Wednesday, November 30, 2005

Online Ad Spending Growth


2005
A new milestone for the online advertising industry

It appears that online advertising has become mainstream as Corporate marketers have made it a standard part of media budgets. Spending on online advertising is projected to reach $12 billion in 2005 as more marketers lose confidence in the effectiveness of traditional ads and spending looks set to accelerate further as we enter into 2006.

According to a study released in May by Forrester Research, nearly all of the marketers surveyed said they plan to cut spending in traditional channels such as print and direct mail to fund increases in online ads. Tim Armstrong, Google's advertising sales vice president, believes that 2005 marks the turning point when advertisers switched from testing to investing in the decade-old medium. "The experimenting and testing phase begun in the 1990s has ended. Corporate ad buyers are investing now.” According to Armstrong, there are two primary factors are driving advertisiers interest and realocation of their ad budgets. First, consumer adoption of the Web has far outpaced advertisers' commitment to the medium and secondly, Madison Avenue executives have begun advising clients to close the gap by committing more dollars online.

These shifts are not just benefiting Google but the entire industry. Greg Stuart, IAB President and CEO states that “On average, people today spend about 14 percent of their "media time" on the Internet, up from basically zero ten years ago, and advertisers are reacting to this change. When consumers shift like that, marketers are sure to follow".

Jupiter Research estimates the U.S. online advertising market will grow 28 percent over last year, to $11.9 billion in 2005 (the IAB concures), moving to $13.6 billion in 2006 and $15.1 billion in 2007. Industry estimates put Google's market share at 30 percent of overall online ad spending, with as much as 40 percent of the category it dominates--paid search. Estimates vary however analysts believe about 5 percent of U.S. advertising dollars will be spent online this year, up from about 2 percent just a couple years ago. In short order, 10 percent or more could move online. After years of fighting an uphill battle, it appears that the business can finally carve out a piece of the media budget pie that they can call they’re own. The question that is yet to be answered for the years to follow is just how much of it they will leave for the others!

Sunday, November 20, 2005

Who Are The Real Pirates?


Who Are The Real Pirates?

Written By: Shelly Palmer, Chairman
Advanced Media Committee
The Emmy Awards

We hear the content industry and rights holders complaining about piracy everyday: file sharing, physical piracy, theft-of-services, derivative works, etc. But has anyone stopped to think about how many times consumers are asked to pay for the same content?

Computer files may be the final form factor, but that is not stopping media companies from extracting every last bit of value from each file. Because most media is delivered through walled gardens or physical copies, even files can be resold. For example: first you pay 99¢ to purchase a song on iTunes. Then you pay $2.49 to download a portion of that song as a ringtone. You can then pay $1.99 to use a portion of that song as a ringback tone--and $1.99 on iTunes to purchase a download of the video for that song.

Next comes a charge of $1.49--for a still image of the artist to use as wallpaper on your mobile device. You would rather download it for free from the Internet, but you can't get it into your phone. (Some people actually take a picture of the computer screen with their cell phone cameras to avoid this charge, but not many.) You may pay $14.99 for the DVD of the movie that features that song and, if you are truly out of your mind, you will pay $19.99 for the CD of the album that includes that song. Then you will pay $3.95 to watch the pay-per-view or video-on-demand version of the movie--and another $6.95 for the HD VOD concert that features the same song.

If the media company has its way, you will pay $12.95 per month for the subscription to HBO that will broadcast the movie and the concert on the cable company¹s linear and VOD channels. Ultimately, part of your basic cable or satellite package will go to pay a per-subscriber fee to Music Choice, where you will hear the song. You may also pay $12.95 per month to a satellite radio company where you can hear the song and, if Apple continues its world dominance over the personal music player world, you will ultimately purchase a co-branded iPod with the complete collected works of this artist (including this same song) for about $200.

How many times can you sell the same master file? There doesn’t seem to be any limit. You just have to keep the walls in the walled gardens up and keep the formats incompatible. How many times will you buy the same master file? That question is being answered every day on P2P networks, via email and podcasts. Obviously, some consumers are willing to pay for the convenience of not having to bother converting their own files to be used in all of their devices. But there are far more consumers who would rather not pay for the same thing over and over again. Is there a middle ground? I doubt it, but I'd like to hear your thoughts.

Read more from Shelly Palmer: Advanced Media Committee Blog

Wednesday, November 16, 2005

AOLs Content Deal with Warner Bros.

Online content just got richer with AOL’S In2TV

The AOL announcement this past week about its deal with Time Warner sister company, Warner Bros. Domestic Cable Distribution, that enables it to offer a free, Web-based VOD service, they will call In2TV. The service will offer over 3,400 hours of archive programs from 100 series of Warner Brothers productions. While the deal is exclusive for one year, AOL executives have stated that they are in negotiations to secure content from other studios as well. In2TV is expected to eventually increase the amount of WB content it offers: It is rumored that they have secured agreement from rights owners to offer up to 14,000 episodes from 300 series on the service.
“This builds on what has been our programming focus
for many years and aligns well with our move to the open Web,” says Kevin
Conroy, AOL Media Networks executive VP. “Our focus is on building a media
business and driving advertising revenue.”


