Talking to a friend and online video producer last night about the state of online video.
She was lamenting that there’s no money in it. And I was asking her if Ask A Ninja is truly going to be the only thing out there that makes enough money to support a few people. She said yes, the time has passed for new voices to be discovered.
I totally get what she’s saying, but I firmly believe that the time has NOT passed for others to break into show biz and make some cash along the way.
But there does need to be an adjustment of expectations. This isn’t Silicon Valley. Online video will never make a single show a billion dollars, or even $100 million. If you’re lucky it make enough to pay back your investors and make you a modest middle class income while getting you known as a creator. (This is valuable for your career). You can then sell or license the IP rights in the future for a wad of cashif you’ve created a brand that has value.
All of the companies out there offering to put money up for production are essentially offering horrible deals. If someone is paying you $10k/episode or less (including your creative fees), and they are taking ownership of any part of the copyright or underlying IP, that is a horrible deal. You’ll essentially be making what a PA on a TV show gets paid to create and produce a show. Ask A Ninja is one of the simplest show types to produce and just the hard costs of overhead (not paying either of us) is over $6k/episode.
When we created our business plan in 2005 for our online video venture, we sold 1% stakes in the company for $12,500. We hoped to sell 10% of the company, but we ended up about half of that. That round of friends and family capital, combined with an early investment from my folks when we didn’t even have a business plan or much of anything else, gave us about $60k of cash to start three shows, the most successful is Ask A Ninja.
That small amount of money was able to buffer us from making rash decisions. We were able to remain independent because we could pay our bills with the raised capital and get the show out the door without taking a deal that we didn’t like or understand.
And we were able to build a large audience during that time.
Once we had that audience we were able to really monetize and make better deals, etc. Because we had leverage and no constraints. But that was a year into Ask A Ninja. Over two years into this we’re still living in the same apartments, with the same cars. (Though hopefully that will change very soon).
We need more people doing what we did. Raise a small amount of capital, create a show that you’ll be able to build an audience for over a long time frame, raise enough money to live on during this (or have a day job), then use the leverage you’ve acquired to make better deals.
So what do you think? Can this model (which is really just the modified indie film model) work and get people better deals and ultimately careers? Or is online video dead as a business?
45 Comments
March 20, 2008 at 9:04 pm
Kent, good thoughts. You hit the nail on the head by clarifying that creating content is not necessarily creating a “Start Up.” The indy film analogy is exactly correct. It is a way to gain experience, audience and build a marketable personal brand starting with a shoe string budget and an idea/concept that is entertaining or informative and hopefully resonates. The good news is that the tools to create and distribute have become so readily available that in some cases you don’t even need the shoe strings. (Years ago, when I worked for TROMA, we thought we hit the big time when instead of shoe string budgets, we advanced to VELCRO budgets!)
There are two sides to the online video question: the creator’s side and the audience’s side. Does the audience want online video? I believe the answer is a resounding yes, and the success of shows like ASK A NINJA are part of the proof. Can online video be a profitable business? That is the side of the coin that is still up in the air, but you have given a good example of one strategy that clearly can and is working. Thanks!
March 20, 2008 at 9:11 pm
Don’t forget that before Ask A Ninja there was Red vs. Blue, a Halo-oriented machinima series. For 5 years and counting 4 partners made a good living selling subscriptions on their website, selling merchandising and DVD compilations, and ultimately making deals to create videogame commercials and content for the Independent Film Channel.
So that’s 2. It really is hard and rare to break out.
March 20, 2008 at 9:14 pm
As Jim Morrison once said, “let it roll baby, roll.”
We all are so early to this game. The market is not built yet. You will be able to make money. Just not this week.
Online Video can’t be dead yet, it hasn’t even made it out of the birth channel yet.
March 20, 2008 at 9:35 pm
Great column Kent, thank you. And thank you for the encouragement.
BTW I agree that online video is in its infancy. It won’t be long before the geeks hook up the little guys with IPTV, although Ask a Ninja on a 65-inch screen might make me soil myself….
March 20, 2008 at 9:36 pm
I 100% agree with Tim Street. This biz is just getting started. There’s no way it can be dead already.
