Friday, March 07, 2014

Rise Of The Robots

Over the past few years I've watched with amazement as more and more online video producers chose to work just with YouTube. So, it's sad to hear of the demise of KoldCast TV in the same week as Machinima decided to lay off staff and outsource its as selling to Google.

It was particularly telling that KoldCast TV founder, David Samuels, cited the cost of attracting audiences as being the major problem.

At its root, commercial television on any medium is a simple business. It involves selling advertising for more than it costs to attract and keep an audience. Forget, for a moment, all the bits in between - quality programming, cross device distribution. What media companies do is buy and sell eyeballs (or ears if you're a radio station or music service).

Even production companies will not last long if their programmes do not attract and retain audiences.

But this simple equation has become tough in a market where one company has a near total monopoly.

If you want to build an audience, one of the most effective ways is to pay Google. However, if you're successful they'll up the rate until you squeal. (I say 'they' but by this I mean computer algorithms, of course).

You want to sell advertising, well, you need volume. Again Google come into play. But the more you sell, the less you make. The CPMs available for video advertising on Google platforms are sometimes up to twenty times lower in my experience than working with specialist companies such as InSkin Media.

Conveniently, in between they also provide you with a free platform called YouTube which provides eyeballs and does the ad selling for you. They do what Amazon does for buying things, or Facebook does for socializing: they make it easy for you.

But if your business is based on producing and distributing video online, this approach strikes me as lazy and short sighted, as Machinima and their big media investors will find to their cost.

It's interesting that Maker Studios decided to go in the other direction, as did Channel 4 in the UK, so the war is not lost.  It's time to rise up to challenge the rise of the robots and recognize that, in media, they make fools of us all. The audience is made up of human beings, after all.