METUE INTERVIEW: Talking Net Video with Rob Barnett, CEO My Damn Channel
At times during the past couple years Internet video sites have seemed like the fad du jour, like another bubble of inflated expectations waiting to burst. Every few weeks there seemed to be another monstrous financing. $10m invested here. $20m gambled there. Even a pledged $30+ million from time to time. Super Deluxe. 60 Frames. Joost. Veoh. Metacafe. Crackle. Revver. Daily Motion. Funny or Die. Hulu. This Just In. Deca.TV – Every week a new company name to add to the lexicon and the watch list. It was all part of the “next new thing.” The big gamble.
Like any new market, especially one with big opportunity, a certain amount of this speculation is understandable. With billion dollar market opportunity, there is invariably going to be a lot of competition chasing the same trophy. And unequivocally, all these sites were, and are, chasing just that same predictable future – the migration of television and video programming to a time-shifted, place-shifted, long-tail-wagging world of Internet distribution.
The challenge is that many won’t survive to see the finish line. Just as Yahoo outlived Lycos, AltaVista, Excite and the other players from the 90s “portal wars,” many of today’s entrants will be bought up, reinvented or shuttered. Some in fact, like HBO’s This Just In (shuttered), Sony’s Grouper (repurposed as Crackle), Revver (sold), and Turner’s Super Deluxe (folded into Adultswim.com in May), already have gone.
Part of the struggle is a matter of revenues. Today, the advertising market expected to support web video is still in its infancy. Industry standards for measuring audience reach, or viewing habits, and related pricing terms are still undetermined. Likewise, even the methods of displaying advertising are still being explored. Depending on the site you visit, today you can see variations from in-stream video (pre-roll, mid roll), to branded video player skins, to sponsorship advertising and on screen overlays. Nobody knows what will last. Sites operating today have to be flexible, and financially sound enough, to survive the market’s growing pains (and the cost of hosting video content if it’s part of their business).
When it’s all settled, though, some of today’s competitors will be around. Like multiple TV networks and content production studios, in this battle there is going to be room for more than one victor. But in that regard, in the chaos of this entrepreneurial free for all, not all sites are created equal.
Whether its traditional Hollywood like Warner Brothers, Disney and Viacom, or startups, whether its companies aiming to tackle the front-end of consumer distribution (YouTube, Veoh, Joost, Hulu), or studios focused primarily on original content creation (Vuguru, Deca.tv), or companies that are aiming to both host and syndicate original works (My Damn Channel) – there are vast differences in approach.
Some companies, for example, have built sites that are aimed at building audience with the hope of cracking the monetization challenge later. Another group is living to fuel those sites with new video content (Askaninja.com, theburg.tv).
A third group has been more deliberate, more cost conscious. They’ve focused on balancing a top level user experience with fiscal responsibility. They’re betting on their own abilities to judge quality. They’ve aimed to build businesses that have the flexibility to adapt to the changing ad marketplace in which they’re drawing revenue. My Damn Channel is one of the video sites that fit the latter group.
Since launching in summer 2007, the company has carefully selected just 8 episodic programs to air. They’ve watched their expenses and emphasized quality. So far, audiences and advertisers are noticing. Earlier this month, they signed a sizable sponsorship deal with a value nearing the mid six figures. They also won the approval of their peers with 7 Webby award victories.
To cap it off, or maybe just get things started, sources familiar with matters indicate My Damn Channel has closed a substantial new global syndication partnership with a major portal too. Details haven’t been confirmed by either side yet but the news is coming soon, likely sometime in the next six weeks or sooner.
Amidst all this activity, I had the chance to sit down and talk with My Damn Channels founder and CEO, Rob Barnett about online video, about My Damn Channel, and about the ever popular struggles between the worlds of traditional media and Internet media. In this Metue exclusive interview, here’s what came from that discussion:
METUE: There’s a lot going on in the web video space. As an insider, how do you view it?
Rob Barnett, CEO My Damn Channel:
There’s no question that there’s a ton of activity. At the end of the day, what’s going to shake down obviously is who can run a business.
We started with a couple of basic ideas. The first one was, don’t throw up another site with thousands and thousands of videos. That territory was well covered and there seemed to be no reason, in our opinion, to go out an imitate YouTube.
So we looked at the world of online video and really saw three camps. The first was the user-generated camp that was creating all of this behavior. Then there were two versions of the professional camp. The first being repurposed content from major broadcast entities. The last, being what we do, original content created specifically for this audience.
In order to put all that together, we made some very key decisions about doing it at high speed with low drag, very low cost and big upside.
METUE: From your blog posts and otherwise, I know you’re evaluating a lot of new programming but you haven’t green-lighted too many different series so far. That seems very deliberate?
Rob:
We’re almost a year old, we’ve only run 8 different offerings because the feeling is there are thousands of other sites you can go to. When people come here we want to make sure the experience is one that gets them quickly to high quality content without a lot of junk mixed all around it. We make very careful bets. When we decide to back something, we don’t greenlight thousands of episodes. We pick really talented creators and start with six to ten episodes.
In the case of Wainy Days we realized a few weeks that it was one of the best things that have been made for this market. ‘Let’s sign him again.’ In the middle of the third week we signed a second season. In the second season we won best comedy at the Webby Awards and we launched season three.
We do this in a step by step process because we think when this shakes down in the next year there won’t be hundreds of sites that survive.