March 20, 2008 at 9:42 pm
I sure hope it’s alive. There are lots of good ideas and talent out there, and online video is the best chance of bringing many of them to life. I want to follow in your footsteps, don’t let the tide wash them away!
How does Ninja cost $6k/episode?
March 20, 2008 at 9:49 pm
I don’t think we know the model yet, and I don’t think we will until the money has arrived.
Ninja was/is sort of an anomaly in that most web shows struggle to find a large, consistent audience even after 1+ years. Consistent being the key word. Any of us can get featured on YouTube’s homepage and bag a few hundred thousand views on a single episode. But to build a large, week-after-week audience on the web right now is damn near impossible without major partnership deals (e.g. Myspace and Quarterlife). And I don’t think a small amount of startup capital will help an unknown indie producer score that kind of a deal. Bottom line.. right now if you want to bank in online video you need a name (again, see Quarterlife) or a gimmick.
Sadly it seems like there’s no place in new media for critics — and critics are what we desperately need. When I open up the LA Times and see an indie web show reviewed next to the film/TV reviews… well that’s when things start to change. When people start looking for good content they will find it. That’s the model I subscribe to.
March 20, 2008 at 10:03 pm
Agreed with both comments above—things are just starting to get interesting. If you want to become a millionaire next week I think this is the wrong business, but if you’re in it for the long haul I’m certain that talented, innovative people will be rewarded down the line.
I do think that there is a small window of opportunity for small guys to get in before big media *gets it*—in my opinion getting it entails recognizing this as a new form of storytelling, rather than simply repurposing old TV and throwing it online.
I am certain that the first show to really take off online will truly use the medium and be something that is hyper interactive—in other words something that would be impossible to pull off on TV and is completely native to the web. Whoever can achieve this will be the Seinfeld/Spielberg of the web and will be rewarded financially on that level.
March 20, 2008 at 10:14 pm
@joe don’t forget Homestar. RvB are friends and mentors.
March 20, 2008 at 10:29 pm
Rick makes an excellent point about critics.
Steve Woolf was half-whining that maybe he and Zadi should make a film. You do get more mainstream attention and notoriety in a more traditional medium.
A feature film has a premiere, it gets you reviews in national magazines, it gets you on TV, it looks great on your resume. But a lot of things suck about it, too. It’s a hard road for other reasons.
Doing both, like Ken and Doug, is the super awesome option if you’re lucky enough to make it to that level.
March 20, 2008 at 10:38 pm
great thoughts. online video isn’t dead, but the lack of big money available for those early in the game (as I guess the next 4 or so years will be) may result in only those who are driven to it by passion partaking. Not completely unrelated to online video, I heard filmmaker Terry Gilliam say (http://www.youtube.com/watch?v=DHn-ByiJMdg — 8:09 minutes into clip):
“You’ve got to be possessed…If filmmaking isn’t the thing you’ll kill for then get out of it now because there’s so many easier ways of making a living and having a life…”
March 20, 2008 at 10:55 pm
I wouldn’t say that online video is a zombie. I agree that it’s still in its infancy and I aphorisms like “don’t throw the baby out with the bathwater” apply in this medium. However, monetizing online content (audio and/or video) is totally different. The Internet, like information, wants to be free.
March 21, 2008 at 4:31 am
6k an episode? Where did you pull that number from Kent?
I’ve been producing the cult for years now and other than buying the camera and some green poster board I haven’t had any expenses at all (unless you count the occasional DV tape.) or are you counting the magical “my valuable time” values people assign themselves?
March 21, 2008 at 7:22 am
[...] “5 Reasons Why Your Podcast Sucks” (I’m working on it, promise), today’s inspiration comes from Kent Nichols, one of the minds behind the wildly popular video podcast Ask A Ninja. Ask A Ninja is one of the [...]
March 21, 2008 at 7:25 am
The 6k number is everything we spent last year divided by the number of episodes. We do everything by the book, i.e., insurance, lawyers, ad sales, agent commissions, publicity, etc. When you do everything by yourself it’s obviously cheaper, but there is opportunity costs.
