• by kyle , Daisy Whitney , October 29, 2009

On YouTube's most-viewed channel list you'll find the how-to video network ExpertVillage in second place for all time with 812 million views. But nowhere in the top ten will you find any of the online digital studios aiming to make the next generation of hits.

Internet video viewers watch a lot of how-to videos, which is good for advertisers and good for an Internet startup's bottom line. How-to videos are phenomenally cheap to produce and that's why a handful of Internet startups are avoiding scripted drama and comedy and going straight for reality - the fast-growing information video business and the promise of its much more economical business model.

Companies like Demand Media, Howcast and 5Min.com come at how-to from different directions, but what they have in common is a bet on a low-cost, high-return content model.

How-to queries are among the most popular search terms, and portals now send consumers to how-videos for the answer to such online questions. Videos like "How to write a resume" and "How to do tie a bow-tie" can be monetized easily via ads. The consumer mindset when searching for how-to content also favors the low-cost model.

"If you want to know how to plug your Blackberry to your PC, you don't really care who gives you the solution, as long as it is a decent one," said Ran Harnevo, CEO of 5Min.com, which syndicates and pairs targeted how-to videos with ads. "This has big implications on the market, and allows Web studios to compete with the big studios, and be creative with production costs. In reality, niche content is getting commoditized much faster than entertainment. It creates a huge opportunity for Web-based companies to produce great content, with low cost, and create a much better ROI."

5min distributes rather than produces how-to videos. Companies like Howcast and Demand Media do commission such videos through their videographer networks. Demand Media, the largest supplier of content to YouTube, has paid out $17.6 million to filmmakers over the past three years, which equates to about $300 for a day's work shooting and editing 10 to 20 finished videos. That shoestring model has turned Demand Studios into a profitable division of Demand Media, said company spokeswoman Wadooah Wali.

Howcast pays filmmakers $50 for every video they create for Howcast and provides them with scripts, voiceovers, music and graphics to control quality. The company pushes its videos out to YouTube, Yahoo, AOL, Verizon, Comcast.net and also aggregates how-to videos from the likes of Popular Science and Home Depot.

In addition, Howcast produces videos for big advertisers like JetBlue, AT&T, Nestle, AARP at a much lower cost that traditional agencies. Howcast charges in the thousands of dollars for those videos, exponentially less that brands are used to paying for 30-second spots, said Jason Leibman, CEO of Howcast, who expects the company to turn a profit next year.