Online Videos - How much ad revenue?

F

Fahad

Veteran
Hi,

I’ve been researching self-distribution, but can’t answer this question:

How much revenue could an online video generate from ads?

I know a lot of video hosting sites offer "ad revenue sharing", but whenever I look for numbers, I can't find them.

Specifically, I’m looking for: revenue on pre- and post-video rolling ads.
I’m assuming it’s similar to banner/text ad revenue, maybe a little more.

I read this article, but it’s dated and specific to text/banner ads-not video.
If I had an idea, I could develop a project based on expected returns.

Could anyone refer me to any resources?

Thanks!

P.S. why is this information so hard to find?
 
The information is hard to find because it doesn't exist. There are too many variables and the market hasn't stabilized. People are still trying to figure out how to make it work. You'll have to talk to specific ad companies to get any meaningful answers.
 
There have been some articles on YouTube ad revenue in the past, but more a guideline as to what is possible than clear examples of user generated content making $$. I would have to go back and do some searching to find it.

Michael
 
Fahad said:
Hi,

I’ve been researching self-distribution, but can’t answer this question:

How much revenue could an online video generate from ads?

I know a lot of video hosting sites offer "ad revenue sharing", but whenever I look for numbers, I can't find them.

Specifically, I’m looking for: revenue on pre- and post-video rolling ads.
I’m assuming it’s similar to banner/text ad revenue, maybe a little more.

I read this article, but it’s dated and specific to text/banner ads-not video.
If I had an idea, I could develop a project based on expected returns.

Could anyone refer me to any resources?

Thanks!

P.S. why is this information so hard to find?
Click to expand...

I guess I'm confused on what it is you're asking. You're talking about your own personal website having ads (video or otherwise) and you're asking how much you'll get paid to let advertisers place ads on your site?

The problem with your question is that you either must A) set the price yourself, or, more likely, B) go with whatever price or percentage the merchant is asking for (A or B will be determined by the popularity of your site). If you're a smallish site (say with 5K unique visitors per day), then anything you can get is pretty much gravy. If you're seeing closer to 50K per day, then you can probably find some comparables out there.

So let's say I have 10,000 unique visitors per day coming to my site and 75K members. I can then tell people it costs X amount to advertise XYZ style of ad on my site (or I want X percentage amount -- btw Google and others already have this metric in place so that your revenue scheme is simple; if you're getting a percentage of whatever is sold on the Click-Thru, and the average thing sold is, say, 20 dollars, you would simply take your percentage points and multiply them by your click-thru rate, which will be a metric that you'll have to establish yourself). So if someone wants to put, say, a video ad on my site, that will cost them more than a smallish, blinking ad. My revenue will be based on what I charge.

If I went to advertise at a pizza place (e.g. "attach my flier to every pizza box you deliver and I'll pay you X"), each pizza place is going to charge me differently.

If you're asking how much YOU should be being charged for having your video ad on someone's site, they will be able to provide you with that information.

And if you're asking about ads on top of videos (ala YouTube), from what I understand no one makes any money worth mentioning with those ads. And you have to be a "partner", which is aweful. Ditto, unfortunately, for most Google ads. Google ads are scary and obtuse and most people don't click on them unless they are actually searching on Google.

There may somewhere be a metric that says, like, GENERALLY a person with 10K unique visitors per day should charge GENERALLY X amount of dollars for XYZ style of ad, but your best bet is to check out places like DVXuser and DeviantArt and see how much they charge for adspace (and in that gather data of how many unique visitors and members they have, which is information usually given at purchase -- btw I'm not sure DVXuser sells adspace, but it sure looks like they do!).

There can't be a clear answer because what Google provides the seller and what your site provide the seller are completely different. There must be some literature somewhere, though, giving some approximations of 10K = X amount, 50K = X amount. But in the end, if your site speaks to a niche market, you might be able to charge more than whatever those metrics might be.

For instance, selling a book on how to work a DVX on a DVX forum -- that will probably yield greater returns for the advertiser than would that same book being listed on, say, Google.

