• by Ashkan Karbasfrooshan , Op-Ed Contributor, September 17, 2012

Quality.  Scale.  Pick one.  Bet you can’t pick both.  Can you?  If you can find a way to deliver those two things to advertisers, investors will reward you amply.

As a producer of content, I know  the quality vs. scale conundrum all too well. 

Producer vs publisher

Every producer is a storyteller.  For some, their weapon of choice is the pen, for others it’s the microphone.  For fewer still, it’s a camera.  Either way, producers start off by dreaming of creating content they are passionate about, building an audience of dedicated viewers, growing their brand  -- and for those who work online, landing advertisers, because as we know, content is now meant to be “ad-supported.” 

That’s the “dream,” even though for purists the concept of blending church and state is blasphemous.  

The reality, however, for most is they forego all that and take on production mandates for others.

Fortunately, apart from a couple of mandates early on, my company’s never needed to shoot weddings and bar mitzvahs, and by and large, 99% of what we’ve produced has been “our content.”

The “artists” among producers prefer to create their own content, while the “business oriented” producers know that there are no M&A multiples in production: acquirers and investors pay a premium to technology and distribution plays, less so for publishers, and practically nothing for pure-play producers.  Of course, once you realize that investors don’t finance content producers anyway, then you can let go of that dream and embrace production deals (for others).

Most producers need to take on such production deals not because they want to, but because they need to keep the lights on.  Content production is a very tough segment of online video. Just because content is made available for free to viewers, doesn’t mean it’s cheap to make, let alone free to produce.

But whereas production scales very differently (read: slower) than distribution, it’s not a zero-sum game.  As such, if you can hang around long enough for last call, you’ll end up walking away with the spoils.  But so many content producers have faded or run on empty because they mistimed or miscalculated the market.

Mistiming the Market

I’ve long referred to how my company is among the third wave of video-content producers.  The first ones like Pop.com or Pseudo were too early (no one had broadband).  The second wave like Mania, Ripe and Heavy had to build their own infrastructure and invest in marketing.  The third wave wave also included players like Revision3 and Next New Networks, which have exited. We’re now seeing more and more of these third wavers who are practically only on YouTube, which may or may not work, if they don’t…

Miscalculate or Misread the Market

Once you don’t have to absorb marketing and infrastructure costs, you can build a solid video content business provided you don’t bite off more than you can chew.  What the Revision3 sale to Discovery showed was that online video may never be “commercial” (that is, it won’t generate enough revenue to really matter) to old media, but it is certainly “promotional” (it can create promotional value to linear, traditional programming, where the big ad budgets remain).

The One Advantage of Online Video is Its Biggest Disadvantage, Too

You are also now seeing a new wave of content creators bet perhaps too heavily on YouTube, forgetting that what made cable (and broadcast) successful was the power of linear programming.  As we’re seeing everywhere, the democratization process comes with its share of headaches, too. 

Simply launching YouTube channels -- regardless of whether YouTube is funding them or not -- isn’t a bona fide successful strategy in of itself.   Ultimately, you’re a YouTube back-end producer -- and we know how poorly investors reward producers.  But to get there, you need to cut through the clutter. With 4 billion daily video streams and 72 hours of new content uploaded each minute, in all likelihood, no matter how “cool” and “awesome” your content is, no one will watch it; or rather, not enough people will watch it to make it matter to advertisers.  And users will by and large be drowned with too much content – be it ultra-premium, super-premium, premium, prosumer, or user-generated – for you to build your brand.

Which means, ironically, that for many content creators who aspire to build their own content catalog and brand, their only shot at survival is turning to production for hire work, be it for YouTube or someone else. 

As such, if you don’t misjudge the market, you can create the kind of content you want, while building your brand and the company you want.