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Friday, May 9, 2008

When Will Online Video Creators Become Rich?

People are always asking me. When will it happen?" "When is it going to happen?" I assume that when they ask me this they are asking: When will online video creators see a lot of money?

Well first let's talk about who has seen money so far.

Miles Beckett and Greg Goodfried, the guys who created Lonelygirl 15 and the spin-off KateModern got $5 million but that isn't 5 million they get to keep. That's $5 million in Series A venture funding that they are using to launch Eqal, their new “social entertainment” production company.

Kent Nichols and Douglas Sarine of Ask A Ninja gross $100,000 per month in advertising revenue but they do have to pay other people out of that money. On the other hand, they landed a book deal and a writing/directing gig for the remake of the classic film “Attack of the Killer Tomatoes”. With that they stand to take home more money than what they bring in with advertising on Ask A Ninja.

Wallstrip got $5 Million from CBS. I don't know if they got to keep the money but they did have to go to work for CBS.

None of these examples show a producer posting a video and getting rich. Each of these online video series are examples of people creating businesses with online videos and there will be more people who are going to make money in online videos by creating businesses.

If you aren't planning on creating a business out of your online video you might make a little money, but you will not become rich. That said, I'm sure there will be some kid that creates a video that goes viral and then a large company may pay money to buy or license that video but I wouldn't plan on that as your exit strategy.

Recently I had a friend come to me with a great idea for a viral video, A HOME RUN viral video idea but I can't see a way to make money with the idea right now. Unfortunately it is a timely idea and as each day ticks by it loses value and any chance of going viral. I don't see a way of getting a sponsor for his viral idea. I don't see how I could get video ads up and running fast enough to make any money so I had to pass on doing it. My friend is pretty upset with me because he thinks if we make this video it will go viral and we will get "Big Deals" out of it. Well I've said it before and I'll say it again, fame without fortune turns you into Joey Buttafuoco.

If I had another video go viral what would it get me? A big Hollywood agent? I already have one. Meetings with Movie Studios and TV Networks? I already go on those. A job with a media company? I don't want one. I want to be able to create, distribute and license my own content and make a living off of it. I think I'm very close to seeing that happen and when I have that in place I will launch new videos that have nothing to do with French Maids.

Now don't get me wrong, I'm not saying don't create viral videos. I'm saying if you create them try to think of a business plan to make money before you post them and get the money making machine in place. Chances are no one is going to pat you on the head and say, "Great video, here's 5 Million dollars."

Imaging being a prospector during the early days of the California gold rush. You have traveled across country before anyone else. You have bought axes, picks, shovels and even a pair of new fangled denim trousers. You stake your claim, start digging and find gold. You go into town and they don't take gold as payment yet. You have to convert that gold into cash before you can buy anything with it.

If you create a viral video with millions of views you have struck gold but there's no place to use that gold until you convert it. But unlike real gold you can't exchange your millions of views for cash. You have to find a way of convincing someone that you can strike gold again. That might be a sponsor. That might be a production company. That might be an advertising network. That might be a DVD distributor.

If you look back at the California gold rush the people who sold the axes, picks and shovels made the most money as did the other suppliers who enabled the prospectors to dig or pan for gold by proving food clothing, shelter and even sex. Now the only two companies that I can think of that are still around today are, the company that made the denim trousers, Levi Strauss and the company that turned the gold dust into cash, Wells Fargo. I'm sure there were some individual minors that struck it rich and cashed out but there is no one stand out prospector that we all know by name. My point is, you might become rich from posting a video that goes viral but chances are that you won't and you won't make any real money unless you figure out a business. It may be the Internet and Online video may be the hot thing but unless you can turn your videos into a business you aren't going to make and money and until you can build a market for your business you will not become rich.

What do I mean by a market? Well, you could have a market of one like Wallstrip did with CBS or you could have a market of millions (and a wine book) like Gary Vaynerchuk's Wine Library TV .

There are many ways to convert your "gold" into cash. Tim Bourquin from the New Media Expo has posted 26 slides that tell you how but you have to pick your poison. You have to figure out how you are going to convert your gold dust into cash. Once we all do that we will have a market place. Once we have a market place will make money and if more people like your business more that the rest of our bussiness's you will become rich.

5 comments:

mjlambie said...

great post tim. it's not a get rich quick scheme. you really need a thought out business plan at this time. I like your coparison to the gold rush.

Jeff Cutler said...

Love the site. Came here at the suggestion of Steve Garfield.

Two comments on this post (or this one comment has two points).

1 - the white on black is making me insane and it's hard to read. If the content were not so compelling, I would have gone away.

2 - as a writer, I feel some of the same pains and pangs, and have experienced far less success or contact-building than you have. Your post excited me to the point that I'm setting a portion of my brain power aside to storm about this whenever I get the chance.

Thanks for making me think. I shall return.

Jeff
http://www.bowlofcheese.com
http://www.jeffcutler.com

Jeff Cutler said...

Outstanding.

You know what I'm talking about.

Jeff

Nick Schmidt said...

Interesting post. It's hard to get funded. Just like it is hard to do videos all by yourself. Plus make good quality videos each time too.

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