Break.com is considering charging users for content. WHAT? What happened to the currency of the Internet? Free? The only content we've ever paid for is going to the movies. We already pay for connecting to the Internet, how can you charge us more?
Break.com will attempt to address these questions and more as investors are going to start wanting to see some type of revenues from their investments. Break (one of the top 10 video sharing sites; 310 overall, but well behind #1 YouTube) will start charging a subscription fee for exclusive content. They've already created advertiser sponsored channels (more of an Internet model) for companies like Keystone Beer. Keystone gets to pick which videos they want for their brand sponsored channel. We've been talking about how to monetize online video for quite a while. Advertising can only provide so much for free especially with the coming glut of user generated video. The refreshing thing for professionals is that sites like Break.com and others realize the potential for professionally created content. Can Break get subscribers for professionally based content? Hard to say. After all, I'd say Internet video is more like television and we've never had to pay for television at least not in an obvious manner (meaning that we all pay for HBO but we don't really see that bill when we flip the TV on). As previously mentioned, theatrical films, some pay per view events, and recorded media are the only things we've ever paid for.
If Break.com starts charging what does this mean? Advertisers, who will probably snag the best content, will have their channels subscribed to more often not only because they have the best content but because it will be free. If a Sopranos type show appears online, then perhaps users will be compelled to pay for it. However, once it appears online, there's very little that companies can do to prevent it from showing up on the YouTubes of the world. Sure there's the DMCA takedown but not after a few million potential paying customers already viewed the content. And thus, I find that pure subscription will have a tough time finding an audience. Here's a solution. Remember watching soccer games on television (or am I in the minority on this one?) Soccer has no breaks so they only time to serve up advertising is up on the upper third dashboard next to time left, half, score, and station identification. Can't we simply overlay an advertiser over the bottom sliver of a video - we already see this with the station identification watermark in the lower right hand corner? If we do this, and I guess we should wait to see how Keystone turns out, will we be turning all of our great content into another Bud.tv fiasco?
Brand Dilution There's been a few announcements this week in merger mania that has left me scratching my head. Sure, the Dow is at an all time high making stock transactions relatively cheap. Still, I think that synergies are more important unless these big conglomerates have something farther up their sleeves that they are not letting on. Granted there have been some M&A activity that makes sense: Coke buying out Glaceau , the Vitamin Water manufacturer. This makes sense as a line extension of "healthy drinking" as soft drinks are slowly falling out of favor from the more health conscious community. Further, Coke already has a wide distribution channel that the smaller Glaceau can take advantage of. Great deal here for both sides.
Then there's the line extensions that just make no sense whatsover. Even if he has something up his sleeve I really don't see how this ties into his brand. The brand I'm talking about is Trump. Donald Trump. After his successful runs in New York City real estate and Atlantic City casinos, the mogul has put his name on a few different items that didn't really reinforce his luxury brand status. Trump Water? Trump Vodka? (from the man who doesn't drink?) and the latest Trump Steaks. The Apprentice definitely reinforced Trump's image as a wheeling and dealing businessman but steaks? Perhaps vodka, water, and red meat will be given to the folks at the Trump Modeling Agency? I'm not sure, but I'm sure there's something behind this...or not, just another thing to slap the Trump name on (which at this point, might not be such a great thing - The Apprentice was not picked up by NBC).
Back into technology where I have a feeling that I know where Google is going with its acquisition of Green Border. Google is becoming Microsoft slowly and surely. It more or less has an entire suite of products and once those products become unreliant on IE and can stand independently on any browser, Google will have a portable desktop. And since you don't want other viruses you may have picked up while using your virtual desktop anywhere else, Green Border protects your home computer (note I didn't say PC). So that's Google's strategy it seems. Buy everything to make it a viable competitor to Microsoft. Google's about halfway there (market cap GOOG: 151B, MSFT: 295B).
The final question in my head (and please help me here!) is CBS. We covered CBS's purchase of WallStrip last week for $5 million. I speculated that CBS wanted to lock in the rights on Lindsay Campbell as their own Amanda Congdon. Ok, that makes sense, I think. But this morning, CBS announced their intent to buy Last.fm. We've spoken about Last.fm's loyal user base and I think its a great tool to find new artists and even old ones that you didn't know about. A StumbleUpon for music so to say. But I'm not sure how these two purchases really help CBS in the long run. CBS spokespeople have said that Last.fm helps them get that younger demographic that is so elusive to advertisers. Could be true. And perhaps this is where the synergies begin. Since the split of CBS and Viacom, CBS has all of the "old" properties, while Viacom retained the MTV's, Nickelodeons, Vh-1's, Paramounts, etc. Further as its old parent is suing YouTube, CBS has publicy said that YouTube has boosted its viewership. I think that these last purchases are probably more of a way for Les Moonves to stick it in Sumner's face more than anything else (since Sumner was so mad about the loss of MySpace that he fired Tom Freston). And for $280 million (half the cost of MySpace) why not?
