Don't Mind Us, We're Joost Watching You!

The Mediapost article Joost's Volpi Touts 'Targetability' (free registration required) states:

"Our biggest asset is targetability, and our belief is that TV advertisers want a high degree of targetability," he said. "From an advertiser perspective, we know exactly who's watching what content."

This is the kind of statement that anyone hardly bats an eye at anymore. Twenty years ago there would have been a privacy uproar at such a statement, even if it were made in a trade publication. Now, in the age where we've come to expect ubiquitous government surveillance, and in which we're raising a generation of children who grow up taking for granted that they're constantly being surveilled, we just shrug our shoulders and say, "meh..."

I don't know whether to laugh or cry. After all, I work in this industry, too. But from a marketer's perspective, this is good news, indeed.

Big Studio Involvement in Online Video Takes a Step Forward

Joost Boost Worth $45 Million (free registration required)

The concern over Big Media's ability to control distribution of their content online should be more possible with the launch of Joost, the new online TV-cum-social networking start-up that is sure to get more blessing (and money) as they evolve. Not only have they received money from CBS and Viacom in this round, but they already have content agreements in place with Warner Music, National Geographic, Turner Broadcasting, The Cartoon Network's Adult Swim, CNN, Hasbro, the NHL, Sports Illustrated and Sony Pictures Television.

This looks like the VOD model they've been talking about for 15 or so years, only online instead of through your cable or satellite provider. The key differences between Joost and GoogleTube are (1) Professional media companies provide the content, not regular folks; and (2) it will focus on long-form programming (half-hour-plus), as opposed to short-form videos (under 15 minutes).

The key to this taking off, in my view, is the ability to watch Joost through your TV set, the ultimate lean-back medium, as opposed to watching it through your computer, a lean-forward medium. This will get easier as HDMI connections on TVs and ever-faster broadband Internet connections become more common. I'm not positive how fast the video stream has to be for the quality to approximate current 525-line standards, let alone HD, but it has to be faster than current 384 kbps standard.

Click and Buy in Online Video: Fine Idea, Limited Execution

This BizReport story says that Kohl's has become the first advertiser to to use MSN's new VHL (Video Hyperlink) technology. (Microsoft loves those cool little three-letter extension handles.) When you're watching an MSN video (actually, a Kohl's video on MSN Movies site) and an item on sale at Kohl's come onto the screen, a big green arrow starts flashing in the lower right hand corner. That's your cue to mouse over the items for sale and click it. At that point the video pauses, and another browser window pops open to the Kohl's site to the page where you can purchase the item.

It's a cool technology and the idea is almost as cool as the technology -- you can see the video in action here. This execution does have some limitations, however:

• People have to want to view a promotional video, such as a Kohl's marketing video, to see it in action. This is probably not a practical application for content-oriented video.
• In this video, you have to move quickly, say within three to four second, to click on the item or it's gone, and it takes a while to figure out how to go back and see something you like again. (Just clicking on the time status bar behind the current point won't do it.)
• In addition, the model in this video is always moving, so it's easy to click and miss.
• The video gets interrupted, which hurts the flow of the experience.
• You can't click on the green arrow and choose the featured item on the video -- they should consider allowing that.

All in all, it's a good first effort, and I can't imagine it won't improve with subsequent executions.

Viacom Sues Google -- Now What?

Everyone knows the what, and few people are surprised, although the amount does make one giggle in shock -- but what does this mean?

The core legal issue here is the "Safe Harbor" provision of the Digital Rights Management Act, which indemnifies online service providers when their users infringe copyright law by storing protected materials on their servers. The idea is that there's not much a provider can do to stop the individual, so only the individual is liable, not the provider.

What Viacom maintains is that, in this case, YouTube is profiting from the infringing materials, so Safe Harbor doesn't apply to them. Viacom has demanded that YouTube remove some 100,000 pieces of copyrighted materials from their servers, but YouTube is just not moving fast enough in bringing them down, nor are they proactively preventing users from uploading new material.

