Bi-Weekly wrap up, 16-31 August

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Online Video is Still Too Expensive

There are a number of ways to deliver digital video content, and delivering that content online is the most expensive of them all. How expensive? Dan Rayburn recently took a look at CDN pricing, and while it is on the downswing, it’s still pretty expensive. For example, a customer who buys 100 terabytes at $0.15 a gigabyte would have to pay around five dollars in bandwidth to serve 1000 views of a three minute video. That means they’d have to get at least five dollars in CPM (cost per thousand) advertising just to break even, and that doesn’t include storage costs.

Top 10 Video Search Engines

Here is a top 10 Video Search engines:

blinkx
clipblast!
dabble
everyzing
exalead
Fooooo
metacafe
pixsy
PureVideo
VidSea

Analyzing YouTube's Revenue Potential

Full article

So, Google's YouTube will finally sell video ads. How much revenue will they generate?

Let's run the numbers.

- YouTube is testing overlay ads that run along the bottom of videos. If viewers click on these ads, the videos they are watching will pause, and the ad will launch.
- YouTube will only run ads on videos from signed content partners (for now).
- In tests, approximately 75% of viewers presented with an ad chose to watch the whole ad.
- Google plans to begin by charging a $20 CPM.
Combining this information with Comscore's finding that YouTube streamed 1.7 billion videos in May, we can construct a basic range of revenue estimates.

ASSUMPTIONS
For our initial scenarios, we make the following assumptions:
- Google streams 2 billion videos a month (up modestly from the May numbers)
- A sub-set of this group are from content partners and will eventually have ads (we'll run a range of 10%-50%)
- A sub-set of this group will have ads that are actually watched (we'll run a range of 33%-75%.
- In tests, 75% of videos were watched, but this was likely heavily influenced by the curiosity factor. In the early banner ad days, banner click-through percentages were high, too).
- The ads will be highly targeted, full-motion video, and should therefore command a high CPM (we'll run a range of $10-$50).

RESULTS
We ran five scenarios, from Conservative to Aggressive (please see this page for details). In the Conservative scenario, YouTube generates about $8 million in revenue, less than 1/10th of one percent of Google's overall revenue ($16 billion). In the Aggressive scenario, the company generates about $450 million of revenue--enough to make a meaningful contribution, but barely.

FIVE YEARS FROM NOW
We also ran scenarios using a far higher number of monthly streams (range: 10 billion to 50 billion), a greater percentage of ad penetration within videos (range: 50% to 70%), and a similar percentage of ads watched as in the above scenarios (range: 33% to 60%). Here, the revenue is far more meaningful. In the Conservative scenario, YouTube generates $200 million of revenue: nice, but nothing to write home about. In the Aggressive scenario, however, the company generates $13 billion of revenue--closing in on Google's current revenue today.

BOTTOM LINE
In short, YouTube's revenue won't likely be material to Google for at least a year or two and possibly more. The impact on the bottom line, moreover, will probably be even less pronounced: Serving a video ad, even for Google, is far more expensive than serving a text link. At a $20 CPM, the gross margin on such ads will likely be well below Google's current margins.

Deezer: free and legal music on demand

Deezer (formerly BlogMusik) is a service born in France that lets you search for mp3 files on the web and listen to them in streaming mode for free. Dezeer announced that they came to an agreement with the SACEM, clearing the service of copyright infrigement accusations. The details of this agreement are not are not being disclosed, but other deals suggest it is based on a revenue sharing mode. Deezer’s business model is relying on advertising and affiliate revenue coming from the sales of songs on iTunes and Amazon.

RadioBlogClub, another popular french service was forced a few months ago to change hosting provider following a complaint sent by the same SACEM. The service was interupted a few days and opened again as fresh as new.

