Friday June 19, 2009 at 8:18
2 notesHollywood hits the stop button on high-profile Web video efforts - Los Angeles Times
The calculus was elementary: If amateur Web stars like “Fred,” the high-pitched persona of Nebraska teenager Lucas Cruikshank, can create the most popular channel on YouTube, imagine what Hollywood could do with its stars, budgets and marketing muscle.
Conceived with great fanfare, big media’s attempt over the last two years to capitalize on the Internet video phenomenon embodied by YouTube and “Saturday Night Live” digital shorts has fallen victim to recession-triggered cuts and inflated expectations about the advertising revenue they would command.
Unlike other media, where larger numbers of viewers lead to higher advertising revenue, high-volume trafficon the Web hasn’t necessarily translated into big money. Advertisers in short-form Internet video pay about $10 to reach every 1,000 viewers, so even a video that gets watched more than 1 million times — a big hit by Web standards — might not generate more than $10,000. Three- to five-minute-long “Webisodes” cost $5,000 to $25,000 to produce.
“It’s very similar to what happened in ‘99 and 2000, where everyone saw gold in the hills,” said Mika Salmi, the former head of digital media for MTV Networks and now a technology venture capitalist, in reference to the first dot-com boom. “The reality is that it’s much harder to make money than everyone thought.”
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