GigaOM » Tech

Newslook iPad app brings order to news video viewing

Ryan Kim — Wed, 23 May 2012 11:07:06 +0000

While video lovers have gotten more and more social services that serve up interesting clips from friends, it’s still not easy to construct a more comprehensive look at video news by topic. That’s the gap that New York state startup Newslook is trying to fill with a new iPad app that allows users to construct channels of their favorite news subjects on the fly.

Newslook, which has been operating a video streaming news website and a video syndication service for publications, is now getting even more into the consumer video space with its first iPad app. The app, which will debut at the paidContent 2012 conference Wednesday, allows users to build their own channel using video from more than 50 sources including the AP, Reuters, Bloomberg, National Geographic and others.

It’s different from social video services like Showyou, Shelby.tv and SocialCam, which serve up video based on a user’s social network. And it’s not like YouTube, which is a mix of all kinds of user generated and professional content that is often not well organized. Newslook takes in hundreds of videos each day from its sources and applies a bunch of metadata to a smaller number of clips, putting them into various taxonomies that can be searched. Users who look for Barack Obama or The Hunger Games can pull up a stream of professional videos that are tied to the topic and can create an instant channel based on that topic.

“There’s a lot of content out there,” said Newslook founder, Fred Silverman, a former CBS producer. “We sift through the crap so you don’t have to.”

Newslook adds more than 150 new videos a day that have been hand selected and tagged with metadata. In addition to search, there’s also tabs for finding top videos and clips that are trending and featured. Users who view one video can also see a list of relevant metadata terms to construct a similar channel. And they can share their videos on Facebook, with Twitter and Pinterest support coming later.

Newslook founder and CEO Fred Silverman

The company has been working on its core services for the last two years and has lined up a number up of companies including Gannett and LexisNexis who use its video syndication service. Silverman said he hopes to have 200 sources for video by the end of this year. The goal is to avoid user generated content and stick to professional content that appeals to serious video lovers.

I think there’s a market for a more organized video news platform that puts users back into the drivers seat. But I think Newslook also needs to get more video sources to feed its service. For hard news subjects, it’s pretty good at serving up timely and relevant stuff. But for lighter fare, there’s room for more depth. Newslook is probably not the only video app people need on their iPad but it’s a good addition to have and should only get better over time.

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Howcast fuels its video engine with data

Ryan Kim — Thu, 17 May 2012 19:33:59 +0000

Jason Liebman, the CEO and co-founder of how-to video producer Howcast, has a lot to be proud of these days. His service is up to 1 billion videos streamed since launching three years ago. And the main site just got a redesign that launched on Wednesday. But get him talking, and what excites him is how the New York City-based company is using data to turn the business of creating reference videos into a smooth science.

The company, like a lot of Internet firms driven by search traffic, is obssessed with mining data to find the best way to select and package its content. But Liebman said Howcast is constantly on the hunt for more and more data to help inform every decision it makes. This is becoming critical now that the company is producing more than 1,000 videos a month for its library of 15,000 videos. And it’s also important because each video is like a long-term investment in an evergreen product that is expected to generate revenue over many years.

One of the biggest decisions is obvious: what videos should Howcast produce? The company ingests all the data it can on the way its videos and other videos perform on its own site and through its distribution partners such as YouTube. For example, it will look at the drop-off rate of viewers second by second. And it looks at what people are searching for on video sites and on search engines. It draws in as many other signals as it can to figure out what to create.

Howcast CEO and co-founder Jason Liebman

But since it’s trying to balance high-quality production values with popular content, Howcast agonizes over how well it can predict its chances of getting a positive return on its investment for each video. It will look at how well the video is expected to age and what it can expect to make through advertising. And it combines that with the data it has on production costs, down to which camera it uses, to determine what it can expect to make from a video over time and whether it’s worth it to greenlight a project. To present the content, Howcast also looks to data to determine what the best titles and thumbnails are and how to position them the videos for better viewing.

Liebman said this data-driven approach is helping drive more video viewing and time on Howcast. He said it’s a lesson for other older media companies, who are still just putting up shortened content online but aren’t thinking about how best to utilize their videos.