But maybe not.

In the end, if your question pertains to click-thru profits, everything will depend on your sites' community and whether or not your ads speak specifically to that community.
 
Cassius said:
The information is hard to find because it doesn't exist. There are too many variables and the market hasn't stabilized. People are still trying to figure out how to make it work.
Click to expand...

Cassius, that's what I was led to believe, too.

But if you think about it, it doesn't make sense. There are individuals/studios making
money from online video productions-through advertising. This assumes, of course,
that their content is solely intended for the online entertainment value (i.e. not part
of a marketing campaign).

YouTube even has a "non-disclosure of income" clause in their partnership contract.
That means there is one instance of known information, but it is forbidden to be
shared.

I use the term entertainers because these guys have figured out exactly how to
make money from entertainment (of which filmmaking is a subset). They used the
cheapest equipment (laptop + webcam) and yet are raking in more money than a lot
of aspiring filmmakers. That's my logical explanation of why the production values
of these online shows get progressively nicer.

Granted: no one knows what they’re really doing with online videos right now.
Even if you did make money, it’d be through countless hours of dedication,
persistence, building a fan base, etc. Also, the money that you’d make is fine for a
single 20 or 30 something, but is not sustainable (yet-no one knows).

According to this article, the top YouTube partners might be making $50-100k from
their YouTube venture. That’s not a bad figure. But how did that figure get there?
How many views generated that much income? Can it be magnified? How? etc.

I would basically like to get to the bottom of this online video ad-revenue mystery.

I found these analyses, but they’re expensive to purchase.
 
Chamber005,

yeah, i definitely appreciate the mechanics of advertising.

but specifically, i'm asking if this is feasible:

1- you have a website with several short films.

2- before each video starts, there's an ad saying "your ad here".

3- when a person/business clicks on that, they can upload a pre-video ad. which will
play whenever anyone wants to watch a particular video.

4- you charge them per thousand "impressions". Say $10 per 1000 views.

5- if you have 50,000 views, that's $500. if you have 5,000,000, that's $50,000.


this is all assuming your content and marketing are taken care of.

are these numbers realistic? are they too much?

i understand that the content will determine the audience which will determine the value of the advertising space.

But, is $10 per thousand views a good "ball park" figure?

thanks
 
I don't know what ads before videos are like, they're probably higher CPM, but back in the day, when I ran online businesses in 2000-2002, for banner ads for instance I'd be lucky for a $1 CPM, sometimes it would be 30 cents after the market crashed. It would depend on the campaign.

I had worked with companies like DoubleClick and Advertising.com on my sites, but this was all before video was a big deal online... I would hope that video ads that play before another video pay higher, but who knows?
 
JonathanLB said:
I don't know what ads before videos are like, they're probably higher CPM, but back in the day, when I ran online businesses in 2000-2002, for banner ads for instance I'd be lucky for a $1 CPM, sometimes it would be 30 cents after the market crashed. It would depend on the campaign.

I had worked with companies like DoubleClick and Advertising.com on my sites, but this was all before video was a big deal online... I would hope that video ads that play before another video pay higher, but who knows?
Click to expand...

To op -- First off, forget whatever they're saying about "top YouTube partners". You, me, and no one any of us will ever know will ever be "top YouTube partners". Institituons like The Guild, who even have big name corporate sponsorship are nowhere near being "top YouTube partners".

But to the point of pricing, I don't understand what the problem is. You're asking to know how much, say, Sprint or Verizon or Toyota is paying to put an ad in front of a video? Sorry to burst a bubble that may or may not have been forming, but unless you are Hulu or some other site that is doing MAJOR broadcast work, any video ads you're seeing in front of videos exist there because those videomakers are SPONSORED by the company in question.

