Making Money from Content

In a recent episode of TWiT, a weekly tech talk show hosted by Leo Laporte, David Spark of Spark Media Solutions gave the TWit audience his thoughts on the NBC.com Communicator – a new social media, communication & entertainment app set to be released this month.

“The NBC.com Communicator as a really cool communication application.” Spark says, “[it has] text, voice and video chat all within the desktop application.” NBC.com is creating the [app] with itiBiti allowing users to watch NBC programs on the desktop.”

Disclosure: David Spark consults for Intertainment Media on the launch of NBC.com Communicator and is also one of the authors of this blog.

TWiT is one of the most popular internet shows that features discussions on the latest technology news and reviews. Leo Laporte hosts the weekly podcast with TWiT TV network to present light discussions and arguments on the internet and electronics.

Listen to the show podcast here.

You can also read transcript of the podcast.

Augmented Reality No Longer Science Fiction

Layar, which has been the ‘poster child’ for augmented reality smartphone apps, just launched a brand new app in the iPhone’s App Store.  If you’re still at a loss as to the significance of augmented reality, Layar’s own explanation from inside the app explains it well:

“Layar is a tool to browse the world. It enables exploration, more informed decisions, serendipity and fun. [...] While looking through the phone’s camera lens, a user can see houses for sale, popular bars and shops, tourist information of the area, play a live game, etc.”

How it all works

The app retrieves information from third-party developers who contribute their “layers” to the Layar platform. For example, there’s a layer called iMetro, and when it’s selected and you’re standing outside, Layar will display digital overlays of nearby bus stops and the time the next bus is arriving.

Layers are similar to plug-ins that customizes desktop browsers. There are also layers for Yellow Pages, Las Vegas casinos, and Wikipedia. The layers are free, as is the Layar app. However, Layar told Wired.com that after the platform generates enough interest, it might begin charging users for premium layers.

Some marketers have experimented with augmented reality (AR) to promote products through interactive and web-based applications, but AR is still in its infancy stage despite the huge potential it has to make our virtual experience very close to our real world.

Check out this great example from GE:

According to an article on TechCrunch late last week, TV broadcaster Channel 4 in the UK appears to have signed a content deal with YouTube for their 4oD video-on-demand ‘catch-up’ service that would provide Channel 4 with additional advertising revenue and reach.

Here’s the release that just went out:

YouTube, Channel 4 sign pioneering long-form content deal

October 15 2009: YouTube and Channel 4 have signed a pioneering content deal which will make the broadcaster’s original programmes available on demand, in full and free-of-charge via YouTube in the UK in the coming months.

The strategic partnership marks the first time that a broadcaster anywhere in the world has made a comprehensive catch-up schedule available on YouTube, providing Channel 4 with additional advertising inventory and reach: YouTube last week announced it was serving over 1 billion video streams every day.

Under the terms of the deal, Channel 4 will make its 4oD video-on-demand ‘catch-up’ service of new programmes available via YouTube shortly after television transmission, including series that have already proved particularly popular with online audiences such as Skins, Hollyoaks, The Inbetweeners and Peep Show. YouTube users will also be able to access around 3,000 hours of full length programming from the Channel 4 archive at any given time, including shows like Brass Eye, Derren Brown, Ramsay’s Kitchen Nightmares, Teachers and many others.

Content will begin appearing in the coming months and be fully available in early 2010. All programmes will be available only in the UK, free-of-charge supported by advertising.

Financial terms are not being disclosed, but the partnership runs for an initial term of at least three years and the two parties will share advertising revenues on an agreed formula. The deal will create significant value for Channel 4 and its independent production partners, generating additional revenue to invest in creating high quality, original content. YouTube and Channel 4 will continue to co-operate on additional monetisation opportunities as new technology evolves.

Channel 4 will have a branded presence on YouTube and will be able to sell advertising around its content on the site. The agreement also allows Channel 4 to sell advertising around some non-Channel 4 content on YouTube for the first time, expanding the amount of inventory available to its sales team and bringing its considerable expertise in advertising around full length TV content to the YouTube platform. It will help Channel 4 develop its advertising sales proposition in digital, including the use of YouTube’s demographic targeting tools to target advertising against Channel 4 content on YouTube.

The deal builds significantly on Channel 4 and YouTube’s existing partnership; Channel 4 was the first broadcaster to sell pre-roll advertisements on YouTube clips and to incorporate an offline sponsor into an online YouTube package (Lucozade, Big Brother).

The deal is non-exclusive, allowing Channel 4 to continue distributing its 4oD service via its own website, channel4.com, and other third party sites and services.

Nikesh Arora, President, Global Sales Operations and Business Development for Google, YouTube’s owner, said: “Over the past few years, fans have had access to increasing amounts of professional programming online as TV companies experiment with new ways of distributing their content. Channel 4 have been visionary in their online strategy and are consistently at the forefront of new uses of YouTube to engage their viewers and unlock new revenue streams. This significant new agreement brings Channel 4’s great full length content to the YouTube community, helping Channel 4 to grow their online revenues and to continue to invest in the creation of high quality original content.”.

Andy Duncan, Channel 4’s Chief Executive, said: “Channel 4 was the first broadcaster anywhere in the world to make all its commissioned content available online and we’ve consistently pioneered in this field. This strategic partnership is another important milestone for us and we’re delighted to be combining the power of the ‘4’ brand and the appeal of our content with YouTube’s unrivalled reach and reputation online.

“Making our programmes directly accessible to YouTube’s 20 million UK users will financially benefit both Channel 4 and our independent production partners and help bolster our investment in quality British content. It demonstrates our ability to strike dynamic commercial partnerships to help underpin our future as a commercially funded, not-for-profit multi-platform public service network.”