Make Money with your Video - Vator.tv So this entire time we've been focusing on how to monetize your content online. Most of that is through ad revenue, but Bambi Francisco, originally from Dow Jones owned site Marketwatch has put a new spin on monetizing content. Her site Vator.tv allows entrepreneurs to post their elevator pitch while at the same time allowing investors to find start ups that they'd like to invest in. Definitely a different model than the ones that we were looking at, or are they? NBC and other networks have been looking at YouTube and other online shows for pilot ideas. In a way, post your content and if its good, a big network will pay for it.
Vator.tv, though is definitely an interesting play, although sometimes start ups are invested in because of the management team and not necessarily the idea. This provides the perfect forum since management needs to be somewhat coherent about business and not just all about the technology and Vator.tv provides that perfect medium to evaluate the people that you are investing in without wasting a lot of time.
What's next? The video resume? Aleksey Vaynor would say no. In our open world confidentiality is becoming more and more difficult. Start ups are having a tougher time keeping things under wraps. And likewise, HR departments, are having a more difficult time keeping candidates' information hidden.
Regardless, this is a great idea for this medium and I think the video resume would be as well, if it could be posted behind some type of password protected site for HR folks only. Will Vator be successful? Hard to say. Should they have an accredited investor check? Probably not (see bud.tv). Will wanna be entrepreneurs be watching Vator in a chance to rip off someone else's idea? Probably. How can we protect this? We can't, but hope that if you're video is on Vator and its a good idea you'll get funding before someone can rip you off.
OpenFaceBook The Facebook Platform, launched yesterday, is designed to do exactly what MySpace didn't want: Allow for third party content. Facebook has opened up all of its API's in order to encourage development for its site. There are tons of applications now that are sanctioned for use on Facebook. So unlike MySpace (when they shut down Photobucket, which they now own), Facebook encourages open access to their proprietary network. Facebook has some impressive statistics on growth and engagement and with the launch of their video network could really give MySpace and even YouTube a run for it.
Why is the opening of Facebook so important? Better yet, is that the right move? After all, third party widgets could take users away from the site. I think that it is. Think of Facebook as Windows. If Windows could only utilize Microsoft applications, there would be some utility but not as much as if Windows could also use Adobe products and (gasp) Apple products. Sure, the third party widgets are going to lure some users off of Facebook's site, but in the long run, users will be more engaged, Facebook will have free development, and third parties will develop cooler things for Facebook (leading to more and longer page views for the site). Think Amazon, Second Life, Linux...all of these tools were made better because users and developers could plug in their own enhancements. From a marketing and monetization standpoint, this offers unlimited possibilities. Zuckerberg noted that Facebook was the sixth most trafficked site in the country. The ability to create embeddable widgets on a site like Facebook offers huge possibilities for commerce and contextual advertising. Favorite books, shows, music, and media could be purchased off of someone's profile page. Facebooks photo application (the largest in the world) could be integrate with an Ofoto or Kodak Gallery to provide for prints. Mashable talks about some of the applications already created for Facebook. The lesson here is that closed source does not work in today's open world. The music industry learned that, Hollywood is learning, and Microsoft will eventually learn that. If we can embrace our users and partners, then we'll hae a better platform all around.
Great concept as comedy seems to be the one aspect that can be controlled in online video. The other is shock which usually comes from UGC. Prom Queen probably falls under suspense/thriller and I'm curious to see if there's any drop off from last month's reported numbers. However, as Mashable pointed out, Rooftop Comedy provides an outlet for comedians to get their funniness out there and they have links to the comedians own website. I mean, that's all well and good, but what's the business strategy? I'm smelling Web 1.0 e-commerce bubble where everyone would put a storefront on no matter how much money they lost (Pets.com anyone?). Now there's a Web 2.0 online video bubble where we can simply place a niche targeted website up that plays back some content. Are we really going to serve up that many banner ads? Are people really going to click on your AdSense that's next to the video?
I think that the real winners are going to be the TV Guides in this new world. Is it Blinkx (which IPO'd overseas by the way)? Is there a way for us to find the content we want online? In the world of the long tail, this will be the company (Google?) that emerges from the dust as the broker of viewers and content.
Everyone's a Star
The ever popular live webcast Justin.TV has turned Justin Kan into an overnight web celebrity. He's opened his life up to the entire world, everything from police raids, landlord eviction, even things in Justin's personal life. Justin Twitters his goings on and keeps everyone in the loop about what he's doing. At just two months old, the site has really gotten some great traction. So, what's next for Justin? They are opening the site up for other live webcasters to become the next Justin. Via TechCrunch, you'll be able to create your own URL's, broadcast your own Twitters, real time chat, calendar, everything.