“Video content is exploding and we’re looking to data to intelligently plug that back into the business,” said Liebman. “Data allows us to scale with quality.”

Howcast has invested in its own data analytics tools to uncover more insights and unify disparate data coming in from various sources. And while it has just one data scientist on its staff of 30, all of the teams at Howcast work with the data on a regular basis to inform their decisions. It’s taken a while to really start harnessing the power of data but now, the work is paying off, said Tom Bender, VP of product development at Howcast.

“We’ve gotten to the point where the production model makes sense now and the quality and ROI is much better,” Bender said.

“Big data” is a popular buzz word these days but what you do with that data is what really matters. Howcast is showing that it makes sense to ingest as much data as you can, but more importantly, put the insights to work. This is obviously important for publishers like Demand Media and the Huffington Post, which rely on getting up quick content that people are looking to read. But there’s a lot of content owners that have a trove of stuff that can be better utilized if they look to the data.

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Hulu Plus subscriptions hits 2 million, accelerates revenue

Ryan Kim — Tue, 17 Apr 2012 14:25:14 +0000

Hulu Plus, Hulu’s paid subscription service, has hit 2 million users and is helping put the company’s revenue on a faster pace than last year, said Hulu’s CEO Jason Kilar. Speaking at the Ad Age Digital conference in New York, Kilar said the milestone makes Hulu Plus the fastest growing video subscription service in the U.S. to hit the 2 million subscriber mark.

Kilar said the company is off to a faster revenue pace than last year, when Hulu grew revenue by 60 percent over the previous year to $420 million. He said the growth of Hulu Plus along with the robust online advertising market are helping accelerate Hulu’s revenue growth. Kilar said the $8-dollar-a-month Hulu Plus service is providing users with good value and the revenue is helping pay for more content, which is helping improve the service and make it more appealing.

Hulu’s subscriber base has grown from 1 million users last summer and 1.5 million as of January. The service is expected to account for more than half of Hulu’s overall revenue later this year.

Hulu is also looking at improving the situation for advertisers by charging only for completed video advertisements. The standard used to be that advertisers were charged for any video ad that was streamed even if it wasn’t watched to completion. The completion rates for Hulu ads are already 96 percent, well ahead of the industry norm, so it’s not going to mean too much of a loss in volume. But the move helps advertisers get more comfortable with advertising on Hulu and addresses the 4 percent of advertisers who are still paying for ads that don’t get watched all the way through.

Kilar said the move is part of Hulu’s vision for the future of TV, in which ads will be even more relevant and personal for users and will support a higher fidelity conversation for advertisers.

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Carriers must prepare for the flood of online video

Alon Maor, Qwilt — Sat, 10 Mar 2012 20:00:05 +0000

It’s no secret that most of us are starting to watch more and more video on the Internet today, as opposed to regular TV. What’s not so well understood is just how much more room online video has to grow, as a percentage of our total video consumption — and the pain that’s going to inflict on Internet service providers whose high-speed pipes are already close to bursting.

After spending the last decade developing products for these ISPs and hearing firsthand the challenges they’re experiencing, I founded a new company, Qwilt, at work on a solution I feel will benefit both operators and consumers.

Consider: Americans today watch an average of five hours a day of regular TV (depressing but true). Yet they consume only a few minutes of online video per day. That balance is changing dramatically with the rapid growth of video delivered through Web services like Netflix, HBO-Go, Amazon.com, Facebook, YouTube, Hulu, Xfinity-TV and others. It may not be too long before many of us will be hitting the volume caps set by carriers while consuming legitimate services of this kind.

In five years, we’re going to be watching about an hour a day of online video, according to TDG Research. That’s roughly 16 times more than consumption today. And it implies that Internet networks will need up to 10 times more capacity than they have now to handle the deluge.

What to do? Service providers are obviously not sitting still while this is happening. But their current options are limited. One solution is to simply throw more capacity at the problem — buy more gear from the usual telecom-gear suspects in the hopes that the boxes can handle all the new traffic. This is what many service providers have done so far.

