cas127
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Wow, $1 CPMs are...low for video.
Hell, even Facebook-glutted display advertising gets 50 cent CPMs - traditional TV probably averages out at $10 - or 10x as much as Youtube views.
The "problem" with any internet distributed media is that the cost of entry is so low - leading to a zillion competitors, all driving the CPMs down to very low levels.
TV gets its $10 CPMs because,
1) There are a limited number of broadcast and cable channels
2) Only 4 major, enormously indebted carriers account for the vast majority of delivery (Comcast, TW Cable, Direct TV, DISH)
3) Only 6 extremely wealthy content providers provide the vast majority of content and have a stranglehold on content libraries (Disney/ABC, Universal/NBC, Warner Bros/Time Warner/WB, Fox/Fox, Paramount/CBS, Sony).
These oligopolies enforce "price discipline" on CPMs the way mafia dons enforce loyalty.
*But* - once online video becomes as easy to access as traditional TV (ie, channel surfing) then TV CPMs are going to crash to something much closer to $1 than $10.
There will simply be *way* too many content providers for the Content Mafia to rule the roost.
Roku, etc. is getting closer and closer to establishing this world all the time.
Nice post - but I have a question/topic I rarely see addressed in tech blogs - given the high failure rate (soon to get worse) what is the tech "salvage market" like?
Do internet startups follow wise coding practices (commenting, etc.) that make the subsequent reuse of their projects feasible?
Or does all that previously funded programming effort inevitably vanish (rather needlessly in my opinion).
After all, there are many non-technology reasons internet startups fail - from misbegotten marketing to simple poor timing.
This argues for a tech "salvage market" where the viable pieces of failed companies can be purchased for pennies (penny?) on the dollar.
What do players like Sherwood Partners have to say?
Do they really only end up selling email lists and Aeron chairs in practice?
Or does actual code find new homes?
$125k = "Incredibly affordable"
Ok - in the alternate reality that is SF (what, with your $5 tacos and all...)
In post apocalypse LV, $125k is known as "median price".
And why, at bottom, has all the QE savings dilution occurred?
To purchase political power from the debtor class (whose debts are diluted through money printing), the political class (who are paid via money printing), and the "political client" class (whose welfare and entitlements are funded by money printing).
And all of this unsustainable political pandering is supported by a stagnant (at best) or actively disintegrating (more likely) real US economy.
This is the true nature of Weimar America.
"They want to destroy the Fed"
Before it destroys them - and the economy they live in.
Let's boil everything down to basics - since 2008, Zimbabwe Ben and the Fed have more than tripled the base money supply (which ignores further multiplicative leveraging banks are empowered to do) and now after multiple rounds of "Quantitative Easing" (really nothing more than money printing under a market tested name) they continue to add in excess of $90 billion *per month* to the base money supply.
And the real US assets that the money supply ostensibly represents? - They have not even remotely tripled (or quadrupled).
These real assets (which are the only real wealth there actually is) have perhaps grown 12% since 2008 - close enough to zero (relative to the 300% to 400% hike in money supply) to be meaningless.
Net result - there is (lying in wait like a silently growing cancer) 3 to 4 times the US currency to purchase the same amount of real assets.
Anybody who believes this won't end in ruinous inflation eventually, believes that US government economic statistics are not carefully designed to omit unpleasant facts (see US CPI vs. international commodity prices or US "unemployment rates" vs. employed-to-population statistics).
The Fed has essentially destroyed 75% of US savers' wealth without having anything resembling legal authority.
As with the decade of delusion (roughly 1998 to 2008) the US economy is essentially a zombie economy - dead but not realizing it yet.
Thus the Alternative Currency Aeneid.
@paulcarr @PatrickSF @twandosaurus
PC,
I think you have been naive with regard to what the business side of a media company (start-ups and middle market at least) have to put up with in order to survive.
This is a near universal malady among "editorial" side types (infinitely worse in the Era of the Local Media Oligopolies, when the editorial side really were insufferable, morally posturing pricks who had no clue how their salaries actually got paid for...)
It is a jungle out there.
And it always has been.
Why do you think there are really only four major multi-channel TV distributors (DirectTV, DISH, TWC, and Comcast-US Gvt...heh) and only seven truly major cable content providers (Disney, Viacom, Sony, TW, Fox, Discover, and Comcast-US Gvt).
It isn't because nobody else wants to be a media power.
It is because these companies have all their partners scared sh*tless and run their competitive domains just this side of mafia dons.
And right about now you might be feeling the icy finger of fear any startup founder (should) feel - *before* starting up their business (when it is easiest to "pivot" if necessary).
"minimum wage workers handing out cards advertising escort services"
Voila' - You have identified your natural distributors...
@hamishmckenzie @yodoggg @antnisP
Let me know when Pando hires adults who can admit error gracefully - I might come back.
Snark doesn't offset stupidity - it highlights it.
"capitalize on men’s fear and insecurity of successful women by reducing them to pin-up models"
If you really think that is why men like "pin up models" (of any sort) you need to drop your PC, patchouli scented man-purse and grow a pair of listicles.
