BUSINESS BLOGS
BUSINESS BLOGS
category: business
07 Aug 2008

After reading the What is WatchMojo.com’s eCPM? post where I talked about our licensing and advertising revenue streams, a couple of readers email me to ask: what’s this licensing revenue you talk about?

You would think I’d shut my mouth, but I would love it if more content creators pushed for guaranteed revenue, but few do… and it’s a shame because it explains the relative lack of quality video content out there that advertisers look for, and in turn, this explains why video advertising revenues are not yet supporting content creators.

In 2006, we focused on content creation, in 2007 we focused on distribution (admittedly giving it away) but in 2008, the emphasis is on monetization, and the truth is, very few distributors have the ability, size and know-how to deliver advertising revenues.

Anyway, there’s nothing too black box-ish about it, so here’s the secret, sit down, get ready because here it comes:

- We ask for it;

Mind you, 7 out of 10 distributors balk; 3 consider it, and 1 - maybe 2 - agrees to it.  But guess what, those who agree to it get good content, lots of it, and get something that others who don’t want to pay don’t have (just to be clear, sure, some of older partners still get content on revenue share alone, but we get 10 requests for our content each month, maybe more, so I am talking about new deals, I’m not crazy, I don’t go to old partners telling them I will delete our videos if they don’t show us the money).

- This partially explains why our streams continue to grow but not as quickly as if we gave it away.  The posts I link to  below outline the rationale for this.  I could get into a nuance between text and video content about why this is not a bad idea at all… but I will leave that for another day.  If this sounds like something that is interesting to you and you want to read on this sooner, email me at ash@mojosupreme.com.

- Reality is, when you give away your content away for free, people assume it has no value.  Moreover, when a licensor gives it away pro bono, they licensee views the content as “risk-free” and does not really push it (if they pay for it, they need to recover the investment, after all).

- Believe it or not, we even tell syndication partners to let us know before they re-distribute it.

Hulu, for example, re-distributes our content to a wide array of spots, but they email us beforehand to see if we (and other content owners have an objection).  Considering the media DNA they have (the service is a joint venture between NBC and News Corp., after all), to them this is a logical thing to offer content partners.

Technology-centric services like Blip.tv (a company I certainly respect) are surprised when we ask them for that courtesy.  It has everything to do with one’s vantage point: technology companies think that they are doing you a favor when they do things without asking you; media companies understand that you might have an objection when others make critical decisions for you.

There is no black or white rule of thumb, sometimes we welcome the re-syndication (ROO for example gets us on Daily Express, something that we would not have had the time to secure ourselves; but in other cases, we manage to secure guaranteed revenue from some by not letting a distributor redistribute our content).  Honestly, to quote Jack Welch, it has to come straight from the gut.  There are no playbooks in this space and the simple truth, even companies and people who raise millions from VCs don’t have the faintest of clues, so it helps not to pretend to have all of the answers.

My rule of thumb is that I know less in the morning than I do in the evening, and in the online video space, a lot happens between morning and evening, so that’s a good thing.

All it takes, however, is common sense to understand that some companies have cornered themselves by speculating.  That’s right, it helps to be conservative.

Some of these theories seem extremely counter intuitive, but if we relied on speculative advertising revenue share deals alone, we’d be bankrupt, long ago.  Yet we’re almost breaking even and our eCPM overperforms that of the market.

More pontifications:

In Why Online Video Businesses are a Joke, I outline the case for paying for content in exchange for exclusivity, which is uber counter-intuitive in these days of hippie-minded super distribution.

In Does the Law of Diminishing Return Apply to the Theory of Content is King, I make the case that while every incremental unit of distribution/video consumption is welcome, when the ad model is under-developed (or crappy as I like to call it), you actually tend to dilute your offering by giving it away for free.

In Advertising vs. Licensing, we began to explore the merits of the two models, and argue that in early periods of growth, licensing will prevail, while in boom times, advertising revenue will outperform licensing and trace this obsession we have with speculative, straight advertising revenue share deals to two case studies: MTV and Google.

In Successful Revenue Models for Content Libraries, we outline all of the various options available to content owners.