Big Champagne CEO Eric Garland:
That means that this year or next year is going to be Hollywood’s year to really start to lose audience–not just at the fringes but in regular middle-American living rooms. They’ll lose them to the other box, to the smart box.
Read more on CNET.
Interesting times:
At stake is nothing less than the future of television shows and movies on digital platforms at a time when online viewing is exploding, but still remains a minuscule percentage of overall television viewing.
Read more on FT.com:
TV’s troubles outlined on SAI and in the presentation below:
I think it is quite clear that TV is where newspapers were a decade ago. The future won’t be any different. I’ve touched on this in the past, but it’s nice to see other perspetives.
I do wonder if Wolverine’s opening weekend will be helped or hurt by the piracy factor?
I didn’t see any of the pirated material, but hearing about the brou-haha over the pirated stuff spiked my interest. I wasn’t planning on seeing the movies until I see this series we produced this past month:
Origins of Wolverine
Five Things You Didn’t Know About Wolverine
Origins of Wolverine’s Nemesis: Sabretooth
See all the Comic book heroes and villains below:
Just imagine if we stole a tech company’s IP and published a video about it, or wrote an article outlining the secret sauce. Ironically, that would at least be a “derivative work” and not violate copyright, since it would pass one of the tests of the fair use doctrine. Yet a tech company that builds a tool that facilitates and enables copyright violation, that’s innovation?
From the “thanks, but no thanks file”, today we bring you Scribd:
Scribd.com attracts 55 million visitors a month, many drawn by the chance to download versions of books by popular authors that have been uploaded on to the website without the consent of the writer or publisher.
(…)
Scribd was set up by Trip Adler and Jared Friedman, Harvard students in their early twenties, and in two years has become the “YouTube for books”, helped by $12 million (£8.4 million) of financing. It makes money from advertising but pays no royalties to authors. It has rapidly become the most popular site for reading books online and 50,000 books and documents are uploaded on to Scribd every day. The site was used by the Obama campaign to publish policy documents, with the aim of giving people access to information directly, bypassing the filter of the news media.
Mindful of copyright concerns, Tammy Nam, a spokeswoman for the San Francisco Scribd, says that it operates a “notice and takedown system”, where it removes books if their publishers demand it. She said: “If we get a request we usually respond in 24 hours.” This makes the site compliant with the US Digital Millennium Copyright Act, which means that the site is not held liable for actions of its users of which it is not aware.
Critics say that this is not enough, because authors and publishers are not always aware that people are uploading books illegally.
Kind of reminds me of this:
YouTube vs. Hulu? That is the question record labels are asking themselves as they look for options to tackle declining offline sales and piracy.
Actually, there is a third option, which is building their own Hulu-style site. Hulu is a NBC and News Corp.-backed joint venture.
Ultimately, the conundrum for the labels is “which option will drive higher revenues?”
Somewhere in all of this we should mention that News Corp. has recently launched MySpace Music, which has a legitimate chance of being a major player in music; it already is, of course.
The Specific Reality Facing Music Labels
Music labels are going about this latest fork in the road in the wrong manner, as always. Hulu vs. YouTube vs. Proprietary Site is the wrong question to ask, which in turn will yield the wrong answer. We’ve already covered why from a business model perspective the two properties are different, but even from a partnership perspective, they are vastly different. WatchMojo.com distributes content to both companies, by the way. With a new media company, individual distribution channels can over time generate incremental revenues that, when taken as a whole across all distribution partners, can represent a meaningful revenue stream.
But honestly, neither site will drive enough revenues for the record labels. Let me explain. Music executives have seen billions of dollars in sales evaporate in the face of piracy. As such, nothing online can represent a meaningful alternative to the analog dollars they’ve lost. Not ringtones, not digital downloads, nothing. Of course, digital media is a more profitable distribution strategy, so if the music companies cut costs, they can remain wildly profitable. That they have chosen to stick to their old ways with their cost structures is consistent with their desire to stick to outdated distribution models.
The reality is that music piracy means that if someone really wants to find a particular tune, they can do so quite easily. Napster made it easy, YouTube makes it easier (even if of course, they don’t encourage it). So for music companies, they have to find a way to make it as easy to be found and make their offerings of higher quality. The only way to win and remain relevant is by doing both. Then by doing both, does the revenue factor become relevant.
