Economics of Online Video 3: $5 Net CPM = Keep Day Job*


Online video company Revver announced that it has paid $1 million in revenue share to video producers over the past year.  With the help of a calculator and some additional reporting from NewTeeVee, can learn a lot from this nugget.  Would-be online video producers, listen up.

NewTeeVee calculates that this payout translates to approximately $40 per REVVER producer per year, which obviously means that a handful make some money and most make nothing.  One well-paid producer says he is making $1,000 to $3,000 a month. The highest paid Revver producer is reportedly EepyBird, which has “earned over $50,000 to date for the nearly 11 million views garnered by the Extreme Diet Coke & Mentos Experiments clip.”  That’s about a half-cent per view, or a CPM of $4.50. 

This CPM is well below the “$20″ number that is often thrown around by those who are wildly bullish about the near-term money-making prospects of online video.  As an astute reader immediately pointed out, of course, the actual GROSS CPM” (the price Revver sold the ads for) was about $10-$12, before the revenue split.   This, too, is a far cry from $20, but it’s better than $4.50 Unfortunately, after the splits, the $4.50 is still far below the level needed to sustain life at most online video production shops (you could probably make more money writing short stories).  So don’t quit the day job just yet.

Actually, go ahead and quit the day job–but only after you’ve secured a new one at one of the dozens of heavily funded video start-ups around (Revver, for example).  These start-ups all have tens of millions of dollars. And, as we’ll show in the next instalment , they’ll need every penny of it.

Also See: Economics of Online Video 1: One Tough BusinessEconomics of Online Video 2: Unit P&L Analysis