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 Current.tv,
a pioneer of user-generated web content, unique in having an
accompanying cable channel in the US has apparently turned a 'small
profit' according to Derek Baine, a senior
analyst with Monterey-based Kagan Research. The Al Gore backed network
does not boast anywhere near the viewing figures of YouTube, but has an
accompanying cable channel piped to 30 million US homes. Users of the
site can vote on content to 'greenlight' for air, with the best being
broadcast and paid for. The service has a much more socially engaged
editorial focus than most video streaming sites; a competition this
month, for example, offers US filmmakers the chance to win a $100,000
prize for short films about tolerance (deadline October 2nd).
Submissions are normally open for filmmakers anyway in the world,
however.
 The San Francisco Chronicle article, which first reported on the profit, is copied below:
Television insiders and pundits mocked Al Gore and Joel Hyatt a year
ago when the pair introduced Current TV, their San Francisco-based
cable and satellite channel. Even after critics saw that the ex-vice
president and Democratic Party fundraiser weren't crafting a left-wing
network, few in the change-averse world of television could understand
why anyone would tune into Current's programming motif: three- to
seven-minute videos created by emerging filmmakers, citizen journalists
and the most rank of amateurs -- the viewers themselves.
Soon after Current's premiere, the Wall Street Journal described it
this way: "Newsless, often clueless and usually dull, the new channel
is a limp noodle." Plus, Current was carried in only 17 million
households, making it the equivalent of a one-stoplight town in the
television universe. Big advertisers don't start calling until a
network can be seen in 40 million households.
But the media landscape has shifted in the past year, as
video-sharing sites like YouTube.com revealed an audience for
viewer-created entertainment. Current has since led the industry in the
commercialization of that concept, as its viewers are creating ads for
its leading advertisers. Half of Toyota and Sony's commercials on
Current are made by the people watching them, giving advertisers a
window into the mind-set of the coveted younger demographic.
Now carried in 30 million homes, Current will announce a plan next
month for online expansion and is planning an international version
next year. Madeleine Smithberg, co-creator of Comedy Central's "The
Daily Show With Jon Stewart," will start a daily offering this fall
that's still under wraps.
The best news of all for Hyatt, who is Current's CEO, is that the
operation is making a small profit, according to Derek Baine, a senior
analyst with Monterey-based Kagan Research.
And some of the TV industry observers who once mocked Current have
begun to change their minds as several networks, such as CNN and the CW
-- which is a combination of the former WB and UPN television networks
-- are now embracing user-generated content.
But while Current may have been ahead of the curve on this trend,
the next challenge it confronts is tougher: Many in the channel's
targeted 18-34 demographic may not be able to afford the premium-tier
service of some digital cable systems, where Current is carried. Others
may prefer lapping up videos online in YouTube's free-form format
rather than on Current's more organized site. Critics continue to ask:
Is Current focused on the wrong medium?
Current "caught the (viewer-created content) trend early, but it is
kind of surfing by them," said John Higgins, business editor at
Broadcasting & Cable magazine, a trade publication for the
television industry. "These guys (at Current) had all the right ideas
and all the same machinery in place that YouTube did, but they didn't
quite do it. Lighting struck 10 feet to the left of them.
"Do you ever hear people say, 'Did you see that video on Current?'
No. They say, 'Did you see that video on YouTube?' " Higgins said.
Hyatt said Current is trying to position itself as the thinking
person's YouTube -- "a premium offering" where the best of
user-generated content will gravitate to TV.
Part of Current's strategy is rooted in the belief that while
YouTube may be serving up 100 million videos a day to 6 million unique
visitors, the 18-to-34 set still watches and appreciates a lot of
television. But while that age group watches an average of three hours
and 55 minutes a day, it is far less than older folks. The over-50
crowd sees nearly six hours daily, according to Nielsen Media Research.
Yet, in another sign that media consumption habits are
unpredictable, the audience for short videos may not be as young as
perceived. The highest percentage of YouTube's audience is between 35
and 49 years old, according to June measurements by Nielsen/NetRatings.
"Content creators -- people who want to share their stories with
their generational cohorts -- believe that television is at a whole
different level than the Web," Hyatt said recently while sitting in
Current's offices across the street from AT&T Park. "So, yes,
anybody can submit a piece of video to, fill in the blank -- YouTube,
iFilm, Google Video, Yahoo video -- and it's all put up there. And it's
a big mass of stuff.
