Industry
ideas in action
by: dgehring

Over on TechCrunch, Ashkan Karbasfrooshan of WatchMojo posted a very interesting perspective on how to make money with online video.  Essentially, he breaks down the online video market into component parts in a graph that does a better job that any I’ve seen so far.  It’s safe to assume this graph will continue to evolve as the industry continues to mature at a rapid rate.  But it’s also safe to say, the spoils will go to the content producers.

Screen shot 2010-02-15 at 8.19.15 AM This is a particularly exciting perspective.  It seems to validate the value of scarcity, and in this case the scarcity of good content.  In building a successful web video business, it’s not enough to aggregate content, or ad space…you need to create compelling content!  This is hard.  It was hard in the era of TV, Movies, and now the web.

It’s like a natural law of media.  Google‘s success as an aggregator of other people’s content lulled the industry into believing creative talent was no longer necessary for achieving stunning wealth in a media business.  Well, according to Ashkan, Google was a perfect storm of circumstances that I think is unlikely to occur again.

And to be honest, that makes me happy.  From an artist’s perspective, the value of creativity can not be underrated, because truly creating something people can appreciate is rare.  The sooner the web video industry gets to a place where that rare talent is produced, distributed and monetized efficiently, the better.

That said, I think Jeff Whatcott adds an interesting point in his post regarding this piece. He writes, “One of the things that I think Ashkan has missed here is the imporant concept that success in media is about assembling and monetizing an audience at least as much as it is about assembling content. Of course, both are required to succeed, but I think that not enough attention is paid to segmentation, targeting, community building, and brand building. These are a few of the essential building blocks for gathering a valuable audience, and that is essential to building value in media.”

I’m learning from my new colleagues at SmithGeiger, how traditional media companies do an excellent job of segmenting the audience, understanding the audience’s perspective on the content that is created, and then leveraging that perspective more effectively to monetize their work.  This is activity that has been going on for a long time in the traditional media sphere, and it seems the web content world will benefit from this sort of insight as well…as soon as they both realize the need and reach a scale capable of paying for this kind of effort.  It’s not cheap, but as we are learning, few things of real value are.