Webcasting Large Entertainment Events Still Unprofitable

I love webcasting more than any other facet of this industry as it’s how I got my start fourteen year’s ago and it’s what I use to do for a living. But it’s sad to see that so many year’s later, there is still no successful business model in place for large-scale entertainment based webcasts.

In the year’s between 1997-2001, there was at least a couple of large music and entertainment webcasts each night on sites like SonicNet, Rocktropolis, MTV, Pepsi.com and many others. Back then, no website was making any money from the traffic or from the content, but they didn’t need to. In those times all that mattered was getting eyeballs to your site and growing your page count while showcasing content available for free. Since the bubble burst in late 2001, there have been very few webcasts trying to reach a wide mass audience with entertainment based content.

The problem is that no one has yet to find a way to monetize the content. While this is nothing new as it’s a topic we talk about every day in the industry in regards to on-demand content, producing live content is even more expensive and requires more in the way of resources and time. Some have tried doing pay-per-view events with no success as consumers are not yet willing to pay for something that has always been free.

And when it comes to the content rights, entertainers want huge payments as they think this stuff is worth a lot of money online thinking as if this is some sort of PPV event on TV. They quickly learn however that there is no money to be made with PPV on the web and they always end up scraping the webcast when they realize this is not a cash cow. How many large entertainment webcasts have you seen in the past 5 years?

It is a lot of work and money to put on a webcast and even more when it’s goal is to reach a global audience all at the same time. But that is exactly what MSN is looking to do with it’s LiveEarth series of concerts that kicks off today at 9pm EST. The Al Gore-promoted series of concerts will have close to 40 video feeds from countries all over the world for a span of 24 hours. The cost to produce something like this runs into the tens of millions, especially since some of the content will also be broadcast via traditional TV on NBC and Bravo amongst other channels. Since it needs to be TV quality and not just web quality, that means even more cost in the way of audio and video production. Throw in the cost to license the content, pay the artists, pay for audio and video production services, satellite time, encoding services (which one article says consists of a team of 80), not to mention distribution costs to deliver this via the web and you’re talking serious dollars.

Now this event may make back some of it’s money since it has a traditional broadcast component on TV and NBC can sell advertising around it, but even with that, this is a loss leader. And without the TV broadcast, I bet this would not even happen unless a sponsor, or MSN, was willing to kick in millions of dollars to cover the webcasting and productions costs.

The worst part about this whole thing is that it’s just going to play into the hype about millions of people watching video on the web as if it is the TV. It’s not. Remember Live 8 over two years ago? How did that make money? Where are the ROI articles saying how successful the Internet medium was for webcasting to big audiences? Most of the revenue generated from that event came from DVD and content licensing deals after the webcast for mediums other than the Internet.

Already, the hype is starting. ""We expect it to be the most highly watched entertainment event online," MSN senior director Lisa Gurry said in an Hollywood Reporter article. The article also says that "MSN, predicts Live Earth will be a record-breaker." Come on. Is that the best that MSN can say? How about telling us how many sponsors you have? Or how you plan to cover your costs? Or if this is a loss leader for MSN to create awareness for the brand? Or better yet, what metrics MSN is going to use to determine the success or failure of the event? And stop with the "record-breaker" comments. There is no such thing as a record breaker webcast or "largest webcast ever" as no one makes their logs available for review and everyone measure "viewers" differently. And many large webcasts never ever give out numbers or the numbers are inflated. I know. I use to give customers numbers of viewers after a webcast only to see them make the number a lot higher in press releases, sometimes by a few million. And if IF it was the largest ever, so what? Does that mean it’s successful? No.

One other thing to note, unlike the Madonna event or the Live 8 event which was only on the Internet, much of the content of LiveEarth will be on TV. So why would I go to the Internet to watch it?

It’s a shame this has not all been figured out by now. Like many, I love the webcasting medium. It’s fun to webcast, brings its own set of challenges and is a technology that allows anyone to communicate without any geographical boundaries. And while the application has been successful in the enterprise, government, education and other verticals it still does not work for the large-scale entertainment events.