March 21, 2008 at 8:09 am
I could write a book on this topic…
In my opinion the clock is ticking on one thing with great certainty: the-independent-content-creator-with-goals-to-reach-a-broad-audience. That gal/guy is endangered and defensive.
Before we all turn around, an entirely new hierarchy of online video content businesses will emerge in an entirely old model of doing business: the studio. With their collective arrivals the opportunity to make your impact as an individual will be the SAME as it is in movies and tv now. You will have your occassional indie breakout star, but they will be few and far between. And next to none of them will own what they create.
Why, you ask? Because of promotion. It’s one thing to make a great show, but as Rick points out above, without consistent promotion it’s very difficult to maintain viewership levels with new shows these days. And without viewership levels you have only your brilliant ideas, not anything tangible. And brilliant ideas are bought and sold every day in mainstream media. The same will happen online.
Walking in someone’s door with a brilliant idea is very different from walking in the door with 100,000 viewers, or 1,000,000.
We are maybe a year or two away from the new studios. Very soon a couple of them are going to start making money. Once they do (and assuming the U.S. doesn’t go into worse economic conditions) the indie content creator will find it even harder to break through the noise to get their work seen.
I don’t see this as a doom and gloom prognosis for independent video. But it will be the reality for all the new artists who will want to get their voice out there.
Seize this time. If you have an idea, get to work. The clock is probably ticking.
March 21, 2008 at 8:22 am
Hey Steve,
How many promos have you done for Epic FU?
I’ve done a couple for French Maid TV and one of them has made over $6000 on Revver.
That’s right, I did a promo for my show that has made over $6000.
I worked in TV promo for over 10 years and never made a residual on a promo.
I so wish we could go back in time to 1997 -98 and listen to Web 1.0 people have these same conversations about monetizing websites.
March 21, 2008 at 8:26 am
Just my “non internet, old world manufacturing” .02
1. Ask A Ninja can’t be the only good idea that can make money creating video content on the internet.
2. Most small businesses fail regardless of the widget they produce.
3. Kent has a true understanding of what it costs to produce his product in the real world and how to make a business from it. Most small businesses fail not because of lack of ideas, talent or effort but because of not understanding finances and profit margins.
March 21, 2008 at 8:27 am
All interesting points, and I happen to agree with Steve Woolf the most on the comments. The time to move is now, before the studios get their game on. I’m working with a lot of them through my agency, and I just heard a bunch talk about online video this week at the OMMA Global Hollywood conference. They’re working hard with their ad and media agencies to figure out how to take over.
But I can’t help to think that because the Internet allows the openness that it does, that one media giant will be able to dominate.
With television, you’ve got a spectrum issue. If you don’t own a piece of the broadcast spectrum, you ain’t on the air. With cable access, that changed a bit, but the shows and quality sucked for the most part.
With movies, it’s a distribution issue. It’s not easy to get into the Lowe’s distribution chain without bags and bags of money.
The internet allows you to compete directly with ABC, Lionsgate, etc. But as Steve points out, promotion and visibility are key.
I think there are ways to do it. In fact, I’m convinced of them, and I’m in the process of starting a company now to do just that.
March 21, 2008 at 8:31 am
Tim – depends on what you consider promos. We’ve done ARG’s that promote the show, as well as short commercial-style videos that have played on our fellow Next New Networks networks.
A lot of the problem for us has been finding the time to do more, or allocating the money to pay someone to help.
March 21, 2008 at 8:33 am
Oh, and we do quite a bit of personal promotion — panels, events, Pixelodeon…
March 21, 2008 at 9:11 am
I have hopes for the future where its not a rare few that “break out” and make it big, but rather there is a whole flood of creators that can create and tell new stories and make a modest to decent living doing so. I want the tools and processes to be broken and fixed in such a way that it doesn’t cost 6k to have a ninja answer questions for 3 minutes. I hope new tools are created and new methods of distribution and discovery enable audiences to find and connect with more creators and will be able to support the ones they enjoy watching.
thats the dream anyway. good post Kent.
Ben…
March 21, 2008 at 9:18 am
The “where’s the revenue?” and “how come I am not making any money?” question is something I have heard with increasing frequency; I have said it a few times myself.