This idea is really really interesting. I'm not sure how much traction it will gain, although as hardware costs continue to drop a decent webcam attached to your hat (ala Justin) would set you back about $50. Further as we are already impatient enough when you don't respond to an email immediately (and hence IM is so popular) we can actually see what you are doing as to why you aren't responding. Could Justin.tv be the next MySpace?
I don't know about Justin, but I know that the majority of us can't stand to be "on" all the time (like in the Truman Show). Even some stars need their alone, quiet time. Justin is really sacrificing his life by broadcasting 24/7. I think college kids could probably get away with putting a webcam on your head, but what about when you "grow up" and get a real job? I don't think your employer would be too happy.
But the real value in this then becomes who we are putting our webcam on top of. While the rest of the magazine industry has been shrinking, we've seen growth in celebrity gossip magazines. We've seen "glimpse" type shows like Curb your Enthusiasm (look into a day in the life of Larry David), or Entourage (look into a day in the life of a movie star) really take off. However, these are things that are made to entertain. Could you imagine the laws that would be broken if we put a Justin.tv on Donald Trump's head? All of the deals that he would be doing would be known before they were announced. Sergey Brin's head? You'd be able to know what other medium sized company he was going to buy next, run up the stock price, and wait for the official announcement (although I'm sure GOOG traders are watching Sergey's Justin.tv page too). So it really comes down to celebrities and Hollywood celebrities at that, otherwise I'm sure alot of information that we don't want out there will get out when we forget to turn off our Justin cam.
7 Months for 10x Return in Online Video...Not Bad
You can make money in online video! WallStrip, the video blog about stocks and investing, has been confirmed to be purchased by CBS. Rumors have said $5 million was the purchase price. Not bad for a show that started last year in October and to date raised about $600K. As one of the producers of the show stated, its Pop Culture meets stock culture. If you might remember Rocketboom, the once popular daily video blog, starring Amanda Congdon, in which she left for ABCNews.com, this seems to be a similar play. Lindsay Campbell, WallStrip's hostess, discusses reasons for why stocks are hitting 52 week highs in a somewhat playful manner, looking at a company's customers, "man on the street" type interviews, and visits to a company's retail stores if any.
However, as many other bloggers have questioned, who is watching this? It's definitely an entertaining show, but true Wall Streeters won't have time to watch the 2-3 minute daily episodic. Even on Revver, where the show is hosted, the popularity of the show appears to be correlated with the subject matter. (Most watched is the ever popular Cramer, followed by AAPL (anything Apple is interesting), then of course Google, and then some of the pilot episodes). Alexa has WallStrip at 65,865. Surely better than Bud.tv, but worth $5 million? Others have speculated that CBS made the play to lock down charismatic host Lindsay Campbell, which could be true.
Regardless of reasoning, congratulations to the team at WallStrip for sticking it out and making it happen. Big questions remain though:
How WallStrip will continue to be distributed (via CBS.com?)
Monetization? (PreRoll, PostRoll?)
Demographics? (Who IS watching this?) The purchase gives hope to many of the other video blogs out there that would like to create some kind of liquidity event. I think execs at CBS were mainly into the content as opposed to the traffic and statistics. But the Internet definitely gives these execs (similar to film festival) a chance to see how content (which no one can predict) will do in front of an audience. I'm interested in hearing CBS's side to this story.....
Virtual Worlds the New Social Network? We've all heard of MySpace, YouTube, Facebook, and the myriad of other social networks that have popped up since the infamous Friendster spawned the social network revolution. MySpace sold for $580 million and everyone has jumped on the social network bandwagon. Since then however, we've had some interesting developments in the space including virtual worlds, which is essentially a social network based on a movable avatar. Second Life is the most popular of these with a in world economy and real money being transacted. I previously wrote about how I thought that this would be an interesting addendum to the Web with Linden Labs (who owns Second Life) to open up their architecture and allowing anyone to plug into their API (application programming interface) similar to the World Wide Web but in 3D space.
While I still believe that this is Web 3.0, I can't ignore these new Flash based applications like Habbo Hotel, Webkinz, Club Penguin, Runescape, and a bunch of other in browser applications. While most of these are for younger users (children and younger), there is an appeal to many based on the lack of a download and simplicity of it (a common complaint about Second Life is usability). Recently Sony was in talks to acquire Club Penguin for $500 million+. (via Techcrunch) This puts Club Penguin with a demographic heavily skewed toward youth right up their with MySpace. The big difference between the two is that users are willing to pay a fee to dress up their avatars in Club Penguin and have access to members only areas. I think this customization will allow these social networks to finally monetize. MySpace which allows HTML customization is free, but with virtual worlds, the ability to feel like you purchased something as you would in real life appears to be worth payment. So users feel like there is value in having customized clothing for the avatars which is similar to having personalized wallpaper in MySpace. It's an interesting concept and I bring it up because of the potential for true interaction with your customers. There is now a way to track to see if users would like to use your product for their avatar (which would be fraction of the cost of real world usage). Further, as I previously mentioned, in the virtual world you can create anything, so another great opportunity to see how users interact with your brand. Watch this space since it appears that it will follow the way of the social network where a virtual world will appear for the long tail.
