Levels of Quality and Revenue Streams

In a New York Times piece looking at a new batch of Web shows, Mike Hale writes:

Oddly enough, waiting through the commercials at the beginning of each snippet didn’t bother me. I could have avoided them by going to YouTube, but the lower video quality and ugly viewing environment there — still insulting after all these years — made the ads at the CBS site seem palatable.

Last month, experts at the RBC Capital conference said advertisers were still wary of associating their brands with user-generated videos, but there’s a demand for professional content. From News.com:

Video ad executives said that while YouTube has a lot of inventory that’s hard to monetize, sites with professional content such as Hulu.com don’t have enough inventory to serve demand from brand advertisers.

Consumers are also interested in professionally produced material. A 2007 report (pdf) from the Pew Internet and American Life Project found:

Overall, 62% of online video viewers say that their favorite videos are those that are “professionally produced,” while 19% of online video viewers express a preference for content “produced by amateurs.” Another 11% say they enjoy both professionally-produced video and amateur online video equally.

Connecting the dots, it seems there’s an opportunity for publishers to link ad-based revenue streams, levels of download quality, and audience experience. For example:

  • A studio could post low-fi versions of its Web shows to YouTube, social networks and other Web destinations. The free videos would include branding and links to higher-quality versions of the same material on different sites. These low-quality videos would act as a brand campaign for the show, reaching out across a broad base of users to increase awareness and (hopefully) motivate a percentage of the viewing audience to access the high-quality videos. This is the same technique TV networks use when they advertise upcoming shows during popular broadcasts (e.g. anyone watching Fox lately knows the network is hedging its bets on “Fringe.”).
  • High-quality downloads would be available through a studio’s own site or through upper-tier services like Hulu. These videos would include pre- and post-roll advertising from sponsors. If the show proves successful, studios could take a note from Joss Whedon’s recent Web effort, Dr. Horrible’s Sing-Along Blog, and sell related downloads, soundtracks and merchandise.

This process extends to other media areas. On the print side, publishers could push basic material out to a wide audience through Scribd and other text-centric services, while also driving a percentage of the audience toward high-quality digital and print editions available through established retail channels (Web-based and otherwise). Earlier this year, Trent Reznor employed a similar tiered strategy with the Nine Inch Nails album “Ghosts I-IV” and the results were positive.

I realize this is back-of-the-envelope analysis, but this emerging mix of low-fi brand building and consumer/advertiser demand for professional-level content bodes well for publishers experimenting with digital delivery.

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