Some types of media and entertainment content are likely to be better suited to this world than others. In general, according to entrepreneurs such as Mr Reese, it suits short-form, highly targeted pieces of information that can easily be indexed by search engines or matched to specialised websites (readers of a site such as Free-beauty-tips.com, for instance, may have more of an interest in pimple solutions than most).
The second part of this new online media model relies on distribution to as wide an audience as possible. This means tapping into mainstream "destination" sites that attract large audiences of their own (for ExpertVillage, that includes submitting its content to Google Video's servers); making it easy for people to discover the material through search engines; and tapping into the various new online syndication services that have been set up to make it easy to reach a wide range of potential online outlets.
Not all the mechanisms required for this distributed media world to operate efficiently have yet fallen into place, however. Controlling content as it passes around the web and collecting money each time it is "consumed", often in very small increments, requires a level of technology infrastructure and standardisation that has yet to be achieved.
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Entrepreneurs change the rules to cash in on clips
By Richard Waters and Aline van Duyn
Published: February 16 2007 02:00 | Last updated: February 16 2007 02:00
Byron Reese is typical of the new wave of internet entrepreneurs out to turn the economics of the media industry on its head. While traditional publishers and broadcasters struggle to adapt to a disruptive new medium, often by trying to limit access to their content and retain their premium pricing, newcomers such as him start with a different idea.
The approach is based on ultra-low cost, purpose-built content and the ability to tap into a rapidly expanding and highly diverse ecosystem of independent online distributors to build a wider audience. Many of these new distributors, however, are at an early stage of development and some important technological underpinnings have yet to be put in place.
ExpertVillage.com, the US website that Mr Reese heads, does not produce the sort of videos that you are likely to want to watch every day. Its short instructional videos, each two to three minutes long, include items such as "How to get rid of pimples" and (recommended for would-be automotive mechanics only) "Replacing the serpentine belt with jacking screw".
In a world exploding with amateur video and other "user-generated content", such sites represent a small but fast-growing area of professionally produced but cheap material. ExpertVillage, which has rivals including VideoJug in the UK, pays filmmakers just $20 (£10, €15) for each video they submit (which must feature advice from an "expert"). Each video costs a further $10 to publish online.
By finding an average of 15 viewers a month to watch each segment, and by generating 10 cents in advertising revenue for each viewing, ExpertVillage hopes to recoup its investment in each video within two years, says Mr Reese. To do that, it looks not just to traffic on its own site but to a range of other distributors to reach out and find a global audience: among others, the company is negotiating with a website in India to promote its how-to videos there.
Ideas such as this turn the economics of media on its head. The old way of doing business was built around the idea that distribution was scarce. With few outlets available (whether that meant television channels or newspapers), the trick for each producer/distributor was to attract as big a share of the audience as possible, usually with expensively produced content. The large audiences that TV stations or newspapers have traditionally been able to attract have justified high charges to advertisers, which bought audiences in bulk.
The new approach to media that is purpose-built for the internet is the opposite. First, cut costs to the bone, then spread distribution across as many sites and online services as possible, pushing the content out far beyond the original publisher's domain.
Some types of media and entertainment content are likely to be better suited to this world than others. In general, according to entrepreneurs such as Mr Reese, it suits short-form, highly targeted pieces of information that can easily be indexed by search engines or matched to specialised websites (readers of a site such as Free-beauty-tips.com, for instance, may have more of an interest in pimple solutions than most).
Some big media groups are attempting a similar approach to content creation themselves. The Warner Brothers Television Group, the biggest maker of television shows with hits such as Friends and The West Wing, last year created Studio 2.0 to produce short-form programming for the internet. Instead of tapping only the group's impressive but expensive roster of television writers, the division is signing up newcomers. Many of the people working on the emerging digital ventures are not a part of any union and they often work on short-term contracts.
Other production costs can also be cut. Content made for web viewing can be of a lower resolution and fewer frames per second than that made for television; quality can be reduced further for video viewed on a very small screen such as a mobile phone. In addition, the absence of marketing, packaging and physical distribution costs leads to budgets in the thousands rather than the millions of dollars.
The second part of this new online media model relies on distribution to as wide an audience as possible. This means tapping into mainstream "destination" sites that attract large audiences of their own (for ExpertVillage, that includes submitting its content to Google Video's servers); making it easy for people to discover the material through search engines; and tapping into the various new online syndication services that have been set up to make it easy to reach a wide range of potential online outlets.
Online publishers will eventually find that their content is "watched, listened to and read more off their sites than on them," says Dick Costolo, chief executive of FeedBurner, one of the new syndication companies. Among the material it distributes, FeedBurner puts out nearly 100,000 independent podcasts as "feeds": consumers can subscribe to any of these directly and other websites can pick up the material, provided they pay a share of any advertising revenue they generate.
Not all the mechanisms required for this distributed media world to operate efficiently have yet fallen into place, however. Controlling content as it passes around the web and collecting money each time it is "consumed", often in very small increments, requires a level of technology infrastructure and standardisation that has yet to be achieved.
For instance, while there is a convention about what defines a web page "impression" and therefore when an advertiser must pay an online publisher, there is no similar agreement when it comes to video and audio, says Mr Costolo: what happens when the material is only partially listened to or watched?
Systems to identify and track the use of copyrighted material as it moves around the web, enabling the owners either to limit or charge for its use, are also in rudimentary form. Digital "fingerprinting" systems, which identify content based on their unique audio or video patterns, have been put in place on a number of websites to combat piracy: MySpace, for instance, announced a video identification system this week.
However, tracking video automatically in this way remains difficult to do reliably. Also, fingerprinting systems have yet to be set free to crawl the web at large to track down copyrighted material.
Richard Waters
and Aline van Duyn
Copyright The Financial Times Limited 2007
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