Lonely Girl on Amie Street
The ever popular webisode LonelyGirl15 will now be featuring music from AmieStreet. LonelyGirl15 is the extremely popular breakout hit on YouTube that featured a video blog about a girl, her problems, and her friends. An extremely popular hit on YouTube it racked up hundreds of thousands of hits before it was outed that the girl was actually a Jessica Rose in Santa Monica and that the content was scripted. However, it was too late, LonelyGirl15 was a hit and to date still averages hundreds of thousands of views. Enter AmieStreet. We spoke about AmieStreet a while ago as the ultimate in supply and demand economics. Users purchase music and the price goes up. Up to 98 cents (1 cent cheaper than Apple's iTunes). Now the popular video blog is teaming up with AmieStreet's artists to try and push music through to its users as a way to further monetize this medium.
Interesting concept, as AmieStreet features many unsigned and unknown artists that would love the exposure on LG15. Is there a way for users to know that the songs are available at AmieStreet? How will they track sales? Obviously if this concept works we will see a spike in the featured artists on LG15, but is it that simple?
I think that this is a great idea since music and the moving image have always gone hand in hand, and some shows have even made hits (The Rembrandts and Friends). I think the challenge here is to let the user know that the songs are available for purchase and if the song is from one of AmieStreet's more popular artists to have a special link that let's the producers know where the lead came from.
The Power of the Blog
Yes there are two posts today! I had to write about this (via IRWebReport) because it really supports how powerful the blog is, who is reading them, and what a popular blog can do to a big company. Engadget, a very popular blog about technology, wrote about how Apple's iPhone would be delayed as well as the new Mac OS X Leopard. The post was at 11:49am yesterday and accordingly Apple stock dropped nearly 3% from 107.89 to 104.63. Wow! Since then its been outed that the email in which Engadget derived its information was a fake and has been retracted. However, this is a good sign for tools like Monitor110 that look at the blogosphere for various tips that could give you an edge in trading and that information is moving faster than ever. Sometimes there won't be time for an editor to read something over and that's why the blog is a great tool for communication (as long as the information is accurate). But in the dense world of the blogosphere, the tools to find the information you need are going to be more and more important and hence tools like Google and Technorati are going to be playing a big part in determining what is information. Could these new tools be the new Bloomberg of Wall Street? Time will tell.. It just goes to show you the power of the blog, the investors that read them and the power one blog has over a very successful and powerful company.
Product Placement Rears Its Head Online
Someone is finally listening! In an announcement yesterday (via Mashable) VideoEgg announces their exclusive syndication strategy with The Burg an online series about life in Williamsburg. The Burg which aired in June 2006 and is available at theburg.tv started as a twenty minute sit com like series. However VideoEgg appears to be syndicating four minute episodes that are sponsored by Motorola and therefore featuring Motorola products.
Well this was what I've been talking about for a while. The integration of product with content in order to convey lifestyle messages to an audience. The cool hipness of Williamsburg residents should cross over well with the audience that Motorola is trying to attract. Now I guess the big question is if Motorola is willing to split the sponsorship or if The Burg producers are willing to up the ante and not only have a cell phone sponsor but also a clothing sponsor, sunglasses sponsor, watch sponsor....
Crowds Being Manipulated I didn't want to write about this, but I think that if its brought to attention to most of these online platforms, perhaps something will be done about it. Some of the most influential websites include Digg, Reddit, YouTube, MySpace, and Yahoo News. Like most social networking sites, these sites include areas for superlatives, that is Most Viewed, Most Emailed, Highest Rated, etc. Collactive which Sequoia Capital invested in (via The Alarm Clock) helps you get your story to the top of these sites. You simply submit your story to Collactive and they utilize their network to affect the social network rankings. Digg, of course, is not happy with this, as their tool like most of the other tools above is all about the collective "wisdom of crowds" and not about a single lobbyist manipulating the system. However, as Mashable has pointed out before, its fairly easy to game YouTube to get to the "Most Viewed" list via a couple of browser plug ins and a desire to do so.
