Why don't we charge for our web films/series? The common arguments don't hold up.

[GuerillaShowrunner]

Hey, everyone!

Thought people on this forum might be interested in a discussion that's brewed following a post of mine on Guerilla Showrunner.com.

It's all started because I've been doing a bunch of research into unconventional methods of monetising web series, specifically. As I did the research, it became more and more apparent to me that whilst conventionally, everyone regards the idea of putting a web series or film behind a paywall as crazy, in actual fact the idea might have legs.

In fact, there are both filmmakers and web series producers already doing that and making decent cash.

So I wrote a blog post up presenting this as a "modest proposal" (except unlike Swift, I actually mean this one): http://guerillashowrunner.com/2011/...some-web-series-then-get-people-to-pay-for-it

It's subsequently sparked off a fair bit of debate on the Web Series Network and Moviestorm forums (links at the bottom of the post). I figured that a lot of Indietalk people have skin in the game on this stuff too, so - very interested to hear what you guys think!

Is the idea of charging for films directly crazy talk, or might it actually work?

 

[PaulGriffith]

If you have an audience that's willing to pay, then charging is great. I think most people won't.

Would you pay to see a random web series when you can watch broadcast shows on hulu.com or their respective network websites for free?

IMO, advertising is the way to fund web content. Everyone already expects online stuff to be free. Besides, it's a pain having to enter in credit card info, not worth the 10 minutes to complete checkout for a 5 minute short.

 

[Papertwinproductions]

If i'm right in what you're referring to, that you wish people to pay to watch a "Web-series" online, then i would have to decline that the possibility would be too much, for too little.

One reason being the enormous amount of choice of hundreds of thousands of other webshows that are free to watch. This being the trend, as people now assume all webshows are free, your demographic would be immediately perturbed to being asked to pay for their viewing. To change the fierce society of the "impatient and i want it now", would be a huge effort, networking, and publicising your work to as many folk as possible, and giving them good reason, infact, great reason why it is they are to pay for your web-series, when there are other avenues that don't cost a dime.

As for Cinema taking a similar approach. It's a double-edged sword, in which the small gain would inevitably slay the entire industry.

If you allow movie-goers to download your film to watch upon its immediate release, yes, some will download, and you may just make some cash. But the majority will jump on the first leaked torrent of that magnificent quality copy you've just cast out to the entire net...

If cinema takes this route, if studios decide that a "Web release" is now the way to go beside a Theatre release, then it would be a massive blow.

The latter will never happen ofcourse, Theatre releases will stand the test of time, I'm very sure of that.

 

[GuerillaShowrunner]

Paul - the problem with advertising, as I mention in the post, is that the Return On Investment is pretty horrible. You can up it if you can sell advertising yourself, but it's a hard road.

Papertwinproductions - I agree, no-one's going to pay for a web series that's just one amongst thousands. However, would they pay for a web series that is exactly in line with their interests and that they're sure will give them an engaging experience? I wouldn't pay to watch A.N.Other random web series. However, if a bunch of my friends told me that, say, this new Web series was like the West Wing but for digital Europolitics, and it was at West Wing standards? Yeah, I might pay a fiver for that.

 

[PaulGriffith]

How would your friends have seen it though? Word of mouth is great advertising, but how do you convince enough people initially?

I agree, advertising revenue isn't the best means, but pair it with a large audience and you do pretty well.

The only way I'd pay for something like this is if someone like Christopher Nolan released it. I'm already a fan, so it's worth it.

You can buy a full 42 minute episode of the best produced shows for $1-3 online and own it forever. How could you justify the same amount for 10 minutes of unheard of crew and actors?

One of my videos is going through the partnership program on YouTube. I'm getting close to $1 a click in some ads, $.20 on the lower, with a click through rate of about 2%. Not a ton of money, but over a lifetime of several years at the rate it's being watched it'll have paid for itself. Paying for itself and making money are different things, but I'm currently new to the scene and untested to most people, so it's understandable.

 

[Papertwinproductions]

Papertwinproductions - I agree, no-one's going to pay for a web series that's just one amongst thousands. However, would they pay for a web series that is exactly in line with their interests and that they're sure will give them an engaging experience? I wouldn't pay to watch A.N.Other random web series. However, if a bunch of my friends told me that, say, this new Web series was like the West Wing but for digital Europolitics, and it was at West Wing standards? Yeah, I might pay a fiver for that.

