Imagine the following two scenarios.
A: "My Terrible Dentist" is an award-winning web series streaming online at TerribleDentist.com. I just watched it, it's really funny. It's fifteen six-minute episodes. It costs $2.50 to watch. You should check it out. It's totally worth it.
B: "My Terrible Dentist" is an award-winning 90-minute feature that just came out on DVD. I just watched it, it's really funny. The DVD costs $25 (you can order it at TerribleDentist.com), but for a limited time they're streaming the whole thing online and you can watch it for just $2.50. You should check it out. It's totally worth it.
Real survey here (post in the comments): do you feel the same difference I do between these two, or is it all in my head? I feel like there's a greater chance I'd spend $2.50 on B than A, even though I'm talking about exactly the same thing. That the problem with paying for videos on the Internet is (1) we have no idea how to value them, and (2) they never seem like a bargain, since there's so much out there that's free. But we totally know how to think about the price of a DVD. It's the iTunes model -- we know what CDs cost, so we can judge how much is "fair" to spend on a music file. But how are we supposed to know what we should spend on a web series, and why would we want to spend any money on it anyway? If the anchor point is "video on the Internet," anything above $0 is overpriced. But if we're able to change the anchor point to "actual real DVD," suddenly $1 seems like a huge bargain. Pitching something as random garbage that streams online makes it feel like it should be free. But a piece of content that's really a DVD but happens to be streaming online, especially for a "limited time"? Value. Maybe. I think. I don't know.
And if I'm right? There's even more potential for upside because if anyone in scenario B were to order the $25 DVD, that's pure profit because someone just dumps the files onto a DVD and burns it themselves and sends it.
The other piece that I think makes it hard for web series to find an audience is that we aren't used to watching things broken up into 4 minute or 6 minute or 8 minute chunks, and they don't feel as satisfying to our brains as 22-minute sitcoms or 44-minute dramas. I don't get the same reward. And yet watching a 22-minute original sitcom on the web isn't something I want either. But for instance -- I read something about Rob Corddry's new series, Children's Hospital, on TheWB.com. It's sort of a spoof of medical shows, broken up into 10 5-minute episodes. I watched the first one. It was decently funny. Then I watched #2 and #3. They were decently funny too. And then I stopped. I'd seen enough, I didn't really care anymore or feel any motivation to watch the rest. If it was two 22-minute episodes, I don't know if I would have watched them both, but I think I might have. I think I would have preferred it. But having to "start over" every 5 minutes -- click on something new, watch the credits again, start a new story -- it feels less rewarding than getting to really know the characters in a longer-form piece. But that's not really on point with my A and B thought experiment above.
In any case, just a theory I wanted to throw out there.