Media'ZBiz!

The content industry is worried about distribution becoming free. This is a global phenomenon. The more broadband we have the better devices, the more the push towards sharing without payment is clearly there.

BBC News in their yesterday’s Q&A, Internet Piracy Plans highlights the principal issues:

The creative industries estimate that six million people in the UK regularly file-share copyright content without permission, costing the industries revenue that they cannot recoup.

In 2007, an estimated one billion music tracks and 98 million movies were shared illegally. A report by analyst firm Forrester recently reported that 10% of all internet users in the UK share files illegally. The figure for Europe is 14%.

Will banning persistent file-sharers work?

The creative industries believe illegal file-sharing is almost endemic while the government has set a target of reducing the problem by at least 70% in the next two or three years.

The difficulty is that the problem is a moving target. More persistent illegal file-sharers are already beginning to use software which masks their IP address while online, and the files being exchanged are encrypted, so it is harder for ISPs to use DPI technology.

Stephen Garrett from Kudos, the firm behind Spooks and Ashes to Ashes, warns that illegal file sharing threatens the existence of hit and quality TV shows.

Gerd Leonhard, from MediaFuturist, said in a recent interview:

… On the other hand, the content industry has, to a very large degree, refused to license the content in so many new ways that are being asked for, starting with imeem and YouTube, and MySpace originally. The refusal to license has essentially created a vacuum to where everyone rightly then also says if we can’t actually do it legally, we have two choices which is to quit or to do it without permission. Then you have companies like imeem and MySpace and YouTube initially doing it without permission.

…The discussion about solving this problem with technology is nothing but a fig leaf because it will never work. In a democracy, it’s not actually technically feasible. If you imagine this, then I get disconnected from the web for downloading and I go to my neighbor and use his Wi-Fi.

….It’s basically not a technology problem. It’s a structural and licensing problem. It’s basically a business problem. Whenever you try to solve a business problem with technology, like we have with DVD region coding, and those kinds of things, you end up really going against the consumer and sacrificing things that otherwise the consumer will hate you for.

The key question really is this; does any of this make any money for anyone? Does kicking people off the web because they have downloaded without permission make any money for anyone?

In a perfectly timed article for Contagious Magazine, Faris Yakob (Chief Technology Strategist at McCann Erickson) debunks the “Content is King” aphorism in favor of “Content is the Republic.”

At the heart of Yakob’s thesis are two ideas:

1) As more consumers produce content, traditional content monetization models (paid, advertising) are challenged. Because digital content is platform agnostic (no distinction between video, news, articles – it’s all content online) it creates room for different monetization models based on context and consumer desire.

2) Align servicing next to content: iTunes has been successful because it made buying music simple and cheap enough. Youtube is experimenting with a new monetization model by allowing users to offer high-quality downloads of videos for low prices.

So is Content 2.0 Content as a Service…

The leading social media company, Demand Media seems to think such wise and offers it.

The company is currently the 15th most visited property in the US according to comScore. Demand Media has created more than one million pieces of content (artciles and videoas), making it one of the largest producers of content on the web today. The content is distributed to an audience of more than 80 million via Demand Media’s network which include LIVESTRONG.COM, eHow.com, Trails.com, Golflink.com and others.

Demand Media seems to have found a new stable and profitable business model, that fits into consumers’ video on demand needs. Here is an extract from a great article published by WIRED MAGAZINE explaining the Demand Media business model:

Volume is also crucial to Demand’s top distribution partner, Google. The search engine has struggled to make money from the 19 billion videos on YouTube, only about 10 percent of which carry ads. Advertisers don’t want to pay to appear next to videos that hijack copyrighted material or that contain swear words, but YouTube doesn’t have the personnel to comb through every user-generated clip. Last year, though, YouTube executives noticed that Demand was uploading hundreds of videos every day — pre-scrubbed by Demand’s own editors, explicitly designed to appeal to advertisers, and cheap enough to benefit from Google’s revenue-sharing business model. YouTube executives approached Demand, asked the company to join its revenue-sharing program, and encouraged it to produce as many videos as possible.

