It’s easy to call MTV’s decision to restrict third party websites from embedding videos as a media company thinking within the box, but that’s unfair.
Last year, many criticized the WSJ for not canning the paid subscription strategy, but then as the ad market tanked (along with the economy), preserving the $120M paid business proved to be a wise move, especially with competitor NYT itching to find a paid content strategy.
The dichotomy runs across many levels:
1 - For traditional media, in boom times they can allow themselves to think “open up and give away”, whereas in bad times it’s “close up and batten down the hatches”.
2 - There is also a very distinct strategy between upstarts and established brands. MTV doesn’t need to allow others to embed videos to build a brand or augment its audience. Of course, it would get more reach, but at the expense of revenue (at least in the short term). In this environment, Viacom (MTV’s parent) can’t allow itself to think too long term, what with traditional revenue streams being decimated. This is the key nuance: We at WatchMojo.com allow users to embed our videos in blogs, but we need to do things like that to build distribution, but even we don’t totally give away our content, generally opting for licensing deals with media companies that want to distribute our content. MTV is doing the same thing: users will continue to be able to do this, but developers can’t ransack MTV’s library in exchange for more visibility alone.
This begs the question: even if individual users cannot embed the videos from MTV, would they get them elsewhere or be forced to go to MTV? Not sure what will happen. A site like Imeem might allow the embedding, but when you consider that Imeem was forced to cut costs and looking to shop itself, you have to ask if that is any better of a strategy? Imeem, after all, is trying to become a destination, and MTV’s decision means that it just doesn’t want third party sites building destinations on the back of MTV’s licensing deals.
Ultimately, as crazy as it sounds, you need people to engage with you on your terms.
3 - Those who push for the embeddable strategy don’t actually produce or own the content. YouTube is the company that made embeddable videos an explosive growth strategy, but let’s be fair here: YouTube was trying to run ahead of the piracy issue avalanche, and since it did not own the content, it didn’t care to see other sites host the content, be it if the other site is a blog or a massive social network like MySpace, which helped fuel YouTube’s growth.
So the point in all of this is: with the economy tanking and the whole Web 2.0 buzz fading, what used to be considered crazy is turning out to be good old common sense. Running WatchMojo.com, I would not disable the option to embed our videos, but if I were running Viacom’s video strategy, I would consider it…
This also reinforces what I’ve been saying all along: the value of videos isn’t simply the sum of what you charge for the content via ads, if you build an audience around video content, there’s a lot of value there, and MTV is trying to reclaim it.
YouTube is not making meaningful revenue for Google, according to SAI.
MySpace, Facebook and their ilk are trying many things, but none of them are working when it comes to scaling revenues, according to USAToday.
This year:
- YouTube will make $100 million in revenues.
- MySpace will make $700 million to $800 million, with FIM (which includes IGN) making $900M in all.
- Facebook will make $300 million.
How does this stack up against the index? Well US online ads are about $25B and global sales twice that much at $50B. The precise stats:
ZenithOptimedia estimates online ad spending worldwide will soar 26.5% this year, to $47.7 billion. Total ad spending worldwide, by comparison, is expected to grow 4.6%, to $653.9 billion this year, says Universal McCann.
Here’s the problem: social media advertising is a stretch for online media executives to swallow; for marketing execs from all walks of life (ie. offline) who will be seeing offline dollars flow online, at best it’s a joke… at worst, it’s borderline blasphemy.
Even within the online advertising segment, 40% of it is going to search; Google pulled in $17B in revenues in 2007. Do the math. Google owns 60% market share. Why did you think MSFT was willing to pay $45B for Yahoo!?
The opportunity, if you ask me, is neither in social media ads nor is it in search. The former is game over; the latter is too small relative to video.
After all, video is only going to do $1.25B in the US this year but will grow to $7.1B by 2012 and about $10-15B worldwide. By then, of course, global online advertising sales will be way north of $100B, I think video can be more because video ads stand to gain the most of TV ads; the one with the most to lose to online.
If I were Facebook, Bebo or MySpace, I would be focusing on using the social media bells and whistles to become a modern day video empire. Oh wait, YouTube is trying to do that. The problem? YouTube’s overlord Eric Schmidt, CEO of Google has pretty much admitted that he does not know how to make money off YouTube… that’s a problem. I see YouTube as a $1B-in-annual-revenues-property, the problem is, no one listens to me.
“Hire slow and fire fast” - those are not my words, they are the words of Seth Goldstein, CEO of Social Media, but they do strike a chord.
Last week we did an office pool to guess the score of a hockey game and I was taken aback by the fact that we were now 11 people on staff. Eleven employees is not a lot, mind you, but that’s more than we had at my old company. I don’t even know how we got to 11, mind you, but we’ve worked with well over 100 people in numerous capacities as freelancers and interns. The advantage there has been that I’ve been able to gauge people’s mojo without risking bringing on people that did not fit it or did not have their heart into it. It surely has been an indirect benefit of bootstrapping. Some times when companies get a massive injection of cash, they rush the hiring process and end up with bad apples that quickly become cancerous.
I won’t names, ok, I will. You’ve heard how this has happened at LinkedIn (which actually remains on the few companies out there with a real business model and potential). But the point is, hire slow and fire fast is a helluva good HR mantra. Better than Don’t Be Evil, just kidding, I think.
Anyway, here’s the video, from Paid Content’s latest shindig, lots of good tidbits, listen to it in the rearview as you work through your day:
PLAY
