SHELLY PALMER REPORT: Revver's Financial Woes: Business vs. A Business Model

This week Greg Sandoval posted a story on CNET about revvercom The article says that Revver the online video site has fallen on hard times and the company which raised almost 13 million in venture capital is on the block for 300000 to 500000 as well as the assumption of the companys debt which is in the 1 million range This should not come as a surpriseRevver hit the radar map in 2006 the year of usergenerated online video mania Then as now YouTube was the dominant player but Revver had a twist share advertising revenue with content creators A simple plan that if well executed would win the UGC online video wars by attracting the very best talent with cash PerfectWell almost perfect There was one sticky little detail Revver was not a business it was a business modelLets review There are really only three business models I pay you pay or someone else pays Combine them into the most complicated schema you can imagine but in the end there are only three directions for cashflows In this case I pay means that a video would be fully funded by its creator or publisher You pay means that the consumer of the video pays per view or per subscription And someone else pays means a sponsor or interested third party put up the cash Its pretty simple reallyRevvers model was based upon advertiser support Thats someone else pays from my list above Great Well no not that great because thats not the whole storyRevver did not have any defensible technology They created a very nice video upload site with good navigation and most if not all the tools a consumeruser of such a site would expect For a while Revvers video quality was superior to many of theiramp160amp160Ask Jack Myers Live Video Chats on Wed Feb 13thcompetitors but as you can imagine this kind of superiority did not last There are simply too many smart people working on the problems related to video quality for any small organization to dominate in that arenaRevver did not have any particular social network component or relationship that might propel it to stardom YouTube and MySpace sort of evolved symbiotically Revver was not so blessedWhat Revver had was a model and a dream Split revenue with aboveaverage creators and they will keep exclusively uploading the best content to Revver Sadly it was doomed from the start Why Because if Steven Starr Revvers founder was right and if splitting advertising revenue with creators was a valid business approach YouTube could put them out of business without breaking a sweat and thats exactly what happenedThe model is a good one Content creators like to get paid and a split of ad revenue makes sense As an aside I happily post my daily video MediaBytes to revvercom as well as 25 other online video sites and we even make a little money But the technology required to make this happen is childs play It was literally harder for the marketing and product development people to socialize the concept throughout the various online video aggregation sites that now offer this model than it was to program OuchEach week about a halfdozen entrepreneurs contact my office with business plans for technology plays that will change the paradigm of More often than not they are related to online video A herald gleefully conveys the invention of a new distribution methodology or foretells a time when their new approach to online video will change the worldIm so optimistic about the future of online video I listen to all of them But always through the filter of business model or business The test is easy 1 is the technologymethodology proprietary 2 is there a clear demonstrable revenue stream 3 will the business come out on the right side of a build or buy analysis As with so many things the questions are easy the answers not so much I am truly sorry to see Revver going through this I like Steven Hes a very smart guy and he had a great idea Unfortunately it wasnt a business it was a business modelShelly Palmer is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted The Transition from Network to Networked TV 2006 Focal Press Shelly is also President of the National Academy of Television Arts ampamp Sciences NY the organization that bestows the coveted Emmyamp174 Awards He is the ViceChairman of the National Academy of Media Arts ampamp Sciences an organization dedicated to education and leadership in the areas of technology media and entertainment Palmer also oversees the Advanced Media Technology Emmyamp174 Awards which honors outstanding achievements in the science and technology of advanced media You can read Shelly39s blog here Visit Shelly39s website at wwwShellyPalmerMediacom or reach Shelly at shellypalmernetCheck out the Shelly Palmer Report archive

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SHELLY PALMER REPORT: Revver's Financial Woes: Business vs. A Business Model

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