Making Money With Youtube

Since the invention of media (the book, the record, the movie...), there's been a pyramid of value and pricing delivered by those that create it:

Starting from the bottom:

Free content is delivered to anyone who is willing to consume it, usually as a way of engaging attention and leading to sales of content down the road. This is the movie trailer, the guest on Oprah, the free chapter, the tweets highlighting big ideas.

Mass content is the inevitable result of a medium where the cost of making copies is inexpensive. So you get books for $20, movie tickets for $8 and newspapers for pocket change. Mass content has been the engine of popular culture for a century.

Limited content is something rare, and thus more expensive. It's the ticket that everyone can't possibly buy. This is a seat in a Broadway theater, attendance at a small seminar or a signed lithograph.

And finally, there's bespoke content. This is the truly expensive, truly limited performance. A unique painting, or hiring a singer to appear at an event.

Three things just happened:

A. Almost anyone can now publish almost anything. You can publish a book without a publisher, record a song without a label, host a seminar without a seminar company, sell your art without a gallery. This leads to an explosion of choice. (Or from the point of view of the media producer, an explosion of clutter and competition).

B. Because of A, attention is worth more than ever before. The single gating factor for almost all success in media is, "do people know enough about it to choose to buy something?"

C. The marginal cost of one more copy in the digital world is precisely zero. One more viewer on YouTube, one more listener to your MP3, one more blog reader--they cost the producer nothing to produce or deliver.

As a result of these three factors, there's a huge sucking sound, and that's the erosion of mass as part of the media model. Fewer people buying movie tickets and hardcover books, more people engaging in free media.

Overlooked in all the handwringing is a rise in the willingness of some consumers (true fans) to move up the pyramid and engage in limited works. Is this enough to replace the money that's not being spent on mass? Of course not. But no one said it was fair.

By head count, just about everyone who works in the media industry is in the business of formalizing, reproducing, distributing, marketing and selling copies of the original creative work to the masses. The creators aren't going to go away--they have no choice but to create. The infrastructure around monetizing work that used to have a marginal cost but no longer does is in for a radical shift, though.

Media projects of the future will be cheaper to build, faster to market, less staffed with expensive marketers and more focused on creating free media that earns enough attention to pay for itself with limited patronage.

When we reported on the importance of great design to the success of tech startups recently, the lack of many designers co-founding startups was seen as a problem. The Designer Fund is looking to help support that philosophy.

The Designer Fund is a network of angel investors, offering seed investment in startups with designer-founders. The idea is that design needs to be at the core of tech products. As a release from the fund today says, “No longer can design just be an outsourced add on, limited to occasionally putting ‘lipstick on a pig,’ tech moves so fast that it’s a continuous process of iteration for designers to prioritize solving the right strategic problems, contexts and use cases for their company to prosper.”

Beyond financial backing, the fund offers mentorship and access to the network of experienced designers with backgrounds in companies such as YouTube, Facebook, Google and Twitter.

Today the Designer Fund has announced investments in ten startups with products that range from an augmented reality toy, to a tool that allows campaigners to harness online content about their cause.

The full ten are:

• Tiny Review, an image and review sharing app for iOS from Melissa Miranda, a former IDEO designer.


• Launchpad Toys, a Ycombinator graduate startup offering Toontastic, an iPad app that lets children create animated stories.


• The work of Khoi Vinh, a former New York Times designer who has created collaborative collage app, Mixel.


• From designer-founder Aaron Perry Zucker, The Creative Action Network is due for launch in January. This is a tool to help organizations and campaigns harness cause-based content more effectively.


• Superflux, from Anab Jain, is developing a prototype toy for augmenting reality in digital and physical spaces using sensors.


• 500 Startups participant WeddingLovely, from designer Tracy Osborn, is working on making weddings easier to organize.


• Social blogging tool Teethie comes from Standford Product Design graduate Nina Khosla.


• Designer and former basketball player Maurice Woods is launching Convozine, a social magazine service.


• Cooking-focused startup CultureKitchenSF is founded by Stanford Product Design graduates and 500 Startups participants Jennifer Lopez and Abby Sturges.


• Storytree, from IDEO designer and alumni of the Stanford Graduate Design Program Matt Sullivan, is a service that lets families capture stories about their histories.

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