The Striking Writers and the Striking Lack of Web Hits
Why does the idea of a marriage between Hollywood writers and VCs make me slightly queasy?
But that’s just the feeling I got when I read the always sharp Joseph Menn of the Los Angeles Times, who penned an interesting piece earlier this week about writers in Hollywood turning to venture capitalists as the strike drags on.
Wrote Menn: “At least seven groups, composed of members of the striking Writers Guild of America, are planning to form Internet-based businesses that, if successful, could create an alternative economic model to the one at the heart of the walkout, now in its seventh week.”
That includes meetings with Silicon Valley VCs like Jim Breyer of Accel Partners, whose investment in Facebook gives it insight into the creation of new audiences.
The hope for the–let’s just say it, shall we–unnatural pairing of tech VCs and Hollywood folks?
That the sour lemons being thrown between studios and writers–ironically over future Internet revenues–will actually yield delicious lemonade, spurring the creation of quality online programming using the Internet’s massive distribution system that could also make lots and lots of money.
“Could” is obviously the operative word here, because–as we have noted many times in this column–very little original content created on the Web has had any true payoff yet.
Um, well, none, actually. (Save porn, which is an almost perfect content format for the Web.)
To be fair, there have been promising signs.
Ex-Yahoo exec and Hollywood player Lloyd Braun struck a deal with PepsiCo to pay for and create online content.
MySpace has been backing a range of online-only shows made by Hollywood types (although none has shown strongly increasing popularity and even seem to display worrisome declines in viewership, despite the justified potential touted by creators).
Of course, there’s the high-profile Sequoia Capital-backed and Will Ferrell-fronted FunnyorDie.com, as well as MyDamnChannel.com, from former MTV executive Rob Barnett.
And Viacom agreed this summer to create a new online entertainment studio in a 50-50 split with the creators of the popular “South Park” TV program.
Finally, Creative Artists Agency, which is the biggest talent agency in Hollywood, is apparently working with Silicon Valley VC firm Draper Fisher Jurvetson to raise up to $200 million to invest in the digital entertainment sector, even as other such firms as UTA and William Morris are making similar moves.
While that is a very little amount of money considering the billions of dollars that slosh around Silicon Valley to fund things like dopey widgets and yet another movie-comparison site, it is still a start.
The presumable goal is that by creating and distributing content for the Web in a lower-cost way, many kinds of revenues could be garnered via everything from advertising to getting back investments by selling the online material to television and the movies.
That sounds like a plan, except for the fact that the current state of advertising innovation related to Web videos is quite nascent, even pre-fetal.
While a lot of companies are focusing on this and advertisers seem willing to move in the direction of more online ad spending, it will simply be a long time before these investments pay off.
Which is just not part of the no-risk-and-all-reward mentality of most players in Hollywood, who wouldn’t know a start-up unless it took their prime table at the Ivy.
In all seriousness, it seems unlikely that the high cost of production now in place in the entertainment industry would in any way lend itself to the critical need for that kind of massive shift in economics required to make online content pay off now.
Currently, studios still only grudgingly want to consider sharing ownership of content, and the talent seems even less willing to take the burden of risk required onto its shoulders.
Still, I admire all the efforts on the part of writers to not just strike, but strike out from their current comfort zone and move into the future, where online entertainment production and distribution seems obviously inevitable.
The problem is that it might take a longer while than those creators have patience for and they will prematurely abandon their efforts and return to propping up a system that is destined for, while not oblivion, then certain diminution.
So what’s needed–as in all marriages–is a crazy leap of faith, like this one from “Heroes” Peter Petrelli on NBC.
I am definitely no expert on this topic, except to say that the problem is that the delta between falling flat and succeeding is frighteningly close.
In other words, I Has No Idea what to do.
Comments
Hi Kara,
If you had done more research beyond the portals, you would have found that Broadband Enterprises has already produced and delivered 3 broadband video hits to date.
The first, Cube Fabulous, was viewed over 200 million times by a unique audience of over 30 million and distributed to over 500 sites within the Broadband Enterprises video network. This show featured brand integrations by Honda, AOL, Monster, and Staples.
Broadband Enterprises is currently distributing “The Fantastic Two” - a fantasy football mockumentary - which features brand integrations by Honda and McDonald’s. Furthermore, BBE’s newest show “Hollywood Fast Track” (produced in conjunction with Paramount) is being supported by Proctor & Gamble and Milk.
http://www.fantastic-two.com
http://www.hollywood-fasttrack.com
Through the power of syndication, Broadband Enterprises is in a unique position to actually provide SCALE and a profitable business model with advertiser-supported online video programming.
In 2008, these productions will only get bigger and better.
Please take a moment to visit http://www.broadbandenterprises.com to find out more information.
Thanks.
