August 1st, 2006

It’s the Users Calling…They Want Their Money

by

The Guardian observes (via Jeff Jarvis) that YouTube has overtaken MySpace — but here’s the thing — it’s not really YouTube vs. MySpace. It’s user content and community hosted by YouTube vs. user content and community hosted by MySpace. The hosting is besides the point. It’s people like Fritz Grobe and Stephen Voltz who are getting people’s attention, not some entity called YouTube.

In case you’re not among the 5 million+ people who have seen it, Grobe and Voltz created an immensely clever and entertaining performance video that channels the explosive power of Mentos added to Diet Coke:

The video that you see above (press the play button after it loads) has appeared on YouTube and Google Video, but not with the permission of Grobe and Voltz. I got this code from their site, EepyBird, where they ask users:

Please do not post our videos on sites like YouTube and Google. [Emphasis theirs]

But why wouldn’t they want their video uploaded onto the immensely popular YouTube?

Because YouTube isn’t paying them a dime. Neither is Google.

Instead, Grobe and Voltz are distributing the video through Revver, which shares with them half the ad revenue generated by THEIR (i.e. Grobe’s and Voltz’s) content.

As BusinessWeek reported:

It took eight months for Fritz Grobe and Stephen Voltz to mastermind a now iconic Web video that shows them creating intricate fountains of soda by dropping 500 Mentos into 100 2-liter bottles of Diet Coke. The video became an instant hit after it was published in June on Revver, a service that shares ad revenue. Within days, bootlegs showed up on Google and YouTube. Voltz, a civil litigation lawyer, figured out the process for getting the videos removed. But as copies kept reappearing, Voltz learned that he had to keep contacting YouTube to take down each new version.

The Mentos/Diet Coke video was seen 5.5 million times on Revver and made Grobe and Voltz $30,000. But Voltz estimates they lost another $30,000 to pirated copies. And for several days recently, blogs buzzed with attempts to sort out the rights of artists to control uploaded videos. As the prospect grows for making money online, what started as a lark for many is becoming all too serious.

User-generated content is going through a novelty phase, where most “users” are content with attention as a form of recompense for their efforts. But for savvy “users” — or in this case video production artists, let’s get real here — getting paid in attention while hosting platforms like YouTube get all the take-to-the-bank revenue is sheer lunacy.

To all the Web 2.0 sites that think they are going make a fortune off of “free” user-generated content — it’s the users calling…they want their money. And if you don’t give it to them, they are going to take their content elsewhere.

UPDATE

Just came across this Heather Green post from a few days ago about Ze Frank’s Video Blog:

Frank is deliberately trying to create a show and a brand and he wants to figure out a way to support himself. That’s why he chose to upload his videos on Revver, a videos sharing service that shares revenues. But just as important, he’s trying to keep control of the archive of his shows so that sometime in the future he can figure out a way to make money with them.

Heather also references Amanda Congdon’s appeal regarding videos posted to Amanda UnBoomed (this one is very funny and worth watching):

Please do not upload my videos to YouTube or any other video hosting site that reserves the right to make commercial works out of other people’s vids. This video falls under the creative common non-commercial sharealike license. Thanks for understanding.

Ze Frank calls this trend a “coming of age” — indeed, it’s time for all the Web 2.0 business models to GROW UP.

  • Two nitpicks:

    1. Grobe and Voltz didn't lose $30k, unless you accept the bizarro-world MPAA calculus where every unpaid viewing represents exactly one lost full-price sale. Without the network effects of YouTube, would their video even have earned the $30k they did receive?

    2. Amanda Congdon has nothing to worry about from YouTube's license, /if/ she's not the one doing the uploading. As Lawrence Lessig recently wrote, someone who lacks the permission to distribute a video commercially (everyone except Amanda) also lacks the power to grant that permission to YouTube according to their license.

  • Something that I'm really curious about in the realm of user generated content is how much video is being posted to sites like youtube with the desire to get thousands or (hopefully) millions to watch it vs. how much is being posted by people like me, video of my kids that I can share with my family?

    While I like the idea of Revver sharing revenue with content creators, I'm not trying to generate revenue with my content, I'm just trying to let Grandma and Grandpa see their grandchildren. Is there any information out there to tell me if I'm a typical or highly atypical user of video sharing sites?

    If I'm a typical user, then the question about how these kinds of sites are going to make money is, to me, even more open ended that if they were only appealing to the "mass viewer market".

  • Kim Wilkins

    YouTube is v1.0 for online video. Let's face it, most people don't have a clue about how to prep video for the web, or post it. So YouTube fills a certain niche. The next wave of service providers are going to step up and provide a solution for people who want to be compensated for their efforts. Fledgeling media site 9thx.com. claims to offer video sharing that compensates the content creator each time the content is shared. Not sure I believe it. But if it really works, it could be a step in the right direction. Technology tends to follow the money, so lets see if their really is any money out there in UG content.

  • Ted

    Also, 8 months was probably not 8 hour days 5 days a week. At least I hope not. And now, they can produce a sequel likely in a week or two.

  • Tony, you've got to start somewhere.

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