TWiT, Revision 3 and...Keith Olbermann? Television networks on the cheap

Update, February 8, 2011: In a teleconference this morning, Keith Olbermann and Current TV announced that Olbermann will do a nightly news and commentary show on Current beginning in Spring 2011, become the company's Chief News Officer and have an equity stake in Current Media.

Update, February 2, 2011: I fixed all of the capitalization errors for Leo Laporte's name (it's Laporte, not LaPorte, although he's known as "The Door" to his friends). In addition, NewTeeVee reported today that Revision3 reached profitability in the last quarter of 2010 and claims that it's the number one "over the top" television network in terms of viewers.

Last week, TWiT Network owner Leo Laporte signed a lease to move his operations from his farmhouse in Petaluma, CA to a 9,400 square foot building formerly occupied by the audio software company Bias. TWiT will turn it into multiple television studios, a radio studio and business offices. The TWiT Network is entirely Internet-based, although Laporte also does conventional radio and television shows for other outlets.

TWiT didn't arise out of a vacuum. Laporte was one of the central figures in the creation of ZDTV, which originally started by producing programming for MSNBC and became a 24-hour cable network focused on technology news and information in 1998. ZDTV immediately ran into problems getting (and paying for) cable carriage, as well as advertising, and in 2000, it sold out to Paul Allen's Vulcan Ventures and changed its name to TechTV.

Allen and the programming team he put in place at TechTV tried a variety of programming approaches, but nothing worked to make the business profitable (and no one approach stayed in place long enough to build and sustain an audience). In 2004, Allen sold TechTV to Comcast, which merged the channel with its G4 games-oriented cable network and renamed or eliminated most of TechTV's programs. Today, only two of TechTV's on-air hosts remains at G4.

Laporte didn't make the move to G4; he stayed in Northern California and started the "This Week in Tech" podcast, from which TWiT gets its name. Laporte added more podcasts, then began simulcasting some of the podcasts with video, and eventually added some video-only shows. Last August, the Los Angeles Times reported that TWiT's revenues were $2.25 million in 2009 and were on track to reach $3 million in 2010, with 10 full-time employees and 30 to 40 contractors. Not a huge business, but profitable, according to LaPorte.

One key to TWiT's success is that Laporte has scaled its growth to fit its revenues. He still runs it out of his Petaluma farmhouse, and he's kept the operation "bare-bones". Even with the move to a larger facility and Laporte's intention to eventually offer programming 24/7, it's still operating on a much smaller scale than ZDTV or TechTV ever did, and that's essential to its success.

Another ZDTV veteran, Jim Louderback, runs Revision3, a spin-off of Digg (which was co-founded by yet another TechTV survivor, Kevin Rose). Revision3 is also an Internet-based news and entertainment video network, and in addition to his duties there, Louderback is a columnist for Advertising Age. He recently wrote about cable network WealthTV's decision to create a channel for the Roku set-top box, and in a follow-up article, suggested that cable networks that have been unable to get much carriage from U.S. cable, IPTV and satellite operators could follow WealthTV and create their own over-the-top Internet video channels.

The problem for these cable networks (Louderback calls them "zombies") is that the can't simply move their operations to the Internet and hope for a better outcome. Instead, they have to scale their operations to the revenues that they can generate from the Internet. They don't have to pay for carriage, but they're going to have an uphill climb to earn any significant subscription revenue. (TWiT gets the vast majority of its revenue from advertising.) That means that they're going to have to dramatically lower both their costs and their expectations.

That brings us to Keith Olbermann. Keith Olbermann? U.S. readers probably know that Olbermann anchored the most popular program on MSNBC, "Countdown with Keith Olbermann", until last Friday. Initially, it was thought that NBC, the owner of MSNBC, fired Olbermann, or that Comcast, the soon-to-be owner of NBC Universal, had played a role in the decision. However, it now appears that Olbermann wanted to leave the network and NBC wanted to get rid of him, so they worked out a mutually-convenient settlement.

Olbermann spent eight years at MSNBC, but he's bounced around among many networks for years, including CNN, ESPN, Fox Sports and a short previous stint at MSNBC. The only option he's had over the years has been to go to work for a different network, but the Internet offers him another option. The Huffington Post and The Daily Beast have both built large, profitable audiences on the Internet from nothing in just a few years (The Huffington Post, in less than six years, and a little over two years for The Daily Beast). Olbermann could create his own Internet video network, operating at low cost (like TWiT) while providing a forum for a variety of outside contributors (like the Huffington Post). Whether it would make enough money to keep Olbermann interested is a separate issue, but it would enable him to work as he wants without answering to a phalanx of corporate management.

The wheels keep turning: Dan Rather went to HDNet and Conan went to TBS. Could Olbermann go to the Internet?

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.