The service will also include interactive features, such as games, quizzes, polls and trivia contests. AOL states that In2TVthe will serve as a "cornerstone" of the AOL.com Web site's commitment to delivering broadband video through AOL Video on Demand and AOL Video Search as well as through AOL Television. AOL Video Search now draws on an archive of over 18,000 licensed and original content assets that is maintained by AOL VOD, as well as on over 1.5 million pieces of video content on the Internet indexed through AOL's Singingfish.


"This service will bring an unprecedented collection
of popular TV series to a totally new platform, revolutionizing the distribution
of television programming," said Eric Frankel, president of WB Domestic Cable
Distribution. "It will enable users the opportunity to be entertained and to
interact with the programming that has groundbreaking interactive features.
Visitors will be able to program their own personal network."


At Launch In2TV’s six original channels will be:

  • LOL TV (comedies such as Welcome Back Kotter & Perfect Strangers)

  • Dramarama (Falcon Crest, Sisters & Eight Is Enough)

  • Toontopia (animated shows like Beetlejuice & Pinky and the Brain)

  • Heroes and Horrors (Wonder Woman, Lois & Clark & Babylon 5)

  • Rush (action shows such as La Femme Nikita, Kung Fu & The Fugitive)

  • Vintage (Growing Pains, F-Troop and Maverick)

In2TV will be supported by advertising: AOL says that it will offer instream broadband advertising and site sponsorships with banner ads. However, the company says that :15 and :30 second spots will take up no more than one to two minutes within each episode and viewers will not be able to fast-forward through commercials. This strategy allows Time Warner to bring more content online faster. That, in turn, means more eyeballs, which in turn drive ad revenues and additional content. AOL now and Google, Yahoo and others soon to follow, it’s easy to see where this is going. Will my children’s offspring ever know the difference between a television and a computer?

Monday, November 14, 2005

TV You'll Want To Pay For?

Taking network television revenues to the next level.

It was only a short time ago Apple announced it would sell some of ABC-Disney television programs via iTunes and by the end of October, the company’s customers had already purchased over 1 million videos. If we can get television content online, on demand, whenever we want it, how will networks convince us to tune in on their schedules? For that matter, how can they be certain we'll tune in at all?

This new online distribution model presents the networks with an enormous opportunity to change the traditional network business model. Allowing viewers to purchase individual episodes would free the industry from the current strangle hold of advertising revenue. Imagine a new era in broadcasting where fans have the power to keep their favorite series in production and producers have the opportunity to create more elaborate, controversial, and innovative programs.

Network television has followed a predictable pattern with programming, no ratings, no airtime. Many of the most innovative shows of the last two decades, shows that generated critical acclaim and cult followings, have been early casualties of the ratings wars. When these programs are canceled, there are generally two explanations: Either the network didn't know how to market or schedule the show, or the series grew too complex and unwelcoming for casual viewers and latecomers. The problem is that there's still an assumption that if a show is good enough, a sizable audience will be sitting in front of the television when it airs. In an age of TV series being widely available via DVDs, the Internet and DVR, such a belief is fatally flawed.

As iTunes and its future competitors offer more video content, producers will no longer need to depend on the networks “prime time” viewers as their only audience. The compromises that they currently make to meet broadcast requirements will also disappear. Episode lengths can vary as needed, content can be darker, more topical, or more explicit. If the network execs are clever, these changes can supplement broadcast programming rather than replace it. Viewers already have been programmed to expect director's cuts and deleted scenes from DVDs. It's certainly conceivable that in the future networks might one day air a "broadcast cut" of an episode, then encourage viewers to download the longer, racier director's cut the next afternoon.

The industry was quick to introduce “end of season” DVDs of hit series and consumers have purchase and rented them by the millions giving viewers the chance to catch up between seasons. In a online, on-demand world, anyone can catch up at any time, quickly and legally. Producers will no longer have to choose between alienating new viewers with a complex storyline or alienating the established audience by rehashing details from previous episodes. Forward thinking networks will realize this is not only feasible but also extremely profitable. Rather than recapping relevant details from previous episodes, we could soon be encouraged to buy our way up to speed.

On-demand television will allow audiences to take an active role in programming the networks. We've seen several examples of fans banding together to save their favorite programs in the past few years. On-demand and direct downloads give fans of endangered shows the chance to vote with their wallets while a show is still on the air. And if a program is cancelled, revenue direct from the viewers might provide enough revenue to keep it in production as an online-only venture. Assuming that the average half hour show costs $1 million per episode and downloads will cost around $2 per viewer, shows would only need a few million viewers to turn a decent profit. Would a few million viewers pay $2 a week to download their favorite show? The concept is certainly possible.

Henry Jenkins has written extensively on potential business models for online, on-demand television. Jenkins outlines a subscription model where viewers pay in advance for an entire season of downloadable episodes, providing the startup capital needed to fund production. Episodes would also be available at a higher cost on a per-episode basis, providing a steady stream of additional revenue. The Apple iTunes business model proves that audiences are willing to purchase their media when it is simple, affordable, and convenient. With Google, Yahoo!, and Microsoft set to join Apple in the television distribution wars, it's a safe bet that you'll see more major-network content for sale in the near future.

