Making Money from Content

Brightcove’s blog today has some interesting findings from an online video research study they did with Tubemogul.

They analyzed Q1 performance in online video from 2009 and 2010 and summarized their findings as such:

• Online video views has grown dramatically: 40 percent for broadcast media networks. 300 percent for web-based media networks. Spike is attributable to newspapers (37% jump) and magazines (70%)
• Online video production has grown dramatically: Newspapers (up 190%), magazines (up 60%), music labels (up 64%), radio (up 62%).
• Engagement levels vary by media type: Average length of viewing stream (in minutes:seconds) by media type broadcast networks (2:53), music labels (1:50), and newspapers (1:41).
• Completion rates vary by media type: Percentage of people by media type who finish watching videos – newspapers (41%), magazines (39%), broadcasters (38%), and music labels (29%).
• Twitter referrals create the highest level of engagement (longest viewing times): Broadcast networks (1:52), magazine publishers (1:23), and music labels (2:33). The exception is newspaper publishers, which see the highest level of engagement from viewers who find their content via Yahoo! (1:20).

Lastly, Brightcove claims that the majority of publishers in their study plan to launch ad-supported mobile video within the next 6-12 months.

I am an extremely avid podcast consumer (see my podcast listening lineup for 2010), and sometime podcast producer. I have completely stopped listening to over-the-air radio, and I now listen to podcasts whenever I can. All except one of my podcasts are free. The podcast I pay for is “Never Not Funny.” It’s a 90-minute podcast. You can get the first 20 minutes for free, or you can pay to get the entire podcast. I like the podcast so much that I pay for the full 90-minute version. To learn more about “Never Not Funny’s” business model, read or listen to my interview with the show producer, Matt Belknap.

Because I pay for the “Never Not Funny” podcast, I make sure that I always watch it (I pay an extra $5 to get the video feed). I’m paying about a dollar per show, but that’s enough to get me invested into the show that I feel compelled to watch it. That’s not the case for any of my other free podcasts.

I feel the same way about watching films I purchase and download from iTunes. Or music I purchase from iTunes. Or listening to music on the paid service MOG for which I also became a paid subscriber ($5/month).

When I pay for content, I’m compelled to consume it before content I can get for free.

But as we all know, even charging a nickel for content can be a barrier for consumption. Some may see this as dealing with two mutually exclusive issues:

• If people pay for content they’ll be compelled to consume it.
• If you charge for content it will be a barrier to consumption.

I see the ability to overtake these conflicting issues is by not scaring people when you charge for content. Instead, get people excited that you’re going to charge for content. And I believe you can do this by creating your own form of scarcity. Give away a portion of content for free that leads people to want to purchase the rest of it.

How do you charge for podcasts?

While iTunes has an app store, a music store, and a movie store, they don’t make it possible for podcasters to sell their podcasts. Podcasts within iTunes must be completely free. That doesn’t mean you can’t sell your podcasts, you just can’t do it completely within the four walls of iTunes. You have to go outside and create a personalized RSS feed that requires a username and password for access. You can manage that through services like Premiumcast (read and listen to my interview with Premiumcast’s founder, Paul Colligan).

I love stories of people sidestepping gatekeepers. At WordCamp in San Francisco, Karl Vogel of QuestionCopyright told a great story of how one animator and filmmaker, Nina Paley, chose to distribute her film, Sita Sings the Blues, completely open source. The open source distribution was so complete that she even let other people profit from her film and the character likenesses. You could, if you want, show her film at a theater, charge admission, and keep all the money. Or you could sell products with images of the characters on it and keep all the money.

Unbelievable.

Paley didn’t make a fortune, but she did make money, about $90K in profit.

Except for a music licensing deal that cost her $50K (she had to take out a loan to pay it), Paley didn’t deal with any gatekeepers, or have any additional film distribution expenses beyond site hosting fees. She made her film completely free via an open source platform and made money using these techniques:

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Every single action we take online can be monitored, analyzed, and then used to serve us even more targeted information. Online advertisers have been doing this for years by dropping cookies and tracking our web behavior. But many of us don’t realize that every iota of our actions are being tracked. It isn’t just the websites we click on, but whether we scroll a screen, how long we spend on a page, what links we click on, where we track or hover a mouse, and so much more. Amazon and Netflix have been using filtering technologies for quite some time.