If you are a MASSIVE content provider (like, a place where everyone is putting their webshows and short films for viewing), you MIGHT be able to get a sponsor for that website (which would then end up with ads being placed on those videos). But I have not heard of any company paying to put ads ON VIDEOS. That's not happening the way you think it's happening. They're giving you X amount of dollars based on how many unique visitors your site has and how long they stay and then their ads (with other advertisers, potentially) are ending up on the front end of the videos being displayed on your site.

But okay, your business plan is thus:

1) You make a video.

2) You get 200,000 unique views on that video every month (good luck proving that to anyone with money to invest btw -- it's easy to prove unique VISITS, but unique views of a video is a different tech. I'm sure it exists, but I don't know what that tech is and, as an investor, I don't know that I would believe someone who told me to trust their data who isn't a major corporation with the SEC breathing down their neck)

3) You then ask people to pay you to put their ad on the front of your film.

Immediately you can completely discount ANY large company. The only way you will get a large name is if they sponsor YOUR SITE. They will then say where, when and how they want their ads displayed. That's all worked out in your contract. Most of the time, though, (like in the case of MSN), they'll fund your productions and show them on their site and charge for the ad space, etc. You are then allowed to show your videos the following month (or weeks) after it has premiered on MSN (or the like).

So, assuming you don't want that, I'm sorry, YOU have to decide what a view is worth -- and what's more, you have to find out what people are willing to PAY.

I said before, your best bet is to ask DVX and places like it how much they charge for their adspace (facebook, for instance, gets me about 350K unique impressions for 50 bucks). Since a stationary ad is not as robust as a video ad, I would maybe, I dunno, quadrupal that amount? At best? Depending on the targeting?

Thus 350K impressions/views = 200 bucks.

So if you had, say, 4 videos on your site, and each one was getting, say, 200K views per month, you could run ads on all four videos at approx $500 total.

$500.00 + 12 months = $6,000.00 annually.

And, of course, that's IF you maintained the 200K views per month for the entire year (or if you got someone to sign a yearlong contract. Good luck! LOL)

These figures are, literally, IMO, probably impossible. But I think they're the correct PRICING, which is what you're looking for.

In the end, though, it's all about sales. If you can convince some shmuck that he should give you 2,000 bucks per month to have an ad on your video, then you'll be making 24,000 dollars per year.

I think your confusion comes from thinking that advertisers are paying for their ads to be on specific videos. They're not. They're giving money to the website owner and are thus sponsoring the SITE, not the videos. The site then pays the providers X amount of dollars for production costs.

I think you're trying to combine artistic ventures with business ventures. Most business people do not own the building where their business operates. Chase Bank, for instance, does not probably own the local Chase Bank in your area. The building is being leased. I'm sure the company Chase Bank has huge investment dollars allocated to real estate, but that is a separate business venture.

If you're trying to make MONEY from your ART, you need to find a sponsor or you need to self-distribute (both models of which have been clearly defined). If you want to operate a profitable WEBSITE, that should be a completely different venture (though I'm not saying that your art can't be affiliated, I'm just saying that that content on its own cannot create a profit without sponsorship or distribution).

The only vague blending I can see that makes any sense at all are things like Google ads and smallish, online companies that may want to advertise on your popular SITE. Once you have sold the online company to put banner ads on your site, you can then solicit them to have video ads, but, IMO, there's no reason why they would want to pay more for that privlige. See?

But again, at best you're looking at maybe a few hundred extra bucks per year. And that's if you have an ENORMOUS -- like, HUGE following, which, if you did, you'd be being sponsored by a large company like The Guild or Legend of Neil.

If you insist on making money from your web videos, you have a MUCH, MUCH, MUCH better chance of turning a higher profit by simply charging people to watch the video, the way an online comic book costs the reader 99 cents, etc; or an iTunes download is $1.99 (but good luck getting anything on iTunes, lol).

You're thinking too hard about something that's not worth thinking about (unless you're doing research for a class assignment or something). Your approach is the opitome of NON-PROFITABLE. Like, it is the LEAST profitable thing you could possibly do in regards to video distribution. So, that's pretty much it.

