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Ad Revenue Model, Enscramble, and more

March 17, 2007

There are four main streams of revenues for an online filmmaker.

1. Advertising revenue
2. Subscription
3. Paid download
4. Merchandise

From an indie filmmaker perspective, I think advertising revenue has to be the business model of choice. It works like this. Platforms like Revver and Brightcove (Google Tube most likely to follow) will serve a relevant 5-second post-roll ad after the video content is done playing. If the Revvers and Brightcoves of the world match up advertisers with appropriate demographics, there is a likelihood that a viewer will be interested in the ad and click through it, which will get both the filmmaker and the platform paid.

On the other hand, if you’re a filmmaker who doesn’t have a personal brand or a well-known series/franchise, nobody is going to pay upfront to download or subscribe to your content (unless it’s porn….seriously). Plus, an indie filmmaker’s goal should be to find an audience. Period. The money and opportunities will come later after a filmmaker gets exposure and proves he/she can draw an audience. It happened for Lonelygirl15, Sam Has 7 Friends, and Lisa Nova. Therefore, advertising model seems like the way to go.

Ah, hah. But the advertising model has its issues too. A couple of nights ago, I had dinner with a friend who works in the Video 2.0 industry at one of the top players. We were discussing advertising revenue when he brought up an interesting point. The current online platforms are set up so that a video can be shared easily on other sites. For example, if you have a blog or a My Space page, you can embed a You Tube video by adding it to the code of the page. The advantage of making embedding video so easy is anybody can distribute a video through multiple distribution channels, meaning the video has the best chance of reaching an audience and potentially going viral. The downside, as my friend pointed out, is that content providers and platforms cannot police where these videos are being distributed. So in a worst case scenario, some pervy schmo could embed a Lisa Nova video on his kiddy porn site. All of a sudden, the Fortune 500 company that advertises with Lisa Nova has a major problem and is associated with kiddy porn. This issue is keeping a lot of advertisers away.


Enter Enscramble. I saw this company demo during the February Video 2.0 meetup and I was fairly impressed. In a nutshell, Enscramble does what cable boxes did in the old days. It scrambles video if the video isn’t playing in an authorized location. In other words, advertisers and content publishers can rest assure that the video will only play on the website it was intended to. If Fortune 500 companies want to advertise with Internet video, I expect that companies like Enscramble (or at least their technology) will be in demand. Anyway, some food for thought.

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