Media1st.com: "There is Money in Streaming"

It hasn't been an easy road for Media1st (www.media1st.com), an Atlanta-based webcaster. After building out its infrastructure and focusing on the consumer/entertainment side, it realized that money just wasn't coming in. So it switched to the e-learning space and saw that there was money to be made with streaming.

Media1st started out with what it called a "B2B2C" model, creating newscasts and aggregating content focusing on small verticals. The company tried to tie videos with related content, advertising and e-commerce — but it just wasn't working.

"Revenues were primarily based on advertising, and we know where that is today," said Tom Doty, president and CEO.

"We had signal acquisition, pre- and post-production, plus an OC-12 connection to Enron's backbone," said Doty. "Now how do we make money on this?" With the infrastructure in place, he realized that he needed a way to generate revenues.

"Around August or September last year, we were engaged by e-learning companies asking us if we could create an environment for them to do learning and certification," said Doty. "So we developed the iNstruct product around that market need."

iNstruct is a web-based e-learning platform designed as a corporate training tool, which ties user registration, interactivity, and streaming media into one application.

Pop Quiz

Part of the solution was created to ensure that viewers are actually sitting in front of their monitors and paying attention. Since some employees need certification training, it's crucial that you know whether they're watching and learning. "You have to make sure that someone's not going out to the kitchen and making a sandwich," said Doty.

So sometime after the video is played, a pop-up question appears. The viewer must then correctly answer the question within 60 seconds. "That way we can see, 'Yes, you're paying attention and you've learned.'"

This happens throughout the session so that users are sure to pay attention and learn. "There's a level of urgency," said Doty. "You have some skin in the game now."

It's The Revenues

Doty warns that many streaming companies are simply working off the capital they raised when the economy was good. "They're going to die if they're banking on advertising when the economy kicks up," he said. "You can't kid yourself."

Success, said Doty, is measured in revenues. After getting his first sizeable check from an e-learning customer, he found that he could make money in streaming. "I'm no genius, and it didn't take a brainstorm to get into e-learning."

Doty said that besides an upfront fee, there's recurring revenue, from monthly fees, plus fees for making new classes, and per-seat costs. Although Media1st just got its first few customers, it's looking to target the Fortune 1000 "corporate universities."

Doty said that Media1st is now "10 percent a streaming media company and 90 percent an interactive applications company." He says traditional e-learning systems use plain text and no interactivity. "How compelling is a text-based system?" he argued. "Video is compelling."

Currently, iNstruct is a video on demand solution but at some point Media1st will start doing live, instructor-led events.

"Are we in the right space? No question about it. We have absolutely no regrets," he said. "We have found a way to make money with streaming media."