Posted by Jeff Skaggs at December 19th, 2007 at 8:59 amWhat if:
Posted by David Brayton at December 19th, 2007 at 10:04 amThere is a technology that actually broadcasts to a webpage without the ability to steal the content? and that it can adserve exactly like broadcast television pre, mid and post roll on the fly? and it can quantify every viewing globally by IP? and can demographically choose what spots get to what demos?
In an inexpensive delivery mechanism?
Monetizing the content quicker for ROI. What if?
Jeff,
I will look. I assume you will let me see all the relevant revenue and costs information too!
Posted by Kara Swisher at December 19th, 2007 at 11:04 amDave:
What if? I say: Do it!
Posted by Kara Swisher at December 19th, 2007 at 11:04 amApart from being a bit more optimistic about the potential for mixing Hollywood and Silicon Valley, I think you have brought up some valid points. And it is interesting to get the point of view from the tech side of things.
In particular, the capacity of the content creators to have the patience needed to wait out the development of the advertising and other monetization models will be important to make this “marriage” being successful. Right now it is pretty hard to convince the striking writers that they can make the next mortgage payment if they just put something on the web, and for good reason. We have been trying that approach with http://www.yournew.tv. Almost every writer we have talked with is interested in putting content online, but once we explain that the revenue won’t show up right away, it is a much tougher sell to get them to create videos for us to use.
The bigger deals you mention are going be critical in bringing the advertisers to take online video seriously. Once they have a platform for trafficking their ads, things will start moving. Moving advertisers into the mobile world is even further down the line. So you are right, the creators need patience.
Posted by Tom Leonard at December 19th, 2007 at 11:13 amTom:
Thanks for your thoughtful comment. It is too bad writers will not be getting Facebook valuations, but the bubble does not seem to reach to L.A. Thus, patience!
Posted by Kara Swisher at December 19th, 2007 at 12:03 pmWhat if?…
Aren’t companies like VideoEgg, Panache, and ScanScout doing this?
Posted by Rick Reisdorf at December 19th, 2007 at 1:59 pmRick:
I was talking about content being made by Hollywood. Sorry for the mix-up.
Posted by Kara Swisher at December 19th, 2007 at 6:37 pmI’m on Youtube and I saw these two girls who lipsynch a song names Hey! They have 18 million views. Sad to say, no income, but some press.
The revenue coming from sponsorship of web programs has to be weighed against the cost of producing those programs and the cost of hosting. I am exploring this avenue for my company, yet it is hard to find exact figures on how much these on-line productions actually generates from businesses.
Does anyone have any way to find out how much money businesses are sinking into online productions?
Posted by Alex Michaels at December 19th, 2007 at 6:50 pmAlex:
Unfortunately, a lot of this info is dispersed and unreliable.
Posted by Kara Swisher at December 19th, 2007 at 11:54 pmA HA! OK it does exist and we have 8 patents so far regarding our systems called “PanOpsis NetCast Systems Technology”. It does all of the above and more in HD. Kara if you are interested in seeing the beta site please let me know. I am interesting in your take accordingly since we are still “under the radar”
Posted by David Brayton at December 20th, 2007 at 9:06 amActually Rick, every company you suggested are doing nothing really new in ad serving. Our tech doesn’t even use a player such as Flash or WMV which are actually old tech as of now. Ours broadcasts or NetCasts directly to the http with no player…at a bandwidth burn rate of 1/5th to 1/10th of all “players”. Additionally, it can adserve real spots of any length pre, mid and post on the fly based on myriad geo and demo actualizations. There is nothing that exists like this until now.
Posted by David Brayton at December 20th, 2007 at 9:21 amDave:
I will be in touch!
Posted by Kara Swisher at December 26th, 2007 at 3:40 pmKara,
To be honest with you, I had exactly the same feeling when reading that article and the others like it. You put your finger on the reality of the situation: Web video advertising is in a very early stage (you say pre-fetal, I’d say fetal) and the industry as a whole is still gestating.
It’ll be a while before the Web will be able to support the kind of budgets that TV writers have been accustomed to. If you believe Chris Anderson’s way-overplayed Long Tail it may never support those kinds of budgets because hits will become ever smaller and harder to predict as audiences fragment.
The folks who are doing well with Web video right now are the ones who are approaching it like a real Web 2.0 start-up would: they’re spending very little money and experimenting, rapidly throwing away those things that don’t work and slowly building on those things that do. The networks and these VC-funded production shops want to spend $50,000 per episode. The independents out there are spending $50 per episode — and their content looks pretty damn good.
Web video is like any new frontier. Some portion of the folks involved over-spend and expect instant returns. Some portion bootstrap and grow *with* the market instead of trying to grow the market all by themselves. As with any new frontier the folks who rush in and over-spend will be shaken out. Those who take a slow, steady and thoughtful approach (read: don’t spend too much money too fast) will ultimately reap the rewards.
Yours,
Mike Hudack
Posted by Mike Hudack at December 27th, 2007 at 12:27 pmCo-founder & CEO, blip.tv