As you can see this is a big problem not just for marketers but news in general. To some extent, yes, we need editors to make sure that we get real news on the front page instead of simply the most viewed, otherwise we'd still probably be reading about Anna Nicole. But at the same time, Web 2.0 is about the collective intelligence of the group, and not simply the brute force that Collactive or any other system manipulation provides. And therefore you can see the danger here. The Web is about equality and not about money. However, if tools can be used to receive honorable mentions, high diggs, YouTube views, then the rich will continue to get richer. Great products and services will still be available online but will need to compete against the deep pockets of larger companies whose products might not be as superior. Furthermore, if we know that these rankings are being manipulated then what's the point? It becomes editorial again and the most Digg'd article becomes similar to "Collactive Presents..." and YouTube's Most Viewed becomes "Videos who's owners had nothing better to do but refresh a few hundred thousand times in order to draw traffic to their own websites."
It's a big problem for Web 2.0 just like spam was a big problem (and still is) for Web 1.0, especially for YouTube, where SuperMoviesDownload.com is trying to steal some of their traffic by gaming the system. And based on this, perhaps they will be able to more accurately reflect the collective wisdom of crowds...
Survivor made television history as being one of the first reality shows on primetime network television. (I think The Real World on MTV was the first real reality show, but who's keeping score?) Since Survivor and Richard Hatch's win, television has gone on to produce hundreds of reality shows and rekindle the game show as a source of prime time entertainment. While many cited reality television as simply a fad, others have noted the strength of reality not simply in the economics (sometimes 20% of the production budget on a scripted show) but also in the fact that the audience has an opportunity to determine the outcome sometimes (ala American Idol). It appears that audiences want more and more power and when you hear someone in the theater screaming "Don't open that door!" they really mean it.
Well that's great that reality is here to stay, and there's been a bunch of horrible shows out there in the genre and there's been a few that have become part of our culture (The Apprentice, Dancing with the Stars, and of course American Idol), but what does this have to do with marketing? You may remember LonelyGirl15 the YouTube vlogger that was outed as being scripted, and racked up hundreds of thousands of hits all the while. There's been the Subservient Chicken, where you can control the chicken via a text box. Recently I noted a "Text Your Own Adventure" Spiderman video on YouTube. And even more recently, the Diesel Underwear marketing campaign, where two "Heidies" capture a Diesel salesperson and lock themselves into a hotel room for five days. Visitors to the site were able to communicate directly with the girls by asking them to write their names on the guy's flesh, singing a song, and just about anything, similar to Subservient Chicken. There was no explicit branding but a lot of Diesel underwear as product placement. Reports were cited that traffic to the site spiked to five times its normal traffic. So that's it. A reality interactive commercial, creating an interactive event (you can communicate LIVE) without any scripts (clearly since you can ask them to do anything) with a great branding campaign (all of the beautiful people in the video in their Diesel underwear). The two hottest trends out there reality and interactive combined into one. Will we see more of these campaigns? Absolutely. But I think we'll also see more combinations of interactive commercials scripted or reality using the Internet as enabler. We'll see....
Video Ad Overview So the big question of Web 2.0 is how to monetize the online video. Revver has tried to embed an add at the end of the video, Metacafe serves pre-roll, and VideoEgg has an ad overlay that plays during the life of the video. Recently served up are Adap.tv which provides some type of contextual ad placement in the bottom of its player as the video is streaming (via Mashable), ScanScout (via TechCrunch) offers contextual text overlays on the video, and more recently YouTube announced their inline and post roll advertising method. (via Mashable). Are video overlays the way to go? Possibly they could be. However, YouTube's demo doesn't make too much sense. As Michael Arrington notes, the ads served up via YouTube are not relevant to the video at hand and its way too easy to ignore them, while Mashable has the opposite view point. I'm not agreeing with either since I still feel that video ad models are interesting but as a user they are still ads. I'm a true believer that content is king and integration of the advert with content is the best way to go. Remember when Alias was sponsored by Nokia? Or the obvious product placement at BMW Films? I think that advertiser sponsored shows really build goodwill with audiences AND if an element of product placement is involved, great recall of products. However, while I am writing this I know that many are citing the huge bust of Bud.tv. Some products are definitely trickier than others.
However the question if video overlays work remains. And only time will tell. I think though that video overlays are a step in the right direction toward interactivity. As I previously mentioned, video games are the most interactive of movies where you make a decision nearly every second (or several times per second). As TV watchers, an extremely passive activity, we are not used to interacting with anything, whether it's ads or any other type of clickable. Video overlays are bringing us one step closer to that next generation.
Social Network Woes? This past week MySpace announced the purchase of Photobucket for $250 million in cash. Compared to News Corp's $580 million acquisition of MySpace, this looks relatively expensive. Further since Photobucket users are primarily MySpace users, News Corp is paying a lot for an incremental amount of eyeballs. Why would News Corp do such a thing?