Screen Digest pointed out that the ad load (number of ads shown per programme) on web VoD services is approaching broadcast levels.
‘VOD on cable TV is an opt-in medium and that means viewers are engaged’ says Daisy Whitney in her New Media Minute video report:

Simon McGrath, CMO of SeaChange International has said the following in February:

Relevance is the key to success here, as in so many other areas of marketing. It’s possible for marketers to place ads in context for a viewer by mining viewing information available from operators using advanced VOD advertising platforms to source the right ads for the right viewer, down to zip codes. Content owners – the networks and cable operators – have opportunities to work more closely with media buying agencies and their advertising clients to reach audiences on what is arguably the best screen in the house, the TV. VOD ad platforms support a variety of ad formats, from traditional embedded ad spots to ad overlays, bookends and even long-form, on-demand ’showcase’ ads that deliver information and some degree of interaction. And it won’t be long before an AdWords-type clickable link can take the viewer from a traditional ad to a showcase spot that delivers deep information about a product the viewer is really interested in.

But wait – don’t time-shifting viewers skip the ads?

Reports vary widely on the percentage of viewers who use their DVRs to skip ads. The good news here for marketers, according to Capgemini’s 2008 report on addressable advertising, is that many viewers who watch VOD appear to be willing to watch ads inserted into VOD programming (76% prefer to watch ad-supported content as opposed to 23% who prefer to watch paid content).

VoD will most probably shake up the TV ad market, but will ultimately lead to a better viewing experience and a highly targeted, accountable medium for advertisers. The advanced targeting methods and interactivity used around VoD on the web cannot be ignored by broadcasters or advertisers and will set the standards as VoD becomes more prevalent in our living rooms.

Who haven’t dream of finding that famous scene in that specific film?

Who haven’t repeated hundred times with friends the dialog of those two actors from that great movie?

Today, your dream came true… at least for French film lovers (to start). Vodkaster, the video collaborative platform has launched its beta service this morning. Users can watch thousands of film extracts, can help indexing them (tag, actors names, category/type of scene), commenting them, linking different scenes together, and sharing their findings with other members of the growing Vodkaster community.

Users have as well the possibility to upload extracts of films from YouTube, limited to 3 minutes length.

Users can create their own playlist from the thousands of film extracts available on Vodkaster and share it with friends on Facebook and Twitter.

At this stage, it is difficult to evaluate the future success of Vodkaster, which seems to be related to the number of fans that will freely register to the platform and collaboratively help uploading and indexing movie excerpts. The challenge will then be to monetize this audience and catalog of film excerpts. Probably licensing them to VoD platforms as additional teasers selected by film lovers … will see.

As some of you already know, I take some pleasure animating the GLITNER group on LinkedIn. Recently, André Lange from the European Audiovisual Observatory (EAO) has posted the following question:

Does the cable consumer spend more for VoD than the IPTV subscriber?

One of Screen Digest assumption in assessing the VoD markets in Europe is that a cable subscriber will spend more in VoD than an IPTV subscriber. Does anyone have any evidence on such thesis?

It is true that when researching the net looking for some evidence of such thesis or looking for some available market studies, it is disappointing to find out that often, the info, articles and/or reports found have conflicting forecasts and statements. In order to keep track of the most updated (and relevant) info, I have listed here below some my key findings of the last few months:

-       Global annual revenue from rental transactions of full-length movies and TV shows on pay-TV and online platforms generated $2.2bn in 2008. This is forecast to grow to $3.7bn by 2012 (source: Adam Media Research a division of Screen Digest).

-       VoD will generate $330 million a year (in the UK) in ‘direct revenue’ by 2013 (source: PaidContent:UK quoting Claire Enders speaking at the Westminster eForum on September 15^th).

-       The sum of all forms of video (TV, video on demand, Internet, and P2P) will account for over 91 percent of global consumer traffic by 2013. Internet video alone will account for over 60 percent of all consumer Internet traffic in 2013 (source: CISCO – Cisco Visual Networking Index: Forecast and Methodology 2008-2013).

-       Digital media revenue will jump about 270% between 2009 and 2013 to $3.28 billion (according to a Futuresource Consulting research).