EDIT: Last note on this, if your business model is to put someone's ad on your video and then display that video on Vimeo, YouTube, Exposure Room, including your own site, then you will ABSOLUTELY not get a large company. For one, they can't know if anyone is seeing the video because you cannot prevent the viewer from fast forwarding -- unlike on sites that do heavy broadcast work who have a mechanism so that you can't fastforward. CAN you sell that business model to Joe Blow? OF COURSE YOU CAN! You can sell anything to Joe Blow so long as you don't promise it will regrow his hair (no, seriously, there's a law against that).

I garauntee there is someone out there right now charging some fool to promote his crappy product and charging him more than is reasonable by any metric. But that's SALES, that's BUSINESS. And, you betchya, LAWSUITS are sure to follow.

So make sure that LLC is set up!

Welcome to advertising!!

:D
 
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Chamber005,

thanks for the lengthy reply. i do understand what you're saying; the gist of which is that it's
impossible to make money from online videos.

however, i am of the opinion that the internet has a great revenue potential that's not being
efficiently tapped into. i'm just trying to figure out HOW it could be done and WHY it hasn't been done yet.

you might be right that i'm chasing a wild goose, but i won't know until i've done all the
research. as i mentioned above, there are resources i could access if i were wiling to pay.

profit is dependent on costs. yes i won't turn a profit if i spent $50,000 on a video that i'm distributing solely
online (yet). but if a video cost $1,000 to produce, and i got $2,000 out of it from ad revenue, then that's a
pretty good profit margin.

if i knew the income potential from a certain video is $100, then i could design the production around that
potential.

also, i'm not just talking about art film/video productions; i'm talking about educational videos, instructional
videos, documentaries, etc. (i. e. videos that create value for the viewer AND advertiser).

basically, i'm trying to figure out a business model for a sustainable online video production company.

why online? here's why:

1) fighting online "piracy" is impossible. you might as well fight the advancement of information
technology and communications. it can't be done.

2) selling physical media for the sole reason of the content in this day and age is just anti-productive.
might as well start selling 8-track tapes. it'll make more sense if you sold t-shirts or coffee mugs with it.
why? because it'll just end up online anyway, accessed without financial return. if you were hosting
the content and everyone wanted to access it, they'd just go to your site-seeing the ad
which generates revenue for the production.
also, it could provide the production with perpetual income over the course of infinity, because
it'll always be there, freely available to be advertised on, whoever wants it.
additionally, copyright is near impossible to control internationally.

3) the internet user base is growing exponentially. in 1996 there were 16 million internet users.
in December 2009 there were 1.8 billion users. source
now, out of that 1.8 billion users, are you saying that you cannot ever make something that
even a fraction of those users would want to see? there's no advertiser that would pay to
have their message seen by those users? i find that hard to believe.

4) i read somewhere that most kids under 18 are getting the majority of their "video consumption" online.
i don't remember the source, though. but, if this is true, this means that television is dying.

finally, charging any kind of fee to access the content would require the content to be
especially valuable in the eyes of the potential viewer. that would be hard to do, especially
if the website/production company is still growing.

this kind of company will start with especially concentrated niche-targeted content. depending
on the target market, a certain fee could be figured out for advertisers. after that income has
covered the costs of producing the content, it could be used to finance something with a
broader audience. advertisements would be cheaper depending on the broadness of the target
market.

anyway, i appreciate the replies.

i think this might give me a reason to go to grad school in mass communication/media studies.
maybe after that i'd have a good idea of where this market is going.
 
I suggest you try contacting sites that are currently running such ads. See how much it would cost you to run your own, or a client's ad there. A site like ESPN might be at the top of the heap with a huge built-in audience, but with several other sites you could get an idea of the range of pricing and the extent of the finely-targeted distribution available.

One thing I just noticed is that some site (Yahoo?) will have a B&H animated ad that shows products I recently viewed on their own site, and a Jeep ad that knows what state I live in. Mmmmm cookies, but that kind of creeps me out sometimes.
 