The same organizations that have been helping retail sites target information are doing the same for content sites. Services such as Baynote and Loomia track and digest more than a dozen user behaviors on retail and content sites to serve up more personalized and relevant information.

Known as “session psychology,” many companies are working very hard to make information more and more relevant in hopes to lead to the goal of Web 3.0, a.k.a. the semantic web.

But our focus has constantly been specifically on user behavior. There are so many other factors, not measured by personal behavior, that affect our decision and interest.

On Friday, the LA Times reported that NBC.com has announced that they’ve enlisting the services of a British company called Filter to serve up more targeted personalized video content. Those recommendations will be based initially on the digital breadcrumbs we leave behind as we search, click, and browse across the web. NBC.com Communicator, built on the itiBiti communications engine, is a separate effort.

What’s intriguing about the Filter announcement is how they’re taking into account other factors that have nothing to do with individual behavior. Time of day, day of the week, and location are some of the other factors that come into play in the decision making process. For example, people are more interested in news information in the morning, but want to watch comedy at the end of the day. Comedy viewing also shoots up dramatically at the end of the work week, said Will Rogers, CEO of Rooftop Comedy.

Filter is keeping much of their secret sauce hidden, but they are also taking into account what videos your friends on Facebook are watching as well. This is not a new concept either. Social reading for recommendations is a feature that Loomia uses as well.

Years ago when Napster went legit in its pay a flat fee for all-you-can-eat music, many believed that they hit upon something huge. People have already proven that they don’t like their consumption metered. Phone service and Internet service went in that direction. Later, DVDs-by-mail providers Netflix and Blockbuster did as well. Flat-fee monthly pricing seemed an obviously successful business model for music. But it still hasn’t worked nearly as successfully as iTunes’ $.99 per song own-it-forever model. Why?

People don’t want to pay an ongoing fee for the music they love

You can give people all the music they want for a comically low price (MOG offers a $5/month subscription and Rhapsody just lowered its price to a $10/month subscription) but it’s still not enough. Because once people have the music they love, they don’t want to part with it. And on the onset, these services are saying, to keep the music you love you have to pay us a fee every month to keep it. It’s a concept that rubs a lot of people the wrong way. Still both services allow you to download and purchase the music. But many people think that’s paying double for their music.

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More great news coming out of the itiBiti platform. We’re still in the BETA phase of the lifecycle, and already we’re seeing very positive metrics emerge.

A few of the highlights:

• Over 60% of those consumers directly targeted by brands in a closed environment have downloaded the application
• 64% of the users engage with the application regularly. When compared to other social media applications, this figure is very substantive (e.g., Twitter only sees 1/4 of its potential audience engage)
• Active Consumer Engagement with itiBiti is averaging 2.4 times per day, with an average length of 6.8 minutes

And underscoring this is the fact that no major marketing or brand push initiatives have been undertaken up to this point. All of these figures are coming from organic growth, and early adopters. Consumers are responding & engaging.

More and more brands are seeing the value in customized desktop applications. It’s critical that within a fragmented media arena every opportunity to continue a discussion with consumers is utilized. And in the desktop lies an avenue of untapped merit…

Check out the nbc.com Communicator version of itiBiti

We’ve just announced an agreement with a major US online distribution partner that guarantees 5 Million North American installs of the itiBiti platform before the end of 2010.

The users are showing us velocity…In February, average user “on time” was up to 2,125 minutes per month per brand, or 76 minutes per day, with engagement activity running as high as 20%…And now, we’re bringing the mass.

With the itiBiti platform, revenue is derived from advertising and data analytic services based on user engagement – the effect of 5 Million users will help increase the value proposition for our clients very quickly.