Over time, yes, if the labels aggressively and frequently publish online, then they can generate meaningful revenues, especially if they then hire sales teams to sell the inventory and get creative with ad packages. But to add a 100 or even 1,000 clips from their respective catalogs and then expect a million dollar check is a recipe for failure.
Option 1: YouTube
Labels have to be on YouTube because YouTube has such a huge audience that it literally will be their loss if they’re not on it.
Option 2: Hulu
Do they have to be on Hulu? Not yet, because Hulu is basically become a TV show hub.
Awareness, Relevance and Revenue
We distribute our content to both, but I personally don’t think anyone goes to Hulu for made-for-Web programming such as ours, so the hundreds of thousands of streams that we generate on Hulu are bonus; whereas the millions of streams we generate on YouTube become part of our overall business strategy.
I think if labels want to unleas the value of their catalogs, they need to be online, so they should look at being in more places than less. But this might not translate into revenues, which means they won’t stick to it over time.
Missed Opportunities
The music labels have essentially missed every major opportunity since the 1980s, starting with MTV. To read more on why MTV was in fact a missed opportunity, read this.
But they then botched Napster, digital music in general and even how they (and Viacom) are using MTV.com. After years of taking the MTV brand away from music (by playing anything but music), we are now seeing MTV.com trying to add music videos… but the convulated copyrights and distorted licensing deals means that in nations where the advertising growth rates will surpass that of the US, there is a good chance users see this:
Which is, by the way, what most people still see on Hulu… explaining why despite the top notch programming, YouTube remains king of the hill.
Strange Bedfellows
I personally think that FOX and NBC will eventually spar over Hulu (they own the venture 50-50%) because while FOX has to decide if it wants to push MySpace TV (and increasingly MySpace Music) over Hulu, NBC has been loading the site with content from SNL and other shows. But ultimately, I will go against the grain and say that Hulu will hit a wall because the business model for a “rerun hub” is limited, and TV companies - while desperate - are not stupid enough to totally embrace online because I am not even sure of the online pennies that await them are over time going to become dollars, let alone replace the analog dollars they are losing.
Option 3: Build it and they will come?
So this leaves option 3, creating their own Hulu-style site.
Well, back in the day, Bertelsmann decided to tame Napster by investing in it and bringing it over to the dark side. Instead of aligning themselves with the leading online file sharing network, the other record labels tagged team against Bertelsmann and killed Napster. By doing so, they let Gnutella and KaZaa grow and those non-centralized P2P networks made Napster look like a RIAA project.
The point being: the labels disdain of consumers is only rivaled by the disdain and distrust they have for one another…
I think media companies are the same way. As the Web develops and becomes more regulated, the media companies’ foes go from these “rogue properties” to one another.
NBC and News Corp. deserve a lot of credit for putting aside their differences and bringing in Jason Kilar to run the company without necessarily operating under the thumb of either company’s senior management.
But over time, I expect that to change, because traditional media firms are getting increasingly desperate in the face of the severe market meltdown they faced in 2008 and the “acceleration of the deceleration” of their traditional revenue streams in 2009.
To quote Al Pacino’s character in Any Given Sunday, as you get closer to the end zone, every inch becomes harder to gain. For the media companies, it might become easier to start pushing one another out of bounds instead of trying to get ahead of the new media reality avalanche that is catching up to their business models.
What’s worst than a good illegal product or service (such as Red Lasso)?
A bad illegal product or service (such as Mygazines.com).
The site’s down - wonder why?
Read more. I bet you somewhere a VC is considering writing a check as we speak.
Is this math correct? Who knows… but YouTube and Google’s legal team sure is busy these days:
Gestevision Telecinco SA, a Mediaset unit that owns Spain’s most-watched TV station, sued YouTube last month for copyright infringement and illegally posting its video content on the Web.
According to a sample analysis run by Mediaset on June 10, at least 4,643 videos belonging to the company were found on YouTube. That equals more than 325 hours of broadcasting without corresponding rights, the company said.
Mediaset claims that, based on the number of its clips available on YouTube and the hits generated, the broadcaster lost the equivalent of 315,672 broadcasting days.
The claim of 500 million euros corresponds to “immediate damages,” Mediaset said in the statement. Lost advertising revenue linked to the videos may add to the amount of compensation demanded, Mediaset said.