But in many ways that’s a wasteful solution: carriers are still transmitting the same video time after time, again and again across the network every time a new user calls it up. This approach doesn’t take advantage of technology that would streamline this process and allow carriers to cache popular videos and serve them more efficiently. It also cannot scale with the exponential growth of video. Plus, it’s expensive — all that new gear isn’t free.

A second solution is for carriers to build their own content-delivery networks. Some have built internal CDNs to mainly distribute their own content to subscribers. Others have gone further and built “wholesale” CDNs that compete head-to-head with giants like Akamai, Limelight and Level3. Some of the challenges to these approaches, however, include:

Content providers would rather not deal with dozens of small CDNs to get widespread geographic coverage — today, they deal with just a couple, or even one, to achieve global reach. The content providers we’re speaking with these days tell us that dealing with multiple, small CDNs is an operational headache.
The economics of CDNs don’t work in favor of small providers. There are economies of scale at play here: the more traffic you bring as a content provider, the better prices you get per bit. So it’s cheaper to concentrate traffic with a smaller number of large CDNs.
Carriers’ sales teams aren’t skilled at engaging with online content providers. Big guys like Akamai have been doing this for years and have a big advantage.

A third solution for carriers, which attempts to address some of the problems inherent in solution #2, is to create a federation of new CDNs. This would allow content providers like Netflix and YouTube to deal with just one CDN on a commercial level, instead of dozens of smaller ones, even though multiple, regional CDNs would be propagating and distributing the video content for carriers.

This is a nice idea, but it’s far from being a reality. Think about it: It won’t be easy to get operators from different countries, often with competing business objectives and different regulatory frameworks, to work together on a project like this. This doesn’t even take into account the technical challenges of having different content-delivery products made by different vendors, and owned by different carriers, work seamlessly together.

I think there is a better way.

Some new solutions, including Blue Coat and PeerApp, are being developed today that attack the problem through what is known as “transparent caching.” That means inserting a layer of network-optimization technology into networks to help make them more efficient and cut costs — specifically, reducing 60 percent to 80 percent of video traffic on the network.

Given how much video traffic is expected to soar in the coming years, that’s a technology that can make quite an impact in freeing up network resources. In basic terms, this technology temporarily stores popular videos at the edge of the network, so that they can be delivered faster, using less bandwidth, to geographic areas where those videos are in high demand.

This type of technology could be installed by such carriers as Comcast and Verizon to make sure the most popular content they’re transmitting is delivered in the highest quality. For example, let’s assume that the latest Super Bowl video summary is available at www.nfl.com and becomes very popular in New York. Carriers offering this kind of technology would automatically detect the high consumer demand for the video. They would then make any subsequent requests available to viewers from network points close to the various customers’ locations, both improving viewing experience and reducing costs.

There are several upsides to this approach. They include significantly lower costs and also more flexibility for carriers. A transparent video-delivery solution doesn’t require any specific commercial engagements for it to work. It can be used with any type of CDN. Such a system also doesn’t require any changes to existing network IP architectures, modifications to any system or browser settings, any special HTML code or integration with different vendors’ equipment. It’s an intelligent system that could be deployed and managed very easily, almost like a consumer product.

Such a solution has the potential to be a win for the entire video value chain — carriers, content providers, consumers and CDNs. The carriers get a low-cost, easy-to-integrate and flexible solution to deal with the current flood of video traffic. Content providers would have reassurance that their videos would actually get through crowded networks without bumping up against usage caps. (Recently, GigaOM reported that Charter Cable would impose such caps to combat the surge in online video that is overwhelming its network.) Consumers would benefit because they’d be able to see the video they want, in the highest-possible quality, without delays or extra costs. CDNs would also benefit, but that’s a topic for a post of its own.

With today’s technologies and the right algorithms, it is possible to unify real-time network intelligence with high-volume storage and video-delivery capabilities in a very compact, form-factor appliance. These products may then get distributed across the broad edge of carriers’ networks for delivering any form of video at a higher quality and much lower cost for all parties.

