Lather, rinse, repeat...the right model for webcasting?

Continuing with my webcasting theme for this weekend, there are many different ways to do webcasting (and, for that matter, video on the web in general.) One approach is the talk show, done over and over with different hosts and different subject matter. One of the first people who pursued this model successfully is Leo Laporte. Laporte, a TechTV alumnus, started a podcast called "This Week in Technology", or TWiT. Eventually, he produced additional podcasts, and then started webcasting them. At first, he did occasional video versions, but he subsequently turned his Petaluma, CA ("Home of the World Wrist Wrestling Championship") farm into a video production center where he produces around 15 webcasts, most on a weekly basis. His TWiT Webcast Network is funded by advertising and contributions; Laporte pays his own salary from the contributions (he also hosts radio and television shows for commercial broadcasters and cable networks), and uses the advertising revenue to pay for everything else.

Following TWiT came Revision3, founded by Kevin Rose, Jay Adelson and David Prager in 2005. Rose, another TechTV alumnus, cofounded the digg website with Adelson, and on the side, Rose and Alex Albrecht (yet another TechTV refugee) started a podcast and webcast about digg called Diggnation. The success of that show led Rose, Adelson and David Prager (he worked at TechTV as well) to found Revision3. The company has close to 20 shows, most of which are produced weekly in Revision3's studios in San Francisco. Like TWiT, Revision3 is funded by advertising, and it also sells branded merchandise.

The latest entry into this field is "This Week In...", owned and run by Jason Calacanis. If "This Week In..." sounds familiar, it should. Calacanis, a frequent guest on TWiT Network shows, purchased the "thisweekin.com" domain name and set up a very similar webcasting network to TWiT, which caused confusion on the part of the audience and a good deal of animosity between Laporte and Calacanis. This Week In produces 19 webcasts, the most popular of which is "Kevin Pollock's Chat Show," a weekly talk show hosted by actor and comedian Kevin Pollock. This Week In is advertising-funded.

All three networks have a number of things in common:

• While all three networks have shows with female hosts and shows targeting women, most of their shows are male- and technology-focused (which makes sense, given that the founders of two of the three networks came from TechTV, a strongly male- and technology-focused cable network.)
• Their production values are very much on the basic side: TWiT's shows are shot in Laporte's combination studio/control room, and This Week In's shows look like they're all shot on Charlie Rose's set when Rose isn't around. Revision3 uses a TV news set metaphor, and goes for a little more color and outside-the-studio production than the other two.
• The shows tend to be overly long, meandering and often light on content. Webcasts have no schedule and no time limits, but schedules and time limits force producers to tighten shows and get to the point. It's asking a lot to expect viewers to watch these shows for more than an hour (or even more than two hours, as a "Kevin Pollock's Chat Show" with Seth MacFarlane ran earlier this year.)

The business model behind these networks is quantity over quality: TWiT, Revision3 and This Week In know that most of their shows will get small audiences at best. They plan on a few of their shows getting large audiences (at least for webcasting), and that the appeal of those shows will allow them to sell advertising across their entire schedule of webcasts, generating more revenues, even at a lower CPM. With a large schedule of webcasts, they also hope to have the option of selling out to a bigger media company, as Calacanis did when he sold Weblogs, Inc, a service that published Engadget, Autoblog and several other blogs, to AOL.

I question whether this is really a viable long-term strategy. It's similar to the 24-hour cable news networks, whose audiences pale in comparison with those of entertainment-oriented cable networks, even though they have distribution into tens of millions of U.S. homes. They have to put something on the air 24 hours a day, but very few people are watching most of the time.

I'd like to see someone do fewer but better, more tightly produced shows that are a better use of the audience's time. Could a webcasting network build a viable business with just a few good, well-produced shows? Would really compelling shows increase audiences and eliminate the need for a bunch of "filler" shows? It seems like a reasonable alternative.

Why "Pay-to-Pitch" makes no sense for anyone

Over the last few months, a firestorm has erupted over angel venture funding groups and "deal-finders" that charge startups to pitch to their investors. The battle has been led by Jason Calacanis, who's declared war on pay-to-pitch. The most recent pay-to-pitch scheme to come under the spotlight is from New York Angels, led by David Rose (not the one with the orchestra.) New York Angels charges $150 as an application fee for a chance to pitch to whichever members of his group decide to show up that night. That's a lot less than some other groups and finders who charge thousands of dollars, but it's still pay-to-pitch.

In defense of why his group charges an application fee, Rose said the following: "The reason we charge a fee is because we're between a rock and a hard place. The unfortunate but accurate fact is that 90% of all companies requesting funding are simply not fundable, by anyone, anywhere...no matter how earnest the entrepreneur might be. The larger VC funds get upwards of 10,000 plans each year, but that's ok for them because they either completely ignore over-the-transom submissions, or have them read by a paid associate." (Click here for a link to his complete response.)