Jon Gisby, Director of Future Media and Technology at Channel 4, added: “Channel 4 has a clear lead among commercial broadcasters in video-on-demand and we’re convinced extending our relationship with YouTube will help consolidate that position. The deal will grow our share of the audience and enhance our advertising sales proposition. It will create new advertising inventory for Channel 4 Sales in digital media and will help us realise our ambition to be the UK’s leading sales house for video-on-demand.”

Patrick Walker, YouTube’s Director of Partnerships, added: “We know that the YouTube community is enthusiastic about full-length programming on the site, and we’ve been working hard to create the right environment for more broadcasters to make their content available with the right branding, the right advertising formats and the right level of control over advertising sales. This partnership demonstrates our commitment to bringing an even greater range of content to YouTube and we look forward to other similar agreements to come.”

This partnership, once again, demonstrates how brands are seeking effective ways to reach their customers by making their unique content available online generating new brand awareness and ad revenue opportunities.

PepsiCo just underwent an onslaught of public dissent (#pepsifail) and debate over the “Before You Score” iPhone application for its AMP energy drink. Here’s the commercial that shows the application in action.

There’s been endless debate on the subject. Read Mashable’s article on the issue and then their follow up piece on AMP’s apology. Here’s my summary of what PepsiCo/AMP did right and what they did wrong.

What did the PepsiCo/AMP brand do right?

1. They created a controversial application that got people talking.
2. They created an application specifically targeted towards their demographic, young men.
3. When the online anger took off, they immediately responded and apologized if some saw it in bad taste, but that their intention was humorous. Here’s the tweeted apology.
4. They invited feedback.
5. They saw that the discussion was trending on the hashtag #pepsifail and tagged their tweeted apology with it. This first and foremost guaranteed that their apology would be seen, but they also accepted the community decision that this was how this story would be classified.

What did the PepsiCo/AMP brand do wrong?

1. The application’s content was not unique, it just played off of tired stereotypes.
2. It could have been funnier. AXE’s commercials and content are funnier because they create a completely over-the-top male fantasy. And AXE’s content really pokes fun at the male fantasy. This one didn’t really poke fun at male behavior, even though that was AMP’s tweeted intention. Rather it stereotyped women in an often unflattering way.

Having done standup comedy myself I know that offending people is an unfortunate part of the business. It’s hard to get away from it. There are very few comedians that don’t offend anyone. Even Jay Leno who is about as squeaky clean as you get actually has a mean streak as he makes fun of people for their ignorance in his “Jaywalking” segments.

Ultimately, was this application, the community response, and AMP’s response successful? I think it was successful for the following reasons.

1. I didn’t even know what AMP energy drink was before this happened. I’ve now “discovered” AMP.
2. Nobody died and they had an open and honest dialogue with the community about the application, and their intention. They didn’t cave to pressure and pull the application down (the usual response). Rather they engaged in a very open conversation. We’ve seen true social media failures where the communications department runs in around in circles trying to hide their mistake. Those epic failures live on as what not to do in social media. This will not live as one of those examples. Instead this case will live on as an example of how to spin a mistake into a win in social media.
3. They got TRAFFIC! As of Friday last week all of 150 people had download the program. Today, Wednesday, they have over 17,000 downloads, according to an AMP spokesperson I talked with. UPDATE: I talked with the AMP spokesman again, and it turns out those numbers are very dated. As of Thursday morning they had nearly 77,000 downloads of which 75,854 came AFTER the story broke on Mashable. They’re now the #2 free entertainment application, and #12 overall in free applications.

What do you think? Can you argue with success like that? Do you think the PepsiCo/AMP iPhone application was a success or a failure?

Leo Laporte is a long time veteran of radio and TV broadcasting, and now owner of the TWiT (This Week in Tech) network which offers a cornucopia of online tech programs. I worked with Leo at TechTV (formerly known as ZDTV), the ill-fated 24-hour cable news network devoted to technology and the Internet that lasted only six years. I was the editorial supervisor on both of his tech help shows, “Call for Help” and “Screensavers” at TechTV. Leo was a great guy to work with and what we all knew back then was that  Leo was one of a kind. He was the only person who had massive tech knowledge, and years of broadcasting experience, plus was great on camera. While there are plenty of people on camera today that talk tech, there is no one that equals Leo’s breadth of relationships, knowledge, and experience.

I just finished 15 interviews for a series I produced called “Making Money from Podcasting.” A summary article is available on the Mashable site “9 Successful Techniques for Making Money from Podcasting.” One of the repeated comments in the article was “What about Leo Laporte?” And they’re right, I should have interviewed him, but there was a reason I didn’t. Given Leo’s experience, to some level he’s simply not repeatable. Yes, one can build the model that he’s built with TWiT and enjoy some success, but you still wouldn’t have the background connections and experience he has. I remember when Leo started TWiT, my comment was, “If Leo can’t figure out how to make money from podcasting, nobody will.”

Luckily Leo did figure out how to make money from podcasting. A lot of it. In fact, $1.5 million according to him during his speech at the Online News Association Conference in San Francisco on Friday, as reported by Pete Cashmore of Mashable. He produces TWiT with a staff of seven and a yearly budget of $350,000. Watch his presentation where he talks about the plans to launch CNET and what it would cost to launch a 24 hour cable network about technology. Leo did some research and at the time he came back to say it would cost $50 million a year and you would lose money for the first five years. He also pointed that CNN didn’t make any money until ten years. So using that logic, you’d spend somewhere between $250 to $500 million dollars before you’d see any profit. At the tome, CNET chose against it. Quite a risk back then. And it’s a risk that doesn’t exist today.

Watch this video (about 40 minutes) where Leo goes through his whole history of “The Site,” ZDTV, and now TWiT. Specifically, he talks about how you can make money finding niche audiences that are passionate. It’s rather fascinating.