It isn't 1998.
The myth of private market c(r)ap has been exposed repeatedly between then and now.
Just because you can sell 1/200th of the company for amount X (in cash? maybe...maybe not...only insiders really know) does not mean the company is "worth" 200x - unless you can actually drum up another 199 investors (99.5%) of the shareholder base who share this "valuation".
Private company "market craps" may give certain naive entrepreneurs and LPs woodies but anybody who has observed the startup market for more than 5 minutes over the last 15 years understand that such metrics are little more than french ticklers wielded by NYC bankers cruising the Valley.
One pretty decent source of (semi) reliable return information are the periodic reports that CALPERS, CALSTERS, etc. put out.
The mega public pension funds are so widely invested in VC that their investment return lists (which took threatened lawsuits to pry out of them) cover a decent percentage of the PE/VC universe - in a (relatively) un-gamed format (more or less).
It would be fantastic if somebody had the time to compile and cross reference the detailed VC/PE fund return results that a dozen or so mega public pensions put out - that would probably capture about 85% of the active VC universe.
It would also be nice if somebody used the Wayback Machine to get the fund results for funds that CALPERS has already exited...
"There are two reasons why"
Actually...three....er, four.
3) Institutional investors with absurd assumed rates of return (7% plus, in a world where the US government is ruthlessly sterilizing the natural consequences of its 100% Debt-to-GDP ratio by printing money endlessly) *have to* reach for yield - regardless how hopeless or delusional.
Otherwise they end up on the laundry list of belly-up Cal municipalities with the public pension obligations of third world kleptocracies.
4) Placement agents. Kickbacks. See CALPERS.
SV has officially jumped the shark.
The Valley has been through two massive capital blowups (at least) in the last ten years or so and *still* the fixation is on getting the next round of VC funny money upon which to build a bullsh*t market cap of alleged hundreds of millions or billions (based upon the highly conditioned sale of .5% of utterly illiquid corporate stock).
*Not* upon building a sustainable business that is cash-flow positive within a reasonable period of time.
Because, you know, that would be *hard*.
Selling the demented fantasy round by round is sexier...and ever more stupid.
No, SV has become Hollywood without the attractive people and STDs - an endless series of hyping hustlers whose ability to achieve and sustain an objective accomplishment (like corporate profitability - not endless stock spinning) is increasingly non-existent.
Pathetic and doomed.
Achieve *real* profitability in a reasonable time frame (not the VC circle jerk) or, please, STFU SV.
1) In the era of the internet hyper-supply, the premium is on getting to the point,
2) Directing your readers' attention efficiently,
3) And extinguishing the authorial ego inherent in the "long form"
"While the economics of high cost delivery facilitated demand for the "long form" in the era of the Book, the economics of no cost delivery in the era of the Internet will compel the "short form".
***
"I’m shocked that the Web hasn’t done more of this. "
It is because *very* few people have enough of interest to say (on a given topic - let alone Dan Savage, door knob licker extraordinarie) to justify 5000+ words.
People's attention is valuable and under constant demand in the era of the internet - authors' content decisions need to reflect that.
Given the surfeit of authorial supply that is the web, the premium is on *getting to the point* (not getting off on your longueurs).
Writers (perhaps only writers of a "certain age" or *certain* ego) are deluding themselves if they think there is a huge audience for their long form work on the internet/in ebooks.
While the economics of high cost delivery facilitated demand for the "long form" in the era of the Book, the economics of no cost delivery in the era of the Internet will compel the "short form".
Notwithstanding the near hysterical citing of isolated ebook authors' marked success, the truth is that ebooks are going to follow *exactly* the same trajectory as the web - a huge demand (of readers), subdivided into obscurity by a huge supply (of newly-enabled) authors.
Look at the shrinkage of web CPM rates and their vast inferiority relative to television CPMs (perhaps 50 cents per 1000 readers vs. 10 *dollars* per thousand viewers) - this is because the internet, while having a vast reach, also has a vast supply - because the barriers to entry are low - driving CPM prices down, down, down.
Television still retains (barely) the monopoly on the megaphone that local newspapers used to have - propping up their profits.
Ebooks are almost exactly like webpages in their economics - low barriers to entry = vast supply = prices driven very low (note how almost all of the orgasmically received eBook success stories are priced at $3 and under).
And the hundreds of thousands of eBooks selling a few dozen copies at $2.99?
They don't get hyped.
Either before or after the fact.
@jargente Well...there was a lot of money put into play in the late 90's and median VC returns have been negative ever since (take a look at Cambridge reports).
A VC money blizzard may be good for the overall economy (Google, et al did get built after all) but a disaster for most investors (be they LPs or angels - the latter at least having the virtue of blowing their *own* money...) - witness the now nameless thousands of startups that have disappeared - with billions in LP funds - since 1995.
"Meanwhile, venture capital was disbursed at its highest level in years"
Actual stats, please.
"Meanwhile, venture capital was disbursed at its highest level in years"