How Do Producers Make Money on the Internet

One of the hot topics in my seminars and email is the question of how producers can make money on their projects. Clearly, if they are commissioned by a client, your money comes from the fee you charge. But what if this is YOUR project?

In the past, we would either sell it into distribution or put it on DVD and sell the DVD.

But with the train wreck that has become Blu-ray (and by that I mean the warfare with HD-DVD, exorbitant licensing fees, and lack of software support), the normal business models producers can use to make money have been tossed into a cocked hat. (Um, arcane term for “totally messed up.”)

There are three, mostly, viable ways to generate revenue with a video project: 1) SD DVD, 2) Web downloads which viewers pay for, and 3) Blu-ray Discs.

Like Horace Greeley exhorting “Go West, young man!”, the new mantra is “Put it on the web.” But my question is where is the money? First, we can’t get the same amount of money for a download that we can for physical product. This means that we need to sell more to make as much. Second, the burden of marketing becomes greater, just at the time when more and more viewers are tuning out more and more messages. And this burden is borne by the producers, rather than the distribution channel. Third, while the costs of distribution have fallen through the floor, the cost and sophistication of marketing is skyrocketing.

What I am seeing, and I’d like your opinion on this, is that the costs of marketing in both time and effort, are far greater now with the web than with traditional channels. This is not a complaint, nor a forlorn wish that “things should go back to the way they were.” It is a statement of how things are now, at least from my perspective.

Additionally, I’m seeing that we need to make greater and greater efforts in our web marketing to get the same amount of attention.

This last weekend, I got an email from Clayton Moore, a friend I’ve been emailing off and on for the last year, who had some additional insights that I’d like to share with you.

Clayton wrote:

The fact is that independent producers are about to get caught in the most significant shift in video communications distribution since the first portable camcorder rolled out. The problem is that, this time no one knows how this is going to shake out. The Visual medium like music is just a tad concerned right now. An acquaintance of mine, Bob Cringely, wrote about this using the example of SONY Pictures investing $50 million in a children’s picture only to find themselves competing for little Johnny’s attention. He was not in the theater, instead he was watching his cousin light up farts on Youtube. SONY does not know how to compete with that. You see, even a child only has so much time to give for entertainment. Now that competition for attention is growing by the day. Commercial TV is … well, who knows.

Computer / internet geeks who dabble in video are pretty much set. For them, all they have to do is learn some video skills and off they go. They already have a grasp of how internet models make money and they have the skills to milk it for all its worth. What concerns me A LOT, are all the video guys and gals with years in the TV and video industry who don’t get the internet very well and could not build a web site if their life depended on it. I’m afraid some of them may wake up one day having to learn an entirely new career. It may not be that bad after all, I hope not.

Could they continue to produce for clients who want their content to go in line? Sure, but the question is obvious — where is the revenue stream to pay the bill?

Then there’s the economy.

What the community needs is a serious discussion about internet revenue modeling. Understanding what the money-making truths and myths are. If and or how they fit into it. Its time to be proactive.

This is just me thinking out loud sorry if I have droned on here. I think its worth a more public conversation with the community.

Larry replies: Thanks, Clayton, for writing. I’d love to know other reader’s thoughts.