There are several business models that are used by online TV channels. It is through these business models that the owners of the online TV stations are able to generate revenues, to keep the channels running. You have to appreciate that running an online TV channel (or any other type of TV channel for that matter) is usually quite a costly undertaking. So there has to be a revenue stream to keep it running. And this means, by inference, that every online TV channel has to be backed by some sort of (sustainable) business model. Otherwise it would be difficult to keep the TV channel running for long. Here then, are the business models that are most commonly used by online TV channels:
The model where the online TV channels rely on ad revenue
This seems to be the most popular business model with the online TV channels. It is an arrangement where the viewers get to watch the online TV stations for free. But then, they have to watch ads in the course of the online TV shows (just as they would have done under the free-to-air TV model). It is the money raised from the sale of ads that finances the TV channel, under this model.
In some cases, the online TV channels will approach advertisers directly, and try to sell them ad spots. In other cases, the online TV channels enroll for advertising programs – whereupon ads are automatically served to the viewers of the TV stations. Beneath it all is tracking code, which calculates the earnings due to the online TV channel owners, depending on the numbers of the viewers and types of ads served.
Under the latter approach (of enrolling the online TV channels for advertising programs) you find that the owners of the TV channels don’t have to bother looking for advertisers. The people who run the advertising programs do that on their behalf. They are therefore left to concentrate on the task of generating content for their TV channels. But on the downside they have to forego some of the ad revenue – as the people who run the advertising programs are left with a bit of it, as payment for their ‘labor’ in looking for advertisers.
Conversely, the other approach of selling ad spots directly to advertisers means that the owners of the online TV stations would stand to earn more money (at least theoretically) – as they wouldn’t be having to share it with an advertising program. But on the downside, selling the ad spots directly to advertisers can be painstaking work, and it is not always easy to compete with the major advertising programs that benefit from the economies of scale. That, of course, is unless one has a particularly popular online TV channel: in which case it would be possible to find advertisers lining up and making requests to have their ads run on it.
The model where the online TV channels rely on viewer subscription fees
Some of the particularly good online TV channels are able to get paying subscribers. These are people who pay subscription fees, in order to watch the online TV channels in question. It can soon get to a point where an online TV channel can generate enough money, through these subscription fees, to keep its operations running. Such a TV channel would then be freed from having to rely on advertising revenue. (The viewers in turn, having paid the subscription fees, wouldn’t have to be constantly bombarded with ads).
But it is important to point out that an online TV channel has to be very good, if it is to be sustainably financed through subscription fees. People are so used to free content online, and there is indeed lots of good content available for free online. But then again, just as it is possible to get people to pay for particularly good programming under the cable TV model, it is also possible to get people to pay for particularly good online TV content. The content just has to be excellent, and there will be willing payers for it.
Here, it is worth mentioning that some of the subscription-based (traditional) cable TV channels nowadays also have online presence. So the people who have paid their subscription fees are able to stream content from such TV channels online. So you find people watching online the content they’d otherwise have watched on normal TV sets, thanks to their cable TV subscriptions. So this can be viewed as a scenario where the people would be watching TV online, on the basis of subscription fees that were initially paid for the traditional format cable TV (but with the option of accessing the cable TV content online). In most cases nowadays, one only needs to ‘activate/enable’ a device (including a web browser), usually by entering certain codes, to start receiving cable TV content through it.
The model where the online TV channels depend on donations
There are some online TV channels that are entirely funded through donations. The donations are usually solicited from the individuals who watch the said online TV channels. So you may find messages, on the websites through which such TV channels are accessed, inviting the viewers to make donations to keep them running. The donations that are solicited may be individually small. But cumulatively, they add up to considerable sums of money – enough to keep the online TV channels running.
The religious online TV channels can sustainably run through donations. This model is also suitable for online TV channels that broadcast/narrow-cast rare ‘truths’ (whose dissemination certain individuals may be willing to finance through donations). We also have the online TV channels that broad-cast/narrow-cast political content being in the category that can be sustainably financed through donations. In the latter case, it is mostly individuals who share the online TV channels’ political persuasions who donate the funds to keep the channels running.
Still on donations, it is not unreasonable to envision a situation where a particularly wealthy individual can opt to wholly finance an online TV channel’s operations. So in this case, the online TV channel would be depending on donations, alright – but those would be donations coming from one specific individual. The individual in this case may be supporting the online TV channel in a bid to propagate certain knowledge, or just to tickle his fancy.
The model where the online TV channels depend on corporate funding
Some of the online TV channels are connected to the mainstream media houses. The mainstream media houses use their funds to keep the online TV stations associated with them running. They may then use the online TV stations to maintain connections with their audiences even when those audiences are online. We also have some online TV channels that are owned by media training schools. So the media training schools use the online TV channels to give their students practical skills. In this case, you find that the media training schools are willing to use their money (including the fees paid by the students) to keep their online TV channels running.