New Internet Business

[Bern_uk]

Hello

I've been preparing an entertainment video network website for some time now. Targeting the young adult market (16 - 34). Requiring an investment of £60K. A Membership subscription will be charged at £9.99 for the month. I realise there are many video websites where people can view material for free such as bbciplayer, youtube, channel4, heavy, atom, uktv.

I am curious as to your thoughts on a subscription for a video website.

Thank You

Bern

[Burden]

Bern, what kind of site?

It will all depend if its worth paying for and who it targets. If i can get it on another website for nothing and its fine then i'll go there.. I dont usually subscribe to any websites that are paid these days.

[JumpStartForBusiness]

I would say that it need to be niche videos (not referring to adult videos either!) to attract a specific crowd. youtube are struggling with monetizing as Google calls it the free internet sites. How about a free area and a subscription area with full videos maybe?

Why the idea? Would you part with your cash?

[Esk247]

better to get hits up and have a few adverts running isn't it?? i wouldn't pay much at all for video websites..if they start charging me to watch YouTube i'll literally not go there anymore! even if its just £2.99 per month! its free now and so it shall stay free or else it will fail. they get there money from other advertising operations anyway.

[Esk247]

the best idea would be that it is targeted....e.g. for animators or video production specialists or people wanting to build online portfolios of there video/movie work rather than another youtube style site that just features everything.

[DBMark]

Ok, so I'm probably unaware of multi-media costs, but why would it cost 60k to start up? In these days of dedicated servers costing 100 a month (or less!), surely you could start up small scale to ascertain the popularity/viability of going big-scale? Far better to start a beta site and spend just 3k - if it's not as succesful as you thought you won't have lost so much.

[protobyte]

I can't understand the costs either. Please share :)

[iSourceBiz]

Whether or not someone can pay for a video site depends on your offering and the target market. If it's worth paying for the videos and you can convince your targeted audience about the same, they will. But, if it's just another video site, they won't.

[Bern_uk]

Do not want to go into detail about the entertainment side, It’s a new video network with 8 channels, will post the website name to this site when it is ready. (not an adult website - the adult market is saturated).

The cost breakdown is 15-20k for website design. £15k for video development. 10k advertising. 2.4k legal. Other costs 3k and about 9k to cover first couple of months cash flow if negative and the first few monthly video purchasing costs if subscription targets not reached.

To go down the advertising route instead of a subscription does not suit me mainly because of the work involved for the website development company that I am outsourcing. I could share a chunk of equity however I would require a proportionate amount of investment for this equity. Whereas once the subscription site is set up, I can manipulate most of the website under an administrative account which means less monthly maintenance cost.

Thank you for your constructive responses.

[movietub]

Its very difficult to say whether a subscription system is viable without knowing what type of content you offer.

I can say that unless the content is completely unique and incredibly appealing (i.e as appealing as the latest blockbuster movies) then a subscription model will fail.

People have to really really want to see something in order to go through the hassle of even getting their credit card out, registering and paying. So you have to pursuade the audience to make an effort AND lose a tenner. Thats a lot to do in a world where people expect and can get pretty much anything for free.

It's simply not good enough to say you don't want to go down the advertising route because of logistical or budget issues. The bottom line is you need to find a business model that will work and then research costs. You cannot succesfully twist a business model to fit budget or resource limitations - it never works.

My belief is that a business needs to be designed to fulfill the expectations of the market place. The Market online expects you to give them fantastic content for free - and they expect you to find an invisible and non intrusive way to pay for it. Web2.

[WhiskyFive]

Joost can't make money, nor can YouTube....so it doesn't augur well.

Possibly if you have a very specific business to business model - e.g. training videos, you might have a monetizable niche.

[movietub]

Tis true YouTube still runs a massive loss and they collectively have more appealing content for just about any taste for free than anywhere else on the planet.

Thats some stiff competition!

[FireFleur]

You are after a 60K investment and not putting in anything yourself?

Or have you developed part of the site, and want to get paid for the development of the rest.

If we take the former, position and a 50 / 50 split, what you are saying is you have done work worth 60K combined with the idea.

That aside, tough market that one, it could come off, but you generally need very good contacts in the media world, and if the idea is viable the big boys can move in very fast so a niche could suddenly become very crowded.

So much content is free and that is unsustainable, so anyone who succeeds is nearly doomed to fail the next month as the others rush in with their offerings.

In truth we actually need someone big to succeed first in leading the way with charging for content, and then that model can be used to gain entry as people get use to paying for content.