What we’ve seen in the last few months is that many carriers worldwide have realized the significant benefits of a transparent video-delivery technology and have started to roll out projects accordingly.

We’ll see how the landscape shakes out this year. As content providers expand their video offerings, delivering more and more bits to networks, it’s becoming critical for carriers to deal with their video-overload challenges.

Alon Maor is the CEO of Qwilt, a startup backed by Redpoint and Accel Partners that is developing new transparent video-delivery technology.

Image courtesy of Flickr user covilha.

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Videoplaza plots ‘device-agnostic’ future for ads

Bobbie Johnson — Tue, 06 Mar 2012 09:00:39 +0000

Ad delivery firm Videoplaza is taking the wraps off a new system that it says will help advertisers and media companies make money from their content on every device in the market — without having to cope with the headache of managing them all.

Called Karbon, it’s a complete rebuild of the company’s existing service that is intended to let media companies more easily incorporate and serve ads across a wide range of different platforms — whether it’s smart TVs, Flash-based systems, HTML5 or something else entirely.

The idea, apparently, is to liberate video companies from the pain of trying to predict where users are going to be and let them focus on delivering content.

“We felt that as publishers were having to add more and more devices, it was getting so complex that after a while, they end up just sticking to the platforms they have,” CEO Sorosh Tavakoli told me.

“But you don’t want to define your audience by their devices: you want to define them by their demographics or their interests. If you’re a publisher you don’t care what system people use, you just want to be wherever the audience is.”

The company says that beta testers have already achieved around 30 percent efficiency from using the system, since they have to worry less about specific technologies and can hit larger audiences without extra hassle.

But of course in order for clients to stop worrying about devices, Videoplaza has to do a lot of worrying about devices for them. Karbon is based on a vast library of more than 7,000 devices and systems that it can identify and automatically serve video ads to — as well as on a system to prepare for devices that haven’t yet been released.

This futureproofing, says Tavakoli, means that eventually media owners will not have to think about where their ads are going at all — just who is on the other end.

“About a year ago it became clear that the PC was just one of many devices where video would live,” he says. “In the end I had to slam my hand on the table. This is not about building a couple of features; it’s really that we have to stop talking about ‘online video’ and start taking a device-agnostic approach.”

Karbon is another attempt to grab a big slice of the video ad market by a company that has been trying a variety of different approaches since it was founded in Stockholm in 2008. The company won’t disclose discrete numbers, but says ads served are in the billions and growth for the past two years has been around 500 percent — plus it now has offices in London, Paris, Berlin, Barcelona and Singapore.

With early backers, including Northzone Ventures and Creandum, funding $15 million — and a fresh injection of $12 million raised earlier this year from Qualcomm and Innovacom — Videoplaza hopes it can expand into new markets and become a trusted guide for media companies as Internet-based video moves further and further into the living room.

And that critical market is unlikely to get much less complicated, despite the desire of the TV companies producing Internet-connected sets.

“Nobody knows how this is going to play out,” says Tavakoli. “You’ve got IPTV, you’ve got games consoles, you’ve got streaming from the iPad to the TV set. There are so many ways to get video on your TV set already. There is currently an overhype in smart TVs, but in the end there’s going to be a mix.”

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Kill Hollywood? You’re 100 years too late

Steven E. de Souza and Sunil Rajaraman — Sat, 03 Mar 2012 20:00:53 +0000

A few weeks ago, we both read an article by Paul Graham, rallying Silicon Valley to “kill Hollywood.” And indeed, many companies in Silicon Valley are trying to free the entertainment industry from Hollywood’s death grip. But anyone who wants to “kill Hollywood” deserves a history lesson in its tenacious will to live.

Hollywood has risen from the dead time and again, and it will continue to do so no matter who tries to destroy it. Let’s take a look a closer look at Hollywood’s many reincarnations.