Well, in a case of the rich getting richer, MySpace is the primary destination for social networkers out there. Sure, there's LinkedIn for business folk, Friendster for early adopter social networkers, Sneakerplay for sneaker lovers,Facebook for college students and so on and so forth. However, nothing beats the shear strength of MySpace's reach and depth (176 million as of right now). MySpace helps to launch many items of interest including a high proportion of Michael Eisner's Prom Queen episodes, various movies and television shows, and of course the original intent of MySpace: music and unsigned bands. MySpace video is second only to juggernaut YouTube and the numbers for MySpace are staggering, with the social networking site consistently in the top 5 sites hit, searched for, and session time.
MySpace is protecting its territory and rightfully so. However, those of you who remember Friendster also remember how quickly that social network flickered out. With niche social networks coming out, MySpace wants to be the ONLY destination for social networkers. Two weeks ago, I was notified that my account on Nike's Runner's social network would no longer be supported. I suspect that as time goes on this will be a common scenario. However, the niche social networks do have targeting which many advertisers find valuable. The social network is stronger than ever however, we are slowly seeing segmentation. I would compare this now to the age of network television versus cable. We have the big players, the MySpace, Friendster, LinkedIn, and Facebooks (akin to ABC, CBS, NBC, and Fox) and then the niche players like SneakerPlay, MuscleDog, Barack Obama Supporters, etc which all serve a very important purpose. And if we take this a step further, I could definitely see MySpace purchasing other social networks (like StockPickr for example) similar to NBC and CNBC, simply to sell highly targeted niche advertising.
Music Video Long Tail Ever since Chris Anderson's book The Long Tail came out, there's been a lot of news and buzz about it. Whether its the irony of Pirates of the Carribean setting a blockbuster record (since broken by Spiderman 3) or the reality of the Long Tail happening (Rhapsody, YouTube, etc), the Long Tail has become a part of our vernacular on the ability to pull up on demand any piece of content ever created. Amazon.com is already a Long Tail for books, iTunes could be a long tail for music, eBay is a long tail for other people's stuff, and Google is a long tail of the Web. Last.fm the popular social network music community, has launched a long tail not only for music but also (soon) for music video. Via their press release, "Last.fm aims eventually to have every music video ever made on the site."
Content creators out there can do nothing but rejoice over the Long Tail. After all, in the TV business, for example, while they make money on the initial run, real money is made in syndication, see Seinfeld, where advertisers are putting up new money for the space every time. In essence, Last.fm is providing a distribution platform for artists to be available when the consumer wants to see it. So, if someone mentions A-Ha's Take on Me video, you'll be able to call it up on demand and A-Ha (if they're still around) should be able to get a cut of the advertising served up against their content. Marketers should also rejoice over the Long Tail since content now from various eras or genres can now be identified. So, if you are trying to sell a product to a certain age group or demographic, music tastes could be identified to pinpoint that target. Radio has done a great job of that but no one has the time to sit through a radio commercial anymore. Perhaps, Last.fm could partner with Poptopus for a fairly interesting business model and since they have an embeddable player we wouldn't be stuck with the latest iteration of a revenue model that YouTube has come up with.
Music Industry Growing eMarketer's report today talks about growth in the music industry (yes, believe it or not, GROWTH). Revenues last year (2006) were $60.7 billion and by 2011 will be $67.6 billion (about a 2% annual growth rate). The report states the obvious that CD sales will continue to plummet and digital continue to grow, however, digital sales will never make up for the loss from CD's. Thus, the growth will come from other innovative ways to exploit the music such as online and mobile, concerts, licensing deals with TV, films, video games, and tie in with various products (the report states U2 and iPod and Bob Dylan and Victoria's Secret). I think that the record labels have definitely enjoyed a monopoly on this business for a while, however, in order for good music to continue to be put out, there needs to be a way to monetize this business. Apple recently put announced that 100 million iPods were sold and about 2.5 billion songs sold via iTunes, which puts each iPod on average with 25 legally downloaded songs, a far cry from the thousands of songs that you can put on it. So where is the other music coming from? I wonder....Regardless, some very interesting models have come out, one of them I talked about before called AmieStreet which is a true supply and demand model. However, with sites like MySpace offering streaming music how would a band make money from them? The answer: Poptopus. Poptopus (reviewed by Mashable), is a widget (we talked about these yesterday) that you can embed on your site and revenue is shared by the artist and the publisher. Advertisements play in the video portion of the player and are paid on a per listen basis. It's actually a radio type model but uses the visual portion of the Internet to play the commercial while you are enjoying the music. I think its a great way to utilize the single servingness of the Web with a business model that could be sustainable. And since everyone makes money, or gets eyeballs, everyone should be happy....the one downside I see is that if a popular band doesn't want to be associated with a certain advertiser (but I think those are few and far between).
Regardless, its a good time for the music business as they've finally embraced the Internet as opposed to fighting it and it turns out that artists as a whole will be making more money than ever and some artists will actually be able to call themselves full time musicians because of this long tail phenomenon. We'll keep track of the music space as it continues to innovate....perhaps Sirius XM can take a lesson here? (i.e. Give away your units and advertise on your proprietary hardware?)
