Blip.tv Brings Programs to YouTube, Ads to 'Channel Awesome'

NBC, Roku, Vimeo Get New Deal for Web Shows

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NEW YORK (AdAge.com) -- What does the TV network of the future look like? A version of it is coming into focus at New York-based startup blip.tv.

The company, purveyor of little web shows such as "Nostalgia Critic," "Epic Fu," "Average Betty" and 48,000 others (seriously), is inventing its version of a TV network for a fractured media world where viewers gravitate to shows that appeal directly to who they are, the opposite of what may be TV's last true megahit, "American Idol."

Mike Michaud, founder of Channel Awesome, said he made $32,000 last quarter in ad revenues from 'Nostalgia Critic,' a show on blip.tv.
Mike Michaud, founder of Channel Awesome, said he made $32,000 last quarter in ad revenues from 'Nostalgia Critic,' a show on blip.tv.
While niches are small, the dream is to seed enough of them so that together they start to become a big business.

"This is about developing shows that reach a couple million people who love them and having 10,000 shows that do that," said founder and CEO Mike Hudack.

Today, blip.tv announced a raft of new distribution deals, including YouTube, NBC local sites, the Roku set-top box and IAC's Vimeo. Add these to blip.tv's existing distribution with Verizon Fios (and soon, other cable operators), web-connected Sony TVs, Apple's iTunes, AOL, MSN, Facebook and MySpace, and you get pretty full distribution across the web, with one free upload.

In addition, YouTube will share analytics with blip.tv, allowing it to feed them into ComScore, which will allow for more accurate metrics for advertisers. It's part of YouTube's new willingness to accommodate content producers, as it did when it integrated the players from ESPN and Sony earlier this year.

Indeed, the mid-tail producer (defined as non-studio content produced expressly for the web) is now of greater importance for YouTube as some of TV's most valuable real estate is locked up exclusively with Hulu, and cable networks are increasingly looking to paid solutions like "TV Everywhere" as their preferred model on the web.

The vision for blip.tv is to enable a new world of thousands of startup web shows that address a niche and are ad-friendly. Audiences can watch dozens in one sitting, as most are under six minutes long. Blip.tv does not charge to host or distribute shows, and it does not ask for exclusivity. Instead it provides services to producers too small to sell advertising or build a network on their own. The company splits revenue evenly with content producers, minus a cut for distributors such as YouTube.

Getting closer to the ideal
The new deal, Mr. Hudack said, "brings us closer to the ideal, which is you can produce a show, you don't need anybody to bankroll it and you can reach the biggest possible audience without giving away ownership or editorial control."

The recession has hit this sector hard, and big, well-funded players such as Veoh and Joost have given up as consumer sites, having burned through tens of millions of venture capital funds. Several well-funded content producers have also gone under, including 60 Frames and ManiaTV (which recently tanked but was bought back by one of its founders).

Blip.tv has managed to avoid some of the most obvious pitfalls: It didn't try to be a destination site, it hasn't raised much money (just $8 million so far), and it hasn't tried to sign big-money deals with the studios. "They've done a great job of bootstrapping the company and being capital efficient," said Warren Lee, partner at venture-capital firm Canaan Partners. "Like all video startups, Blip's challenge will be building a business with significant revenues."

Blip.tv has a lot of volume, but of the 48,000 series, about 500 to 1,000 are good enough and address a valuable enough audience to be meaningful for advertisers.

The company is benefiting as some shows cut adrift by production companies are now relying on blip.tv to sell ads, such as the former Next New Networks and Revision 3 show, "Epic Fu," which covers the intersection of pop culture and the web. At Revision 3, the show had a staff of six, but now supports three, including creators Zadi Diaz and Steve Woolf. Mr. Woolf said the show is their sole source of income, which comes from ad sales from blip.tv and YouTube, which place overlay ads over episodes.

Bright spots in recession
"It's tough to make a living off these shows at the moment," Mr. Woolf said. "We've been lucky to be able to hang on."

But even in the recession, some shows are making decent livings for their producers. Mike Michaud, Chicago-based founder of Channel Awesome, said the company made $32,000 last quarter in ad revenue from one show: "Nostalgia Critic," all from run-of-network video ads from Puma and Starburst. Overall, Mr. Michaud made $53,000, including two other shows, "AskThatGuy" and "Bum Reviews."

His costs? A camcorder and his own salary.

Mr. Michaud's website gets 4 million visits a month, but he expects to make more now that YouTube is in the picture. "If it goes on YouTube and we get another 200,000 people coming to the site, the potential for a new audience is huge," he said.

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