BVX,

that's not a bad idea. and, i actually found a few resources.

i don't know why i didn't do this before, but googling "video ad cpm" gave me
good and relevant results.

apparently, the average is about $12 per thousand (CPM). So that's $12 in the
interested party's pocket minus expenses. that's a huge number.

so, say you did your marketing right, did all your promotion right, and managed
to get 500,000 views. also, say your getting $5 CMP. does that mean you'll
(potentially) make $2,500?

dependent on the cost of marketing, this might be a great idea.

any thoughts? am i missing something?

i've found a case study for what i'm researching: Next New Networks

and i've found a company specializing in this sort of thing: tubemogul



if anyone's interested, here are my sources:

TubeMogul: Average Video Ad CPM Is $12.39

Online Video Advertising CPM Rates – Currently a Bargain for Advertisers

TV CPM: $25. Online Video CPM: $70 (video)

What Are The Going CPM Rates For Online Video Advertising?

Next New Networks to Turn Profit This Year, CEO
 
Hey, glad you found some concrete figures. That definitley helps.

And so long as the person only has to pay X amount for X amount of views of the (non-fast-forwardable) video, I can at least see the potential.

But, not for nothing, just so we all stay sane, I was the one who came up with the 500K metric and, realistically, that is an ENORMOUS number that NO independent has EVER achieved. Like, the most popular people on the interweb are not seeing 500K views on a video in a span of MONTHS, let alone in a day. I mean, you're acting like you'd somehow be able to manufacture these massive amount of views and it just doesn't seem logical and so, again, I'm having trouble grasping the business potential.

But okay, I'll try the ONLY possible way I can even imagine...

As always, $50 for 350,000 unique impressions gets you, with a GREAT ad, a .30% turnaround. The average is .15% online, so you'd have to DOUBLE that (which I have several times in my own marketing, so it's not impossible).

So that's 1,050 views of your video = 12 dollars = 38 dollar loss.

Obviously you could tap into social networking, if you maxed out at 5K friends on FB and got, I dunno, probably not more than 10% (if that, because, let's face it, you don't actually KNOW these 5,000 people -- there's a reason there's a limit), you might see, what, another 500 people?

So, like...18 bucks on average minus the 50 = 32 dollar loss?

You said you could make some instructional video, and, in my experience, the best most popular instructional video over like a 2 year period might see 100K. So, I mean, that's 1200 bucks after two years, if you could manage to keep the client that long. And it's not like you could run anything else on that same video, so you'd have to either have that one ad running on, say, 50 different videos and hope that you get the return you're looking for, or you'd have to run all different ads.

But let's try to make this work.

You make a 27 part instruction video about After Effects. BEST tutorial video EVER! Smash hit!!! Each video, on average, over a 6 month period, gets 25,000 views each. Like, just a RIDICULOUSLY high number, like ASTRONOMICALLY high. But you do it, you get it.

At $12 per thousand and 25K X 27 videos = 675,000 = $8,100 after six months.

This is like SO insanely out of the scope of reason, but the numbers are the numbers. So IF you made 25 videos and IF you found a client with an 8K marketing budget (or eight with 1K or 16 with 500), and IF you managed to get 25,000 views on each of those videos within a six month period, you will make around $8,000, minus Uncle Sam's 30%.

I think a LARGE and AFFLUENT company (even something like Creative Cow, potentially?) can hit these kinds of figures. But the days of getting rich quick off of internet adspace -- I mean there was a bubble for that, and it burst because everything was valued incorrectly.

I'm not saying money can't be made, but sir there are faaaaaaar easier ways to make a buck, man. This, to me, seems like a nightmare. lol

But if you're PASSIONATE about it, yes these are the numbers.

Good luck!
 
this is just preliminary research, of course. i'm trying to figure the limits and sustainability of the online ad-revenue
business model for video production. but there's a chance that it might be hard to start from the bottom up.

seemingly, the most expensive factor is advertising to get exposure.

generally, i'm trying to find a synthesis between film and internet that's economically sustainable.
 
