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9/25/2006
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Digg Founders Launch Online Network Designed To Kill Your TV...Sort Of

Tuesday marks the official debut of Revision3, a venture capital-funded video site offering original, geek-oriented content with an advertising model reminiscent of 1950s TV programming.

Revision3, the new Internet video network backed by the founders of Digg.com, isn't really aiming to "kill your television." That phrase, used in the site's publicity material, is just a figure of speech, Jay Adelson explains.

"We're actually not trying to cause any harm to anyone," say Adelson, CEO of Digg.com and Revision3, which makes its official debut Tuesday. "But we are implying that there is something new going on with Revision3."

"This is the first media company, the first Internet TV network that actually produces its own content and distributes it itself," Adelson says.

But let's be clear. While Revision3, or Rev3, produces original video shows targeted at the geek crowd, it's an Internet site, not a TV network. Its video content can't be found on TV unless you download Revision3 shows as video podcasts to your TiVo box. The main source of Revision3 content is partner Web sites such as Apple iTunes Music Store, Google Video, YouTube, BitTorrent, and DivX.

Adelson's use of the term "TV" is all the more unusual, given that his new venture doesn't really aspire to reach the TV audience. Revision3 is aiming for what he calls the "on-demand" audience; the millions of Internet video enthusiasts who have made YouTube and the like popular.

Revision3 was founded in April 2005 and its "launch" is really more of a stamp of approval from the venture capital community. The company says it's received angel funding of almost $1 million from Greylock Ventures, Marc Andreessen, and others. In effect, Revision3's business model is out of beta.

Revision3's programs include Kevin Rose and Alex Albrecht's Diggnation, Geekdrome, Ctrl + Alt + Chicken, Systm, InDigital, Infected and thebroken. There are new shows as well, such as Not Mainstream Typical Videos, Mysteries of Science Explained, Geekdrome, and PixelPerfect with Bert Monroy. Collectively these shows are being downloaded at a rate of 1.5 million a month.

For some, Revision3 is bound to bring back memories of TechTV, the ill-fated satellite and cable technology channel from years back that was founded by Ziff Davis (as ZDTV) and later sold to Paul Allen's Vulcan Ventures. Revision3 founders Kevin Rose and David Prager, in fact, both worked for TechTV.

But Adelson contends Revision3 represents a new and better approach to video production. Cable channels, he says, have to cater to a mass audience. "It's difficult from an advertising perspective to create content like that," he says. Niche channels like defunct TechTV have it even worse, he insists, because of the high cost of distribution relative to the size of the audience.

Revision3 is betting that it can produce popular video content on a shoestring while still being well-paid by sponsors. "A very good television show has a million dollar budget for an episode," Adelson says. "Our budgets are certainly less than $50,000 and can be as low as $500. The podcasting generation, what it did was it created distribution and editing technologies, where the costs are just significantly less than traditional media."

In other words, these aren't flashy, Hollywood-style union productions. Adelson acknowledges as much, though he insists Revision3's talent gets paid better than union scale. Revision3 pays its talent a percentage of net profits that varies based on the talent in question and the show. (In Hollywood, net profits points are considered far less desirable than gross profit points, because entertainment industry accounting practices can keep even a blockbuster from showing a profit by adding post-release marketing expenses to offset income on the balance sheet.)

As Adelson sees it, the youth audience of today doesn't want the expensive Hollywood polish. Gritty is the new glossy. "They're more focused on the quality of the talent and the content than whether or not you have a $2 million set behind them," he says, pointing to the fact that Diggnation--two guys sitting on a couch, drinking beer and talking technology--is getting 250,000 downloads a week.

The irony here is that Revision3 isn't so much killing your television as exhuming your grandparent's old RCA from the landfill to salvage the mid-twentieth century advertising model. "Our revenue is based entirely on product placement," says Adelson, explaining that its videos will have sponsors the way that TV shows did during the early years of television.

Gartner analyst Allen Weiner says Revision3, like Yahoo's recent deal with Current TV, reflects the market's continued difficulty in monetizing user-generated content. "YouTube, for all the things it's doing, is still not making money," he says.

Advertisers, Weiner says, want to participate in Internet video, but don't want to deal with the problematic content that plagues YouTube: Copyrighted material and videos produced without evident talent, taste, or merit.

With sites like Revision3 that produce competent, ad-friendly content on the cheap, sponsors may get their wish and more. Marketers may actively drive the creation of these shows and help to further popularize and legitimize online infotainment. "I'm betting that one of the biggest producers of this adjacent content is going to be advertisers and marketers," Weiner says. "It's going to be back to the 1950s when Procter & Gamble sponsored shows."

Pointing to Apple's plan next year to introduce its iTV device, a set-top box that will transfer Internet content to televisions, Weiner predicts "a mad rush to create content."

Revision3 is already off and running.

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