The Pros And Cons Of Building An Audience Outside YouTube

As YouTube marches towards greater market share of viewers and video streams, "It's YouTube's world, we just stream it."  But can you build an audience on or outside YouTube?

The reality is that unless content creators rely solely on licensing sales, they need to build advertising revenue.  In theory, that means that content creators are in the business of maximizing their audiences.  But only when that audience is on one's own-and-operated property can the right holder fully monetize it.   In a distributed model, the content owner and distributor face sales channel conflicts, reduced margins, and unsold inventory.

Distribution vs. Destination

It's challenging for a company with no offline brand, celebrity cachet or multimillion-dollar marketing budget to build a destination around video content. 

Indeed, while YouTube owns video in the figurative sense, it's not a monopoly in the literal sense.  comScore's list of top 10 video properties shows aggregators or traditional media companies: YouTube, VEVO, Facebook, MSN, Viacom properties, Yahoo, AOL properties, Turner Digital, Hulu and NBC Universal.   The traditional media companies have proven that if you hold back distribution, people will come to you if you have compelling/popular content and an offline brand.

Where and why do people watch videos outside YouTube?

This doesn't mean that it's impossible to generate views on one's own site.  After the top 10 properties on comScore,

1.  Other aggregators such as Metacafe, DailyMotion, Break or Blip boast high/medium reach.  Metacafe and DailyMotion have sought to emulate YouTube's strategy; Break branched off into original content; Blip seeks to aggregate original series made for the web, but it encourages producers to also syndicate to YouTube, according to CEO Mike Hudack.

Aggregators will leverage their massive catalog and multiple inbound links to index higher than the underlying content owners' website on search engines even if the video originated elsewhere.  As a content creator you can avoid distributing to the aggregators altogether, but then you might miss out on the largest video audiences.  In fact, according to Mefeedia, the number of content producers who had their own sites fell from 30% to 10% from 2007 to 2010.

2.  News sites have timely content that draw users, be it CNN, BBC, the Australian, al-Jazeera English or local stations.  Meanwhile, TechCrunch TV can leverage the archive of blogs and news-breaking new articles to point traffic to videos, let alone AOL or HuffPo traffic since its acquisition (worth noting that TechCrunch's traffic would be included in AOL's and CNN in Turner's).

3.  Humor sites such as FunnyOrDie.com, which has successfully leveraged Will Ferrell's brand name to build a real business; TheOnion.com that has leveraged its satirical take and offline mojo to successfully transition into video; or College Humor, which restricts content to its site and uses what it does publish on YouTube to draw users back there.

4.  And of course, Adult sites remain more popular than ever, especially as they embraced the free "tube" model, too. 

Value = revenue / cost (basically)

Most of the new media content producers around today are part of the Third Wave of video creators.  We have all benefited from YouTube:
 
a) investing in the technical infrastructure (hosting, encoding, ad serving etc.) and
b) the search engine marketing/optimization (a cynic would say "not surprisingly," since Google owns YouTube, but in all fairness, YouTube was well on its way to being the second search engine when it was sold to Google).

These two are expensive money-sucking cost-line items, so while it's easy to complain about distributors building their businesses on top of a content owners' back, a more level-headed perspective is required.

Exacerbating all of this is videos' long-term payoff. While you can write an article and publish it and before long search engines will send you traffic, with videos there are other challenges.

Erosion of pre-roll CPM

The reality is that for all of the talk about a lack of supply of videos, CPMs are -- at the aggregate level -- falling precipitously.  The reasons for this merit an article by themselves, but unless you have massive streams, you won't be able to close direct deals, having to rely on ad networks to fill your inventory; your ad rates won't be as lucrative as you might think.

Bye-bye Margins

The combination of high video-related costs, a long-term payback and eroding ad rates means lower margins in the short-term and unprofitable operations over time, which explains why content companies have either shut down altogether or moved into aggregation.  I think having a low-cost structure is the single top variable determining who has survived.  After all, Apple wouldn't be as valuable if it didn't outsource production to China. It's no different in video, though I don't think you can outsource content production to China.

The comScore effect

Of course, until last month, it might have been worthwhile to try to build views on your own property.  Today, with comScore and YouTube finally partnering to open up audience sizes for each content provider on YouTube, you're almost better off putting up the white flag and simply focusing on amalgamating your viewers and views on either your own site (if you have any traction there) or YouTube.

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11 comments about "The Pros And Cons Of Building An Audience Outside YouTube".
  1. Michael Michael kokernak from Across Platforms, Inc. , September 5, 2011 at 10:48 a.m.

    Excellent article. Well thought out. Clear and concise. Really underscores why we are going to see hybrid distribution models emerge straddling the "traditional TV" to online world. Both important. Bigger opportunity for everyone. Thanks for a great well thought out article. Just what I needed to read on the holiday.

  2. Casey Quinlan from Mighty Casey Media LLC , September 5, 2011 at 10:55 a.m.

    The nugget is "entertain AND inform" - so much business video is either yawn-worthy, or just a longer-than-:30 ad, that it doesn't do either. You've got to either hit people in the heart or the funny-bone to get them to watch something from start to finish - and then what do you want them to do? Did you make that clear?