There is still a ton of money in online advertising, actually way, way more than ever before, and it will continue to grow, but I agree with Chamber that it isn't a viable business model to make videos and expect to make the money back in ad revenue. It's smarter to do what YouTube does and let other people post content for free, and then pay the top performers a tiny cut of what you make for advertising. But like Chamber said, if you made your own site and thought somehow you're going to generate enough ad revenue to pay for the cost of video production, it's just not going to happen.

Most of the ad revenue is in large sites with VERY large unique user counts daily. I was able to make about $3,000/month (gross) off my humor site in 2001 on 10-15K uniques per day, but those were the good old days.

The one thing Chamber isn't right about is the people who view the top videos -- the top YouTube video bloggers like Phil DiFranco get 500,000 views in a single day no problem. His videos will get up to 1.2 million views per one after a while. There are a lot of people following top shows like The Guild, Legend of Neil, etc. My lead actor in my upcoming feature worked with Sandeep (and we're trying to get him on our film) and has his own show, Squatters. There is definitely a growing user base for online content, but how viable is it financially in and of itself? I don't think very. I think it's more of a catalyst for future career success in other areas, frankly.
 
A few years ago I read that 90% of the videos online generating any kind of revenue were coming from three sites. Your traffic has to be huge, repeatable, sustainable, to depend on ad revenue as a living.
 
alright, upon further research, i got to this article. it has a diagram that's especially illustrative of what i'm trying to find:

tc-ash-4-graph1.png


now, the red part (no profit) is most people wanting to start out.
the green part (most profit) are the exclusively online-production networks.

everything in between are aggregators with higher end content (e.g. hulu) to aggregators with
"free for all content" (e.g. youtube).

now, the question is: how can one move from small-time producer to big time online-production network?

after reading this article, i've come up with a general model.

how about starting an "aggregator" website that showcases videos of invited filmmakers which are
lumped together in a few abstract categories. those filmmakers get a cut of the ad revenue that
was accessed from their own videos (or 100% of ad revenue minus promotion costs).

the stipulations, however, will be as such:

1) the video has to fit one of the abstract categories.

this will help define the style, target market, and overall theme of the website.

2) depending on category, the video has to be less than X amount of time, or cost less than Y amount of money.

for entertainment-focused videos, this will serve the purpose of encouraging better writing. also, it encourages creativity regarding the presentation of film as an art with the cheap tools technology has enabled us. if a production would cost a lot, then based upon past performance, the filmmaker would know before hand if it's worth the effort.

the time-limit is based on internet viewing habits, but is highly flexible dependent on target, content, etc.

3) last, but perhaps most importantly, it can't be a free-for-all kind of website

in the beginning especially, this kind of imodel should be between a tightly knit group of filmmakers/producers who share the same vision as to what they want out of the website and their craft/art.

i would honestly say, no more than 10-20 people should have a direct stake in the website.

this business model can start extremely small and grow-if the vision, and the plan, are kept in cohesion.

think of it as a sort of joint venture of a few independent filmmakers.

the purpose of the managers of the website would be to provide analytical information and analysis to the filmmakers.

a few examples:

1) a cooking website.

i'm sure a lot of people know a good chef or two. a simple video "tutorial" on cooking something would be quite simple to produce. 10 people produce a video on different dishes. with "vacancies" for each (pre-assigned) dish to be filled.

for the producers (partners of the site), the website would have a tutorial section on how to produce an effective cooking presentation. a few guidelines to keep them focused. guidelines that can be broken, if they choose. generally, apart from the website being a distribution channel for producers content, it would serve as nurturer of their craft (based on numbers).

2) a humor website.

a good writer knows a good actor who knows a good cameraman. they all have a friend that's good at organizing. they get together and make something funny.

3) a funny film about cooking.

after the two websites have now had a good following, and ad revenue is actually coming in: some people from each site could come together and form a larger production. they can make a funny film about cooking that's filmed in diverse locations with (now) recognized faces/personalities.