But what Kent has said (albeit without the round of funding) is what our goal with Galacticast has been. We looked to support to fans and when we reminded them we always got a response in kind. But ultimately I wanted a way to write/direct and Casey wanted to become a celebrity.
We have succeeded to various degrees; I’m still rocking the upper-management tech job to pay the bills. But we have learned so much, and I regret very little, and a draining bank account is nowhere near that list.
I’m writing a movie! How cool is that? I got paid to make a comicbook review show? How cool is that? People come up to me and thank me for making them laugh. How cool is that?
It doesn’t pay the bills … consistently … yet. But the work we – any of us – do now and the work we do in the future will always lead to bigger and better things. As long as you do your biggest and best with what you have in hand. And it is so easy to do something spectacular.
The lowering of that barrier of entry and reaching out to those who want to see and participate in your creations has been the fundamental drive behind any online success. That’s the one thing we must ensure remains true. The rest will take care of itself.
Cheers.
March 21, 2008 at 9:33 am
I hope it is not dead as I am launching a business now. We have help from a state funded incubator and have been over and over different models and we think we have one that works. At my company Station X failure is not an option.
March 21, 2008 at 10:10 am
The question asked by Kent is – “So what do you think? Can this model (which is really just the modified indie film model) work and get people better deals and ultimately careers? Or is online video dead as a business?”
Can this model work? Of course. You proved it. The idea that Ask A Ninja is not only a one-hit wonder, but the only one-hit wonder possible on the Net would be, for me, a silly and implausible idea.
Is online video dead as a business? No. I believe as more are drawn to online video (viewing and creating), more opportunities for income (if that is the desire) arise.
It is important for the content creator to recognize what they are after. If you are solely after cash, then you might easily be disappointed. If you are trying to build your brand and your expertise for commercial use in other areas, then the reward might come faster. Having a plan, working the plan, knowing what you are after in the end – that is key. And, based on comments and my own observations, is the ingredient most lacking.
Tony Katz
March 21, 2008 at 10:11 am
Provocative post Kent.
I think it’s obvious that online video is just getting started. I’m a believer that there are emerging models that don’t fit into the entertainment, ad-based TV model. You mentioned licensing. I think there are huge opportunities in making online video content that is entertaining, but also solves real-world problems. This is content that can be distributed via the same free channels as Ask-A-Ninja, but appeal to an audience that will *also* pay for a license to use the content in professional situations, be they classrooms, on Intranets, etc. Maybe not as fun and cool as vlogs and pure entertainment content, but something with a market that’s willing to pay.
March 21, 2008 at 10:16 am
It’s only dead if it turns out we’re the only ones watching it. I.e. if online video is just one giant echo chamber and the only views are coming from people like us, in the business.
March 21, 2008 at 11:24 am
I suck at coming up with (good) ideas and sticking to them. I need a partner for sure. Being someone that went to school for digital film making, I still have a lot of friends working in the that field and trying to “make it”. I talk to them all the time about their online presence and what they are doing to promote themselves and their work. The only thing I ever get from them is “I have a myspace page”. I think people are so oblivious to what’s going on online short of youtube and myspace. It’s sad really cause there’s a lot of opportunity in my opinion.
I agree with most people here, it’s not dead, because it hasn’t even started. However, like Steve said, it’s already starting to change. In the short time I have been in this community I have already seen a huge shift. The video bloggers that first attracted me to this scene aren’t making the same types of videos they used to. Now that people have proven that money can be made doing online video, their thoughts and ideas shift in a different direction to try and harness some of that lovin’.
I love it all and am a huge fan of YOU all. Keep doing what you’re doing cause people are starting to listen.
P.S. If anyone is looking for a semi-talented, hyper-active, self-promoting, not afraid to get in your face with a camera, host for a show idea, I know this one guy…..
March 21, 2008 at 1:29 pm
I agree with Tim. It’s all just started. And it’s all changing too, really fast. That makes it difficult.
There seems to be a lot of discouragement in the room lately. I’d be lying if I said we didn’t feel it here too. Part of the problem is that there are so many possible avenues and none of them are THE proven way. You end up doing lots of things that end up not working. And if you are doing most everything yourself as many of us are, your time is precious. There’s only so much time you can spend on failed experiments.
