Go Medium or Go Home?

Bernard Moon has a thoughtful article posted today, “Forget the Long Tail! For video, it will be the big and mid-size players that win in the end.” in which he argues that the real winners in the rapidly-changing video landscape will be the large and medium sized players, not the “long tail” of content producers that have been receiving all the blogosphere hype lately. He writes,

“But this isn’t a story of the long tail; the hit makers will get richer. Instead, it’s a story of the wide range of new revenue opportunities that are available to established and mid-size players in this evolving media landscape…. I’m talking about is a middle market in the video and movie industry where sustainable companies can and are being created… Just as the big boys can expect to profit from this changed video landscape, so too can the mid-size production groups that are able to develop content to fill the gap between big Hollywood productions and homemade video.”

His argument rests on his thesis, “In this new digital landscape, it’s not simply about content but rather type of content and how it’s distributed.”

The one important component in this equation which he doesn’t cover in his article, however, is the role of advertisers. The transition towards new digital distribution formats has traditional brand advertisers searching for the right medium to convey their message. This situation creates opportunity for large established who are nimble enough to capitalize on the change, as well as the emerging medium-sized players who can establish credibility. But large brand advertisers are reluctant to associate themselves with long tail user-generated video content, and they are going to be for a long time coming. The problem with this type of content is that you never know what you’re gonna get – and unlike with Forest Gump, that isn’t a good thing for brand advertisers.

But don’t count out user-generated video content just yet. Even Bernard hedges a bit, “Whether in the service of journalism, entertainment, or art, user-generated content is here to stay…” Again, it comes back to advertisers. While big-name brands may shy away from this content type, there are plenty of advertisers who will desire this inventory (albeit, at a lower effective CPM rate). The market of direct response and performance marketers will demand and consequently determining the price of space associated with user-generated video content. Think next-generation punch-the-monkey ads at first transitioning to more “sophisticated” $19.95 knife-sets offers that you see on late night television.

With the increasingly prevalent proliferation of digital video content of all types, I believe that there’s plenty of opportunity to go around. The key is knowing the target, both consumer audience and advertisers.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.