The following remarks were delivered by Thom Woodley at the WGAE’s Capital Hill briefing on Internet policy.
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I am a writer, and a creator of content, and as such, by necessity, an entrepreneur. What I’m going to talk about today are the business models of web video, how the open web allows creators to do innovative work, and the dangers that paid prioritization creates for that innovation.
In our discussions of net neutrality today, we’ve a couple of times heard the comparison of the internet to highways. I’d like to expand that. Let’s suppose that a state decides adopt the prioritization model to their roadwork. This would mean they don’t pave roads in a certain area as well as other ones. We all know what would happen. The economy in that area suffers. Trucks can’t get to it, no one wants to drive along the bumpy, dirty road.
It’s the same online. Pavement equals streaming speed. If the streaming speed is slow, no one will watch. We don’t force the people who live on that road, the businesses on that road, to pay directly for paving the whole thing. But Internet Service Providers want to do that exact thing to content providers. If we don’t have net neutrality, ISPs could charge content providers money to deliver their content at a reasonable enough speed.
I am going to make the case that that is tantamount to killing a new industry before it has developed.
There is a business model of independent web video. There are a few. They exist, but they’re still nascent. And it’s very different from television or most other traditional economic structures.
I don’t know how many of you are familiar with the Long Tail Theory of economics. I’ll just give a quick abstract. Say we’re in a book store. 80% of people who come into that store will tend to buy the same top 20% of books. The remaining 20% of people may also buy that top tier, but in addition, seek out products that are more diverse, less common denominator. When we chart these spending habits, rank of products sold against volume of sales, we get a short ‘body’ and a long ‘tail’.
Now, in a store, there’s a physical inventory. So it only makes sense to keep that top 20% in stock. Of course, for an online store, inventory is more vast. So you can open up the full 100% of products, and get that extra business. And here’s a hidden secret: people in this long tail will tend to pay more for the products they love, if they are perceived as rare.
How does this relate to television? TV has a fixed inventory of time that it is selling. As well as a great expense in broadcasting it. So it only makes sense to program shows that 80% of the populace will seek out. The same with movie theaters – a fixed number of screens. But web video has no fixed period of time. It has no fixed numbers of screens. Strictly speaking, it has no distributional limits, except for streaming speed.
That means that online, this long tail of specialized content is now open for everybody.
From an advertising perspective, we know that a message moves farther and more effectively when it is highly tailored to its audience. You are three times more likely to watch a video if a friend shared it to you. So advertisers have an excellent model here. Let’s take as an example, an award-winning and very popular series I participate in called The Temp Life. It is sponsored by a staffing agency who could never afford to buy TV time. But they could afford a more specified and tailored web production with Hollywood celebrities like Milo Ventimiglia and Illeana Douglas. And the show just finished its 5th season, which is longer than most real Hollywood shows.
Web video, due to its long tail nature, has the tendency to gather audiences of more specific demographics. These shows function with a smaller audience, but they become more valuable to the sponsor. My show The Burg gathered an audience of hipsters and influencers mostly based in New York. It’s the kind of audience TV shows desperately try to attract, but had not reliably done so. Sure, the show did not rack up the millions of views per episode that a TV show needs. That’s okay. We did not need it. We had a highly activated audience who, when we did do sponsorships, were much more accepting of our sponsors’ products.
Web TV will not be, in the future, about gathering the ‘most views’, but gathering the ‘best views’.
But it’s worth pointing out that putting any of this content behind a paywall, or tiered download situation where it didn’t stream quickly, that would have killed it. People would not have watched.
There are two more models I’d like to briefly discuss.
One is the audience-supported show. Take the show Anyone But Me. It’s a multiple award-winning show about a lesbian teenager and her struggles. It’s excellent. It tells a difficult story about a topic some would think is controversial. And it likely would never have been made on TV. They are able to make this show because they have an audience who is demanding it. Again, it’s a smaller audience, but they are so passionate about this show that they pay for it. Not per download – by donation.
But it’s tight. Profit margins are slim in both of these models. If we were charging Anyone But Me an extra fee to stream fast enough so that the audience can watch it, then they probably would not be able to make it.
Another model that is developing is even more interesting to me, as a small business owner: the local webseries scene.
Distribution is, at present, open to everyone. I can make a video and put it up – there are no walls between me and a prospective audience of millions. At the same time, the means of film production are accessible to everyone, with consumer-level editing software and digital cameras. This means that a webseries can be generated and created anywhere, for any audience. This is of course different from film and TV, where you have to be in LA or NY.
What we are seeing now is communities of content creators and webseries makers beginning to pop up in every state of the union. In places that never had any sort of film industry before, we suddenly see one popping up. And it can be sponsored by local advertisers. I point to one of the shows I’m involved in, Greg and Donny, which is about two guys just chatting about stuff going on in the small, post-industrial steel town Johnstown, PA. Now, that sounds like a very specific show that no one outside that town would want to watch, right? Well… stay tuned.
I believe in a few years, we will be seeing small town film scenes. Communities of webseries creators and vloggers from Maine to Utah. Decentralized micro-industries of creative professionals from Alabama to Wyoming. I believe we will see this… down the road.
But not if the road is too expensive to travel on.
Net neutrality is vital to keeping the lanes of communication open. The creative economy of the future depends on it. Thank you.
Writer and web video pioneer Thom Woodley created one of the first narrative web series “The Burg“, the Streamy and Webby nominated shows “The All-For-Nots“, “All’s Faire” and “Greg & Donny“, and is the founder of DIORAMA, a new web video channel aimed at programming television-quality independent content.