YouTube, CBS, NBC, ABC are going to have an awful lot in common in the not too distant future.
Which company uses its traffic to drive eyeballs to programming on which it sells advertising? They all do.
The biggest difference between YouTube and the broadcast networks is
that one actually produces content or pays a licensing fee for the
content before they sell advertising around it. YouTube doesn’t.
I don’t think there is any question that the YouTube model is better.
Now that they have stopped hiding behind the Digital Millenium
Copyright Act, YouTube has taken the very smart step of letting content
“audition” for the right to sign a license for YouTube to send it
traffic and sell advertising around it.
Anyone can post content on YouTube. If that content generates enough
interest (even if its interest that is artificially created by the
content production company), YouTube will offer it a license that
allows YouTube to sell advertising around the content and share that
revenue with the content creator (Without a license,YouTube is not
allowed to sell advertising around the content. By the DMCA, they are
not allowed to even know it exists. YouTube acts only as a host). It
really is win win.
Which leads to the question of whether or not broadcast networks
like CBS, NBC, ABC should try to copy the YouTube model? Should they
create an “audition” environment and let the winners get slots of
broadcast TV? The answer of course is no. As networks have already
found out, what works on the Internet has yet to work on broadcast TV.
I think the real approach is for the broadcast networks to “Game”
YouTube. There is nothing that says that they cant use YouTube to
audition their pilots. By putting pilots on YouTube and Hulu as well,
its a chance to see what the level of interest is for the pilots. This
“crowd-sourcing” approach, when combined with some traditional research
and analysis could allow broadcast networks to be smarter in choosing
which pilots to put on TV.
Not only would it allow broadcast and cable networks as well to be
smarter, but it also would allow them to get paid to promote the show.
Its in YouTube’s financial interest to promote the pilots heavily. Its
the most professionally produced content available to it to promote. So
why wouldn’t they? More promotion means that pilots would actually
generate revenue in addition to awareness prior to a network scheduling
decision being made.
From a bigger picture perspective, unless YouTube can reach a
position where it generates more advertising revenue online than a slot
on a broadcast network schedule, this approach would cement YouTube’s
position as the “minor leagues” for broadcast network content. Pilots
would be auditioned online and then possibly get “called up” to the
major leagues, also known as the network schedule. Those pilots that
didn’t warrant a call up can get polished up for a second audition, or the
production company could choose to stay on YouTube and produce future
episodes, working with in the revenue levels earned online.
It’s also interesting to project where this could lead. If YouTube
generates significant enough revenue for professional content producers
to consider it a viable platform to invest in, then it faces the
prospects of having to decide which content to generate traffic to.
Content producers will recognize the revenue available and that will
act as a magnet for more content created at greater expense. Those who
have made significant investment will expect that YouTube will send
traffic its way. Of course even on YouTube, not all content will get
equal traffic. At some point decisions will have to be made as to which
content gets the most traffic pushed its way. Put another way, YouTube
will have to “schedule” its traffic. It may be done algorithmically,
but its a schedule . Just like ABC, NBC, CBS try to schedule their
shows to optimize “traffic”.viewers, so will YouTube.
The first step for YouTube is deciding where to send its traffic.
Which in turn should allow YouTube to maximize its revenue from that
traffic. Right? Absolutely, but it may also lead to a recognition that
some content producers are better at generating revenue for YouTube
than others. If there are a couple that really stand out as stellar
revenue producers, how long before they demand minimum guarantees or
licensing fees rather than just a percentage of ad revenues ?
What if there is a Mark Burnett or Jerry Bruckheimer of YouTube
Video? So good at what they do, generating so much revenue for YouTube
that the leverage switches from YouTube to the content creator? Will
YouTube just walk away from those producers? Or will they pay the
license fee?
And if YouTube finds itself paying its best content producers a
license fee and slotting those programs in the highest traffic slots in
order to make money on their content investment, how does that make
them any different than any broadcast network ?
Both make all their money from advertising and pay license fees for
content around which they sell advertising. Right? Yes, YouTube can
host unlimited hours of content, BUT they also deliver far fewer viewer
hours than broadcast TV (remember people still watch 141 hours of TV
per month compared to three-plus hours of Internet video consumption). So how
will YouTube address “programming’ their traffic allocations ? It’s
going to be interesting.
But wait, there is more! At some point YouTube traffic will level
off. It may not be for 10 years, but it will happen. Then what?
We live in interesting video times.
(Image source: electronicpulp.net)
