Online video has spurred countless talented video creators to pursue their dreams and connect with their audiences. But finding a sustainable business model remains a persistent challenge. Should videos be free and ad-supported? Or paid for by viewers on a one-off iTunes type basis? Or be part of a "freemium" model? Or be in a subscription service? Or maybe some of all of the above? Experimentation, intuition, knowing who the customer is and listening to feedback, and taking risks must all be taken into account when determining the right business model.
And that's why Common Craft, a husband-and-wife team that focuses exclusively on producing simple, short explanation-oriented videos often on technology topics (see below for an example) that have been viewed 35 million times in the last 4 years offers useful lessons for video creators. After pursuing a pure iTunes approach with payments on a per-video basis while doggedly staying away from an ad-supported model, the company has now completely shifted its model to subscriptions-only.
Lee LeFever, Common Craft's co-founder, explained to me that his big insight was understanding customers - including teachers, trainers, businesses and bloggers who want to educate their target audiences - needed a more affordable, simplified approach to accessing Common Craft's full range of videos for all of their various uses. So for example, a 2,500 person organization will go from paying over $4,600/year if they had paid for all of Common Craft's videos under the old approach, to paying $799/year for full access, including all future videos under the new model.
To bolster loyalty, Common Craft is also seeking customer input on which topics would be selected for future videos. Lee believes there's already plenty of choice in the library, particularly in the technology category, and with a new video released each month, the subscription value continues to increase. International is also a big expansion opportunity and much of the library has already been translated into 8 languages.
As the pay-TV industry has learned over the years - and Netflix has more recently - the pay-once/watch-as-much-as-you'd like aspect of subscriptions is very compelling. The purchase decision needs to be made just once up-front and thereafter the provider can focus on delivering value. That's the approach Common Craft is now using and it looks like a smart move.
Now admittedly, not all video genres lend themselves to subscriptions in particular, or even to payments in general. But I believe one of the key insights here is that if video fills a need (whether that be for education, explanation, entertainment or something else), there may be well be an audience willing to pay, especially if the terms and access are right. Staying flexible over time, as customers' loyalty builds and insights about how their consumption patterns develop are key to monetizing.
VideoNuze is the authoritative online source for original analysis and news aggregation focused on the burgeoning online video industry. Founded in 2007 by Will Richmond, a 20-year veteran of the broadband, cable TV, content and technology industries, VideoNuze is read by executive-level decision-makers who need to get beyond the standard headlines and achieve a deep understanding of online video’s disruptive impact.