YouTube responds that they do not allow advertising on user video pages, in order to comply with the spirit of Safe Harbor (that is, not profit directly), although one could easily maintain that existentially, YouTube profits when the system is widely known to allow protected material. In practical terms, that means that if I remember a great "Family Guy" bit and want to see it replayed, I know I can get it on YouTube -- and as of today, that's still true. (Careful when clicking on this link -- this clip could be construed as very disturbing for some people.)

OK, so now what the technical issue is and what it means, but what does this lawsuit really mean? On the one hand it's hard for Google to control their users. If their users infringe, they're gonna infringe, so what can they do? That's not a good argument, says Viacom -- it's your service, you're making money off these videos, so we want our cut, and if you can't pay us, then take them off -- and it's up to you to figure out how.

Google is reported to be working on a search function to identify protected content on both Google Video and YouTube, but they're not there yet. So what can they do in the meantime? Go to signup-only model so they can control users better? That could cut down their reach significantly. Review every video that users upload? That would create a backlog months long, on the optimistic side.

When you get right down to it -- meaning using your "follow the money" instincts -- this must have something to do with the failed negotiations between the two parties to allow YouTube to carry Viacom clips. Google apparently wasn't going to pay Viacom to their satisfaction, so Viacom might very be using this lawsuit as a negotiating tool. Pay us now, Google -- or you'll pay us later. But either way, you're going to pay us. (Wow, maybe the "Family Guy" clip is a propos, after all!)

I predict the lawsuit does not proceed to fruition. It can't -- YouTube risks sinking an entire online marketing channel if they fight and lose. Google will settle, and it'll cost them.

The Most Successful Online Video Event So Far ...

... has got to be CBS March Madness product, located here. When they first came out in 2004 in conjunction with CSTV, it was as a $19.95 subscription. Starting last year, CBS started offering it free to viewers, with the cost underwritten by advertisers.

Now that's really starting to bear solid fruit: this Mediapost story (free registration required) reports that revenue has gone to $9 million this year, over double that of last year's $4 million, with advertisers such as AT&T's wireless unit, Kraft Foods and DiGiorno buying into the fun.

I can think of four key reasons why this specific online video offering has become so successful:

1. It's an event. March Madness has become the #1 sports event in America, and it generates a significant amount of low-level non-professional (and professional) gambling. So there's a lot of intense interest inherent in it. (I love serendipitous assonance.)
   
2. It's sports, a top avocation for the heaviest users of video, young men.
3. It's free. Appealing for obvious reasons.
   
4. It's a viable alternative to nothing. This is not an insignificant point. I would be willing to bet that the vast, vast majority of online video viewership of March Madness comes in the early rounds during weekday day games, when most people are at work and have no alternative method of or access to viewing games. Once you get later into the tourney -- specifically, Sweet Sixteen -- every game is on TV anyway, and plays at night or on weekends. The chances you'll be watching a relatively grainy online video versus watching the same game on better-resolution TV, especially hi-def, has got to be nearly nil.

If proven correct, then the implication here is that people respond to scheduled video events that are special in nature and not otherwise available to them. This is not the same viewing psychology as watching UGC on YouTube, or catching up on the latest 30 Rock on NBC.com.

What Frustrates Users About Web Video

Wave of the future though it might be, the online video revolution might experience blips on its way to content nirvana, as detailed in this eMarketer article.

Of course, commercials within videos is the #1 annoyance, since despite the well-established commercial nature of online, people still expect content for free, without commercial sponsorship (or interruption, depending on your POV). But check out what trails closely behind:



I find it very interesting that #2, #3 and #4 are all related to the ability to find decent stuff to watch, on a consistent and predictable basis. People are conditioned by their TV-watching training to be able to find exactly what they're looking for in the same fashion, all the time. Why wouldn't they want that in online video as well?

I think people will get used to the advertising aspect over time and its prominence on this list will diminish as online video matures as a platform. But the desire of users to consistently and reliably find good quality videos to watch creates a business opportunity for someone with good coding and marketing skills, I believe.