The ones who will succeed, however, are the ones who can stick with it. “Makin’ movies” is very, very, very, difficult. Most people haven’t a clue how hard it is. The new car shine is gone from New Media and now the hard drudgery begins. This is the point where the wanna-be’s quit. Those who can stay with it will succeed.
Online “studios” or “networks” will grow but I don’t think they will dominate, at least not right away. From what I’ve seen of the broadcast/corporate world, they are WAY too risk averse. Much more so than even a few years ago. They want proven business models with guaranteed return. Most will fail miserably because of that and will create content that is hollow and unsustainable. I’ve already seen some of this in the wake of the writer’s strike, unbelievably bad shows supposedly created by writer’s guild writers.
The independent artist’s strength is their ability to nurture their show through the hard beginnings, quickly adjust, and build the audience, instead of expecting it to be there as soon as you premiere.
March 21, 2008 at 1:58 pm
[...] of his periodic attention getting link bait articles (mission accomplished, sir) titled “Is Online Video Dead?” I think the first “podcasting is dead” article I saw was in April of 2005 and [...]
March 22, 2008 at 10:41 am
I agree with bromike666. We have great ideas and all the talent, I pitched to a group of “business types” and they thought it was all great but wanted to know what the unit economics were. To which I said “Duh..what” they then ran me through the ringer for about a month and we looked at models from Revision 3 to local TV stations and print. If you have the talent to get into this find you a business mentor or partner that can help with the making money end.
I too worked broadcast promotions for years..here is a thought I had yesterday after reading this post. What if we formed a group, and figured out a way to help promote each other. An Independent Promotional Network, no money just trade of promotional videos and banner ads.
March 22, 2008 at 1:01 pm
Hmm… I don’t understand how online video could be dead
More people are tuning in to online video shows, and all that matters it the number of people a show pulls in, that alone is sell’able.
But good post, it’s awesome that you’re out there talking about how you did what you two did.
March 22, 2008 at 1:15 pm
I just read Steve’s comment – and that’s true, the days till big money starts drowning out the indie content creator *are* numbered.
But I wonder sometimes how successful they’ll be – short of telecom co’s changing the way the web works, we’ll always have one advantage: we will never *have* to go through them to put our stuff out there.
And also, no matter how hard they try, they’ll never have the same level of interaction and community that indie produced shows have. They’ll come in with their top-down mindset and they’ll make a lot of money. But shows like the ones people are making now, I think, will always have a place, and always have the opportunity to pull in a reasonable income without selling out.
March 22, 2008 at 3:11 pm
Just wrote a post in response to this: http://urltea.com/2zoc
March 22, 2008 at 4:35 pm
“The 6k number is everything we spent last year divided by the number of episodes. We do everything by the book, i.e., insurance, lawyers, ad sales, agent commissions, publicity, etc. When you do everything by yourself it’s obviously cheaper, but there is opportunity costs.”
Ahhh ok. I get ya. Cost of doing business type of thing. Thought you were somehow spending 6k per episode on top of cost of business. Blew my mind there for a sec.
As far as being dead by the way. No I doubt that, more like just getting started and changing over to the big boys world. Hobbyists like myself are few and far between these days in Video.
March 24, 2008 at 5:08 pm
Thanks for sharing the numbers Kent and your approach.
The ‘raising a small amount of capital’ makes complete sense for many folks, including me. I’ve been bootstrapping solo and am now considering doing something akin to what you did. I’m assuming people invested in Beatbox so that they’d have benefit through any show you made. Is that right?
I’ve had amazing community support for many shows and my community funded some of my last show at SXSW. This is something that is new and worth considering.
In order to be consistent (which is necessary for success) the capital/buffer is necessary.
Online video is just in its nascent stages. In a few years, I doubt we’ll even call it “online video.”
Interactivity and community will shape and shift some of the form as well.
What we now see in reality TV will happen more in real-time with a much bigger communal/social element.
Having a bigger picture/ multiple revenue streams in mind is necessary.