Juiced! Joost (pronounced Juiced) has been signing deals left and right with everyone from Viacom to CBS to independent filmmakers to now Heavy.com (via Mashable). It's being billed as "a new way to watch TV" bringing the best parts of the Internet (social networking, time shifting, etc), together with the best parts of TV (high production quality and quality content). Joost created by the founders of Kazaa and Skype (in other words pretty smart guys), could be the next YouTube killer? While Joost doesn't support user generated content (yet?) most of YouTube's traffic or at least a consistent portion of it comes from YouTube partners like CBS, NBA, and other established brands and Joost could be taking a large portion of those eyeballs away especially since YouTube's quality has been criticized as of late. I think that as an audience we seek a more interactive user experience. On one hand we have traditional television where we simply watch. The most interactivity we have is by flipping channels. On the other hand we have video games where we are essentially watching a movie but one in which we are making a decision every fraction of a second. The trend appears to be toward the latter, as we see an explosive upward trend in video games and a gradual downward slope in TV. However, to graduate everything to a video game would be much to extreme and I think that Joost will do a great job in letting people understand that if they are interested in the t-shirt that Matt Fox from Lost is wearing, they can pause the show and purchase it in real time and then go back to watching. Further the social aspect of TV watching will have content creators spinning even more elaborate webs than the ones in 24 or Lost, which will engage audiences. Ad model here? I'm not sure, I think that Joost will probably provide some type of interactive commercial as opposed to the traditional 30 second ad spot. Perhaps Joost can even provide some more power to the almost dead Bud.tv?
Keep an eye on this space as I can't wait to download my Joost trial now!
Marketing wise, what does this mean? Well, I think that we can now have those interactive, flashy (not Flashy if you get the difference), and interesting ad campaigns that we've always wanted to. Targeted and completely relevant to the content of the page, these new widgets are more catchy than Adsense and hopefully will provide more value to the advertiser. Time to rethink your SEM strategy!
Monetizing YouTube? ... Not Yet
On YouTube's blog the "YouTube" team mentions that they are going to begin to share revenue with their more popular users outside of their "partners." Partners currently include the biggest traffic drivers to their site like the NBA, CBS, lonelygirl15, and NBC. Now they are going to share revenue with popular users like LisaNova, renetto, and smosh. Revenue share will include participation in Google's Adsense network. This announcement also comes off the heals of Afterworld (Bud.tv's foray into online video content) was announcement (via Mashable) as the first test of YouTube's ad program.
A few very simple questions spring to mind with these announcements. First and foremost: Why don't they share revenue with everyone? YouTube is easily gamed and they are sharing revenue with channels that have the most subscribers or views. You could easily build a bot to knock your views onto the Most Watched list or create many accounts to build your subscription list. And if its a logistical matter of paying out small amounts, have a threshold amount (like $5), similar to Revver. Secondly, this revenue sharing system (of clicking on AdSense ads) doesn't really work. Maybe its my content but I've tried it out (also via Revver) and perhaps its Revver's smaller advertiser base but I've never really had the desire to click on an image based Revver ad let alone a text based Google Adsense ad. Thirdly, most people watch YouTube content not on YouTube but via YouTube's embedded player. (See yesterday's post on Prom Queen and MySpace). Overall, though, I do have to applaud YouTube for making an effort. They're hit with a billion dollar lawsuit. They're probably getting a lot of heat from shareholders about their ROI ($15 million in revenue vs $1.7 billion purchase price). I'm not sure what this Afterworld model will look like but I hope it keeps the viral aspect of YouTube going with a way to embed the ad within the content.
Eisner named Prom King The results are in and Michael Eisner wins ... or does he? The anticipated results for the one month old Prom Queen Internet serial are in from Eisner led Vuguru. According to Mediaweek, the 2 minute web episodic is averaging 200,000 views per day and an aggregate of 5.2 million views since its premiere on April 2nd. Now that's pretty impressive considering that some of the weekly most viewed on YouTube are 200,000 (in fact, at 200,000 it would have been 15th on YouTube's Weekly list). And for many of us, we can actually go back and watch these clips at our leisure and thus racking up more hits. Further, Prom Queen has garnered more than 18,000 friends on MySpace where users are treated to a sneak peak of the show. Out of the show's 5 million views, MySpace accounts for nearly 4 million, followed by Eisner's other company, Veoh, at about 1 million, YouTube at a quarter million and PromQueen.tv.