Monday, November 07, 2005

The Future of Television

Screens so small they fit inside coffee cups. Marriages arranged by TiVo. Production facilities on Mars. The king of late night peers into his plasma crystal ball.

(I ran across this recently and felt it would make you smile. For all of us tangled in the present and future of this medium… this read is well worth the reprint. Hit the link for the balance of the article from Newsweek’s May 30 issue. -SM)

By Conan O'Brien
Newsweek

I have been on television for almost 12 years, and in that relatively short time I've seen the medium change exponentially. Naturally, this seismic upheaval has bred fear and uncertainty in our industry, but throughout it all I have remained calm. Like an old fisherman I have weathered countless storms and kept my tiny skiff afloat. And now, my face cracked and my nut-brown hands rubbed raw by the salt air, I know the mysteries of the inky deep. I've stared into the unblinking eye of modern television and I alone know her startling future.
To begin, the trend toward larger and larger televisions will continue as screens double in size every 18 months. Televisions will eventually grow so large that families will be forced to watch TV from outside their homes, peering in through the window. Random wolf attacks will make viewing more dangerous. And, just as televisions grow larger and more complicated, so will remote controls. In fact, changing channels will soon require people to literally jump from button to button. Trying to change the channel while simultaneously lowering the volume will require two people and will frequently lead to kinky sex.
We will also see a stunning increase in the number of televisions per household, as small TV displays are added to clocks, coffee makers and smoke detectors. Manufacturers will even place a small plasma screen inside car airbags so that accident victims will have something to watch while they wait for help. Toddlers' bowls will have a television at the bottom, and children will be encouraged to eat all of their mush so they can see Morley Safer. Televisions will even be placed inside books and, before long, books will evolve into no more than hundreds of small flat-screens stapled together. Reading the opening chapter of "Moby Dick" will include watching 10 hours of "Gunsmoke."
TiVo, the digital recorder with a brain, will continue to evolve with alarming speed. Super-TiVos will arrange marriages between like-minded viewers and will persuade mismatched couples to throw in the towel and start seeing other people. Tough-talking TiVos will even confront viewers, saying, "You've watched 40 straight hours of 'Sponge- Bob'—get off the weed!" One of TiVo's best loved features—its ability to provide viewers with commercial-free television—will inevitably force TV advertising to go extinct. As a result, celebrities will be forced to find new and creative ways to compromise their integrity. (At this moment, the writer pauses to slake his thirst with a delicious Diet Peach Snapple... now with less aspartame!) The sudden loss of ads on television will push many companies to stage their pitches live on Broadway, revitalizing the theater in America and garnering Patti LuPone a Tony award for her work with Geico.
Meanwhile, computers will continue to be used more and more to watch digital streaming video, eventually turning them into televisions. With no.....
(see the rest of Conan’s thought’s)
Special Thanks to Newsweek… © 2005 Newsweek, Inc.

Friday, November 04, 2005

CBS and CSTV get hitched

CBS moves into sports via cable and the Internet

Hot off the wire this AM… Viacom's CBS is buying College Sports Television Networks (CSTV) for 325 million bucks. Congratulations to Brian Bedol and his staff for a job well done. CSTV was launched in April 2003 and quickly grew its distribution to reach over 65 million homes as it simultaneously developed itself in to a well recognized brand and leader in televising collegiate sports. Bedol is not new to developing ideas into profitable television ventures. He previously co-founded what's now ESPN Classic and sold it to Disney/ABC for a substantial profit.

CBS Corp. will close the deal post-split as its first entry into cable television. This is an outstanding brand extension for CBS, pairing CSTV & its online product with CBS Sports and
CBS SportsLine. Founder and CEO Brian Bedol will stay on to run CSTV and will report to Les Moonves, in his soon-to-be role as CEO of CBS Corp. "I am very excited about this acquisition, which brings a new dimension to our efforts in sports and the digital space as well. We're not only getting hugely valuable assets here, we're acquiring a superb management team that has a proven record in building lucrative sports television franchises. College athletics and the online community it generates represent one of the biggest sectors in sports television, and CSTV has made tremendous strides in capturing this market. We think it's a natural fit for our company and we're confident that, as part of CBS, it will continue to grow and compete even more aggressively," said Moonves. The deal is not just about cable, but also the Internet. Moonves claims that by adding in CSTV.com to those that CBS Sports and CBS SportsLine already have, CBS will have a "larger sports Web audience than any other online medium - - 19 million unique users" Apparently this is his first chance to take an obvious swipe at ESPN.com.

Tuesday, November 01, 2005

TVs online future

TV's online future

Imagine a landscape of video entertainment that is nonlinear, user-controlled, global and online. According to an increasing number of online video producers and distributors, this is the future of TV. Read this eye-opening article written on 10/31 by Marguerite Reardon for CNET News.com. “The Internet and the future of TV”.