Activated Content Licenses Microsoft Technology to Enhance Audio Watermarking Efforts

REDMOND, Wash., and SEATTLE — Aug. 15, 2007 — Microsoft Corp. today announced that it is licensing the audio watermarking technology developed by its Redmond, Wash., research lab to Activated Content Corp., a leading digital technology and application services company in the audio watermarking market, based in Seattle.
Microsoft® audio watermarking technology consists of digital audio software tools that will allow Activated Content to insert nonsecure data into and extract it from audio files, tools that the company can use to offer additional services to the users of the audio file.
Activated Content is a leader in digital audio watermarking with its patented technology it has developed over the years. It launched the industry’s first comprehensive and practical watermarking solution for encoding identifiable, robust, inaudible and unique codes into digital audio.
Activated Content’s technology has already been deployed by major and independent record labels, recording studios, mastering studios, duplication houses, cable television channels and online content distribution services worldwide.
The agreement enables Activated Content to increase its value proposition to customers by offering interoperability. It will also now be available to both traditional content owners and those creating UGC.

Mediadefender Moves into P2P Marketing

You’re trying to download the latest Madonna album, only to find the pop queen calling you…a thief? Welcome to the odd and oftentimes annoying war against piracy. The entertainment industry has been hiring companies to pollute P2P networks with phony files for years, and now some of these very same companies are going into marketing. Instead of sabotaging file transfers, they offer their own media for download, and instead of corrupted files, suddenly it’s all about branding.
Santa Monica, Calif.-based Mediadefender has been at the center of this shift. The subsidiary of ARTISTdirect is known and hated in the file-sharing world for its anti-piracy work, but has recently gotten a lot of press for an upcoming campaign involving ad-supported MP3 downloads. Mediadefender has been experimenting with P2P marketing for a number of years now, and they’ve learned a few lessons along the way. VP Jonathan Lee agreed to share some of them with me.
Mediadefender has thousands servers in co-location facilities around the globe; the decision to put them to use for marketing has been brewing for some time, Lee tells me. With such an abundance of resources, he notes, “What else can you do with it?”
Distributing actual content was an obvious idea, but for the longest time the entertainment industry wasn’t ready to utilize P2P. Companies felt they would undermine their position in legal conflicts if they distributed their own files through these networks. But all of this changed when the Supreme Court ruled against Grokster in the summer of 2005. “After the ruling those gloves came off,” says Lee.
And with that, the learning curve began. “We’re throwing things at the wall and see what sticks,” he explains. Early attempts to do advertising on P2P networks involved what Lee describes as a “bait and switch”. Files were mislabeled in order to get people to watch ads or load Web pages. “Obviously there are tremendous problems with that,” he acknowledges. Most brands just don’t like to frustrate their customers –- except, of course, porn companies, which still use this technique heavily to spam P2P networks.
Another strategy involved sending people to iTunes and similar download stores to make them buy legitimate copies of the content they were looking for with Limewire and other clients. “That really hasn’t worked so well,” admits Lee. Same goes for the idea of mixing ads with search results in order to get people to buy concert tickets and ring tones. He believes that people are just too suspicious to click on anything that remotely looks like an ad in a P2P network, which is why they tend to ignore them.
So what does work? “Things you can’t buy online,” says Lee. It turns out that P2P is actually really good for branding. Mediadefender had a lot of success with a campaign for a soft drink maker that offered people videos they actually wanted to watch. Music works well, and so does goofy stuff. Funny commercials –- the stuff that people re-post on YouTube and then forward to their friends — are a big hit on P2P networks as well.
Does this mean people should just abandon their annoying anti-piracy tactics and instead post some goofy clips on P2P networks? “You are already dealing with your anti-piracy issues if you are doing promotion,” admits Lee. He doesn’t think that the anti-piracy part of his work will go away anytime soon, though.
In fact, Mediadefender is still making most of its money by polluting P2P networks with spoof files, which is why the company will remain be one of the most hated enterprises in the file-sharing world for the foreseeable future. Jonathan Lee doesn’t seem to mind, and he doesn’t think it impacts their marketing business at all. Successful P2P marketing campaigns always looks very viral, he tells me, and the focus really isn’t on his company. “If it is good content, then it’s gonna carry itself.“