TV and the Long Tail

It's anyone's guess as to whether the acquisition by JumpTV of CyclingTV makes sense. That being said CyclingTV actually has paying customers - $40 a year for 18,000 customers - about $720,000 in annual revenues. JumpTV recently raised $100 million in an IPO and is using its stock and cash fairly wisely (the Cycling deal was 50/50 about). But the disclosure about CyclingTV actually brings up a very interesting point. Are customers willing to pay for content that they really really really want?

I think the answer is YES they are. And maybe JumpTV has the answer - aggregation. The ability to bring the long tail into one market. After all, with only 18,000 paying viewers, how can you pay for anything else other than a basic infrastructure? But with aggregation and shared resources this could become profitable. Paid content surely prevents getting around the guys that sign the checks since there are few advertisements if any. The one thing I'm worried about is piracy for these guys. It's not too difficult for a disgruntled customer to take a stream of Cycling TV and repost it on YouTube. Or is it? I'm not a subscriber but I'd be interested to see what their DRM is....

For the naysayers out there....remember in 1985 (if you were alive back then) when someone asked you to start paying for TV (yes it was and still is free for SOME content). Well guess what that trend took off. Pay Internet TV? Maybe not such a bad idea.

Could YouTube be in Big Big Trouble?

The official numbers on YouTube's dominance in the video sharing space are out. Online video as a whole attracted 75% of US Internet users according to ComScore (via Mashable) that watched 158 million minutes of online video in May. The average stream is about 2.5 minutes. 35% of users use YouTube and YouTube accounted for over 20% of the online video stream total. Wow.

And now the bad news. Dailymotion a large French video sharing site was ordered by French courts to pay $32,000 in damages to a French director (along with the producer and distributor) who's CLIPS were on the site. After the clips were uploaded did Dailymotion begin to use Audible Magic which is seemingly becoming the standard in detecting copywritten clips. But what does this mean? Is this the end of the DMCA as we know it? (As an aside the DMCA stands for the Digital Millennium Copyright Act, and basically says that a Web site has no jurisdiction over what its users do, hence YouTube has been claiming as one of its defenses against Viacom). Will YouTube have to give up its users private information if they are caught infringing? Were all those Zidane Mashups from last summer considered copyright infringed?

We saw earlier this year how Digg went down with users posting the HD encryption key on its site. Will YouTube users also contribute to the backlash by posting copyrighted clips, causing massive lawsuits against YouTube and its parent, Google? And while $32,000 is small change for Dailymotion the video in question were clips. Was this fine some type of relative measure?

Lots of questions here. We're digging to get to the bottom of this and what this means for the future of online video sharing. But we do know one thing. Video sharing no matter what is here to stay.

Lessons from Online Video

Dotcomedy was reviewed today by Mashable. It's a Funny or Die wannabe that is ad supported by NBC. The difference with this is that there is no UGC here - all content that is posted is reviewed by NBC's editorial staff. So only the best clips make it on there. Will this model work? Well, at least we won't have to wade through that much stuff, but perhaps volume is still the way to go where people will find something that appeals to them.

What's interesting are some of the comments from the OMMA video conference as reported by PaidContent. Some of the highlights include:

• Video Ads need to rely on visual rather than audio - most users have their sound turned off or low
  
• CPMs are hitting $5-$15 for semi professional user generated content (Heavy.com calls this SPUG)
  
• Greg Wilson from Red Bull Tiger - One other thing he doesn't want is product placement. "It's a crock. When someone holds up a bottle of Evian on TV, is anyone being fooled? Is anyone being enticed? It's only being done because we can't think of anything else to do."
  

So that's another week in the wild west of online video. It appears that more and more brands are turning toward branded entertainment, but the big issue is still search. How can we find videos that are relevant and interesting to us? Will these ads pop up? Some but not all. The sunglasses falling on my face video was sponsored by Ray Ban but for everyone of those there are many more viral ads that barely make their view count out of the 100's. Are those considered successful? What are the metrics here? Greg Wilson's comments take out product placement, but what are our alternatives other than sending someone over to sit next to you and talk about products. I think that technology has been maxed out here. After all, you can't control content, filmmakers will make whatever they want. How do we get this stuff paid for?

Some Interesting Numbers

Frames of Reference, a study from Online Publishers Association, (via paidContent) released a study regarding online video advertising. Some of the highlights from the study:

• 30 second outperformed 15 second
  
• 52 percent of users take an action (learning more to purchasing)
  
• News was number one, followed by weather, and then humor
  
• Companion ads (static banners with video) were most effective
  

The results of this study are pretty interesting especially for those of you living in New York exposed to the branding campaign that NBC Uni is promoting (via bus shelters and phone booths) about how they are innovating beyond 30 seconds. I'm also very surprised about the high number of users that take action following a video ad. Personally if an ad is irrelevant to me (for example on ABC.com) I can't wait to "click to continue" as soon as my requisite 30 seconds are up. So this means that somehow, ad servers are serving up relevant ads. I'm not sure how since YouTube is barely rolling out there new ad serving product, but I'm curious if anyone out there knows what they are doing. Companion ads are kind of an obvious thing which is what ABC.com does. No brainer there. Content wise I'd also agree that news and weather are the most watched. And again this is fairly obvious. We live in a world of Long Tail entertainment and the only common thread that everyone on the planet shares is the passage of time. So keeping up with what's new and keeping up with how you should dress (if its cold or warm, not fashion) is pretty obvious.