My bet is on Blockbuster Video doing it, they have the channels, they have the relationships and there are a few other things to do with communications and the net. The stores are on the down, it is becoming a bit unprofitable there, but the swan song could be the transition over so they will use those locations to make a big push to take people online for their videos.

DRM is another thing that will probably work its way in, it will be cracked but there will be methods to limit it and people will pay a little less to download blockbuster videos, and have that convenience.

If tomorrow I could easily download a recently released film I probably would.

[Esk247]

if its films etc then i can see people paying a small download fee..i would even pay the same to download to my computer as paying in the shop..it just saves me going out! especially as alot of PC monitors are now better than standard tv sets..it makes sense.

if its youtube style content then nobody will pay..youtube is free...Aniboom is another website with user submitted content that is animation based! as far as i know that doesnt make any money from the actual visitors or users, it simply sells advertising space and does competitions to raise money.

There was a story about charging people to access news stories..this won't work one tiddly bit..because one person will pay for the access then they will send the articles out to there own hidden web pages and either charge a tiddly amount for accessing the information second hand or not bother charging at all and offer it as a free service....i dont see why i should pay to access news stories! advertising can cover the costs of that perfectly well.

[protobyte]

15-20k for website design? I can't get my head around that. A good designer should be able to come up with a site design for under £1k max.

I'm assuming that price includes development, in which case it must be a very techincal site with lots of dynamic features. If there are not a lot of features provided to users that gives them a rich experience, then I would ask where your money is going.

[movietub]

So much content is free and that is unsustainable, so anyone who succeeds is nearly doomed to fail the next month as the others rush in with their offerings.

In truth we actually need someone big to succeed first in leading the way with charging for content, and then that model can be used to gain entry as people get use to paying for content.

My bet is on Blockbuster Video doing it, they have the channels, they have the relationships and there are a few other things to do with communications and the net. The stores are on the down, it is becoming a bit unprofitable there, but the swan song could be the transition over so they will use those locations to make a big push to take people online for their videos.

DRM is another thing that will probably work its way in, it will be cracked but there will be methods to limit it and people will pay a little less to download blockbuster videos, and have that convenience.

If tomorrow I could easily download a recently released film I probably would.

FireFleur,

Do you really believe that the future of the web is to revert to charging for content? I understand that mainstream movie releases need to be available legally online. WB and other giants are currently working on such services. Essentially Itunes but for film. This of course will be chargeable, and in the same way as iTunes lowered the cost of a single from £5 to 50p we can expect the latest films to be available for a few quid in the not to distant future. They need to be cheaper to put people off bothering to pirate them! Like iTunes if its cheap enough people amass collections of 1000's and compared to the fixed cost of creating a movie the profits are hopefully greater than pursuading a few people to shell out £16-£20 for DVD/BLU-RAY. This is already in motion, the iTunes business model has worked and thats pretty much all the film industry need to know. The games industry is also going the same way.

I am suprised you made a more general comment about free content being unsustainable. YouTube is an exception here, not the rule. Generally free content has been increadibly succesful - there is no sign of a general shift back to more direct monitization. I also don't see why a few giants offering pay per download for premium mainstream content (latest blockbusters) would in any way pave the way for independant start ups to do the same.

I suppose it really all depands what the OP's content actually is - anyone else feel like this is a useless discussion without actually knowing??? :)

[Esk247]

15-20k for website design? I can't get my head around that. A good designer should be able to come up with a site design for under £1k max.

I'm assuming that price includes development, in which case it must be a very techincal site with lots of dynamic features. If there are not a lot of features provided to users that gives them a rich experience, then I would ask where your money is going.

we presume it's a YouTube style website...with profiles, log-in system, ratings, comments etc etc.

but as Movietub says..we just don't know what it is yet.

[waveuponwave]

The content would have to be phenomenally compelling to work as a subscription model - you're competing with hundreds of free (legal and illegal) alternatives, in a world where anything is available if you look hard enough. The problem with the young demographic you're targeting is that the younger end of it has grown up unaccustomed to paying for anything, and where even filling in a short form to register for a free service is too much hassle.

I'd recommend trying very hard to find some way of trialling the idea without such a huge initial outlay, although that's obviously not easy in this scenario.

[Proximitum]

we presume it's a YouTube style website...with profiles, log-in system, ratings, comments etc etc.

but as Movietub says..we just don't know what it is yet.

also what about the actual hosting costs, required bandwidth and storage, that ain't cheap either!