But you must remember that the "Web-series" is a genre on its own, mostly steered toward the teenage/early 20's demographic (avid Youtubers etc). Trying to gain their attention and for a price, is something that requires a masterpiece, or atleast material with a huge "buzz". It's known that Youtube videos if not entertaining in the first five seconds are switched off. It's cruel, so many great films and web series are never seen, because of a number of contributing factors which almost always rely on the business side before script has even past its first draft.

The one advantage, is yes, if the web-series has brilliant production value, that's absolutely great. Yet, DSLR is bridging the gap that will fool most viewers into believing that thousands of pounds where spent. As film-makers, we see the flaws, ofcourse, but this must be taken into account in the current climate.

The Web-series has to have legs, it has to be a runner, fantastic. Star names (The one life-line of hundreds of thousands of movies) are not an option, there is no saving grace of people checking out the material on a whim.

It has to have a buzz. Even then, do i think people will pay for it? I don't think so. Perhaps it's a pessimistic viewing of the current state of affairs, but beyond close friends and family, unless it's something special, or you have a big enough following that "word would get around", then i don't believe they will.

The very best of luck, bud.

 

[GuerillaShowrunner]

Absolutely agreed, you need to get peoples' attention in the first place. This is actually a semi-solved problem: the Internet Marketing community (and direct marketing before them) have spent ages figuring out things like social proof (my "friends" comment - could equally be one or several well-known Internet personalities getting review copies and liking them), articulating benefits (telling people why they're actually getting a good deal in a convincing way), crafting appeals, and so on.

Stars ARE a possibility for a Web series - one of the examples I quote is fronted by a former "Days of our Lives" star. But I agree, most series won't have them.

"It's cruel, so many great films and web series are never seen, " - Agreed. There are a number of films I've seen sink like stones that really ought to have made it very big indeed.

Paul - interesting, that's a better rate than I would have expected. *Does some quick maths in his head* about $2 CPM rising to $20 CPM max. I wonder what sort of CPM you could achieve with a series targetted to high-paying ads?

 

[ItDonnedOnMe]

I think there's definitely potential for charging for something like a web series. I see a problem with your calculations in the article though...

You take a 1% conversion rate - you say this is conservative, I would consider it optimistic, but that's another discussion - and then calculate income based on current 10k youtube viewership for a free series. Then you extrapolate from there to higher viewership rates - but you don't really discuss how you go from the 10k number to these higher numbers... or how you get to that 10k number initially. A conversion rate assumes you're reaching a certain number of people first and then 'converting' a percentage to paying customers - so what is the approach for reaching those initial 10k viewers if you're not giving it away for free? If you're not actually talking about reaching 10k viewers first, but actually just reaching the 1% directly, then technically that's a 100% conversion rate and, well, pretty unlikely unless you've got a magical way to identify and reach out to only the people who would pay for your show. Additionally, you're not likely to grow very fast if your entire audience is purely the 100 people you initially convinced to pay, as there's very little potential network effect there.

So I assume without giving it away the only way to reach an audience is with advertising... but that's not really new, it's the way hollywood has been doing things for years. It tends to be expensive to reach a large enough audience to achieve meaningful conversion rates if you are starting from zero.

I think the answer is not either/or - it's how much to give away and how much to charge for. I believe you need to look at what you give away as advertising until you've built your initial audience, then you can consider charging. Of course if you just suddenly start charging you'll probably cut off a lot of your audience, so the better solution is probably to charge for a certain level of access - higher quality videos, extra content, early access, a new series, etc - while continuing to give away at some basic level. I would expect higher conversion rates with this technique as well, because the advertising message is different. If you're advertising to a general audience you have to first convince them they'll like your product, then convince them it's worth paying for - with an existing fan base you have to convince them that it's worth supporting, which is a very different value proposition. Plus, this way you also have the large audience which can generate some revenue via ads (no ads could be one of the premium features) as well as making things like merchandising feasible. So charging a subscription just becomes one more piece in your overall revenue model, not the whole model.

 

[GuerillaShowrunner]

ItDonnedOnMe - Really interesting arguments - thanks, your post made me think.

"Additionally, you're not likely to grow very fast if your entire audience is purely the 100 people you initially convinced to pay, as there's very little potential network effect there. "

Web series aren't a business dependent on network effects as they're normally understood - it's not a site like a dating site where the value goes up proportional to the number of users. There's a small network effect on forums and suchlike, but realistically I could be the only person in the world watching Zero Punctuation and I'd still love it.