4) a news/political commentary site.

guy with a webcam: "so today in my hometown, something happened..."

5) a business oriented site.

guy with a webcam: "the dow jones..."

6) news guy and business guy come together to form an opinion on something through a larger production".

7) shock value site.

shocking videos.

8) a director showcase site.

directors who have talent and show their art.

9) shock value guy and director guy come together to make a horror film.

etc. etc. etc.

now, when i say "it can start extremely small", i actually mean "by any means necessary". meaning, if you have a good idea, but you only have a webcam and a pc to make it happen, make it happen. also, if you have a good idea and have access to the latest and greatest money can buy, then do it. but the point is to start as efficiently and as effectively as possible. preferably, start out as a weekend project.

now, the essence of this proposal is actually building brand-equity. it has to be an ongoing process. and this is why it's better if it costs less to do. ideally, access to the internet and a webcam are the only start-up costs. aside from that, you need vision, talent, know talent, and all are committed for the long-haul.

that's just one thought i had.
 
Targeting niches is definitely the best use of the technology. But even here you're already a bit behind the curve as compared to what others are up to. And nowhere online are you seeing people who are getting any kind of good ROI on high-production-value "film." The mumblecore crowd does all right, the vloggers and slapdashers do all right... but if you're putting real time and money into your projects, expecting to make that money back online is a pipe dream at the moment. There's simply too much competition.

But that's all right. Online is only one slice of the pie. And "online," frankly, is a term becoming broad enough that it starts to lose meaning.

In response to your proposal, though: where's the competitive advantage? How are you going to get people on your site and keep them coming back? You either need big names to launch with (and this has been done and failed horribly), or you need a lot of time and money to put into getting the brand out there and promoting it.

Try not to cherry-pick your figures. Keep in mind that very few videos, even those of high quality, will reach 500,000 views... even on YouTube, which absolutely dominates the field in terms of eyeballs. There are dozens of other sites that can't boast even a single video with that many views. You'd do well to make more comparisons to THOSE sites than to YouTube. The chances of you becoming "the next YouTube" are astronomically slim. Look instead to blip.tv, bing, dailymotion, strike.tv, koldcast, Viddler, etc. and then consider how you offer substantive advantage over those guys.
 
thanks for the remarks, dougspice.

yes, i definitely don't plan this to be the next YouTube. this is just one fairly simple business plan i thought of. it wouldn't be a YouTube, per se. instead, think of YouTube as a joint venture between different niche websites.

i agree with the points you made. but, to be clear, this isn't intended to be a get rich quick scheme. all i'm looking for is how much revenue to expect and thus dictate the production costs. granted, the numbers i'm projecting are at the very least optimistic. but, that number is not meant to represent immediate audience numbers. i'm thinking more along the lines that: this kind of venture would take at least 2 to 3 years to become financially stable/lucrative.

here's another example:

Website no 1: comedy site

a cross section sample of the users:

Bob: comedy writer, Boston.
Tim: has a good personality, possibly a good actor, from Wales.
Mohammed: talented musician, from Bahrain.

Bob writes a monologue for Tim. Mohammed makes some background music. Tim presents the monologue via webcam. Tim uploads the video to the site.

they do this once or twice a week. now they have a show. ideally, the show will revolve around a particular theme. after a while, they have a solid following and people eagerly wait for new episodes.

all other users of this site are offering the same basic thing: laughs.

Website no 2: music video site

cross section sample:

Akemi: singer, Tokyo.
Jakob: sound mixer, Germany.
Baruti: editor, Johannesburg.
Gwen: lyricist, New York.

these folks do really cool music videos and upload them to the site. gain a following, revenue comes in.