Hollywood 1.1 (Thomas Edison), c. 1900-1913

Root business: Manufacturing cameras and other film equipment. In the beginning, films weren’t so much entertainment as fodder for Thomas Edison’s New Jersey-based patent and hardware business, Edison Manufacturing Company. Edison entered the content business simply to create demand for his projectors and cameras (he owned most of the patents). Just as today’s technology moguls use every trick in the book to crush nascent competitors, Edison similarly used patent law to drive out upstarts, whose non-Edison equipment violated Edison’s legal stranglehold. Early filmmakers fled the East Coast for Southern California as much for the distance from Edison’s patent enforcers as for the sunshine.
Target demographic: Professionals and prosumers
Killed: When Edison Manufacturing Company’s patents expired in 1913
Driven by: Hardware and infrastructure

Hollywood 1.2 (Adolph Zukor), 1913-1949

Root business: Real estate. Zuckor was the first to bring together production and distribution, setting the stage for today’s studio system.
Target demographic: Mass audience
Killed: By the United States vs. Paramount Pictures court decision (1949), banning “block booking” – the practice of selling multiple movies at once to theaters as a package
Driven by: Content

Hollywood 1.3 (Lew Wasserman), 1949-1964

Root business: Advertising and promotion. In the 1950s, former agent Lew Wasserman turned television into the largest portion of the Hollywood promotion machine — advertising sales fueled Hollywood 1.3’s motor. Broadcasters competed for higher ad dollars from sponsors, whose only metric was the number of eyeballs watching the shows. What remained of the motion picture business became the summer blockbuster (“Ben-Hur,” Cinerama films, “Jaws”, etc.) and foreign fare.
Target demographic: Couch potatoes and cineastes
Killed: Still alive, if not robust, and coexisting with subsequent iterations of Hollywood (sort of like when Neanderthals walked the earth with Homo sapiens)
Driven by: Content

Hollywood 1.4 (VHS), 1975-present

Root business: Consumer electronics. The ability for consumers to watch content at home was allegedly going to destroy the motion picture industry. And in a preview of SOPA and PIPA, the studios tried and failed to have VCRs outlawed or crippled. In the end, the VCR became Hollywood’s main source of revenue for decades. A lot of crappy straight-to-video movies were made as a result, pushing quality content to the back burner.
Target demographic: Consumers
Killed: Still alive, though in its dotage
Driven by: Hardware and infrastructure

Hollywood 1.5 (Ted Turner), 1976-present

Root business: Cable. Turner’s realization that a physically wired nation offered an end run around expensive VHF licenses seems like a no-brainer today. “Narrowcasting” replaced broadcasting, but narrowcasting had its own poison pill. Smaller slices of the pie meant less money to spend on the ingredients for great programming. This began a race to the bottom in production costs. Compare the typical Hollywood 1.2 soundstage (say, a routine MGM musical with Technicolor consultants, lavish costumes and giant camera cranes) vs. the Jerry Springer set.
Target demographic: Advertisers
Killed: Still kicking, but YouTube and other user-generated content platforms are slowing it down
Driven by: Hardware and infrastructure

Hollywood 1.6 (The rise of Netflix), 1997-present

Root business: Streaming video. Worried that Netflix was going to destroy the industry, the studios and mainstream Hollywood were up in arms when it debuted. Instead, even though streaming revenue passed DVD revenue in 2010, the industry has come back stronger than ever. Hollywood proved it has the whip hand when it pulled a few streaming licenses from Netflix and sent its stock into a tailspin.
Target demographic: Consumers
Killed: Not yet, but individual content creators (HBO via HBO Go, for example) still control Netflix’s fate
Driven by: Content

Hollywood 2.0 (The YouTube generation), 2010-present

Root business: User-generated content
Target demographic: Peers
Killed/shelf life: TBD. In this iteration of Hollywood, anyone with a Canon 550D can — theoretically — make a decent independent movie. Narrowcasting is going to a whole new level with fans creating entire web shows devoted to their favorite stars’ performances. The race to the bottom in production costs continues, but quality content remains sparse. Perhaps unintentionally, the YouTube generation is proving that quality content matters, and Hollywood productions trump home productions.
Driven by: Content

The Phoenix is the architect of its own immolation, and — if past is prologue — things are about to get hotter for Hollywood. But what will emerge will — once again — be a newer and stronger beast. Ironically, the very thing that makes YouTube and other UGC sites fantastic may be their undoing: rights issues. Filmmakers are willing to do whatever it takes to make it big — including giving away content for free, or insanely cheap, for the chance to be produced. That model is not sustainable, and the ultimate beneficiary is — surprise, once again – Hollywood. Hollywood controls distribution, and if quality content comes cheaper, all Hollywood is doing is lowering its cost basis, and getting more filmmakers to compete for access to its distribution.

