Sites like Revver.com and Eefoof are hoping to beat YouTube at the video game by splitting the money they take in with the people who produce the videos, like the recent Revver hit, "Diet Coke and Mentos Experiment."
Indie filmmaking used to entail substantial financial risk with only a slight chance of reward. Only a decade ago, independent artists had very little leverage to negotiate favorable contracts or to get their work seen in chain theaters that remain focused on blockbusters.
Today, a multiplex premier remains improbable for aspiring filmmakers. But things are different on the Internet. There's no shortage of screens online; everyone is welcome. And there's a new incentive for making short films: You may just get paid.
Because Revver appends ads to the ends of the films it distributes, viewers that click on those ads generate revenue, which the company splits 50/50 with content creators. If the clip was presented through an affiliate's site, the affiliate gets 20 percent of the gross, before the revenue gets split.
Those 5 million viewers earned $28,000 for Stephen Voltz and Fritz Grobe.
Revver's advertisers have been paying about 75 cents per click according to a company spokesperson. That puts the click-through-rate at about 0.015, which is typical for an untargeted online ad campaign.
Given that the cost to release a typically Hollywood film has surpassed $100 million, 5 million attendees buying $10 theater tickets would be a disaster. But when your production expenses consist of 100 liters of soda and 600 pieces of candy, plus ancillary equipment costs, $28,000 represents a welcome windfall.
And that's to say nothing of the value of the 15 minutes of fame thrust upon Voltz and Grobe during their appearances on "The Late Show with David Letterman" and NBC's "Today" show. Their careers as culinary chemists are made and they'll no doubt be filming further junk food experiments.
YouTube.com leads the online video market in terms of U.S. online traffic, with 172,907,000 unique visitors in June 2006, according to Internet metrics company comScore Networks. That's more than 10 times its competitors. Google Video saw 8,134,000 unique visitors in June while 4,477,000 visited Yahoo Video Search. Some of the other noteworthy video sites include AtomFilms, EbaumsWorld.com, Guba.com, Heavy Networks, iFilm.com, Metacafe.com, and Veoh.com.
Hitwise, another company that tracks online traffic, offers related metrics: YouTube leads the U.S. online multimedia market with 29 percent market share; MySpace comes next, with almost 19 percent of the market; Yahoo, MSN, Google, and AOL lag behind with 3 to 5 percent of the market respectively.
YouTube.com recently said it delivers 100 million videos a day. But it doesn't pay the filmmakers that submit videos. With competitors looking to take market share and talent, compensating content creators has come back in vogue.
The challenge, says Steven Starr, CEO of Revver.com, is to figure out how to allow content to move freely across the Net and be monetized without prohibitive digital rights management restrictions.
Asked how Revver compares to YouTube in terms of traffic, Starr responds that Revver.com isn't a destination site like YouTube but a video tools provider. "We are offering technology to creators," he says. "In our rollout next month, you'll see that we're really looking to create empowerment solutions for creators, not a place to put their content."
In late August, Revver plans a revamp that includes new ad formats, including "pre-plates" which precede videos. But it's far from clear whether better tools and the promise of payment can bring Revver the content it needs to grow its audience.
Like Revver, Eefoof.com, which launched on July 1, promises to pay those that supply it with content. A post on the site's developer blog written by co-founder Matt Farley indicates that Eefoof.com plans to split ad revenue 50/50 with filmmakers: "[I]f we get $10 in video ad revenue for the month, and say you have a video that accounts for 20% of our video hits, that means your video accounted for $2, we keep $1 and you earn $1."
"We believe that sharing revenue with content submitters is the next generation of Internet media," Farley writes in an e-mail. "When you look at the phenomenal success of sites like YouTube, it's easy to see the potential of user-driven sites. Why not build on YouTube's success by taking it to the next level with user compensation? It seems to me that choosing our model is a no-brainer for users looking for such an outlet."
It's worth noting that Eefoof.com plans to split profits rather than revenues. "That's 50/50 'profit' after we've deducted our expenses," Farley explains. "We'll need to clarify when we do our first round of accounting."
AtomFilms has been distributing short films online since 1998 and, according to general manager Scott Roesch, has paid out millions of dollars in royalties. "We've always looked at the Internet, and now mobile services, as a new, viable market for entertainment," he says. "We believe that in order to build that market, the people creating content deserve to be paid."
Well aware that accounting in the entertainment industry has long been a sore spot for independent artists, Roesch says AtomFilms based its payment model on gross rather than net revenues. "You [as a filmmaker might] get a huge percentage net revenues, then the companies go and deduct everything from electric bills to the jets that the executives take," he explains. "We felt that one way to be more transparent was to say that for the revenue that comes in, you get a set percentage of that revenue on a gross basis."
AtomFilms pools the money it earns from on-site banner ads and commercials inserted before films begin and pays out half of its gross with its filmmakers pro rata, based on the percentage of site traffic brought in. It also shares distribution fees paid by companies that contract for AtomFilms content, like BellSouth and Verizon.
Roesch claims the top filmmakers at AtomFilms have made six-figure sums. "We have hundreds of filmmakers who are making thousands of dollars," he says.
Keith Thomson is one such filmmaker. Though he declined to detail his AtomFilms earnings, his series of Flash shorts called "Annibelle Scoops" helped him land a deal with MTV. He says that when the checks come, there's enough transparency that he's confident he's getting properly credited for his earnings.
"In all of my business dealings, there's nobody I'd trust more," Thomson says.
While all online video sites have basic standards and legal requirements for acceptance, AtomFilms rejects films based on quality. "We firmly believe that in an environment where users can upload their videos anywhere and everywhere, there's increased value in a programmed service with a certain level of service and quality," Roesch says. "That said, our eyes have been opened with what's going on in the user-generated content world."
Indeed, quality doesn't seem to have a lot to do with whether video clips find an audience online. Comedian Jon Lovitz's solicitous advice to female viewers during a Saturday Night Live skit many years ago may be apropos for online video companies: "Lower your standards."
After years of building the online short film market, AtomFilms drew a U.S. audience of about 1.8 million unique viewers in June, according to comScore Networks. Parent company Atom Entertainment's new AddictingClips site, launched at the end of March without editorial oversight, saw almost 2 million unique U.S. viewers in June.
It may be that editorial gatekeepers think more highly of their own opinions than online film viewers do.
That's a lesson that hasn't been lost on Revver. "We do not tell people what is good or bad," says Starr. "That is not our place. We think that the market takes care of that." He believes paying for content will encourage more people to create better works. "It's a virtuous circle," he says.
In the meantime, there's always "Diet Coke and Mentos Experiment."
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.