Thursday, January 31, 2008

Funding Content

An announcement was made today saying that content makers were going to be given a share of Google's advertising revenue from the advertising that appears within the videos they made. This definitely sounds like the beginning of something new.

At the moment the whole revenue structure of all kind of video broadcasting \ hosting relies on the media owner purchasing content and then displaying it to their audience. The content maker takes risk in creating the content, but the media owner takes more risk in deciding to use it on their own media platforms.

This model makes sense when the available media space is limited. A TV channel can only cope with a couple of hours worth of prime time content. They have a limited number of hours in which to show their content. This means they have to choose the best possible editorial in order to keep their audience (and therefore money).

Another factor in broadcaster's favour is that they are the ones who employ a sufficiently large salesforce in order to be able to effectively sell their audience to advertisers. Individual content producers will never be able to profitably employ a decent size salesforce.

The new media model however allows the creation of some disruptive businesses. Youtube has the potential to make themselves one of these. Google has invested heavily in their salesforce and can therefore sell their own audience extremely effectively. Youtube is now offering content providers the benefits of their salespeople.

Although the old model had an indirect link between audience size and reward to the content creator, the new model has a direct link. This should allow the content creators to put more time and thought into how relevant they can make the programmes to their actual audience, rather than to the broadcaster's impression of their own audience.

I'm sure more companies will pop up that will give content creators better deals than youtube. They are also going to have to fight against the old dinosaurs who are falling over themselves to shout about the technical abilities of their new platforms.

Media fragmentation is going to get even sillier as people watch different media at different times. The only effective mechanism of supplying them with the ads they want (in order to make the media free) will be through an automated sales team. Selling hundreds of channels will be difficult for our poor overworked sales reps. We're going to need a computer to do it.

Our only hope is that someone will invent a decent system for this before Google gets there.

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