Marketing wise what does this mean? Well our intuition is wrong but the study is a bit fuzzy as it mentions that results were taken from 1,422 online video users. Are they YouTube watchers or ABC.com watchers? A mixture of both? Joost users? After all ABC.com only has 30 second companion ads. Also the numbers are fairly small. And of course if you have to sit through 30 seconds you will have better recollection than if you sat through 15 seconds. So this result could be skewed.

The big (and best) part of the study is the high call to action provided by those surveyed. This shows that users are not only in there for a passive experience but have their fingers on the mouse button ready to click away. It's a great sign that we're ready for interative TV.

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.

GooTube Merger Complete?

YouTube is supposed to be testing out its pre and post roll ads this week according to Businessweek (via Mashable). However, Mashable brought up an interesting business model which seems to be a perfect compliment to YouTube's parent, Google. I've been arguing for eternity that I don't believe in pre, post, or mid roll ads. We all know from our own television viewing experience that they're annoying, intrusive, and very ignorable. So, that being said, the idea was to integrate AdSense with YouTube results and "Related Videos" section. Since more and more advertisers are hopping on the YouTube bandwagon presumably they'd want their content to be seen by more and more viewers. This in turn means that they'd be willing to pay for top placement on certain tags....or will they?

I think that this is a great idea that will, in the short run, help Google recoup some of its investment in YouTube. As long as advertisers can continue to make compelling content, viewers will be enticed to click. However, this does bypass the viral aspect of YouTube. After all, when you hear/see of a viral video how do you learn about it? Maybe if someone tells you for example about the Dove Ogilvy video you'll do a search for it...maybe. Most of the time, you'll be emailed the video or linked to it or it will be embedded like this. Lost revenue for Google. But other than that, I think advertisers will really want to own certain tags, since after all they are only paying for that interaction if it happens. I also love the concept of how the sponsored videos are embedded into the YouTube widgets. Popular videos come to the top. That way, everyone is making money similar to the entire AdSense model. Another thing to be weary of though is the gaming of YouTube, that is, writing a bot that can automatically ratchet your views into the hundreds of thousands. The Butterfly Effect magnifies this by placing your video in the "most viewed" category where more and more people will be curious as to why your video was seen so many times.

Despite these issues, which I'm sure Google will somehow resolve, I love this business model for YouTube, at least for the short term where advertisers/filmmakers can purchase placement for their videos and users know that they are purchasing that space. The question of whether this concept can translate from AdSense remains to be seen....

MySpace Marketing Metrics

Today's AdAge mentions marketing to the MySpace set through profiles and tries to quantify what its worth to a marketer when you "add" them to your friends list. The study was brought about due to the much lower CPM that MySpace is receiving as opposed to a Yahoo. In the end of the study, the real value of the brand interaction on MySpace was not simply the brand itself but how the brand actually plays a part in your daily life. Therefore, the value is four times over because of the actual endorsement from someone that you know, and how this person has benefitted from the brand.

The results here are not rocket science however. I think that the more that you engage someone with a feel good about your brand the better. What this study has done was given marketers a way to quantify that (and in essence put a dollar value on it). I wrote about Coke a few days ago and how they are creating a Second Life contest in which you "create the essence of coke." This is similar. How do I capture the essence of your product/brand? Why is your product/brand one of my friends? The brand needs to come up with a reason as to why people should talk about it, whether through a contest, feedback, or comments. Hence the explosion of all of the viral video contests on YouTube. How does my brand make you feel? Hopefully that is a positive experience although in the case of GM's viral video contest there was some backlash.

Finally, the study mentioned that just having a profile on MySpace didn't contribute to much. Three things that the study found were: that they gave a way for consumers to tell their stories, they gave people something to talk about, and they also provided incentive via a contest or promotion. So in the case of YouTube, #1) Video #2) your product #3) the prize. With MySpace's more flexible platform #1 could be a myriad of things. Creativity is the limit and I think that MySpace will work well with a certain type of brand and that clicks on MySpace may go the way of banners.

The First Collaborative Commercial

Mashable broke a story about the first collaborative TV commercial. For $39 you can buy your own frame of an 8 and a half minute TV commercial. (In PAL at 25 frames per second ourTVad has 12750 frames. PAL is the European standard for broadcast, since this is a Lisbon based site). So far as of this writing they've sold 4 frames. Again, this worked when the guy sold the million dollar home page but I'm not so sure that this will work in video, unless someone buys at least 100 frames. $3900.

I love the warning on the bottom of flickering. I mean come on 25 frames per second and you can buy one frame, of course there will be flickering. If this commercial is ever seen.