Peter Kafka

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Web Video Doubter Mark Cuban Invests in Web Video Studio Revision3

Mark Cuban, Web video skeptic? Meet Mark Cuban, Web video investor.

The voluble entrepreneur and investor, who made his fortune off Web video during the first Internet boom, is dabbling in it again: He has put money into Revision3, the Web video studio/network best known as the home of Diggnation.

The investment was part of a small round of funding Revision3 raised last year, which it hasn’t disclosed until now.

That wouldn’t be that noteworthy, except that Cuban, again and again, has argued that ever-rising expectations for Web video were overblown, and that the technology wouldn’t displace TV. Which happens to be where Cuban is betting heavily, via his HDNet network.

A very brief summary of his argument:  Internet infrastructure can’t support TV-scale viewing; Web advertising can’t support TV-scale programming; people like TV.

And some representative blog posts where he make his case: The Great Internet Video Lie; Why Do Internet People Think Content People Are Stupid?;  The Future of TV Is…TV.

And here’s a representative counter-argument: Cable TV Is Screwd. It was written two years ago, by Cuban’s new partner, Revision3 CEO Jim Louderback.

So what gives? Is Cuban finally backing down? Not at all, the billionaire says. He’s merely investing in a potential source of content for his TV network.

The dollars he’s putting into Revision3 will give him what amounts to a first look on the video site’s programming, and the chance to turn some of it into TV shows.

“I think Jim can make some money from this. I don’t throw money away,” Cuban says via email. “But this investment really confirms my position on web video. While Revision3 will make some money on the web, the real money is [in] TV. And I wanted HDNet to have the option to be that outlet.”

Louderback, for his part, seems fine with a less than total endorsement of his industry–he’s the one highlighting Cuban’s investment. “I like to think that we’re doing some pretty innovative stuff, and [the investment] gives him a broader visibility into that space”, he says.

And since Revision3 won’t say how much money Cuban invested in the company, or the total size of the round–Louderback will only say that it was “relatively immaterial” for his company–it’s impossible to gauge what any of this really means from the outside.

In related can’t-really-judge-what-this-means news: Revision3 says its revenue, which it won’t disclose, grew 80 percent last year, and that the company turned a profit in Q4 of 2010. Louderback defines profitable in this instance as “EBIDTA-profitable,” and says his company should be “solidly in the black” by the middle of this year.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work