Today, the primary consumption model for non-user generated video is cable, satellite and streaming networks.  Each of these distribution channels for the most part charge a monthly fee for unlimited consumption of content from their networks.  Consumers can opt in and pay additional subscription fees for premium and on-demand content and many consumers are compelled to purchase these offerings.  These services differ in cost, but each represents consumers paying for the right to consume content.

The laws of supply and demand simply state that consumers will purchase more of something at a lower price and producers will make more available for sale at a higher price.  At the intersection of these two curves the market is at equilibrium and the market price is set – enough consumers are willing to purchase the amount of goods and services producers are willing to create and sell.  Applying these principles to web video, I believe that consumers are willing to pay for online content, but many consumers are willing to pay for it at a far less price than producers and distributors are willing to sell content.

Taking this one step further – the market for online content is out of balance and either the price has to be lowered, or the quantity of content has to be reduced in order to reach market equilibrium.  Many producers and distributors would argue that the price is already too low and that with the large quantity of free user generated content available on the web – they cannot compete at current market demand.  The primary belief is that awareness is the issue and that driving more consumers to the web to consume high quality content will provide critical mass to allow online video to operate as low-cost, high-volume industry.

Driving awareness will bring more consumers to the web to consume video, but awareness alone isn’t going to build a business and allow producers and distributors to monetize content.  Scarcity and exclusivity of content will have to be created in order to drive up the price consumers are willing to spend to consume web video.  Creating this market condition will entice consumers to move the dollars they are spending with traditional media to new forms of content and specifically web video.  Consumers are spending money on content, so online video producers and distributors should focus on encouraging a reallocation of existing consumer spend vs. trying to increase overall consumer spend.

Web video producers and distributors can create exclusivity and scarcity by distributing content on new platforms that take advantage of faster networks, new devices and attract early adopters.  This goes against conventional wisdom of getting content in front of as many people as possible to increase views and attract advertisers.  Instead, I advocate going after target markets and building a strong community through innovative and contextual high quality content, distribution and engagement opportunities.  Early adopters will be much more likely to move their current spend away from traditional media and will pave the way for producers and distributors to grow their market share and business.

For example, content can be targeted to specific devices such as tablets and be optimized for that user experience.  The content and interaction model would be developed to leverage how consumers use the tablet, the viewing experience and other features of the device.  The content would be marketed to users of the tablet, who are most likely early adopters in general and would have a higher likelihood of adopting this new targeted form of content. The content would be priced higher in the same fashion that new devices are priced higher when they are first introduced to the market and help producers and distributors recoup their initial investment.

Consumers are already paying for content and they will spend money on web video.  Existing traditional models still operate in a relatively one-size-fits all paradigm, so online video producers and distributors have an opportunity to create high quality content for niche and targeted consumers that will encourage consumers to redistribute their content spend away from traditional and to new media sources.  To do this, producers and distributors need to utilize new technology to provide innovative forms of content, distribution and engagement.  This approach will create an environment of exclusivity and scarcity were consumers are more likely to pay a higher price to consume content.  Web video can then operate as a low volume, high price industry that provides enough revenue for producers and distributors to flourish and grow their offerings for mainstream consumers in the future.

Branded entertainment provides companies with a great method to connect with consumers and build an online presence to promote their products.  Not talking product placement, but product integration directly into the story.  Many brands have begun exploring this space and some have had success with web content, but very few brands are partnering with independent producers.

Independent producers typically have small budgets (if any) to develop their content, but with very little resources are able to develop large followings that would compare favorable with many TV programs.  These producers have become experts in short-form storytelling, developing excellent content at low costs and promoting their content via social media.  They have all the tools and skills to be successful and would be the perfect partner for a brand looking to enter this space.  Additionally, independent producers provide companies with a lower barrier to entry as compared to large production companies and bring their all-around expertise in web entertainment and promotion. These are all skills required to launch a successful branded entertainment campaign.

Simply stated, brands are not working directly with independent producers.  This would lead many to believe that this resource isn’t as fruitful as I’ve stated, but that isn’t the case. I hypothesize that the real reason many brands don’t leverage independent producers is that they don’t know who these producers are and traditional media gatekeepers are unwilling to make the connection.  Many brands leverage their existing agency relationships or traditional media production companies to develop and execute their new media strategy.  These companies gain nothing if the brand partners with an independent producer, so they have no motivation to suggest or connect brands with these producers.

Brands should begin looking to independent producers to help them develop branded entertainment that is effective and affordable.  Organizations, such as the International Academy of Web Television (IAWTV), exist that can help brand leaders learn more about independent producers and make those connections.  Sites, like Tubefilter.tv, consistently publish information about independent creators and their projects, so brands can use these resources to gain more awareness of the capabilities that exist in the web content community.  Hopefully in time, brands will begin to embrace independent producers and create a win-win for all.  There are many independent producers actively creating content every day and many great opportunities for brands to partner with them to create compelling content.  The time is right for brands to start leveraging these producers to engage and activate consumers online at a much lower cost as compared to traditional media alternatives.

• Yahoo! Going After TV Dollars With More Original Series (http://news.tubefilter.tv/2011/04/18/yahoo-tv-dollars/)
• Netflix Builds a ‘House of Cards’ That Could Knock Down the Networks (http://www.tvsquad.com/2011/03/18/netflix-builds-house-of-cards-kevin-spacey/)
• YouTube Recasts for New Viewers (http://online.wsj.com/article/SB10001424052748704013604576247060940913104.html)

The web has always been a great equalizer and allowed unknowns to compete with traditional companies to find an audience and engage them.  Google, YouTube, Netflix and Yahoo! are great examples of start-ups that challenged traditional businesses by leveraging the internet to become the giants they are today.  This environment will continue for independent web video producers even as these leading technology companies announce plans to grow their investment in original programming.  I believe these efforts will, in fact, be a boom for independent producers by driving more people away from traditional TV offerings and to the web.  This investment will grow the overall viewership of web TV and thus increase the potential audience for independents to capture with their programming.

“These companies are taking on traditional TV and cable networks and their dollars will help bring the masses to the internet to find their entertainment options.  TV and cable networks will continue to see their audience base be fractured as new options emerge”

Independent content producers will have to compete with this new content, but they’ll be able to do it in a space that they’ve been learning and conquering for the past few years.  They’ll have existing content ready to share with a new audience and the flexibility to produce new content faster and cheaper to grow their brand.  In addition, many independents have a vast social network following and subscribers that can be leveraged to convert new Web TV audiences into consumers of their content.  A growing web video audience will bring more brands and advertising dollars, which will provide a greater opportunity for independents to secure funding for their content production.

Significant investment in original content by these companies proves interest in web content is growing.  Larger audiences online will attract traditional production and media companies to this space, but independent producers will have a head start on how to effectively connect with viewers and can leverage their expertise to grow their market share.  This is just the beginning and growth – no matter how it comes – for online video consumption should be viewed as a positive outcome for all web content producers and great opportunity for the independent production community.  Independent producers need to adopt a start-up mentality, much like their new competition once did, to allow them to effectively seize this opportunity.