There’s a bit of a discussion raging online right now about whether the a la carte nature of online video has economics that can support an industry, prompted by a research report by Craig Moffett over the weekend called “And Now for the News…The Emperor Has No Clothes.” Mark Cuban reproduced many of the best parts and expanded on them in a blog post of his own.

What’s got everyone talking is a sobering (for some) calculation by Moffett that implies that TV producers will have to reduce their costs by nearly 90% to be profitable in the new medium (Cuban thinks it’s even more). But many of the things Moffett and Cuban are responding to are the things we built into the business model of Next New Networks. Not because we’re visionaries, or have the answers to this challenge everyone’s facing, but because it was the only sensible way to launch a new media business in this landscape.

For one, our programming costs average in the hundreds of dollars per minute, which is one tenth or less cable television’s programming costs. We launch networks with the minimum necessary programming to build an audience, which may be as little as two minutes of programming a week — with the goal to add more programming as audience and advertiser demand grows. But most importantly, we made a decision to focus on communities that will embrace our programming. If you make something people love, questions like production value and how much money you spend become less important — what matters instead is, do they love you? Do they keep coming back every week? And do advertisers see undeniable evidence that you’re creating something that speaks to the people they want to reach?

I think our co-founder Fred Seibert addressed all these concerns really well in an interview he did with Beet.TV last week. Check out the embedded video below for his take on our take, which highlights some of the creative ways we’re trying both new and tried-and-true advertising models in our programming, and what he calls “struggling optimistically forward” towards a model that can support great video online. Will it look like TV? Who knows. We always like to say it will be better than TV.

Please promulgate us on the interweb.

Posted by Tim at 3:46 pm on Wednesday, May 7th, 2008 in Advertising, Industry. You can follow responses through the RSS 2.0 feed. You can leave a response, or trackback from your own site.