In the first part of MediaNama’s interview with Puneet Johar, CEO & Co-founder of To The New Ventures on #fame, he spoke about the company’s content strategy, traffic to the app, approach to mobile, among others. In the second part of the interview, he speaks about the monetisation process, brand associations, subscription, talent management and challenges.
MediaNama: What role has YouTube’s monetization model played in the launch of your own app? YouTube takes nearly 50% of the revenue.
Puneet Johar: YouTube deserves the 50% that it gets. It gives great reach and instant audience. Whether YouTube or Facebook, both will extract their share of revenue and deservedly.
MediaNama: But is it fair for the cost of production involved?
Puneet Johar: I disagree. They make up with the reach that they offer. I don’t think the revenue share of 45% was an issue at all. As I said, for us, Facebook and YouTube continue to be extremely important for our business.
MediaNama: In that case, how long do you think it will take for you to break even on YouTube in terms of scale?
Puneet Johar: We don’t think of our business like that. We think of publishing on all platforms. When we are making content or partnering with talent, we are not thinking of only breaking even only on YouTube. If you ask me how long it would take inventory revenue to work, then I would say that it is matter of 3-4 years considering how fast people are moving onto the mobile.
MediaNama: What is the cost of production of videos for the digital media?
Puneet Johar: It can vary. If you compared it to television, it would 10% or 15% of television budgets. At an average it can be anything. Some people may be spending Rs 10,000 and some people may be spending Rs. 80,000 and some may be spending Rs. 2 lakhs. There is no real number. It is like television content where it can be made for Rs. 20,000 and also Rs. 20 lakhs per episode. It could just say that it is 10% -15% of television budgets.
Brand associations and sponsorships
MediaNama: Is YouTube revenue is insufficient? Is that why you are having to approach sponsors?
Puneet Johar: But that has nothing to do with the percentage taken by YouTube. It is just the nature of the market right now. If you look at it, inventory revenue in niche channels in India is also not sufficient. Inventory is valuable only on big television channels, entertainment or sports. Everywhere else, it is sponsorship and branded content that is making it work even on niche channels. YouTube is not different. YouTube as an aggregator of all that content, can make it work. But businesses like ours can’t make it work only on inventory revenue. It is a matter of time. As the inventory revenue becomes bigger in 4-5 years, we will be able to make it big on inventory itself.
MediaNama: What are brands expecting from digital content? What have you experienced in your association with brands?
Puneet Johar: Brands are looking at reach and engagement in a big way. Engagement is a much bigger thing that they are looking at than even reach on digital. Different means to engage with their audience is something that they are looking at. With our deep brand associations, these are the two things that I see them looking at.
MediaNama: How do you work with brands on sponsorships? Is it exclusively for your platform? Or is it combined for both YouTube and your platform?
Puneet Johar: It is all platforms combined. Like any deal, the brands would want your platform combined with social reach on Facebook, Twitter and YouTube. They would want everything. Any sponsor’s idea is to amplify his reach for his audience. At the core will be your app. But you’d have to amplify that across all social media.
MediaNama: YouTube has some rules with respect to sponsored content. Since you post the same content on your platform as well as YouTube, how does this content work for you? Or do you do content that is exclusively for your platform?
Puneet Johar: We are in consonance with YouTube and Facebook’s norms. We do exclusive content for our platform as well. As you mentioned, there is a balance between flexibility and reach. Our platform’s reach is not as high as a Facebook or a YouTube right now. If our platform offers flexibility then we’d have to amplify it with the reach of Facebook and YouTube. But why only Facebook and YouTube, we are even using offline media to amplify our reach. There has been print and outdoor work from us. There will be TV tie-ups. When we have to amplify our reach, we’ll amplify our reach across all media.
MediaNama: Considering that India is behind the west in terms of YouTube market, how are consumers take digital video content? Are consumers willing to pay for it?
Puneet Johar: I think it is too early. Overall subscription is a big challenge in India. Our returns are lowest in the world. It would be $8 or $10 in India compared to $80-$100 in other markets. Subscription has always been a challenge and the model will be ad funded for sometime largely until subscription kicks in. Having said that, I’m not ruling it out. DTH took a long time in convincing people in India that DTH was a viable option to cable. Similarly, deep-pocketed people have to, will and are already coming in which you are seek with Netflix and other similar players coming in on OTT. Zee already has Ditto as a platform. People will start experimenting with subscription but it will take time. It is ultimately monetization follows consumption and all consumption is moving towards mobile so advertising to subscription will move there.
MediaNama: How does your partnership with your content creators work? How does the revenue work in these partnerships?
Puneet Johar: Our content creators can go live on our app. If they want to, we also work with them go live on their YouTube channel. We do both. We are not an MCN in our strategy to go into revenue share with our talent. We don’t have enough money going around the inventory for it to go back to them unlike the developed markets. We give them a share of the sponsorship revenue.
MediaNama: Who owns the IP of the content? How does it work with your talent pool?
Puneet Johar: On live content, we don’t own the IP. Only when we come together for highly backed properties, we own the IP. Where we are spending the money to create that high impact content like Lakme School of Style, Web Singer, that’s when we own the IP. But anyone can go on the platform and create content and he owns the IP. If we don’t put in any production money then why should we own any IP?
MediaNama: You say anyone can go join your platform and you don’t invest money on all of them. What then is the investment that you make on the rest of your talent pool?
Puneet Johar: We have provided you the platform. You can go live. People are chatting with people. You can become famous. People are getting fans on the app. People are becoming more and more famous and that is what we provide. Talent who reach a critical mass, we then work with them to produce content.
MediaNama: Do you post the content of people on YouTube which you don’t produce?
Puneet Johar: No, there are some cases but not really. Only talent who reach a critical mass and when we actively produce content with them, do we then put it up on YouTube.
MediaNama: How are you using the products of To The New Ventures’ acquired companies to drive Fame?
Puneet Johar: Everything that we acquired got consolidated under one company called To The New Digital, which is a digital agency. That agency has almost 300 technologists across Asia Pacific. That experience is coming very handy for us in #fame because #fame has outsourced its technology development to that company. It leverages both Thoughtbuzz, which is our social analytics platform because it is an ability to predict trends from that analytics platform extensively. You should look Bajaoed and other programs they use social analytics in a big way. We use Blogmint in a big way in terms of sign on influencers. All our platforms are used. In that sense, it is a network. The network effect does kick in.
MediaNama: Considering the way you focus on mobile and with the present connectivity, how will it be possible for you to reach your projected numbers on mobile?
Puneet Johar: Those are technology bets that everyone takes. When satellite came in, people spoke about uplink costs etc so it doesn’t make a business viable. People like us who started our career in the mid 90’s have gone through that in our lives. People said terrestrial will make it. Satellite will not make it. Any technology disruption that comes in, if today you are saying bandwidth is not enough, obviously I think it has reached a critical mass where there are many access points including Wi-Fi and 3G etc. But we can only see that amplify and accelerate. When you start a business, you don’t start it for a year or two. We are in the business to stay.
MediaNama: What are the challenges that you face now in the YouTube and online video industry?
Puneet Johar: Challenges are that there are two breeds of talent according me. There is digital native talent who have been brought up on digital. It is less of a challenge with them because they understand the medium, they experiment and know that it takes high degree of experimentation to get it right. They will be continuously at it. And then there is the breed that is slightly older who may be conditioned by the whole television and film culture of making content. They are still struggling. They want to do content with digital but they are still struggling with the pace, the experimentation and the costs associated with this. This process will take time.