-       The total home entertainment market in the US (all platforms – DVD/BD, TV-based VoD, online video and mobile video) is projected to generate over $25 billion in revenues in 2009. “Paid-for VoD revenues are expected to witness steady growth moving forward, as the closure of VoD windows increases the appeal of premium on-demand content. However, looking ahead, packaged media will remain a significant revenue generator for the home entertainment industry, accounting for close to 70% of total revenues by 2013,” said Carl Hibbert, business consultant, Futuresource Consulting (source: one to one).

-       Global revenue for digital formats will grow to $2 billion in 2013, from about $500 million this year. US revenue in the first half of the year was about $140 million, with a significant growth in EST – electronic sell-through (source: Screen Digest analyst Arash Amel cited in an article of videobusiness.com).

-       Over-the-top video (delivery of internet video to the TV) will grow nearly six-fold in the newt five years, from a meager $1 billion in 2009 to $5.7 billion in 2014 (source: TDG – Broadband-Enabled TV: Rise of the OTT Provider).

-       On December 2008, the EAO has counted 691 on-demand audiovisual services in Europe: 142 in the UK, 108 in France, 92 in Italy and 55 in Germany.

-       Eight percent of all consumers in Britain, France, Germany and the United States admit to downloading video illegally from the Internet (source: Reuters UK according to a survey).  I have done the math (based on Universal McCann Wave 4 Social Media Tracker): there are 158 million active Internet users in those 4 countries, from which 12.6 million (8%) are therefore downloading video illegally…

-       VoD server revenue tripling by 2013, date at which telco service providers are expected to derive about $56 billion worldwide revenue from IPTV services offered, not including mobile IPTV services  (source: Infonetics Research).

-       While overall streaming video is more popular than downloading video, users still in the US lean towards downloading when it comes to long-form video content in particular (source: an IPSOS study summarized on Reelseo.com)

-       Total videos viewed per month went up from 7.2 billion in Jan ’07 to 21.4 billion in July ’09. The number of online videos watched per viewer per month went up from 59 in Jan ’07 to 135 in July ’09. The number of minutes of video watched per average viewer went up from 151 minutes (2 hours 31 minutes) in Jan ’07 to 500 (8 hours 20 minutes) in July ’09 (source: comScore as reported on the VideoNuze web site).

-       HD online revenue will reach $2.25 billion by 2012 (source: AKAMAI presentation at the Content Delivery Summit in NY May ’09).

As you can see, the VoD business, which barely registered as a revenue stream 3 years ago, has almost overnight changed the content distribution business. I strongly believe that VoD has a great promising future.

The long tail is often used to describe UGC sites such as YouTube. While this may be correct statistically, it is often used out of context. UGC demonstrates the statistical characteristics of a long tail distribution as plotted on a graph, but it doesn’t demonstrate any business or economic traits that are typical of long tail distribution as it applies to commerce. The word “distribution” in entertainment lingo connotes two things: physical delivery and monetization. UGC lacks inherent monetization opportunity. If a piece of content can’t be sold in some capacity on its own, the long tail theory of distribution will never work because profitability will always be zero or less. Read this article here.

Marc Tessier, ex- CEO of France Televisions (public broadcaster) and now CEO of GLOWRIA one of the VoD leader in France, commented recently (March 09) on the LeBuzzMedia (streamed on lefigaro.com and to Orange customers on mobile, IPTV and PC TV) about the great value catch-up TV brings to broadcasters.  Tessier considers that the on demand TV consumption will reprent around 15 to 20% of the total TV consumption in 3 to 4 years.

BBC was one of the first in Europe to launch their catch-up television, iPlayer, which over a period of 5 months of operation reached 75 million video downloads and recorded 700,000 daily requests to view in April 08.

At the same period, ‘M6 Replay’ of the RTL owned media company M6, recorded 17 million viewings in its first three months of operation and had 1.2 million visitors.

GLITNER is an online market place (currently in beta), enabling right-holders to post their VoD rights available per film/territory and VoD platforms to find content. Communication is on a collaborative and user-friendly on a B2B platform using social networking technologies. www.glitner.eu