Michael Learmonth of Silicon Valley Insider, speculates that Hulu is selling ads at $25 CPM (cost per mille), and that their monthly traffic of 5 million viewers would translate to $125,000 after revenue sharing. He doesn’t cover what numbers he thinks Hulu has on the expenses side of the balance sheet, but does say that $1.5 million annually is not going to cover the costs of a venture valued at $1 billion.
Of course Hulu will probably gain viewers over time, but the catch is that, as viewers increase, so do the costs of bandwidth and marketing. Silicon Valley Insider has another post about why Hulu will fail. Both of these articles raise valid questions for anyone looking to distribute their own content. Even for people not hoping to make a profit large enough to live on, the requirement remains to have a model where you can increase viewership without incurring incremental costs greater than the returns.
So what’s the business model for your content?