Given the long tail, that's a hit. Prom Queen is receiving on average 200,000 views. That's not taking into account any of the archived views or streamed mobile clips. That's an amazing number, especially one that can be sustained over (thus far, 40 episodes). I'm not going to comment about the content, although, I got into it for a while, but then my interest level dropped off (probably because I'm not a Prom Queen friend....yet). The production values are phenomenal and I almost wish there was more to watch at the end of my two minutes. Ok, so the content is great, production value is great, but the big question is this: Is it bringing any value to the sponsor, HairSpray the movie? I'm not sure, although it probably is bringing some general awareness to the movie from this tween demographic. The other question is this: Is this model easily replicated? The team that put together Prom Queen also put together a daily webisodic called SamHas7Friends, which while good did not receive the same number of hits as Prom Queen. But again, that, I guess was an experiment (a very successful one) that landed them the gig with Eisner which didn't have the P&A (prints and advertising) that Prom Queen has (although Prom Queen has no P&A but in web speak, they have banner ads and big time press and a big time backer). So...what's the model here? Does this have to be something daily? What frequency? TheBurg.tv comes out monthly with their 15-20 minute episodes and I think they've done fairly well (537,686 on Alexa vs 148,798 for Prom Queen). Is it the length of time? 2 minutes really does keep you on the edge of your seat... What genre works? My gut would say comedy or thriller but watch YouTube and you find all types of things. Well, I guess keep watching this space for more information as we continue to experiment in this new new world.
Power of the People Even Digg couldn't withstand the power of the people or the so called Wisdom of Crowds. Digg, traditionally against any type of DRM, monitors its posts and takes down anything that they feel is morally wrong. Yesterday (via TechCrunch) someone posted the decryption key to HD DVDs. After the Digg team took it down, someone reposted it. Pretty soon, the entire Digg site went down with a deluge of the decryption key posted all over it. Kevin Rose, Digg's co-founder, says on their blog:
But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying.
So that's it, that's what happens when you try to turn against popular opinion. Digg (valued at $60 million per Businessweek's cover story) could become the next Friendster, where users left at the blink of an eye. Fickle consumers have the power and especially online where the butterfly effect is magnified ten times over. It's a scary place to be right now for Digg as many of their million plus users have revolted against them.
What does this mean? Well, I've touched on it before, and again, I'm not sure how this phenomenon happens but if you think about companies out there Apple, Google, and Craigslist are the "good guys" while Microsoft, Yahoo, and Dell are the "bady guys." It's a connotation that can most likely be traced to a few choice events (Microsoft knocking down Netscape, Yahoo charging for email, and Dell's customer service debacle.) While Apple has come clean with its iPod batteries, Google discloses all (or wants you to think that), and Craigslist doesn't make that much money only through its job postings. Since then Dell has apologized, Microsoft has been a bit more open, and Yahoo provides free unlimited storage. However, the damage is done, and just like Gladwell's book Blink, these corporations are the evil empire while our knight in shining armor are the former companies. Stay open, make sure that your PR team has experience in damage control, and address your customers because the power of the crowd is too much to handle (at least for a $60 million company).
The Final Frontier? There's been a lot of speculation about Web 3.0 and what that will mean in the coming months and years. A quick recap - Web 1.0 was simply push technology, technology similar to a newspaper where a central editor pushed out content to you. Web 2.0 (where we are now) combined Ajax (pages reload with hitting refresh, similar to Google Maps) with an interactivity feature like a blog, social network, or rating system with the first Web 2.0 properties being Amazon.com, eBay, and Craigslist. Web 2.0 has definitely made an impact on the current web with nearly all sites offering these features and valuations skyrocketing into the billions (see YouTube). The most important aspect of Web 2.0 though is the fact that it is so engaging that Web 2.0 sites are one of the stickiest sites on the Web and one of the most visited (behind search engines). Now if you think about where the majority of us spend our time it is on video games. Yes, even older women spend time playing video games online, since games include not just Grand Theft Auto but Sudoku and FreeCell.
So what's the point of this recap? Well, its definitely to figure out where the Web is going. There's been a lot of hype over Second Life (kind of a Sims like game where there really is no point). There's also been a lot of hype over video games including Sony's Virtual World for PS3 users. What about the combination? Hitwise came out with a report yesterday about how quickly virtual worlds have been growing and Runescape is #1 with 44% of marketshare to online worlds with Webkinz coming in a distant second with 14%. This, of course, does not include downloaded virtual worlds like Second Life, or the ever popular World of Warcraft, although I think at some point Web based games may overtake these downloaded versions.
The virtual worlds cannot be ignored. I think that we all like the aspect of the interface coupled with the Web 2.0 characteristics of real people that we can interact with. Brands now will have that intricate product placement opportunity ever so prevalent with video games, an ability to monitor dialogues, and a chance to see what people will create and do with their brands given a blank slate. Is this Web 3.0? Many think so. Many think that its simply a way of representing Web 2.0 in 3D space. I think that if its not Web 3.0 at least it will be Web 2.5.