BUSINESS BLOGS
BUSINESS BLOGS
category: business
28 Jan 2009

Mark Cuban has a piece up talking about how the Web fails to match TV’s distribution, focusing on content creators and how they’ll never reach the masses.

Internet Video. Its the salvation for content creators everywhere. Its the end to dependence on the big bad meanies, the cable and satellite companies. Right  ? Hell no. The concept that “over the top” video creates a valid business alternative for content creators is as misguided an internet business myth as there is.

Cuban will have his share of denigrators and fanboys, but I think he sort of misses the big points here.

For many people who consume content, TV’s push model it antiquated.  The fact that I am at the mercy of what network executives choose to air is plain outdated.

A lot of people (maybe the silent minority) like to pull media, and the Web is perfect for these people.

Secondly, and most importantly, I think he misses the bigger issue: video advertising is a myth.  Yes, I said it.  Let’s consider some facts.

One Strategy for Google

Google used a perfect storm to become king of the Web mountain, but it did so with a relatively speaking open strategy.  Compared to today’s open standards, Google’s AdSense or AdWords are anything but, but at the time, the idea of creating virtual billboards around the Web on third party sites was novel.  In other words, what made Google explode was not the fact that they successfully scaled GoTo.com’s pay per click model, but rather that they opened up their database of text advertising to third party sites who were dying for incremental revenue during the last downturn.

Google is the leader in search, and after acquiring YouTube, has become the leader in video.

Another Strategy for YouTube

Technically, YouTube did the same thing by creating virtual projection screens by allowing for embedded videos… where things seem to have diverged on the openness front is YouTube absolutely owns the video market with 50% market share.  Yes, I know, revenue wise YouTube is having some challenges with monetization, but seeing how it has a stranglehold on the streams, then this means that any other technology is at YouTube’s mercy and in fact dead on arrival.

Memo to Ad Vendors: No YouTube?  No Dice.

You might have a great ad solution but if you don’t to test it on YouTube, you won’t have scale.  Day in and day out, we get calls from “a great company with a great technology” that will allow us to generate a lot of video advertising revenue, but when you ask them if they work with YouTube, the answer is generally: no.  Now we work with YouTube and they are our largest distribution partner by stream count, we like them and all so this is not a knock.  I am mentioning all of this to come back to Cuban’s argument about how content producers are wrong about seeing the Web as salvation, on which point he’s wrong.

Content Creators Are Only Ones With a Shot in Hell

WatchMojo.com has built a library of nearly 5,000 clips, 500 hours of programming, and generated nearly 50M streams since launching in 2006.  An experienced executive at a major media company recently asked me during a call: “are you guys like a big production company that is now moving online?”

Truth is, we’re basically a website that spawned a production company, and now has a considerable syndication network.  The point is: because of the power of distribution online were we allowed and able to become relevant.  We cut deals alongside with and with the traditional television and cable companies… so unless I am missing something, Cuban is wrong about content creators being delusional, I personally think that given YouTube’s position and power, the content providers have the ability to build a real business over time whereas the ad vendors are left outside looking in on the action.