So word-of-mouth growth is purely dependent on the number of your viewers who decide to tell their friends about the show. Sure, you've only got 100 viewers, but you also need to attract a lot less viewers for additional profit - so it all comes down to standard viral loop stuff and percentages of your audience that will share. No different to an advertising-based model.

(Although, admittedly, there are perturbing factors - will people share news of a PPV series as easily as a free series? Might they share more freely because they feel they're putting cash into it? Or less? What's the conversion rate on personal recommendations for paid vs free? Would affiliate programs help? Etc.)

"So I assume without giving it away the only way to reach an audience is with advertising... but that's not really new, it's the way hollywood has been doing things for years."

Agreed. That's actually one of the things that attracts me to this model - we already know it works in other industries.

And yes, I must admit, I'm kinda assuming that you're using advertising - probably highly demographically targetted PPC ads - here. The advantage of having a subscription fee is that suddenly spending $1 or so to attract an individual viewer becomes feasible, wheras if you're chasing 1m viewers for a free series, it's very hard to justify an ad spend.

"It tends to be expensive to reach a large enough audience to achieve meaningful conversion rates if you are starting from zero."

I'm not sure I'd agree here. From practical experience, you can hit a highly-targetted audience using PPC ads for very little money - I just ran an A/B test for an upcoming series using PPC ads for the princely sum of 10 pounds. Likewise, my ebook's ad costs are pretty low.

I would agree that unless you're producing a highly-targetted series, you're screwed. If your target demographic is "males between 18 and 35", and you've got no more idea than that, subs-only series probably ain't for you.

"I think the answer is not either/or - it's how much to give away and how much to charge for. I believe you need to look at what you give away as advertising until you've built your initial audience, then you can consider charging. Of course if you just suddenly start charging you'll probably cut off a lot of your audience, so the better solution is probably to charge for a certain level of access - higher quality videos, extra content, early access, a new series, etc - while continuing to give away at some basic level."

I tend to agree here, too. It's almost certainly a good idea to give away at least some of your work - although I'd be interested to try giving away a really good trailer, for example, as porn sites like Kink.com do very effectively. ( I wrote an article on that a while ago - http://guerillashowrunner.com/2011/...our-web-show-pages-look-like-amateurish-crap/ )

Audience drop-off: I wonder if you could minimise this by using the webapp approach of making it very clear that any and all free content was "beta"? It generally takes at least a season for a show to find its feet - perhaps the best approach would be to release the first season as a "beta" for free, and if you're getting decent fan engagement, then move to PPV after that. Requires pretty deep pockets, though - I'm more interested in a series where you can immediately charge for a minimally viable product, a la lean startup methodology.


"I would expect higher conversion rates with this technique as well, because the advertising message is different. If you're advertising to a general audience you have to first convince them they'll like your product, then convince them it's worth paying for - with an existing fan base you have to convince them that it's worth supporting, which is a very different value proposition."

That's a very interesting point. You've really got two totally different appeals you're peddling there.

"Plus, this way you also have the large audience which can generate some revenue via ads (no ads could be one of the premium features)"

Hmm. I do like that idea. Preroll ads are infamously annoying - I might actually pay just for the benefit of getting rid of the darn things. In general I'm not convinced by the "remove the ads" premium model, but in that case - hmm.

"as well as making things like merchandising feasible. So charging a subscription just becomes one more piece in your overall revenue model, not the whole model."

Again, good points. TV only survives by having a diversified revenue stream right now (when it does at all). Interesting.

Thanks! Given my wallet partially depends on figuring out the answer to revenue streams in web series, I've got a vested interest in having detailed discussions about this stuff - so your comments there were MUCH appreciated!

 

[ItDonnedOnMe]

Web series aren't a business dependent on network effects as they're normally understood - it's not a site like a dating site where the value goes up proportional to the number of users. There's a small network effect on forums and suchlike, but realistically I could be the only person in the world watching Zero Punctuation and I'd still love it.

In terms of whether an individual likes a series, then no - you could argue no network effect, or simply that it's irrelevant (although there has been research showing people are more likely to like something if they know a friend does). However, in terms of people hearing about it - which is a prerequisite for liking it - then there absolutely is a network effect. The more people view it, the more people that are likely to tell their friends about it, the larger your audience grows - that's a network effect.

