TechSmith Relay (Self-Hosted): Encoding fails with "Code 2: No clips on the timeline"

This error most commonly occurs when the source file transmitted from the client to the server is not a valid AVI file or the AVI file which was recorded is corrupt. Camtasia Relay encoding engine will output the following message:
TechSmith.Relay.Manager.Worker.WorkerException: Code 2: No clips on the timeline --->
TechSmith.Relay.Manager.Worker.WorkerException: Code 52: Failed to build the timeline. --- End of inner exception stack
If this issue happens with every recording submitted to your server, please contact Technical Support to diagnose the problem.