The Monetization and Ubiquity of Online Video Now Disrupting Traditional Forms of Media

The Monetization and Ubiquity of Online Video Now Disrupting
Traditional Forms of Media
By Josef Holm 

There’s a revolution occurring in your living room, and you may not even realize it.

The ubiquity of online video streaming is leaving traditional media/entertainment in the dust, and recent shifts and changes in the marketplace continue to demonstrate this. The recent news of Netflix’s huge achievement with its original programming receiving 14 Emmy nominations and adding more than 630,000 US subscribers in Q2 2013 signals that digital video is gaining strength as well as the growing viability of producing and distributing web content.

Google also recently announced its official foray into the digital TV receiver market with the production of its Chromecast device, a flash-drive-sized digital TV receiver that allows users to stream online content to their TV, including YouTube, which popular rival Roku does not offer. Furthermore, Chromecast costs a very affordable $35. The increasing popularity of YouTube, which reaches more 18-to-34 year-olds than any cable network and attracts 1 billion visitors per month, makes the gadget’s functionality a good move for Google to differentiate itself on the market.

Chromecast may be a game changer for thousands of YouTube content creators who rely on the channel to build their fan base and earn revenue as it offers direct access to web video at the most affordable price for consumers. Chromecast may offer consumers the simplest set-up yet, which has been somewhat of an issue for this market.

The fact is that streaming video is the new satellite TV, offering viewers more content tailored to their specific interests and schedules, but that the current embedded ad-based revenue model isn’t working as well as it could be for viewers and producers.

Backing up a bit, marketers have known for some time that video offers more for brands than many other kinds of advertising. Reel SEO states that of those potential customers that viewed a shared video, 49 percent claimed to have purchased the product. Along with this is the increase in related website traffic, where 13 percent visited the product’s home page. The ROI on video ads is likely pretty good in this regard, making YouTube videos a prime advertising channel.

However, oftentimes the ads themselves are disconnected from the actual content and disruptive. An alternative and even complementary form of revenue generation is needed, and Google announced earlier this year that it was beginning a subscription service for 30 channels to start, though they will get a whopping 45 percent of the revenue. Nonetheless, subscription-based crowdfunding and royalty-based campaigns with investors will be the future of web video production, and more third-party providers are entering this space with innovative and collaborative spaces in the near future.

Subscription-based crowdfunding allows video creators to run campaigns that provide their supporters with ongoing access to exclusive content such as behind-the-scenes sneak peeks, extended video, etc.  in exchange for monthly paid subscription fees. This funding model overcomes one of the key complaints consumers have had with cable/satellite providers in the past: “We only have to pay for what we really want to view.” Channels like YouTube and Netflix are the first step in doing away with the archaic model of paying a monthly cable bill to get a whole slate of channels, some of which you may not even view.

Subscription-based crowdfunding allows creators to keep their primary content publicly available to maximize AdSense revenue, while acquiring recurring monthly contributions for driving ongoing monthly revenue. This will allow YouTube creators to realize their ultimate goal of producing top-tier original content that attracts a large fan base.

Josef Holm is the founder and CEO of TubeStart, a crowdfunding platform designed specifically for YouTube content creators. TubeStart provides creators with three funding models, including subscription-based crowdfunding. In addition to being a successful Internet entrepreneur and investor, Josef serves on a board within industry’s leading crowdfunding association, the Crowdfunding Professional Association (CFPA) and speaks at leading technology conferences around the country.