So word-of-mouth growth is purely dependent on the number of your viewers who decide to tell their friends about the show. Sure, you've only got 100 viewers, but you also need to attract a lot less viewers for additional profit - so it all comes down to standard viral loop stuff and percentages of your audience that will share. No different to an advertising-based model.

That's where I think your mistake is, at least in the scenario you initially described. You don't need to attract less viewers for additional profit - you need to attract more subscribers. You talked about a 1% conversion rate from viewers to subscribers - with 10,000 viewers that's 100 subscribers. If you only get 100 viewers, and you expect to turn them all into subscribers, that's a 100% conversion rate - which is highly unlikely. Plus, now you only have 100 people who are able to tell their friends about it, whereas with the 10k/1% scenario you have 10k people who can tell their friends.

And yes, I must admit, I'm kinda assuming that you're using advertising - probably highly demographically targetted PPC ads - here. The advantage of having a subscription fee is that suddenly spending $1 or so to attract an individual viewer becomes feasible, wheras if you're chasing 1m viewers for a free series, it's very hard to justify an ad spend.

Definitely true, I guess a deciding factor is going to be how big your demographic is. I'm still skeptical, no matter how targeted your advertising, that you're going to get high conversion rates, unless you somehow manage to find a demographic of 'people willing to pay for my web series'.

I'm not sure I'd agree here. From practical experience, you can hit a highly-targetted audience using PPC ads for very little money - I just ran an A/B test for an upcoming series using PPC ads for the princely sum of 10 pounds. Likewise, my ebook's ad costs are pretty low.

Absolutely, you can hit them - what kind of conversion rates are you getting in these tests though? I do agree the ability to do cheap testing of ads makes this whole process easier, that's a huge boon to indies of all types - although I'm not sure how many people know about it unless they've read something like 4HWW.

I tend to agree here, too. It's almost certainly a good idea to give away at least some of your work - although I'd be interested to try giving away a really good trailer, for example, as porn sites like Kink.com do very effectively. ( I wrote an article on that a while ago - http://guerillashowrunner.com/2011/...our-web-show-pages-look-like-amateurish-crap/ )

It's possible, but to me a trailer doesn't feel like something you're giving away - because I would never pay to see your trailer in the first place. While the kink.com example is interesting, to me the takeaway from your article is that they have a very good marketing & design team - which they can afford because their content makes a lot of money, and has from the very start - which I do think is unique to porn. I agree with everything you wrote about what they do well - but I also know most people won't be able to come close to their level of marketing on their site because it's pretty difficult to do well.

"Plus, this way you also have the large audience which can generate some revenue via ads (no ads could be one of the premium features)"

Hmm. I do like that idea. Preroll ads are infamously annoying - I might actually pay just for the benefit of getting rid of the darn things. In general I'm not convinced by the "remove the ads" premium model, but in that case - hmm.

I'd never use pre-roll ads or recommend anyone else do it either, the first step in all of this is to eliminate any viewer-hostile technology like that or DRM. When I'm talking about advertising I mean on your site next to an episode, or listed as sponsors in the credits, product placement, etc.

TV only survives by having a diversified revenue stream right now (when it does at all).

Exactly, and I think this is going to be the key. I have a feeling the revenue model may look something like this:

1. Subscribers

- get the newest episodes immediately in HD
- additional related content available for each episode (behind the scenes, etc)
- no ads on the site
- subscription cheap enough to make it easier to subscribe than bother pirating premium content for most viewers
- credit or bonus for bringing in new subscribers​

2. Free viewers

- get each episode 3-6 months after Premium in SD
- no access to additional content.
- ads on site next to video​

3. Product placement

- 3rd party products featured in your video for a fee
- 1st party products featured in videos available for purchase (shirts, etc)​

4. Merchandising

- logo merchandise
- featured products
- physical media (DVD, etc)
- special editions
- affiliate links for 3rd party merchandise
​

Thanks! Given my wallet partially depends on figuring out the answer to revenue streams in web series, I've got a vested interest in having detailed discussions about this stuff - so your comments there were MUCH appreciated!

Glad to participate - I'm very interested in all this too, it's an interesting new world of possibilites and none of this has really coalesced into a definite path for success... yet!

I just saw a story about another possible model - give the first episode away, then produce the second episode only when a certain threshold of people pay for it. Repeat per episode. Here's the story: http://www.boingboing.net/2011/03/22/zenith-crowdfunded-b.html

In that model, you might basically produce a few 'pilots' for different ideas targeted at different demographics and then only continue with the series that gets the most traction. Some interesting potential ideas there.