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The future of media may be the internet, but that doesn't mean that digital distribution's present financial reality is stealing the show.

The recent rift between YouTube and the PRS in the UK highlights an uncomfortable fact: online distribution doesn't quite rake it in like the offline distribution. Services like YouTube simply aren't willing to pay as much for distribution rights as rights holders are accustomed to because these services aren't generating a whole lot of revenue themselves.

At an SXSW panel filmmaker Morgan Spurlock, who created the films 'Super Size Me' and 'Where in the World is Osama bin Laden?' was quite blunt about the situation:

If you're looking to pay your rent, not so much, if you're looking to pay your phone bill, you have a great chance. It's getting to a point where it's down the road from being profitable, but we're just not at that point yet.

Needless to say, the news that online distribution is, for talented people like Spurlock, only good for phone bill payment is quite discouraging. With record numbers of people using the internet to consume professional media, it'd be nice to think that the people creating that media would be earning enough from advertising or digital sales to make continued production financially rewarding.

Obviously that's not the case. As SnagFilms' CEO Rick Allen pointed out, the reason that we often don't hear sales numbers for digital distribution is because the figures are embarrassingly low.

So what gives?

Part of the panel discussion centered on strategy: is it better to take a broad approach to distribution that looks to ensure that consumers have access to content at every online outlet or does it make more sense to be selective? Obviously there are a lot of options out there and figuring out how to deal with them can be a real challenge.

Like most things, strategy will probably depend on the type of content being distributed and the 'brand' behind it.

The good news is that most panel members see digital revenues on the way, and even though these revenues may not approach the levels that have made many people millionaires offline, if digital distribution can give talented content producers the ability to pay more than their phone bills, that would be a great start.

Photo credit: Hey Paul via Flickr.

Patricio Robles

Published 17 March, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (2)

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Jason green

New online revenue models need to be created, yet surely any publicity is good publicity, it seems ludicrous that YouTube are being asked for royalties and in my opinion they have done the right thing to simply remove

over 7 years ago

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Claudio Cocorocchia

Interesting write-up. Currently, and in most cases, if online distributors want professional 'studio' content on their services (big name films & TV series), then they will need to pay licensing fees that would probably be much higher than any actual revenues that could be generated by the service. It's the cost of doing business with the majors. In many cases, if the content owners can't secure the licensing fees that they want for their content, then they will just not issue the rights for online distribution. They will wait until they can successfully demand the fees that they want and this strategy has the best interest of the property in mind. i.e., protecting the high value of that content in the general market place.

over 7 years ago

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