Video on the web as a source of revenue

Once again Thursday - technology Guardian day - brings us things of interest.

Today it's online video as a source of revenue. Now, for the most part I agree with the article, and it's an exciting concept - online video has been dogged by bandwidth issues, storage, streaming, and all sorts and is only now becoming practical (there's been noise about it for ages with nothing really happening). Short-form low-res (and undeniably lo-fi) video is becoming an art-form in itself; the potential in my own field, comedy, is huge.

But one bit of the article doesn't sit right:

If a group attracts a huge following to a site that gives it 50% or more of the advertising takings then it has no need to cash in on its fame by issuing CDs, downloads or even doing gigs, because it could earn a far bigger share through a revenue-sharing web site than it ever could through one of the giant music companies.

Er... well, it's already been stated that:

Each video has an advert tagged to the end of it. If the viewer clicks on it, it generates revenue that is shared.

The killer here is "if" - how many ads have you clicked on lately? Revenue from online advertising comes from the fact that it's cheap and easy to put an ad together, users don't choose whether do view them on not (as you do when you make the time/bandwidth investment to download a video clip) - they're just there - and so you have millions of people seeing them. If only a small percentage click it - and they're probably people who already know they need something then you make a profit.

The video thing doesn't work like that. The time and money investment needed to make a video is much more than a banner ad; the number of people viewing it is going to be minor; and the number of people clicking through at the end of it will be even less.

It's probably closer to be a self-funding promotional vehicle for bands - like the low res video? Then buy the single! - but not a revenue generator in itself. If I watch a video I like then there's no obligation on me to click an advert and, unless I understand the model used and know and like the producer of it, I probably won't.

Now, the 3 model is more likely to work - you're charged to upload and users are charged to download (bandwidth on their phones, so it goes on their phone bill). You get 10% of the revenue from downloads. That's the only way you can be sure to make money from a popular video - and it's not really any different from adding a song to something like iTunes. You may as well cut out the middle man and sell MP3s online yourself.

There are lots of ways for amateurs to make money from the internet - CafePress's home made t-shirts, that kind of thing - and revenue sharing from video can only ever be a tiny part of this.

Anyway, that's my two pence worth.