Until Silicon Valley gets into the content business en masse, which it likely can’t (due in large part to talent issues), Hollywood will retain its power. Netflix has made strides here, but YouTube, Amazon and other upstarts have a long way to go if they want to change 100 years of ingrained consumer behavior.

With credits that include “Die Hard 1” and “Die Hard 2,” “48 Hours,” “Commando” and “Tomb Raider,” Steven E. de Souza is one of a handful of American screenwriters whose movies have grossed more than $2 billion worldwide. He has also produced more than one hundred hours of network television.

Sunil Rajaraman is the co-founder and CEO of Scripted.com, a marketplace for businesses to hire freelance writers. Scripted began as an offshoot of the popular screenwriting and crowdsourcing site, Scripped.com.

Image courtesy of Flickr user greyloch.

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Affine Systems gets another $5M for semantic video ad software

Colleen Taylor — Mon, 09 Jan 2012 22:55:46 +0000

Affine Systems, a San Francisco startup that makes technology that scans and analyzes the content in online video, has raised nearly $5 million in a new funding round, according to a regulatory filing.

According to a filing made with the Securities and Exchange Commission (SEC) Monday, Affine Systems has sold about $4.99 million of a new $5.05 million round. The first stock sale in this funding round occurred on December 27, 2011, the filing indicates. This new round brings Affine Systems’ total outside funding to approximately $13.75 million, according to the company’s SEC filings dating back to 2007.

Affine Systems' object detection

Affine’s software uses computer vision technology that scans videos frame-by-frame and sorts each section of the footage into specific categories. Advertisers can then use that information to promote their products with the right online video content at the most appropriate times. This purportedly provides insight into and control over the online video market at a depth that has previously been available only through television content. My colleague Ryan Lawler has explained Affine Systems’ technology like this:

“Due to worries about the content of most online video, many brands and agencies stay away from a large percentage of that content, preferring to launch campaigns against professionally produced videos. But with Affine’s technology and repository of online videos, media buyers a much larger inventory to choose from. The company provides tools to enable advertisers to create custom video channels to target. And once their ads have been served, Affine provides full transparency into where those ads appeared.”

We’ve reached out to Affine Systems for comment on the funding; we will update this post with any feedback we receive.

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Yahoo teams with ABC News for online news alliance

Ryan Kim — Mon, 03 Oct 2011 14:32:07 +0000

ABC News President Ben Sherwood and Yahoo EVP Ross Levinsohn discuss their new partnership.

Yahoo and ABC have struck a partnership that combines ABC News’ content and staff with the reach of Yahoo News for a total potential viewership of 100 million users. The alliance will include the debut of GoodMorningAmerica.com on Yahoo, new online video programming including a series of live interviews with George Stephanopoulos, and new channels for interaction before and after TV broadcasts.

The partnership will feature original, digital-first content, starting with Stephanopoulos’ interview with President Obama live on Monday. Yahoo’s Executive VP Ross Levinsohn said the alliance builds off an existing relationship with ABC News, which already distributes video and content through Yahoo, including recent coverage of the 9/11 anniversary and the royal wedding.

He said that while Yahoo already has 25 million users who visit Yahoo News daily, much of the content is aggregated from hundreds of sites with a thin layer of original programming. Levinsohn said the ABC News partnership will highlight Yahoo’s increasing move toward value-added content:

We’re focused on premium content. There is unlimited content around the world, there are millions of sites. We’ve set our focus on premium. We believe that the value that is created around premium content is something that can’t be replicated on any site anywhere in the world.

