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Devil Is in Details for Web Video Deals

Jul 13, 2008  •  Post A Comment

Caveat emptor is the watchword in Internet video deals.
As a handful of successful Internet video creators break out of the pack, they are striking deals with advertising networks, Web video studios and other production partners that can sell, market or distribute their shows online.
But creators must be cautious because making money on your art is tough no matter the medium, Web video veterans and attorneys agree.
“The licensee is going to work as hard as they can so you don’t make a profit,” said Jeff Sanders, a partner with Roberts & Ritholz, a New York law firm specializing in media, entertainment and technology. “It’s the way studios and the record companies and the major indies have worked for time immemorial.”
That’s why creators should pay close attention to ownership rights and revenue-sharing calculations. They also should remember that if a deal to carry their videos sounds too good to be true, it probably is.
In the emerging Web-video economy, most distribution deals are non-exclusive and call for a revenue split on ads, which gives creators some chance of making money.
“If you get a $17 check and you can do it in 25 different places, it might add up,” Mr. Sanders said.
A number of independent Web video producers are indeed making a living on their Web videos, among them reporter Daryn Kagan, the producers of the series “DadLabs” and well-known Web talents like Amanda Congdon and the “Ask a Ninja” team.
Online video studio For Your Imagination markets and distributes the Web series “DadLabs” and said the creators are close to breaking even on the show. In a recent month, “DadLabs” generated about $40,000 in ad revenue, nearly half of which went to the creators, said Paul Kontonis, CEO of For Your Imagination. That split just about covers the creators’ costs for the show, including salaries for the hosts, he said.
FYI either licenses or owns the Web series that it distributes and sells to advertisers. When it owns a show, all ad revenue is split 50-50 with the creators. If FYI licenses a show, the Web studio recoups the costs of marketing, managing, promotion, production and distribution before splitting the remaining ad revenue with the creator.
“Those costs are agreed upon and everyone needs to approve them, but they are manageable and well known,” Mr. Kontonis said.
He advises creators to evaluate potential partners on three main criteria: ownership rights, revenue share and the costs for the show.
Don’t rush into deals either, said Kent Nichols, one of the co-creators of Web hit “Ask a Ninja.”
“If you are able to be a sustained hit on YouTube, or anywhere, people will come to you wanting to partner,” he said. “Be aware that your content has enduring value. Don’t sell the rights to it or the underlying [intellectual property] cheap.”
Every contract is different, and that’s why it’s a good idea to have a lawyer take a look, said Sarah Szalavitz, producer of the popular Web series “Zaproot” and also the CEO of 7 Robot, a consulting firm on new-media distribution.
“The language is so precise and can mean different things. Weigh what it costs you in delivery and what you are getting,” she said.
Web personality Amanda Congdon works with Media Rights Capital, an independent film, TV and Web-video production studio, to sell ads and negotiate licensing and distribution deals for her videos.
She said creators should consider a number of deal points, including who owns the content, who owns the primary Web site for the content, where else the content will be housed, who has creative control, how much input a creator has on the type of advertisers and the kind of ads they run and what the promotional opportunities are for the videos.
Former CNN anchor Daryn Kagan produces inspirational news pieces daily and has done well on the deals she inked with online marketplace Voxant, online video platform Brightcove and online ad network Broadband Enterprises. Because of these partnerships, she’s making a living with ads on her videos and her Web site, DarynKagan.com, as well as through speaking engagements and a book deal.
Under the Voxant partnership, Web sites that are part of the company’s network can carry her videos.
“Every time the video plays on one of those sites, and an ad runs, the host Web site gets a few pennies, Voxant gets a few pennies and I get a few pennies,” Ms. Kagan said.
Those pennies add up. One of her recent pieces was featured on 15,000 sites in the Voxant network.
“The way I look at it is I have ads and I have to sell them. I don’t have to employ anyone. I just give someone the keys and I get approval on all the ads before they run,” she said.
Creators also should consider any brand lift they will or won’t get from a deal, said Erik Hawkins, CEO of PureVideo Networks, an online video company that creates destination Web sites. “If your brand is lifting theirs, I wouldn’t do it. If their brand is lifting yours, do it.”

7 Comments

  1. Re Erik’s comment: Not only should your (content) brand receive lift from your sponsor’s brand, but if it is a brand integration deal, the integration must also be organic, relevant, and above all, entertaining/informative. If it isn’t, everyone loses – the audience is turned off, your sponsor’s brand is damaged, as is your ability to attract visitors in future. Be sure to maintain creative control and the ability to sign off on the final product.

  2. Good post, thanks

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