This week, the user-generated video hosting service, Vid.me announced it was shutting down.
Vidme confirmed it was shutting down because it can’t see a way to make money in the face of internet giants Google and Facebook. The company said that new signups and uploads to the Vidme site and apps will be disabled from Friday, and the service will be shut down after Dec. 15
The co-founder, Warren Shaeffer posted on his Medium blog titled Goodbye for now
- “Monetizing user-generated content is increasingly challenging – Advertisers want to target specific audiences, which means a new platform that doesn’t store troves of personal user data is at a severe disadvantage relative to Facebook and Google, which combined control 60% of online ad spending in the U.S.
- Few advertisers are willing to negotiate direct deals with platforms that don’t have enormous scale, meaning ad-revenue rates are lower for newer platforms. In turn, there’s less overall revenue to be shared with creators, which means creators are less likely to support newer platforms for a sustained period of time.
- Storing and delivering video is becoming less expensive, but remains extremely costly – Videos are often massive files, and making them globally available at any time is expensive. YouTube sold to Google (just 18 months after launching) partly because of YouTube’s high burn rate, and to this day is still likely operating at a loss.
- The definition of “scale” has changed, and attracting audiences away from existing platforms is harder than ever. 8 of the 10 most popular apps are owned by Google and Facebook. Both companies also have many other apps that continually pull users back into their networks.
Shaeffer summarized “Vidme came a long way as an independent platform, but we couldn’t find a path to sustainability. We’re building something new.”
These are lessons other startups will surely want to learn from !