Now that we have established that in the online video space it is difficult to generate enough ad revenue to reach profitability, let's take a look at other options for monetizing video content online. In this article, I am referring to premium content that typically would be made available through DVD or Blu-ray and/or digital content made for the web (ex: education, information and instructional videos). I am not referring to episodic or movie content in the entertainment category.
First let's take a look at how paid digital video content has progressed. In 2002, CustomFlix, a business that offered DVD on Demand, was created to make widespread distribution easier for independent filmmakers. Amazon acquired CustomFlix in 2005 and in 2007, the name was changed to CreateSpace. CreateSpace was one of the only options available for independent filmmakers to publish and sell their premium video content on the web.
We surveyed content creators in 2007 and found that CreateSpace did not allow filmmakers to control pricing on their video content. This issue caused pricing conflict with filmmakers who were also selling their DVDs through their own websites and distribution channels. Around the same time, Digital Rights Management (DRM) started becoming a hot topic and many content creators were either hearing about or directly experiencing illegal pirated distribution of their DVD content. The DRM concerns caused additional apprehension for making premium content available for download online. As technology progressed, it became evident that there would always be methods for bypassing DRM security measures and selling digital content online would be the way of the future for filmmakers.
This change gave way for a new breed of outsourced services: video sales publishing platforms. The important distinction here is that this is not about ad supported, video distribution platforms (i.e. Brightcove); it is about publishing platforms that allow content owners and distributors to sell video content online. Paid online video that is made available through streaming and/or progressive download (user can watch the video as it is being downloaded) is now generally being referred to as online video on demand (VOD).
Today, CreateSpace is in the business of actually creating hard copy DVDs on demand and all video publishing is done through Amazon Video on Demand where users can download to own or download to rent. There are other players in the online video space who fall into a few categories: digital download marketplaces, general digital sales platforms and pure video sales platforms. The digital download market has been around the longest and the pure video sales platforms are the most recent addition to the online video space.
Digital download marketplaces sell downloads of any kind which is typically ebooks, papers, audio books, MP3, software and video. They offer a secure commerce solution and are focused on selling downloadable goods. These download marketplaces offer some useful functionality such as reporting, pricing flexibility and sales tools. The benefit of working with a digital download service is that it is simple, straightforward, and does not require a website. Further, these sites usually have a network of affiliates for resellers to pick up and sell products on their websites in exchange for a sales commission. The downside is that the user experience is generic, not customizable and does not feel like a modern service (i.e. feels old school). After payment, the customer is sent an email and given access to the downloadable product. Examples include Payloadz and Tradebit. The payment models vary in that some require upfront fees based on bandwidth usage and others are performance based.
General digital sales platforms also sell ebooks, audio and video; however, there are more features and customization options than what is found in a digital download marketplace. These general digital platforms are also focused on selling what they call instant downloads and do not provide a video on demand environment (i.e. streaming or progressive download through a media player). The ability to create branded storefronts, analytics and subscription management tools set these platforms apart from a general digital download marketplace. They also have marketplaces and affiliate distribution networks. Examples include iAmplify and Fetch/Shopify. The cost varies from a fixed monthly fee to performance based pricing. For example, iAmplify charges 30% of sales if the content is sold by the publisher and 60% if it is sold by iAmplify or affiliate partner. Working with this type of platform can work well for digital goods that pair well with downloads such as audio and ebooks.
Pure video sales platforms focus 100% on video, have embeddable media players, custom previews and more capability when it comes to delivery. Pure video sales platforms offer a true video on demand environment with the ability to preview, purchase and stream through a high quality media player. In addition, a video sales platform has the ability to create fully functioning, branded video on demand stores as well as sell through a marketplace and affiliate distribution channel. They provide analytics specific to video and detailed sales transaction reports. These platform features extend to creating mobile video on demand applications as well as standalone web properties. The pricing is mostly performance based with a small monthly fixed fee that is based on usage. The benefit of working with a full service, video sales platform is that the platform serves as an extension of the content creator's business, brand and website without the hassle, expense and time of building it and managing it in house. MindBites is an example of a pure video sales website platform and it extends from small to large content creators and publishers.
My conclusion is that there are several options available to actually sell and truly monetize your video content. Whether you select a digital download marketplace, a general platform for selling downloads or a pure video sales platform, it takes time and attention to build traction and momentum. Because we are on the early side of video on demand online, the content owner/publisher still needs to focus on marketing and using available sales tools to experience success and revenue. Therefore, placing your content into a distribution network and forgetting about it does not lead to success. The good news is that Nielson recently reported that 42% are willing to pay for content online and the opportunity exists today to monetize and surpass revenue generated through video advertising networks.