In this edition of Web Enlightenment we'll be talking about how video is the same as free government cheese.

This newsletter focuses on giving you practical, interesting insights into how to successfully use technology as a tool to improve the way you do business. Bridging the gap between knowledge and understanding that all entrepreneurs have will help you make money online.

Please hit reply and tell me what kind of cheese is your favorite , I answer every email sent to me.

All the best,

Video is Free Government Cheese

I Love YouTube - it is just the most fun. For those of you that aren't familiar YouTube is a video hosting service. It has become the dominant video site and the word "YouTube" is fast becoming a verb like "Google" is.

I have one of my beginner seminars available via YouTube (The Three Things - What is a Website Anyway) and I've been glad that people have been able to experience it that way.

I have even had a little fun with YouTube and displayed my shoddy guitar playing skills with The Internet Marketing Song. One of my favorite things about this is Jay Conrad Levinson's comment "i like the song. and you're a far better guitar player than i am."

I'm just about to begin a serious initiative with a client to have them present product videos to enhance their capability to sell online, I have high hopes this tactic is going to be very effective for them.

So I just wanted to explain that I am a personal fan of online video and how well it works before my business analysis proceeds to kill all the joy and suck all the air from the room.

Online video is like free government cheese and we must never forget that.

People that haven't been on the web for long may have no idea what I'm talking about here, let me explain. All of the core technology needed to stream video online existed long before YouTube - for the geeks in the room I'm sure you are remembering "RealAudio", which was introduced in 1995. Essentially the same thing as YouTube this product was named # 2 on the PC World list of 25 worst products of all time in 1999.

The thing about RealAudio (and it's subsequent iterations of RealPlayer, RealOne, etc) is that it wasn't free. The software to play videos had a lousy simple free version (most of the time) but the majority of people paid to use it. What they paid was nothing compared to what web geeks paid to make this work - Real had "server" products that were necessary to stream videos, for thousands of dollars you could just barely get started. Beyond the technology we had the bandwidth cost, that fun invoice your web hosting company would send you at the end of the month that typically made your jaw hit the floor.

So in the days before YouTube we had all the same basic technology but we had to build a heck of a business case for online video, and a pretty significant percentage of the time it just wasn't there. We all know that putting a video on your homepage is great fun and an effective way to communicate with your visitors - but what if you knew it would cost thousands per month to have it there? Can you see how it getting really popular could be seen as a disaster for you when the cost went to thousands per day or more?

As web geeks we were charged with making it cost as little as possible and so we'd put videos up for a few days, make visitors provide lots of info before they could view them, and use all sorts of other tricks to reduce the ongoing costs. Bottom Line - video was tightly controlled by virtue of its cost and as a result development was slow.

Today YouTube (founded in 2005) is owned by Google (they paid 1.65 billion for it in October of 2006) - but no one seems to care much about this pretty important fact:

As of Q1 2008, YouTube was not profitable, with its revenues in 2007 being noted as "not material" by Google in a regulatory filing.

So right now you have this giant hugely profitable company - Google - propping up an expensive to operate technology based on the hope that they can figure out how to make money from it via advertising or some other method. Maybe they can, but maybe they can't.

As Internet Entrepreneurs we must never forget that folks love free government cheese - it is the most delicious cheese ever, we are so excited because it tastes so good. The fact it is free has a huge impact on overall perception that can not be underestimated. When you decide (on the basis of those great reviews of the free stuff ) to start charging $5 a pound for it quite suddenly there are all sorts of new comments about the chalky aftertaste. In many ways this is the story of Real - it all fell apart when they had to figure out how to make money.

Economics on the web web often defy calculation - people made these same arguments about free email services when they began. In that arena folks did figure out how to give something away and make a small profit, but it was a bloody battle - you may remember a little company that used to be a cash cow called AOL.

I'd encourage you to use video - I do and it works really well. As an Internet entrepreneur you have another responsibility though - you have to be aware of the business case and the real economics behind this revolution. I sure hope free video is here to stay but I also know it is built on a very shaky house of cards that could crumble at anytime.

Photoshop Fun ...

Recently the folks from Day's Jewelers came and visited me in my rural Maine office. The photographer, Steven Roy, took a picture of me at my desk and "photoshopped" it into what he called Solar Man.

and then , knowing that I am a big fan of Grateful Dead Music he made another pass with photoshop to make it look like I was watching music videos.

You can click on either photo to see large versions.