Thursday, October 30, 2008

Dog Wags Tail Shock

Both Veoh and Metacafe are facing reality and are adjusting the commercial models of their services to reflect the reality out there in ad funded land.

First of all, Veoh georestricted their service to thirty or so countries and now Metacafe have halved the amount they pay to producers in revenue share - and this is payable only in plays in the US.

Both these moves make commercial sense, especially since the gorilla in the room is still sitting pouting in the corner not knowing quite what to do next (yes, I mean YouTube...).

The latter move is worth taking a look at.

Let's presume that Metacafe are getting around $20 net CPM (if they're any good they should be getting more since there's a real lack of inventory out there);  they're paying $2 to producers, and let's presume that they're paying Akamai around a $1 CPM for delivery, that leaves them with $17. Of course, if they're getting $5 CPM for banner ads, then the economics are very different. In fact, I can't remember really ever seeing many ads on Metacafe, so all this seems to, in effect, be doing is lowering their burn rate.

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