The problem with this logic is that $150 isn't going to spell the difference between a fundable startup and one that's not, and New York Angels is taking money from all of them. Assuming that Rose and his team only actually present the plans that they think are fundable to investors, they're effectively collecting $1,500 for every startup that gets to pitch. On the other hand, if they're letting startups pitch that they know aren't fundable, they're misleading the startups and wasting their investors' time.

If I were an angel, I'd want to screen my own deals, rather than let someone else tell me what's good and what's not. I wouldn't put any more trust in Mr. Rose than into a stockbroker or investment banker who's trying to get me to make an investment.

I don't begrudge Mr. Rose or his logic; I just think that it's wrong. Pay-to-pitch doesn't open up any real funding opportunities for startups. Investors involved in pay-to-pitch schemes either a) could do better by screening their own deals, or b) are motivated by the money they make from pitching fees, which means that they're not serious investors.

What could comScore learn from Domino's Pizza?

Last week, The Wall Street Journal's AllThingsD ran an article about comScore, the Internet website traffic measuring service. Yesterday, Jason Calacanis chimed in with his own heated remarks about comScore and one of its investors, and today, Michael Arrington and TechCrunch got sucked into the debate. I've linked to the articles on all three sites, so I won't rehash their arguments. However, let me summarize what I understand as the facts, and then make a few suggestions.

For more than ten years, comScore has used a diary approach for measuring website traffic, the same basic approach used for decades by Nielsen and Arbitron to report broadcast ratings. comScore's users manually reported the sites that they visited, and then their reports were aggregated and extrapolated to come up with gross visit counts. The problem was that almost since comScore's inception, many website operators claimed that their own reports showed much higher traffic than comScore, but comScore defended its methodology and claimed that it was accurate.

Radio and television broadcasters and their advertisers knew for decades that the diary method was inaccurate. People forgot to report programs that they watched or listened to. African-American and Hispanic households were underrepresented in diary samples, as were low-income households in general. Everyone knew that the methodology had serious problems. With the implementation of people meters that automatically track television viewership, the industry saw just how inaccurate the old diary-based system was.

The comScore diary system had similar deficiencies to the broadcast systems, but the company adamantly denied any flaws. Then, a few years ago, Google and Quantcast, among others, introduced "beacon" technologies that would report every time a webpage was viewed, bringing people meter-like technology to the Internet. These systems provided results that were generally much closer to the publishers' own logs than comScore.

Last week, comScore announced its own beacon-based system and stated that it will be significantly more accurate than its diaries. However, for a website operator to get comScore beacons, it either has to pay $10,000 per year to subscribe to comScore's report service or pay a one-time $5,000 fee for the company to "audit" the placement of the website's beacons to insure that one and only one beacon is on every page. If the website operator doesn't want to pay, comScore will continue to use its diary method, which it admits is inaccurate, to measure that site's traffic. It was this "pay for accurate numbers" approach that AllThingsD reported and that made Calacanis go ballistic.

comScore has the right to charge whatever it wants for its service, although $5,000 to "audit" beacon placement seems like a lot of money, given that it's likely to be a largely automated service. What I have problems with is comScore continuing to offer the diary service at all, and that's where my gratuitous Domino's Pizza reference comes in.

Recently, Domino's began running television ads taken from focus groups, where participants said things like "the crust is rubbery" and "the box tastes better than the pizza." Domino's ads say that it has taken the criticisms to heart and has changed its pizzas so they taste better. Domino's no longer sells its old, crappy pizzas, only the new ones. comScore, however, continues to offer the old, crappy diary measurements, right alongside the new, superior, beacon-based ones. If the old methodology doesn'r work very well, STOP USING IT!

If I was an advertiser, I'd now take comScore's diary ratings with a grain of salt. Mixing the two methodologies would actually make it more likely that I'd look at a competitive rating system, not less. I'm sure that comScore is afraid that dropping the diaries before it has a critical mass of beacon-equipped sites will make its overall service much less valuable, but there's an alternative approach it could have taken that would allow them to phase out diaries quickly and still generate revenue:

1. Make the beacons available to website operators free, just like Quantcast and Google do.
2. Provide the auditing service for the first year at a much lower price, and make it an annually renewable service.
3. Clearly distinguish in ratings reports which sites are audited and which are not. This will alert advertisers to sites that may be "gaming the system" by placing multiple beacons on a single page.

It's in comScore's best interest to get rid of the diaries and go to the audited system it's pursuing. It should do everything it can to make the transition as quickly as possible, even if it means leaving some money on the table in the short term.