Specifically a mismatch between expertise and knowhow at the CEO level with the expectations of investors.

This has two impacts. One, is that it often limits the monetize-able clips to a MUCH smaller subset of the actual plays.

Two, it presents the same issues that social networks face wrt monetization; namely that advertisers will pay a much lower CPM for ads on a site with commingled video content (i.e., mastered/UGC content inter-leaved) than one that has verified, consistent inventory (albeit with lower play counts – the first issue).

The other unspoken factor in the online video space is that in-video ad inventory is still fairly limited so you are dealing in a lot of low quality, low CPM infill.

In many respects, a lot of the same truism in my post “Why Social Nets Struggle to get Advertisers to Show Me the Money” can be applied to the online video space.

URL: http://thenetworkgarden.com/weblog/2008/06/why-social-nets.html

Check it out if interested.

Cheers,

Mark

Mind You bandwidth is extremely expensive here in the land of OZ

In business school, they talk about core competencies and having the right people in the right seats on the bus. Every web person knows that display advertising usually cannot possibly cover the costs of video streaming yet so there has to be a focus on other revenue streams in order to have an effective business model.

Too many of these video sites are being built first to attract eyeballs, not to generate revenue and become sustainable businesses. That is not the way to launch a business, that is merely trying to get rich quick by getting bought.

If more of these ventures actually focused on generating revenue as soon as possible, we would see more innovation and more success, but alas, the VCs know best and will provide absurd amounts of money as long as the buzzwords are there.

Youtube doesn’t have a problem earning money, they have a problem earning a profit, since it’s bandwidth and server bills are extremely expensive.