As our President David Lucatch states,

itiBiti is working diligently to deliver tangible client results, providing brands with opportunities to strengthen relationship value with users. As most social media platforms are slow to monetize the user’s online experience, itiBiti and brand clients are experiencing immediate, and accretive, revenue generation, at premium market rates…

We’re looking forward to rolling this out – let us know your thoughts. Many thanks to BlackTorch Capital LLC, our US fiscal advisors who were instrumental in the introduction, structuring, and negotiation of this partnership.

Check out the nbc.com Communicator version of itiBiti

Intertainment Media and Itibiti Systems’ CEO, David Lucatch, is not ashamed to admit how much time and money he spends playing virtual games, especially ones on Facebook such as Zynga’s FarmVille. He admits to watching almost no TV, but is completely addicted to social gaming. Ask him about it and he’ll tell you it’s “research” but we all know he loves bragging to his Facebook friends about how many tractors he has.

Lucatch is not alone. Every day, 67 million people that aren’t running public companies are playing Zynga’s social games on Facebook. They’re currently the best model of how to make money with online content. Within the game you can pay real money to purchase virtual goods. Well now, Zynga, the $2 billion valuated company, is poised to make even more money. They’re offering pre-paid game cards at major retailers such as 7-Eleven, Best Buy, GameStop, and Target.

This is a brilliant move on so many fronts:

• What game do we buy your nephew? I don’t know what he likes and I don’t know what he has, but I do know that he likes to play Mafia Wars. I constantly get his invites on Facebook. Let’s just get him a gift card.
• Every year, an estimated 10% of gift cards go unused (source: TowerGroup consulting). That estimate was more than four years ago. Today I would guess it’s a lot higher. Have you noticed the racks and racks of gift cards now available at your super market? Here are some other amazing numbers from a Seattle Post Intelligence article from 2006.

Limited Brands Inc. said last week that unspent gift cards contributed $30.4 million to fourth-quarter revenue, boosting profit 4 cents a share. Best Buy Co. reported 4 cents in earnings last quarter from gift cards that it concluded would never be redeemed. Home Depot Inc. in June reported $43 million in pretax profit from cards sold before 2002.

• A great marketing ploy to the physical world. They’re now going to expose their brand to physical spaces and be seen. In total, Zynga will be physically distributing their game redeemable cards at more than 12,800 retail outlets. They couldn’t do this at all before with the model they had.

David Lucatch’s birthday is coming up in June. He may be a man that has everything, but he could use a few more tractors.

The New York Times today has an article about real-time bidding for advertising. The idea is that once people make purchases, their behavior is tracked and auctions start going off to be able to advertise to that user. Real-time bidding has been going on for quite some time, but profiled in the article is a new company, AppNexus which helps advertisers automate the process of analysis and bidding.

This whole discussion got me thinking about the role of advertising as marketing, as content, as helpful, and as a nuisance. The latter is not something anyone strives for, but it’s the way so many people describe advertising.

Why do they do that? Are they just being pests? Do they just like to complain?

Yes, that all may be true, but I think the truth of the matter is that advertising becomes annoying when it’s unwanted. And since it’s so difficult to effectively target advertising on a one-to-one basis, so much of it becomes “annoying.” Yet no one realizes when an ad is targeted well. No one announces, “Wow, that ad was targeted so well to me, I’m so glad they sent it to me at just this time.” Instead, they might say, “Oh, that’s just what I want” and completely not be aware of the wizard behind the curtain moving all the levers to deliver an ad to you at just the opportune moment.

So when advertising comes in at an inopportune moment, which is most of the time, how can we make it more useful? Many advertisers realize this and that’s why we see so many ads that appeal outside of their core audience. A purely entertaining ad, even if it’s not targeted to me, is no longer annoying.

But if we get to the point that we can hyper target every single ad right down to the individual, and perfectly time it, will there be anymore need for creativity? If I know at exactly this moment that you want to get a coffee, I don’t need to be creative, I can just tell you that Starbucks is selling coffee right now. Come on in. I don’t have to do anything else. Maybe I have to give you an incentive like a coupon. But really, what more do I need to do?

Could efficient targeted advertising be the end of creative advertising?

Creative Commons photo attribution to: http://www.flickr.com/photos/autohistorian/ / CC BY-NC 2.0

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.