13 May 2013   By Diane Panosian

The recent acquisition of YouTube channel AwesomenessTV by Dreamworks and new paid YouTube channels by Sesame Workshop, UFC, and Magnolia Pictures prove the industry sees money on the digital front. The paid subscription model applied (so far) across 30 YouTube channels is just one way content providers can monetize content. SSN spoke with a group of online experts, comprised of filmmakers, producers and network execs, who’ve risen to the challenge of adapting content to the digital space and crafting profitable financial models.

(from left to right) Tarika Khan, Jeremy Azevdeo, Matthew Arnold, Freddie Wong, and Seth Jaret

At the recent “Monetizing Content for New Media Platforms” panel by USC Women of Cinematic Arts, Seth Jaret, CEO of creative media studio Content Engine, discussed the plethora of platforms: “The rise of all these platforms … makes it accessible to be a content creator and to engage an audience. So [while] the barriers to Hollywood have never been higher, communicating to an audience, having an audience… has never been more accessible. They are free, they are pervasive. It’s just the knowledge that’s missing.”

Learn as You Go and Take the Long View

With the advent of YouTube, content creators have a free and easy distribution platform. But YouTube can be overwhelming for filmmakers and TV producers looking to stand out from the pack. Mike Tringe, co-founder of the online web series school, CreatorUp, says those from traditional media must bear in mind: “It’s a long play, it’s a long game… I think the answer is… know who your audience is and target, create, test and experiment. I used to work with Kristen Jones in creative development at Vuguru. One favorite line she’d throw out there to writers and directors who were coming on to do projects was, ‘There’s no movie jail here.’ If you make a bad movie, you’re in movie jail for three to four years, and you never get another directing deal. But if you’re working online, you experiment, you test, you play, you mess up, you listen.”

Still, Seth Jaret, who also produces the web series, Hollywood Drive & Talk, says successfully distributing content online isn’t as easy as it looks. “Digital requires as much thought as attacking the craft of screenwriting,” he admits. “You can’t just be a director. You have to know how to edit, engage people that follow you on Twitter, upload a video to YouTube, how to add annotations, what that means, how to cross-promote with other YouTube videos and engage with your fans. There’s a medley of skill sets, [and] the only way to acquire them is in the doing. Practice is really the teacher.”

The Magic Word: Consistency

The good news is that, unlike the Hollywood model wherein studios reap the greatest profits from their copious revenue streams while talent and filmmakers find their options limited to contracts and brand deals, the future is wide-open online. As Tarika Khan, director of talent production at Maker Studios, which produces numerous YouTube channels, remarked during the USC panel: “The exciting thing … is that you can make money in all kinds of different ways from YouTube videos: the ads that run, pre-rolls, brand integration, getting paid to tweet, etc. I have some talent that, because their content is family-friendly … their brand deals are huge. But I have other guys that, because their stuff is more crass or X-Rated, they sell interesting merch [merchandise].”

In television, brands market their products in shows that share the same tone, and so, they can sell to a sizable target audience on a consistent basis. The same dynamic can be true in the digital arena too, so long as your content remains fresh and engaging. Jeremy Azevdeo, senior director of original programming at Machinima, which provides video entertainment for gamers, identifies what advertisers look for in prospective online brand integrations: “If you’re not uploading with regularity, people will forget you’re there. You have to constantly remind them that you’re making content … that’s at least in the same universe of style and tone. An advertiser … [is] looking for consistency because they’re basically placing a bet on you. So for advertising revenue, start building your audience with volume and consistency that’s targeted.”

Subscription Vs. Kickstarter

Sizing up digital content’s ever-evolving revenue possibilities, Freddie Wong, co-creator of the FreddieW YouTube Channel and Video Game High School in which a single episode garnered more than 10 million views, sees potential in two very different models. “I think the subscription model is a weird thing. On one hand, you hear sometimes, ‘If only everyone who downloaded Wolverine paid one dollar for this!’ That’s just not how it works, people don’t think this way. But people subscribe to stuff all the time. I’m on Spotify, Netflix, I’m on Hulu Plus. I think there’s a weird mix right now of what Kickstarter represents, which is a one-time per project funding, and a sustained, over-time subscription type of model.”

Wong eyes opportunity in the near future for channels with a small, yet highly targeted audience, “[If] We only have 10,000 users, or a very small number of users, but because they’re paying, we’re doing better than some company with a million users. For us, instead of concentrating on this view battle … we want to capture the audience … in a way that’s meaningful … that can sustain and support what we do as filmmakers. That’s the direction that we’re going.”

Content creators can produce cheap, branded commercial videos online, but for people who want to release episodes or films, the digital space presents funding challenges to narrative content. At the USC event, Matthew Arnold, founder of the new media network RocketJump and co-creator of Video Game High School, doesn’t mince words: “Content is king. There’s a lot of good content online, but very few of it is great because it’s very tough to make great content right now. It’s very expensive to make content in a way filmmakers want to make content. But people want to support, and that’s what Kickstarter has shown.”

As one of RocketJump’s principles is to be transparent, Arnold outlines Video Game High School’s funding of season two. “We made about $808,000 on Kickstarter,” he says. “About 10% will go to giving gifts back, and we got about $750,000 on our deal from Dodge. That’s our entire budget for VGHS, season two. Because we’re transparent on our affiliate page and say, ‘Hey, you guys need to fund us by buying stuff on Amazon through our site,’ people want to support you. You have to find ways for them to be supportive.”

Whether you work in film, television or online, there remains one constant: Consistently great content is the key to consistently great revenue. Taking that content and marketing it to a targeted audience over time will open revenue opportunities in film, television and beyond. YouTube is just one of the many digital distribution avenues that exist for filmmakers eager for new ways to reach audiences. Cheap equipment, free distribution and funding options have opened the gates for filmmakers into the digital arena. Digital is growing, and its future is ripe for imaginative new models to win over audiences, advertisers and revenues.

* This article was originally published in Studio System News and can be found here.