YouTube vs. Big Content: Who Needs Whom?

Story in BizReport tells us that despite Viacom pulling hundreds of thousands of its copyrighted ivdeos off its site, traffic to YouTube has actually gone up since the first of the year, and in fact, the top-rated video site gets more traffic than all TV, cable and broadcast network web sites combined.

The lesson for Big Content is that people are probably not coming to YouTube and other video sites primarily for content produced by big studios. If it's there, great -- if not there's plenty of other things to watch. That seems to be the message video site users are sending to Big Content. Question is, are Big Content smart enough to hear the message?

You know, this YouTube thingy might work out after all.

Like Viacom, CBS Rebuffs Google/You Tube

According to this Mediapost story (free registration required), the negotiations between Google and CBS to extend the agreement to show CBS content on YouTube have ended. This happens not long after Viacom had broken off talks regarding a similar agreement.

Boy, wouldn't I like to be a fly on the wall of the corner offices at the media companies as they talk about YouTube. How much of the problem in reaching an agreement stems from CBS's and Viacom's being threatened by a new media upstart? After all, these companies have been around for decades (Viacom: 1971; CBS: 1927), and YouTube launched -- launched, mind you -- in February of 2005, a scant two years ago. If I were an old media company regarding such upstarts, both in terms of the threat they pose and in terms of the audacity of their very existence -- my nose might be a little out of joint, too.

Interesting comment by Larry Gerbrandt, general manager of Nielsen Analytics: "The problem with You Tube is there is no revenue yet ... How is Google going to see a return on the $1.65 billion they paid? They have yet to create a model. On the other hand, once they start to generate significant amounts of revenue, those copyright issues become more significant."

This all prompts a recall of Mark Cuban's famous email regarding the Google acquisition of YouTube in the first place, in which he wrote that anyone who would buy YouTube is a "moron". The delicious irony here, of course, is that Cuban himself cashed out on Broadcast.com to the tune of $5 billion. To see just how much Yahoo is benefiting from that deal, just type the URL www.broadcast.com into your browser and see where it takes you.

Web Video: The Spirit Is Willing, the Model Is Weak

Credit cutting-edge advertisers: when they see a significant new media model, they work to get in on the ground floor and establish early leadership however possible. In an increasingly digital world, it makes good business sense to be recognized as leading-edge, and moving first into nascent technologies helps that cause nicely. But doing so has to be a "near-future" rather than "right now" consideration, and sometimes moving first also means recognizing that conditions may not be quite right quite yet to make an immediate move-the-needle splash.

That's where online video appears to be at the moment, as this Ad Age article will attest. With digital ad spend expected to exceed $20B in 2007, according to eMarketer, less than 4% (some $775MM) of that will come from video.

According to the Ad Age article, the key inhibitors to make an immediate consumer impact in online video are:

• Fragmented audiences (therefore, hard to generate reach quickly).
• Limited ad inventory availability.
• Lack of web-specific video content to sponsor.
• Ad buying model still evolving.

Industry pundits believe online video viewership must at least partially migrate from traditional TV viewership -- not all online video viewership can be incremental, after all. And the dollars must follow too, says pundit wisdom, as much as 10% of the current $65B by 2010. How can an effective system of categorizing the viewing options and congregating the viewers and ad inventory be created, in such a way that it will be easy for online sellers and buyers to deal with?

But that's only half of the problem. The other half is, where are online viewers going to be watching their videos, even in the next few months? The market is so young and in such flux, that's a major issue. Can viewers be conditioned to accept advertising? What's the proper ad length? Where does it belong during the program? Is the traditional content-plus-ad spot even going to end up being the dominant format long-term?

Some major players are going to have to make some very large bets to try to mold the market to their liking, and many of these players are going to have conflicting agendas with others, and winners and losers will be declared. But that's the way new business models evolve, and video advertising will be no different.