The ongoing question surrounding YouTube and Google’s inability to maximize revenue opportunities on the site is, has been and will be: will marketers embrace the site, which has only 4% monetizable content, according to a recent WSJ article.
But judging by a couple of comments that my post on YouTube’s Nuclear Option on Monetizing YouTube got on Seeking Alpha, I wonder if that is even moot. Judge for yourself:
Commentor Joyful Alternative: But user-generated crap is why I go to YouTube!
Commentor Tom B: I think “joyful” has it right; let’s get MORE “seedier and undesirable content”. In fact, if you make it seedy enough, people might pay subscription fees…..I mean– people pay for cable TV, right? That’s at least 96% junk.
What if YouTube’s users just shun professional content in favor of falling cats and stumbling skateboarders? I mean, our content does very well on YouTube, we’re one of the largest producers - both measured by videos and video streams - but the fact is, the most popular videos will always be random UGC clips of pirated content.
If that is the case, then I pity the fool who shelled out $1.65B for YouTube - well, no quite, I still see oodles of value in Google’s decision… they paid in stock people… stock!
Everyone is freaking out over the fact that YouTube is trying to monetize but 4% of its massive inventory.
Truth is, I thought that number was lower. But whatever the number, it’s a good thing.
YouTube is much bigger than its competitors. I do not think it’s easy for an outsider to realize just how much bigger YouTube is than Veoh, Daily Motion, Revver, Metacafe, etc.
We syndicate clips to a lot of places, and trust me, relative to its peers, YouTube is eons larger. We also syndicate clips to MySpace TV. MySpace is unique, in that MySpace.com is gargantuan, so if and when a clip gets a push off MySpace TV, it can spike your traffic.
Anyway, we love all of our partners… but the point I am making is that YouTube has so much inventory that even if it could sell ads across 100% of its inventory, all that would do in the short term is pummel ad rates because supply for video ads would shoot up but demand won’t change.
The problem is that the TV companies are generating the bulk of online video ad revenues, but they control their content, so you are seeing a bottleneck of video advertising revenue on a few major sites, such as the portals and the traditional media companies (and judging from the list below, the lines blur due to partnerships and joint ventures):
- Yahoo!
- MSFT and NBC’s MSNBC.com,
- Disney’s ESPN.com, ABC.com and Disney.com
- Viacom’s MTV.com, Atom.com, Spike.com, etc.
- News Corp.’s FOX.com, and MySpace TV (despite what the denigrators say, the much vilified MySpace did do $750M of Fox Interactive Media’s $900M in revenue, people)
- Time Warner’s AOL.com, CNN.com and related properties also probably generate meaningful revenues…
- CBS - who until its recent $1.8B acquisition of CNET was out of the Top 10 properties - has embraced a more open distribution strategy, but I suspect that will tilt to a more closed (or balanced) as it owns a larger web audience where it can keep 100% of revenues (this is why, I think, you will see CNET and CBS start to get more serious about web video, something that, well, both companies should be stronger in).
Then, of course, there is market darling Hulu, who reasonably and fairly can do no wrong. Hulu - whom many miss the point about its raison d’etre - can generate revenues off 100% of its inventory, but its inventory will always be relatively small compared to Veoh et al., let alone YouTube.
The problem is these high quality sites already charge an arm and a leg in ad rates for traditional placement (banners, etc.). Then for video, they want you to take out a second mortgage. Technically, new players like YouTube, Veoh, etc., would be ideal places for more cost effective video ads… but with these, the problem is UGC. In this case, UGC stands for User Generated Crap, or User Generated Crime (as in piracy). So net-net, advertisers balk and the entire inventory (or in YouTube’s case, 96%) becomes untouchable.
But here’s the thing, in YouTube’s case, this is a Godsend, anyway:
YouTube commands a 75% market share… maybe more. So even if it can generate revenues off only 4%, well 4% x 75% is still a meaningful chunk of the ad dollars up for grabs. Trust me, Google might refer to the 4% as a problem to get Wall Street off its back, but any self-respecting ad sales man will tell, it’s the inventory, stupid.
I am not saying that ceteris paribus (did we just break out the latin?), YouTube would not prefer more sellable inventory… of course it will… but that is over the mid and long term, when advertisers come on board and embrace online video.
Right now, they just ain’t.
PLAY