Website no 3: episodic drama site

cross section sample:

Jack: director/cameraman, LA
Murad: composer, Istanbul
Sean: writer, Oz

Sean writes a sketch, Jack knows an aspiring actor, Murad composes music. they upload videos to the site. gain a following, revenue comes in.

once these websites are established and the contributing members are fairly successful, larger projects could be proposed. for example: Bob gets in touch with Jack, they get in touch with Mohammed, and then they plan a big(ger) production in Paris (for example). it will have a dedicated website for viewing.

now, why don't they just upload to YouTube like everyone else?

because these individual websites will, from the onset, have a specific goal and target audience in mind. everything about the site will be geared toward achieving that goal and viewer-ship. a portion of the ad revenue generated will work toward bringing in the intended audience. a mechanism would be put in place to offer analytical information to the content providers (i.e. Bob et al). this information would be used to enhance the quality of the productions and the viewing experience.

the thing with YouTube is that it's a free for all. you never really know what you're going to get. vimeo is a bit better, but it's also a free for all. these sites are too broad. most casual film lovers won't go to vimeo unless it shows up as a google result. even then, nothing's guaranteed to be worth watching.

the proposed websites, on the other hand, are specific in their scope and function. efficiency is emphasized. i.e. no s****y load times either.

also, please note that when i'm talking about a "production", i mean it in it's most stripped down form. i can only see the proposal working if the TALENT factor is emphasized.

aside from computer/internet access, you need: good sound, a clear picture from a camera, and entertaining/educational/informative content.

in order to achieve a financial return on the venture, you have to fill those requirements with the best price/performance ratio.

you mentioned that it works for the mumblecore crowd, vloggers, etc.

you're absolutely right, man. these are what i call the entertainers. the funny thing i notice is that these guys are making a decent coin (especially for their peer-group) using the cheapest possible equipment.

sure, the camera's not high def, the music is cheesy, and the editing could use some work. but, if you notice, the videos do have "good" sound, "good" picture, etc.; the bare minimum for a "production".
 
I'm a bit confused, as you mostly seem to be talking about content at this point. The old saying "content is king" is not a reliable maxim in a world of zero marginal cost and infinite competition. I see you proposing something of a business plan from an end user's perspective – how THEY, in theory, get paid... what I don't see is the business plan from YOUR perspective. How are you going to build the site, find/draw the talent, leverage the advertisers, host the service, and get YOURSELF paid? Obviously almost zero of that involves anything even remotely to do with actual film production. What the end users decide to do with the site is a whole other problem, really.
 
well that's where market research comes into play.

of course, you have to do your homework. what's the market like, what's missing in it, who's the target audience, and how are you going to get them to your site (or switch them over from their current provider).

for example:

you find out, through research, that there's a large cooking show audience than can be better served through a particular web-based presentation. you come up with a method that addresses this issue. so you go to Mr. Safeway marketing manager. ask him if he'd be interested to advertise on a cooking site with a particular style, theme, target. the ad goes like "you can get these groceries at Safeway!"

you find that there's a better way to present a niche local music scene, so you go to Mr. local guitar repair guy. ask him if he'd be interested to advertise to locals on a music site. the ad goes like "mention this ad to ... and get a $10 dollar discount". this ad would need to be localized, of course.

go to Mr. horror movie maker. ask him if he'd be interested to advertise his film on a horror entertainment site. the ad goes like "if you like this, then you'll definitely need to check out this film..."

now, after all the above has been studied, detailed and planned out, you can attract the people who can make it happen.

make a website, the cooking website.com, and have the particular method of presentation of content laid out to prospective content creators. they agree to these guidelines, and upload their videos. the videos are screened by the site (company), then approved. if a video is not approved, the up-loader is given critical feedback as to why it wasn't accepted. if a video is approved, then the video is accessible to viewers and the ad revenue generated from the video is given to that video's creators minus expenses. these expenses go toward advertising costs for the whole website, and website maintenance costs.

of course, i'm just making this up as i go along. the screening of and feedback for the videos might have to entail a processing fee for uploading. this will put off content creators. perhaps in the beginning, a website would be founded by several individuals, each with their own responsibilities. also, they would have an advertising agreement with a client. perhaps, at the very least, have some sort of positive rapport with prospective advertisers. after the website's success is established, they can now invite more groups of people to join the website.
 
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