Rob, on the financial aspects:
To talk about it from a financial point of view, a lot of guys raised a ton of money. That’s a blessing in the first five seconds than it’s a curse if you don’t turn it into a cash business. We started on a bet for $500k. For $500k from the first check in we hired most of the talent you see now, we built it, we launched, we signed with YouTube and MySpace for syndication agreement and went out to start making daily content. Then the same fund [Okapi Ventures] who gave us the $500k, came in to lead the A round. That A round closed at $3.2m.
METUE: Early on you seemed to be focused heavily on syndication which lead me to wonder what kind of company My Damn Channel was.
Rob:
We started with most of our views on YouTube. That’s no longer the case. We are drawing nearly a million unique views a month at our home site. Add in the syndication and the number explodes.
We have syndication through YouTube, MySpace, Daily Motion, Imeem. It’s not just super distribution, like Eisner [Vuguru] or Next New Networks. I don’t believe that’s a good strategy on its own. I think you’ll make the most money off your own site. You need the other syndication for marketing and to reach more audience.
METUE: Do you view that as factor of the Advertising Market’s stage?
Rob:
Yes. It is stage, agreed upon metrics, and other factors. You have to constantly go back and look at the audience size. You don’t’ have to look at crystal balls and tea leaves to know where the ad market is going. It’s going up. But at this time, you have to have your own site to make big sponsorship money to add to all your standard ad money from banners, pre-rolls, in-video ads and more.
METUE: So the recent deal with Southern Comfort is a sponsorship deal?
Rob:
It’s a branded entertainment deal. It’s content. We’ve done similar deals in the past. We run a music channel led by Don Was. Don is one of the top music producers around. We film musicians in recording studios, creating new songs and videos. That was sponsored by Lincoln. So this is not our first, just our biggest so far. We described it on our blog post.
METUE: Lets shift back to content. How much of a hand do you have in producing the programming?
Rob:
It’s different on an artist by artist basis. In the case of Wainy Days, David and I knew each other in our MTV days. He came in and had a meeting. He pitched the idea. Took me about ten seconds to agree to do. We agreed on a budget. Then at that point, David put a producer named Jon Stern in place. We pay David and Jon, they deliver the episode. In other cases we’re more involved.
METUE: It sounds similar to TV Network Production concept
Rob:
In a way it is but here’s the huge difference. They get creative freedom from me that they could never get in TV. That’s one of the top reasons people want to work with us. When we make an agreement it’s a three part deal. The artist gets a maximum amount of creative control. We pay for everything. In part 3, unlike a record company who recoups all of the expense, we only recoup per episode production fees. The rest, technology and bandwidth, PR and marketing and syndication are carried by My Damn Channel. And once those recouped fees are covered, ad revenue is shared.
METUE: “Old media” battling “new” is recurrent topic. On one extreme you have the entrepreneurial world like Silicon Valley that sees opportunity and thinks it can do something better. They’ll reinvent the wheel if need be. On the other side you have tried and true media giants that have done this before but are slow to change, and they want to hold on to what they’ve built. Often it seems there is a consistent push and pull battle – one side trying to be too creative with change, the other trying too hard to control things. The middle ground seems to be where the opportunity usually lies. As someone who spent a lot of time in the old world [CBS, MTV VH1] and is now taking on the entrepreneurial challenge, what’s your take?
Rob:
In the lighting pace speed of the internet, a lot of companies have gotten the space wrong because they move at molasses speed. There’s an identity crisis going on in the old world. No question about it.
METUE: Given your personal ties to MTV and VH1 in past career roles, are there deals with big media in the pipeline that you’re working on?
Rob:
We have been very selective; as much as we have been with content. There may be big media deals in the future. We’re having those conversations now at their request.
METUE: Is there a possibility some of My Damn Channels Content will migrate to TV?
Rob:
We’ve talked with a number of television outlets to figure out a way to partner so that some of the content that proves itself to have online audience appeal can find a second life on TV. We’re having conversations. We’re trying to sort through the process. I think you’ll see a couple in the next few months.
We’ve been really clear about our intention. We’re not making stuff for TV. We’re working for a hungry audience that is looking for stuff online. If it ends up on TV in a second life, that’s a different subject.
METUE: I know in the past I’ve taken the company name and assumed it was purely going to be comedy material you’d air. I’ve seen others make the same mistake and presume you were purely a niche site too. Looking at the site, it’s obviously much more than that. So to finish on content then, as a parting note, what’s in the works?
Rob:
We’re not just comedy. We’ve got a full fledged music channel. The Southern Comfort deal is all music. Don Was in one of the top music producers in the world. He produces 2 new songs and 2 music videos for us every week. They’re shot at the Charlie Chaplin studios in LA. We’re spending reasonable money to get great original music every week. We’ve actually even got a horror project in development too.
With that, we wrapped up our conversation.
Walking away I couldn’t help but think back to my first impressions of the company. When they launched in July 2007, I wrote in an article: “The consumer appetite for web video is unquestionable high and there is certainly room for professionally made content like what’s being offered How much room? And whether it’s financially worth well for those involved? Time will tell. But if first impressions count? Based on a first look, My Damn Channel seems to be off to a good start.”
Nearly a year later, the story is following that same outline. It’s a few chapters in, and today, the Internet video world is more crowded than ever. By rough estimates, across the globe at least 125k videos are uploaded to sites like YouTube every day. And even though a majority of these are amateurish, or speak to only a limited audience, it still translates to more than 80 videos a minute. That’s a lot of “noise” to work through.
Rob and his team made the bet that they can consistently judge quality and put out a product that stands out; something people will come to see. So far, by audience and advertiser measurements, they seem to be winning.
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