What's next in social commerce for video creators?

By Prince Boucher , written on November 12, 2013

From The News Desk

Can good video content stay free forever?

We’re used to consuming video for nothing almost everywhere on the Web, but content worth watching is sometimes pricey, or at the very least, time-consuming to produce. It’s hard out there for a video producer, and while aggregator platforms like YouTube are great for audience acquisition, we’re starting to see the producers squabble with them over equitable compensation.

So how do video content creators quickly build audiences and make real money too? They have to think outside of the "Redbox" and go direct, through social. Traditional distribution methods favor big budgets and big fan bases. It’s a closed network that lets in only a select few over time. At the other end of the spectrum is YouTube, for everything else at which one can point a phone or camera. Discovery here is difficult, and there’s little chance video creators in the middle -- those who make quality video but have small audiences -- can do well on either platform. Social video commerce, or selling video from within social networks, is the answer.

There are three hurdles to making money with video that social video commerce overcomes.

1. The friction of finding great video. It has to be simple for video consumers to get and share content on their own terms, whenever and wherever they want. People don’t have to go out of their way for this stuff anymore so it needs to come to them. Last week’s decision by the Dish Network to close all the remaining Blockbuster stores put a fine point on that. And search on YouTube is still “dumb,” it doesn’t know you like your friends do.

2. Catering to niche audiences. We’re exposed to more content than ever, but most of us already know what we want -- or at least what we like. It’s just harder to find with so much video being produced. YouTube alone ingests more than 100 hours of video content every minute.

3. Harnessing the knowledge locked within social networks. People already consider Facebook's Newsfeed a primary source of information. Selling through social networks of friends or valued sources solves the access, niche audience and discovery problems all at the same time.

All of which turns Internet sales strategy on its head. For the past decade, selling on the Web focused on driving traffic to a website. Now social networks are just built-in, connected audiences. You don’t have to push people to go there anymore. They’re already there. Now content producers can focus on customers, not destinations. All that’s left is to take payments, secure delivery and deliver a great user experience. It’s worth looking at a couple of examples where the creators got these elements right.

"Louis CK: Live at the Beacon Theater" was not the first but arguably was the most successful direct to fan video distribution event. At $5 a pop and a heartfelt request for people not to rip him off, Louis CK single-handedly redefined the concept. It worked. His revenues topped one million dollars on costs of $250,000. He demonstrated there is feasible return-on-investment for direct-to-fan. We also learned not everyone would pirate content, even if they could.

The indie movie “Arbitrage” was released in the fall of 2012 and grossed $8 million at the box office. It was simultaneously released as on-demand video which generated another $14 million, making it the most successful independent film day-and-date release. It showcased how users will purchase video content if it’s both convenient and affordable.

Sensing the opportunity uncovered by Louis CK and "Arbitrage," players like Chill, and Vimeo launched direct-to-fan video sales offerings. (Chill recently exited the market, but has played a large role in defining direct to fan.) VHX started as a curator but pivoted to become a direct-to-fan VOD distributor. Tubemogul followed and made the leap to actually funding filmmakers at the International Toronto Film Festival. They borrowed from Netflix’s "House of Cards" strategy by co-licensing and distributing content. Then, Vimeo piled on this past summer by launching a VOD sub-division where "Some Girls" debuted as the first feature film available via Vimeo’s On Demand pay wall.

Clearly, this market is growing. But the question remains, what role should social play in VoD products?

In most people’s minds, social means a distributed peer-to-peer platform where users can easily share and comment on content. YouTube has that capability, and they’re building a direct function but it doesn’t live in your social network or know much about you. For video commerce to work inside of social the video player and payment need to seamlessly integrate with any platform so users can watch at their own convenience, share the content with those whom they are directly connected and execute simple purchases. One example of this is LittleCast, which launched this past September and offers the capability to sell video directly from within Facebook and mobile devices.

It’s Facebook’s audience and social graph that make this possible. In this model, everyone on Facebook is both a potential customer and marketer for the producer’s content. Producers spend less time, less money and less effort to market their work which leaves time for them to focus on creating more quality content, boosting sales and growing their audience and revenues.

Social exploits new opportunities to innovate video on demand. Certain shortcomings with traditional video and film creation, such as costs and ownership rights are ripe for improvement. This is especially true of production, post production and final delivery of distribution, including P&A, or “Prints and Advertising.”

Traditional distribution is extremely costly and includes what the distributor expects to spend on marketing and physical delivery of a film throughout its territorial rights. In certain cases, these costs outweigh the film’s entire budget. Given the amount of money that may be spent on distribution, it often means that no further revenue other than the minimum guarantee, paid up front, will be realized by the producer if the film’s commercial success does not exceed the amount spent on distribution. It could all be a crap shoot: Producers risk a lot on projects that may not even reach their full capacity of audiences.

This is the dark reality of the film business: Content creators frequently lose their backend. The possibilities for continuous improvement in this industry are obvious.

Social video commerce makes it possible for producers to see every dollar that comes in and even who spends them. This puts producers in a much better and creative position. By employing the Web’s social connections for marketing and the digital equivalent of prints and advertising for distribution, producers establish direct contact and build relationships with their audiences while mitigating risks to produce and monetize.

Don’t forget the producer’s ownership rights remain theirs, rather than being sold away. Without having to worry about that stuff, the doors open wide for the experimental, niche and “quirky” projects producers would not have risked in the past.

Video is not just for viewing anymore; it’s for interaction as well. Video social distribution with payment and delivery built in puts content producers and their fans back into a position of power which is just starting to be realized.

Recently Jeffery Katzenberg, CEO of Dreamworks Animation, said, “I’m going to create the greatest pay-per-view television event for scripted programming anybody’s ever done.” His intention was to offer the creators of "Breaking Bad" $75 million to create three more unique endings. With these he planned to deliver six minute segments over a 30-day period online. “He planned to charge viewers from around 50 cents to 99 cents per episode.” said Leo Barraclough of Variety.

His announcement signals the direction for major studios adjusting to consumer behavior. It also signals that VOD and social commerce is not only affordable for the consumer but can offer a profitable market to explore. The opportunities are endless and creativity enables our possibilities. Let’s share it.