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Making Money from Streaming Video: Here's How

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Streaming media is popular, but how do you make money from it?

That’s the big question that’s been dogging streaming media content producers large and small all over the world. Every year, the conventional wisdom seems to shift. Hobbled by internet surfers’ love for all things free online—and willingness to either steal or ignore content with a price tag attached— these producers are struggling to find ways to make a living.

The four content providers noted here— blip.tv, Funny or Die (FoD), St. John’s University, and Streamin’ Garage—each has its own take on streaming media business models. If there is anything to be learned from their success (or anticipated success), it is that when it comes to streaming media business models, one size definitely does not fit all.

blip.tv Harnesses the Power of Conventional Broadcast TV

Since its founding in 2005, blip.tv has pursued one simple goal: to offer the best in original Web TV series. As for making money? blip.tv has followed the conventional broadcast TV model: Sell commercials to advertisers so that viewers can watch content for free.

“I won’t pretend that it wasn’t tough using this business model for the first three and a half years,” says Dina Kaplan, co-founder of blip.tv. “When we started, advertisers didn’t have budgets for web content, so you had to persuade them to divert money from broadcast TV—and that wasn’t easy.”

Since that time, advertisers have grasped the reality of streaming video and are starting to put money into sites such as blip.tv. “The reason they choose us is because we can give them a guaranteed reach and provide a range of metrics showing how their ad sales are performing,” Kaplan says. “Meanwhile, using our model where we split our ad revenues with our program producers, we are making money for our people. In fact, we made over $500,000 for our top show this year in shared ad revenues—and we expect to hit $1–2 million in the year ahead.”

blip.tv’s success lies in the fact that it is offering shows that people want to watch. The irony is that this success is content-driven: blip.tv could likely generate the same results if it was a conventional TV network, rather than a website. Doubtless the edginess and sophistication of series such as Red vs. Blue and Day[9] content makes a difference because this is content not found on CBS or FOX. Still, blip.tv’s ultimate success lies in adapting the old conventional TV model to the web. The reason this approach works is because both media offer free content to viewers, with advertisers paying the bills in exchange for eyeballs.

Funny or Die: Serious About Making Money—In Many Ways

Since being founded in 2007 by Will Ferrell, Adam McKay, and Chris Henchy, Funny or Die (www.funnyordie.com) has become a poster child for popular streaming media websites. FoD’s ability to attract big celebrities and funny writers has resulted in the site garnering more than 11 million users and 30 million video views a month. In doing so, it has proven that streaming media sites can achieve cult status and huge followings at the same time.

With 30 million video views a month, FoD has the eyeballs to make serious money from web advertising. So how does FoD cash in on all this success? “First and foremost, we make money by selling standard Web advertising,” says FoD CEO Dick Glover. “There’s the banner and button and IAB unit ads, of course, and there are variations on that theme such as home page takeovers, rich media and all those techniques.”

But that is just the beginning. There are many other ways that the site makes money. “For instance, we create ‘branded entertainment,’ where we create streaming media for companies that enhances their brands while providing entertainment for the audience at the same time,” says Glover. “A third revenue-generator is by leveraging our success as a producer of comedy shorts into TV shows and films.” A perfect example of this is HBO’s Funny or Die Presents. These are longer form TV shows on cable/satellite that cash in on FoD’s powerful web brand—and allow the site to generate programming dollars away from the web. Glover says FoD is also in the “preproduction phase” of its first digital feature film.

But how can FoD make money directly from its online content? Given the company’s wild success in attracting surfers by offering freebies, Glover is loath to tinker with this model. “In fact, the best way to maintain this success is not to build a pay barrier,” he says. “But that may only apply to the short form content we’re known for. I could see being able to charge for special 20 minute segments that could only be watched on our site. In this way, we would not alienate our core audience—and we would be able to leverage their enthusiasm to sell pay-per- view services.”

Having said this, Glover remains cautious about attaching a price tag to Funny or Die’s online offerings. “You have to weigh the benefits of what you might gain through subscriptions or pay-per-view downloads with the impact it could have on your audience,” he warns. “If you do adopt some form of pay-per-view model, it is vital not to undercut the free content strategy that built your site in the first place.” That’s why Glover sees Funny or Die’s central content as a way of creating money-making opportunities, rather than a direct revenue source in its own right. He does not want to kill the internet goose that keeps laying golden eggs.

As a result, it seems fair to expect Funny or Die to keep its website largely free, with premium content turning up on TV and in theaters. By doing so, Glover will ensure that FoD remains a widely watched fan favorite online and a popular brand that can generate millions in many media. (For a more in-depth look at Funny or Die, read our feature "The Art and Science of Funny or Die.")

St. John’s University: All the Live Sports You Can Watch for $9.95/Month

College basketball fans know the St. John’s Red Storm. The team fielded by St. John’s University of New York is one of the most successful teams in U.S. college sports history. But the men’s basketball team is just one of 17 men’s and women’s teams playing under the St. John’s banner, in sports as diverse as baseball, cross country racing, fencing, golf, soccer, tennis, and volleyball.

The Red Storm is a big draw for St. John’s 161,000-plus alumni, many of whom follow the teams online at www.redstorm sports.com and on StormTracker All-Access, the website’s streaming video platform. For $9.95 a month or $79.95 a year, “Red Storm fans can see all the action live via our streaming video broadcasts,” says Mark Fratto, the university’s senior associate athletics director for communications. “We produce about 110 live events in SD annually. We stream every home game in every sport that is not televised, our ‘Midnight Madness’ basketball season kick-off, our men’s and women’s basketball media day, plus our Athletic Awards celebration at season’s end.” 

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