"And for viewer creators, yes, you get your stuff on the Web, but the best of it can get on television," Hyatt said.
Plus, said Current programming chief David Neuman, cable TV offers a proven business model that a dot-com company doesn't.
Higgins agreed: "That's where they have to make their mark. To be the organizers, the editors of user-generated video."
The majority of Current's videos, called "pods," are submitted by
correspondents with whom the channel's editors have a continuing
relationship. About 30 percent of Current's pods come in over the
transom as "viewer-created content."
The way viewer-created video winds up on the air is akin to
"American Idol." Creators submit pieces to Current's Web site,
www.current.tv, where viewers comment on them and vote on whether to
"green-light" them to the airwaves. Current producers skim the cream of
these for airplay.
Current's lineup is an eclectic mix of point-of-view journalism and
trend and cultural pieces. It has aired heartbreaking stories from
AIDS-ridden corners of Africa and wacky pods on bikini-wearing meter
maids. It's shown correspondents filming from the site of recent rocket
attacks in Israel and aired an insightful conversation with two
Hezbollah members that was filmed days before the current Middle East
war broke out.
Programming chief Neuman, an NBC veteran who supervised mid-1980s
comedies such as "Cheers," became more confident than ever that Current
was on the right track last fall when he saw a video filmed by a New
Orleans resident shortly after Hurricane Katrina struck the city -- and
before network reporters could get on the ground. The resident shot the
video while he volunteered on a 3 a.m. rescue operation aboard a
flat-bottomed boat.
"He was authentically from that place," Neuman said. "He was telling
the story in his voice, from his point of view. It was just a more
compelling and authentic experience than you could get from
conventional news. And he had scooped the competition. They were out by
a satellite truck somewhere trying to figure out how to drive through 3
feet of water."
Neuman said Current has no hard rules on story length, but it has no
plans to begin airing long-form documentaries. While its market
research says Current's audience will watch six to eight pods in a row,
Neuman said, "They don't want to sit there and be annihilated with
miserable war news for 45 minutes.
"When you want the audience to participate meaningfully in digital generation, it's easier in the short form," he said.
Current may be ahead for now in the area of short-form television entertainment, but others in the industry are gaining on it.
In the past few weeks, the CW announced it would allow viewers to
create 15-second promotional spots for its programs, as Current already
does. In September, MTV will start MTV Flux in the United Kingdom, a
channel that will allow viewers to share video they shot; if the
concept works, an MTV executive said all MTV channels could be
"fluxed." CNN just started soliciting viewer video and photos for its
CNN Exchange Web site, and NBC has created a channel on YouTube.com to
promote its programs.
Hyatt smiled and shook his head at the changes, noting that the
imitation is flattering. "We are gratified, to be sure, but we're
motivated by the validation."
But Current is still too small to be Nielsen-rated, "so nobody knows
if people are watching or not," said Baine, of Kagan Research, who is
tracking Current. "That's a tough thing for advertisers. You're showing
them a lot of hypotheticals."
Baine estimated that the company is turning a slight profit of $3
million this year based on estimated revenue of $47 million. He
forecasts that Current's advertising revenue will increase next year to
$19 million from $10 million this year. "For a network in its first
year to not be losing money is pretty good," Baine said.
Major advertisers such as Toyota are happy with Current's first year
-- and especially its V-CAMS, or viewer-created ads, which began in
May. Toyota is so pleased with the new approach that it is considering
using a viewer-created ad if it buys advertising time during the 2007
Super Bowl.
Current "is a great place to experiment with new ideas like this,"
said Kim McCullough, corporate manager for marketing communications for
Toyota Motor Sales, USA. As for whether television is the best medium
for user-generated content, McCullough said, "I don't think there is
one best way. It's too early to say right now. We want to be involved
in all these different platforms as this shakes out."
Next, Current is experimenting with a video-on-demand offering in
Los Angeles, where viewers can watch the pods they choose. It is
attempting to lure more high-end filmmakers with its "Seeds of
Tolerance" contest, which awards $100,000 to the best piece on
tolerance and diversity. And two months ago, it began soliciting short
pods shot on cell phones. Newman said the quality isn't good yet, but
he isn't concerned.
"It's perfectly consumable TV; it's just not really compelling,"
Neuman said. "Where it will become more compelling is when it's taking
you places where you wouldn't be taken otherwise."
Source: San Francisco Chronicle
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/08/14/MNGCIKHTRQ1.DTL
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