What is critical is seeing yourself/your work as the centre, not any one of many video/podcasting platforms.
March 24, 2008 at 5:23 pm
have you seen this new thing Qik. live streaming video from your cell phone with chat! This to me is ground breaking, live shows, news, etc.
http://www.qik.com
March 24, 2008 at 5:25 pm
One more thing, in response @stevewoolf
I agree that the studios are coming in. I haven’t spent time to do their math, but my hunch is that we have 18 months at least based on 1. Hollywood deal/ execution pace 2. the Net being at the bottom of the Hollywood economic hierarchy 3. Hollywood talent production costs 4. state of online ad sales and economy and #5. difficulty of Hollywood moving from “tushes in seats” mentality to community / co-creator understanding.
March 26, 2008 at 1:34 am
Online video is absolutely not dead. As said above, it has barely begun to be born. It’s true, the corporations are moving in, finding the online talent and snapping them up as quickly as they can. 2008 is going to be a HUGE year.
The problem, as Kent has pointed out, is that the prevailing model and public attitude towards online video is relatively flawed – the idea that internet inherently = cheap/free. Just this evening, at what I’m told was the last meeting of L.A. Podcasters, someone actually remarked that $2500 per episode (the amount that has been widely published as our per-episode cost on “Prom Queen”) seemed very high. I found this astonishing. Anyone who actually knows us understands the situation we find ourselves in… Kent, thank you for stating very clearly- artists cannot work for free forever. Especially not when the large corporations start profiting handsomely off not only our creative output, but our physical labor and sleep-deprived days and nights as well.
Hey- congrats on the movie deal – way to take it to the next level!
March 26, 2008 at 9:00 am
I am trying to launch my online video dreams and pay bills by running my own small(just me) ad agency/production house. I am a member of the local Ad Federation here in Little Rock and we had a speaker last night that was from The Richards Group. They do the creative and placement of clients like Home Depot, Fruit of the Loom, and Bridgestone Firestone just to name a few. I asked him if his clients were looking to web video. He said yes and knows that video on the web for advertisers will grow. He said they are always looking for new content and ways to extend the brands of their clients. So there is money to be made. So get out there and make content.
April 1, 2008 at 7:27 pm
[...] you run a regularly scheduled show, it's difficult to make a good profit just from that alone. One of the producers of Ask a Ninja talks about how he has trouble really "making it" even though he has one of the more [...]
April 5, 2008 at 1:00 pm
[...] Is Online Video Dead? « Kent?s Official Blog – Can online video makers ever make a living? [...]
April 8, 2008 at 12:47 am
You guys all venture great speculations. None of you sit in my seat. Sorry, you all are just part of the reason the industry exists, even if you arent getting paid.
The bottom line is their is already a consolidation,
and people are making serious money, yes in the hundreds of thousands off of their videos..
Many artists are,
however instead of being sorry, blowhard grandstanders,(sorry TS) , the just concentrate on the ROI. Its like Hollywood- Many will come and try, few will succeed. But some of you all have a good clue and understand it, but just cant say it.
I can, but I will not here
May 9, 2008 at 5:16 pm
Hey Kent ~
I’m wondering how you came up with the $12,500 number as the value for a 1% stake in your company.
November 20, 2008 at 2:12 am
oh come on dude, you don’t seriously think that Ask a Ninja warrants kubrick type stature. LOL. I still don’t understand it myself dude. So there’s no barriers to making and releasing GREAT videos. You can do it. As a commenter said, you don’t even need shoe strings. But yet, the only noticable thing I found on youtube… that’s right, Ask a Ninja. It was moronic, but it gave me a giggle, and had a consistent theme. The jokes were cheap and bad, and the value of the information: zero. But I spotted it early, this was the work of people actually publishing with intent. Not clueless vlogging about their pointless opinions, instead, a product for an audience. Not a great product, and not an obvious audience, but yeah, it actually looked a bit like a programme.
But where are the new films? I’m myself looking at the largest film festival in the UK on my doorstep: the portobello film festival. Speak to the film makers… DVD is the word.
No no, online video hasn’t even started yet. Nobody has yet made stuff worth watching (apart from how-tos on building websites).