change for them," he said.

Robert Scoble, managing director of FastCompany.TV, said that his technology-focused show has a following of about 80,000 people, and he hasn't had a problem attracting advertisers. Seagate sponsors his show to the tune of seven figures, Scoble said.

"It's a Homestead Act for video...it's untapped for so many niche areas."

 

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