Levinsohn said he expects advertisers will respond favorably to the new ad spaces that will appear on the new content. He said Yahoo will look to ensure a smooth launch of the ABC News partnership first before replicating it across other verticals such as finance or sports.

Ben Sherwood, the president of ABC News, said the deal is a game changer that repositions the two organizations in the shifting landscape for news and information. He said the ABC News talent will collaborate on original content that leverages their interests.

“The whole purpose of this relationship is to create original content which is tailor made for where people are getting their online information, brought to you by the team of ABC News,” Sherwood said.

Diane Sawyer, the anchor for World News Tonight, said she was excited about the opportunities the deal provides to channel some of the reporting that doesn’t show up on ABC News. Christiane Amanpour talked of producing a series that taps into international events that concern viewers in the U.S. Yahoo staff will work alongside ABC News in New York, Washington, D.C., and California to produce the original content. The content will be designed primarily for desktop access, but it will be packaged for mobile using Yahoo’s Livestand platform.

It makes a lot of sense for the two teams to come together. ABC News has a great reputation, but it is finding it tough to ensure distribution of its content to a wide audience and be fast and flexible in the online real-time web. Yahoo is looking to boost its advertising efforts, and it understands that high-quality video is a key way to attract top advertisers. It also seems to suggest that we should expect more combinations to come as news organization look to pool their resources and audiences to best leverage their investments.

But announcing a partnership and actually producing a lot of quality online content are two different things. Despite the optimism in comments by Sawyer and other ABC talent, it’s hard to spend time on new efforts like this when your current responsibilities don’t go away. We’ll see what this eventually looks like, but it still seems like a pretty smart move by both organizations.

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Online ads are finally making serious cash

Colleen Taylor — Wed, 28 Sep 2011 16:06:15 +0000

With people spending more time than ever online, it would make sense for advertisers to go where the eyeballs are. But the Internet has generally lagged far behind older mediums such as television when it comes to garnering big ad dollars. However, new data out of PricewaterhouseCoopers (PwC) indicates that online ads are beginning to enter the financial big leagues.

In the first half of 2011, Internet ad revenues rose to a record $14.9 billion, according to new data from the Interactive Advertising Bureau and PwC. The rate of growth was 23.2 percent, more than doubling the 11.3 percent growth rate that online ad revenues had in the first half of 2010.

The data also shows that growth is continuing to pick up as 2011 rolls on. Ad revenues for the second quarter of 2011 increased 24.1 percent from the year-ago quarter to $7.7 billion. For comparison, the second quarter of 2010 saw 13.9 percent growth.

And while the Internet is still a ways from attracting Super Bowl ad money, the biggest growth area for online ads is televisionlike content: online video. Digital video ad revenues brought in $891 million during the first half of 2011, representing a growth rate of a whopping 42.1 percent compared to the same period a year ago.

Now that big firms such as Nielsen have directed their full attention to monitoring how people spend time online, advertisers are finally getting comfortable investing more of their budgets in Internet ads. The current growth rates of online ad revenues are certainly impressive, but this could very well be just the beginning.

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The paywall debate: monetizing news in the digital era

Paul Sweeting — Fri, 09 Sep 2011 18:00:08 +0000

The transition from print to web-based publishing has been rocky for many traditional newspaper and magazine publishers. While online readership has soared, online advertising revenue is a fraction of what print ads once brought in. Print remains profitable, but hard-copy circulation has continued to shrink.

Those scary trend lines have forced publishers to rethink their approach to doing business online, and that includes erecting subscription paywalls. But as I discuss in my latest report for GigaOM Pro (subscription required), simply trying to replicate the old print subscription model online by asking readers to pay a single price for unlimited access may not be the optimal approach to monetizing content online. Rather, publishers need more flexible paywalls that support multiple payment options and multiple content configurations.

In the print world, audiences tend to be demographically and behaviorally homogeneous, so it makes sense to treat all readers as being roughly equal when it comes to their economic value to the publisher. