New Media: Revenue and Profitability? [Film Friday]

This is the third post in my series, “Understanding New Media.”

So far, it’s safe to define “New Media” as “content financed, produced for, and released exclusively on the web that serves itself and no other.” Last week’s post tried to rule out marketing materials and spinoffs (content promoting other content or products). But I asked a key question: what happens when one of these videos generates its own revenue online? Since “New Media” is a tech and entertainment industry term, it is relevant to discuss the format in the context of commerce.

If a company authors products that collect money from the hands or by the influence of consumers, then it deserves to be called a “business.” If the company’s products drive profits, then it deserves to be called a “good business.”

In web land, advertising, subscription, download, and rental revenue are mere pennies and cents compared to the millions generated by the multiplex or family room tube. Web video is still young, and very few Internet networks have been able to grow through these sources of income. Most content is financed by upfront sponsorship and rarely sees extra money after launch. For example, our company depends on sponsorships from large brands to kick-start our projects in exchange for guaranteed impressions. But in several cases online, the cost of video production was so low and viewership so high that notable returns have been made. It is not uncommon these days to find content producers on YouTube bringing in generous annual salaries through the site’s Partnership Program. They might be small businesses, but these producers definitely deserve to be called “businesses” on their own. And in a select few cases, some large budget web series have garnered such a following that they have paid their bills in full and earned a DVD release. My favorite is The Hire, starring Clive Owen.

Some spinoff series online, as well as commercials and promotional skits, have attracted huge audiences and generated revenue beyond the marketing spend. The Old Spice commercials are famous for this. While these pieces definitely serve a greater purpose, audiences have awarded them the respect and merit of being autonomous content online. When this phenomenon happens and commercials become Internet memes, it is hard for me still to call this material “marketing.” Likewise, when spinoff series build so much traction that they turn direct profits for the label, I owe them respect as autonomous entertainment product.

When first approaching the subject, I assumed all web endeavors were only ever marketing extensions that inspire viewers to spend money in a way that indirectly supports the content producer. For example, a sponsored video promotes a product that, if purchased by consumers, can afford new content produced in the future. If a series makes money on a DVD release and not by itself online, the web release is really just promoting home video sales. In this case, the web endeavor is still a marketing extension – even if it is promoting sales of the exact same material. Therefore, it is important to distinguish between content that makes money through viewership on the Internet and content that makes money elsewhere.

Long story short, I think it’s fair to say that any content that makes money online deserves the “New Media” industry label. So, for the sake of iteration, let us expand our definition to include “content financed, produced for, and released exclusively on the web that autonomously drives traffic or revenue online.”

All of that is well and good, but I am still stuck on the evolution of the Internet. In five years, there will be little-to-no difference between the way television and web video are distributed. The pipes will be the same and the viewing devices will be the same. So what then is the difference between “New Media” and other forms of content? While television and web may converge, audiences interface with these platforms very differently.

Next week, we will address the penultimate quality of “New Media” entertainment: active viewership.

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Groupon and Living Social Just Lost a Customer

GrouponI’ve had enough. Fitness classes, yoga, waxing, Brazilian blowouts, facials, tattoos, beauty products, home & garden, apparel, too many hair cuts, too many massages, too many poorly yelped restaurants. I cannot delete these daily spam notes quick enough. I would never spend money on any of those things. I’ve been registered to both sites for over a year and only purchased five coupons. That means that I found only 0.7% of all available deals relevant and 99.3% mostly irrelevant. Terrible odds. I unsubscribed from both services this morning.

Not sure if you’ve ever checked, Groupon or Living Social, but I’m a 23-year-old male and not really that into blowouts or bikini waxing. A basic search and your own profile form would reveal at least that much. Connecting through Facebook or Foursquare could teach you even more.

The marketing prowess of daily emails and a clever coupon system has completely worn off. If these services made a little effort to market their offers by listing “best steak in town” or “highest yelped masseuse” in the subject line, I might pay more attention. Otherwise, the deal messages sit in my inbox like spam at the mercy of the delete button.

Groupon, Living Social, OpenTable, Facebook Deals, Google Offers and all of the other ripoffs coupon services need to start delivering relevant, targeted and meaningful deals. “Deal type” subscription checkboxes on signup pages are not sufficient. The delivery mechanism of email needs to be treated more delicately. And they all need to compete for poignant brevity (deal announcements should be no longer than a tweet).

I will stay registered to Yipit.com, which aggregates all of the major deal players into one daily email and does a far better job weeding out coupon categories I will never buy. But even Yipit could afford to target better and market the benefit of each deal.