Will Paying for User Video Pay Off?

Paying for content is the biggest weapon left for independent online video sites, though they’re still trailing the portals — Yahoo, MySpace, YouTube/Google, MSN, and AOL. Today, Break.com announced it’s raising its bounties for user video, and Metacafe tells us it’s seeing a larger-than-expected uptake of its “producer rewards” program.

While Revver seems to get most of the attention for paying content creators, Break was one of the first sites to do so, starting with $50 prizes in January 2005. In a recent interview, Break CEO Keith Richman told us that he’s tried revenue sharing, but prefers to buy good content when it sees a traffic spike, and commission videos from up-and-coming creators such as Barats and Bereta.

Monday, Break will raise its payouts from to $400 to $2000, up from $250 to $1000. Richman said the company, which unlike many of its competitors has not raised venture funding, has paid its members more than $300,000 to date.

Metacafe, the Benchmark-and-Accel-funded Israeli video site, whose traffic ranking also hovers just outside the majors, started paying contributors a month ago though its Producer Rewards program. The company uses more of an established metric than Break, but has a higher threshold for payment than Revver. Metacafe pays $5 for every 1000 views if a video breaks 20,000 views, while Revver splits a reported $0.75-$1.00 cost-per-click evenly with creators and affiliates.

Metacafe’s scheme is performing better than expected, according to CEO Arik Czerniak. “We were hoping to get 1000 videos accounting for 10 percent of our total traffic by end of 2006,” he told us recently. “We are now getting about 300 videos being uploaded a day, and the producer rewards program already accounts for 8 percent of our total traffic.” The company is getting 1.2 to 1.5 million unique visitors a day, according to Czerniak.

Independent video-sharing sites seem to be choosing one of a few tweaks to stay alive. Some, like vMix, vSocial, and KickApps, are going the white-label route. There’s the niche markets, of course. Katie’s been covering the mobile plays — such as MyWaves, profiled tonight.

As for getting access to professional video and music, media players like litigation-happy Universal Music Group seem interested in consolidating video sites by picking off smaller players through lawsuits and saving their negotiation energy for pork-filled deals with YouTube. To that end, CBS seems more than happy about the increased audience it’s attributing to 300 clips uploaded to YouTube in mid-October, which have been viewed about 30 million times.

Richman of Break said he doesn’t like cutting studio deals to co-produce content because the terms aren’t good for him. Czerniak of Metacafe mentioned a recent deal with crime television impresario Steven Bocho, and said he’s in negotiations with other legal content owners such as NBC and Viacom. Guba has a partnership with Comcast, Sony, and Lionsgate for a horror movie network. Grouper offers some content from its new parent Sony.

So while the marquee deals are few and far between, paying amateurs is a pretty easy way to attract attention, creators… and perhaps even the next big thing. Revver has gained fame along with talents such as lonelygirl15, Ask a Ninja, and Ze Frank for its clean and simple rev-share deal. AtomFilms (now owned by Viacom), Brightcove, and DivX’s Stage6, some of the stronger players out there, also pay for content in various ways.

Still, we’re doubtful there’s enough good stuff lurking around to satisfy all the talent scouts turning over stones. It’s only fair to pay content creators, but adding and/or bumping up bounties does seem to smell like a desperation move. “Who’s not for sale?” asks Break’s Richman, when we poke at the obvious question. As the days tick on by following YouTube’s $1.65 billion deal, you gotta stand out somehow.

With additional reporting by Om Malik.