Questions from an online business startup (streaming video seller)

[FrankTrv]

Hi all,

We are looking to starting an online business that will deliver streaming videos and tutorials for students for a set price each semester. All of us live in different states and out sales will be all online, we have a few questions before we proceed:

1. Given we all live in three different states (California, Maryland, and Arkansas) and we would like to incorporate - can you give us some advise on where to incorporate?
I am personally leaning towards Wyoming as it seems to give us sufficient protection at a low cost. I found more information here - http://www.small-business-forum.net/starting-your-business/3427-best-structure-state-online-business.html

2. Can you recommend a specific web-host for streaming video merchants?
All I found was - I would have to get a web-host and a video host (vzaar.com) to store the videos (embed the videos in our code). Can you confirm if that's the best way? Are there other options that are better?

3. Do we need to get a business license for this type of sales (video/content sales)?

4. We are planning to use resources such as rentacoder and freelancer to build our site. Are these safe? I.e. can we trust the developers to set up the payment processing information properly?

We are all newbies so thanks for your patience in answering our questions!

Frank

[BeSeenLocally]

Frank,

I would look into Delaware as a place to incorporate. As far as embedding the code that is easy as you are linking to a site that hosts the content. I would get a license to keep everything kosher, however you do not need one absolutely day one. Odesk and Elance are two sites I would recommend (in that order) for work you want done. Make sure you know exactly what you want and do your due diligence on your developer. It has taken me a while to get the team I have now to service my clients and this should not be taken lightly. Another thing is make sure everyone involved is clear how the banking is going to be set up and how the capital is going to be disbursed. Whenever there is money involved you have to account for every possibility.

I wish you the best.

Ellie

[Business Attorney]

In most cases, it does not matter much what you use as the state of formation when you are already in multiple states. Remember though, that by selecting a particular state, you are also deciding to have your LLC governed by the laws of that state.

There are subtle differences in laws from state to state. Where you have multiple members, there are issues like management, fiduciary duties, transferability of interests and rights of a former member that can vary considerably between states. In most cases, you can change what the state statute provides as the standard (or default) provisions on those issues to obtain the outcome you want. It is critical that the person preparing your operating agreement (hopefully an attorney) is knowledgeable about the subtleties of the laws of the state of your organization.

While Wyoming law may be fine, it may be more difficult to find a local lawyer who is familiar with the Wyoming LLC Act. Of course, you could hire a lawyer in Wyoming and deal with him or her remotely, but most people like the convenience of having their business lawyer nearby.

[elohel]

I'm just curious, what do you plan to offer on this site that others don't? There are several websites out there, many very in-depth, that provide this service for free. You can find online videos for just about any subject out there.

[scottish]

There's a few other websites that do a similar service for different markets. students needing to study law, learn dance moves etc. Have a look at those sites and see how they accomplished all this.

also, I'd recommend getting a coder / web developer on your partnership so you can have full control of the site and the flexability of making changes at a mments notice.

[MyITGuy]

2. Can you recommend a specific web-host for streaming video merchants?
All I found was - I would have to get a web-host and a video host (vzaar.com) to store the videos (embed the videos in our code). Can you confirm if that's the best way? Are there other options that are better?


As far as a web-host, the company you referenced seems a bit steep for the services they offer (I'm just focusing on the hosting aspect, not the interface for video content which can be picked up for either free or fixed fee elsewhere). For example, if you look at their base plan they are only providing 50GB of transfer per month...this isn't very much for a site that's going to be focusing on distributing videos. I.E. Using a 10MB video as a reference, this would allow 5,120 downloads per month (170 average per day), not including the submission of these videos or normal web traffic.

You may want to look into your alternatives a bit more.
I.E. For your website, you most likely want a Virtual or Dedicated server as most shared hosting plans have resource usage limits (I.E. Maximum # of connections and etc...).
For your video bandwidth, you want to look into a content distribution network or cloud platform (I.E. Amazon, MaxCDN, Softlayer CDN, or VPS.NET CDN)

For the video encoding/playback and etc, just have this build into your web design/management system (I.E. ffmpeg is a popular encoder from what I've seen).

Using figures from Cingular Hosting - Portal Home (http://www.cingularhosting.net) (Disclaimer: this is one of my companies) you can order a VPS with 500GB of bandwidth for $40 which is 10 times the amount you get with the host you mentioned. Then if you see you're reaching your capacity you can either upgrade your VPS, move to a dedicated server or implement the CDN network for your videos.

Feel free to ask further hosting items here, or check out webhostingtalk.com