    Great post, all very salient points. The comScore/YouTube partnership indicates that online video is reaching platform maturity. What remains to be seen: does that improve content?

  3. David Samuels from KoldCast TV , September 5, 2011 at 11:11 a.m.

    5-1/2 years deep, KoldCast TV, the first and leading TV network for original series, and much, much smaller than YouTube, outplays YouTube views over 95% of the time.

    Here's our company model: http://onkc.tv/onfb

    On KoldCast TV, we can, and do, guarantee discovery. Who else can do that? Who else does that? And who takes a personal and proactive interest in marketing their aggregated content? A curated and professionally managed network. KoldCast TV.

    There's a vibrant and successful world outside of YouTube. And it may be surprising to some, but not everybody watches and/or enjoys YouTube.

    The screen is WORLDWIDE now and it's 7 billion strong - there's more than enough room for success beyond YT!

    KoldCast TV - www.koldcast.tv

    KoldCast TV on Facebook - http://www.facebook.com/KoldCastTV

  4. Ashkan Karbasfrooshan from watchmojo.com , September 5, 2011 at 11:13 a.m.

    Thanks Michael.

    Casey you raise a great point re: Business videos. Ironically our core business videos tend to be highly-produced/polished profiles on companies or biographies of people. They look great, but I wonder if the hard core business user would watch that, or if a more mainstream user would watch a bio of Mark Z. or Steve Jobs, or a profile on Apple etc. Our new business how is far more "talking head" but it appeals to the most targeted business user. We purposely wanted to make it more "meats and potatoes" because oftentimes the viewer just presses play and listens to the show while doing other work.

    I think business videos are somewhat of an anomaly, more utilitarian that anything else.

    I totally agree with the infotainment part of it, that is basically why we produce our videos the way we do, it's all very polished with lots of b-roll and no talking head stuff at all, and explains why we've been able to stand out in the consumer segment. Not saying it's the best short term approach but long-term it builds a more valuable catalog.

  5. Ruth ann Barrett from EarthSayers.tv , September 5, 2011 at 12:30 p.m.

    Video aggregator, earthsayers.tv, in the service of sustainability with a wide, wide range of formats from performances to movies to documentaries in B2B model of thought leadership. Try it. 50% of our content comes from YouTube, a very useful channel, but one of many. Reminded of something I learned sometime ago from reading Marshall McLuhan that has stayed with me through years of high tech thought leadership marketing:

    "The means creates the want."

  6. Chase Norlin from AlphaBird , September 5, 2011 at 12:47 p.m.

    Good article Ashkan. Only thing I would add is that more dollars are flowing to Youtube for the following reasons:

    1. Youtube continuing to grow market share and is the defacto leader in delivery of videos to new devices (IPTV - AppleTV, etc), iPad, and mobile.

    2. Content owners and advertisers are beginning to view "spend" on Youtube as having more longer term value than a traditional ad network spend or buying other sites directly. The reason? More bang for your buck: in an ad network model when the spend stops the video gets pulled down. However, with a spend on Youtube the investment (if done well) can translate into free or earned views, channel growth, etc, long after the media dollars are spent.

  7. Via Madison from VaIntl , September 6, 2011 at 12:22 p.m.

    With the trends showing, Youtube still has the top spot when we talk of videos. In fact they added a download feature, some vids can actually be downloaded just by clicking a button .

    Via

  8. Paul Best from Wolf's Head Productions , September 6, 2011 at 12:39 p.m.

    Very good article. I have to agree with David Samuels, there are many approaches and YT is just one. We are on Koldcast primarily because they at least provide a modicum amount of gate keeping so the consumer is spared the "swimming kitten" videos anyway. Currently good content is being buried under a growing mountain of poor production quality or bathroom humor and the more sophisticated consumer doesn't have the patience to search for compelling content. I believe this in turn affects ad dollars industry wide because the consumers with the largest bank accounts aren't watching any online aggregater in great numbers.

  9. Mike Mcgrath from RealXstream PTY LTD , September 6, 2011 at 2:31 p.m.

    Nice article Ash. Q - What would be the best way to reach out to YT if a company wanted to "wave the whit flag" as you say?

  10. Marian Mangoubi from Sassy CEO, LLC , September 6, 2011 at 3:25 p.m.

    Thanks for the great insights into other video distribution channels out there beyond YouTube.

    Michael Kokernak, I think you're right in that we will see hybrid distribution models emerge. In some cases, you're starting to see this happen.

    I also think though that what we currently see as the dominant models will change. A lot of high quality content gets lost given the vast amount of content out there. As video continues to evolve, you will see new models emerge to help find and showcase the quality content. What's dubbed as 'socialtv' does this to some degree, but I think it will be blown out further.

  11. Ashkan Karbasfrooshan from watchmojo.com , September 6, 2011 at 7:09 p.m.

    hey Mike,

    just open an account, make sure you have the rights, though to the underlying content you are uploading. of course, with 48 hours of media uploaded each minute, the issue then boils down to how to cut through the clutter.

    that it ain't easy, either... but doable.

    Ash