• by Ashkan Karbasfrooshan , Op-Ed Contributor, March 22, 2010

If you're reading this, you're probably a big proponent of online video.  I am, too.

But ask yourself one question: if NBC, CBS, ABC, and FOX took every minute of programming in their archives and published it online, what would be the result?

Initially, already-bloated Web inventories would skyrocket, sending rates lower overnight. Over time, though, this move would drive a lot more advertising revenue into the online system, away from television. 

Why isn't this happening already? Because when it's all said and done, the size of the online video advertising pie will still be smaller than the existing television advertising market (let alone the fees from cable, DVD and box office sales).

Therein lies the big opportunity and threat for new-media content producers -- some of whom are trying to create a form of "light television," and others, like our company, that are basically morphing newspaper or magazine articles into video format. 

The cumulative result for our emerging industry, let's face it, has been hit-and-miss.  Without a doubt, new-media video producers are seeing a lot of viewership: a year ago in February we generated 3 million views, while this February we almost served 10 million streams. Sadly, though, our revenue didn't grow by a commensurate proportion (though it did grow), and we're probably not alone.

What's holding us back?

What's mainly holding back online video advertising from fulfilling its potential is the fact that super-premium content catalogues will remain sidelined for the foreseeable future due to a lack of monetization (think Viacom vs. Hulu).  The money that will be spent online and around video content will initially go to the benefit of the ESPNs and Yahoos -- and finally, goes the theory, to upstarts like new-media companies producing professional, made-for-web original content.

When an ad agency speaks to my company, they ask us who our competitors are.  I try to cast each in a positive light and stress how we're different -- and at most suggest, implicitly, how we might be better suited for their client.  But I wonder how others talk about the competition. I can't help but think they probably torpedo one another to improve their own chances of landing the deal. New-media produce are not likely to bash Yahoo or ESPN -- which would end up hurting the overall group and ultimately, themselves.  Indeed, more often than not, the new-media producers miss out on the deal while the "established players" get the campaign.

A Network?  Association?  Dare I say "Cartel"?

As such, I have long argued that new-media video producers must stop fighting one another -- or at least competing in the marketplace for ad deals and dollars. Instead, they need to come together to position themselves as a strong, cohesive front to bolster audiences, complement content offerings and avoid undercutting one another. 

Ultimately, there are four layers of resistance to be conquered before online video producers generate massive revenues:

a)  Television.

b)  Search (even though search and video serve different marketers and objectives).

c)   Big portals (who have huge audiences, established marketer relationships and decent-sized video streams, thank you very much).

d)  Top-tier publishers (who, like portals, will command a healthy mix of display, sponsorship and video ad sales without needing to produce as much proprietary content as the upstarts).

For these reasons, while big media is sitting on the sidelines and watching, you might see a wave of consolidation among the countless producers who are vying to build a brand, generate an audience, and grow sales -- all before any meaningful acquisitions take shape.