Making Money from Streaming Video: Here's How

So how does Streamin’ Garage make money from its streaming content? “We don’t,” replies founder and CEO Rotman. “The honest answer is that right now we are not in the money-making stage—even though we do generate some revenue from Google ads. Instead, what we are doing at this point is still building our audience, to demonstrate that this form of webcasting can be a very popular medium.”

In doing this, Rotman is targeting sponsors; just like the kind who sponsored TV in its early days (and still do). “Our shows are produced like conventional TV programs, with breaks where commercials can be inserted,” he explains. “In doing this, we are going back to the early days of broadcast television, where commercials were everything. I mean, in those days sponsors often paid for mentions throughout the entire show—and put their name in the title—rather than just buying 30 seconds there and there. That’s something we want to revive at Streamin’ Garage. That’s a model that we think can work for us.”

Rotman hasn’t been possessed by 1950s’ advertising nostalgia in picking this approach. Instead, it is his attempt to attract the vast majority of internet surfers, who notoriously hate paying for content. “If you put up a product for free, build [an] audience and then try to charge for accessing it, people get mad,” he says. “That loses you the audience you worked so hard to build; it just doesn’t make you money. In contrast, ‘free’ TV has succeeded for decades by relying on advertising revenues rather than subscriptions. The fact that broadcast TV has lost viewers to competition is only a comment on free TV’s content quality, not the medium itself. As the Super Bowl proves every year, if your broadcast content is truly compelling, people will watch it— commercials included.”

Conclusions

blip.tv, Funny or Die, and St. John’s University have found streaming media business models that work for them.

blip.tv’s adoption of the standard broadcast TV model is making money for the site and its program producers. Its success proves that old business models can become new again, when applied to new markets.

In the case of FoD, it is the site’s free short- form comedy that drives revenue generation from advertising, branded content, and premium longer-form programming. For St. John’s University, the sales angle is exclusivity: If you want to see the Red Storm in action and live, you need to subscribe to its website.

It remains to be seen if Streamin’ Garage’s sponsorship model will succeed. However, the 1950s’-style TV model being applied by Mike Rotman—build the audience numbers, and the advertisers will come—seems to make sense. The best news for advertisers is if Streamin’ Garage’s viewers are tuning in live, they have to sit through the commercials.

Just as we went to press, Streamin’ Garage launched an online fundraising campaign on www.kickstarter.com. The goal is to raise $20,000 for new production by offering a range of gifts for people who pledge money. A $25 pledge gets the donor a place in his or her favorite show’s credits plus a thank-you email card, while $75 gets these benefits plus a backstage tour via private Flickr account. The prizes go up from there. For a gift of $5,000 or more, Streamin’ Garage will make you executive producer of your own show.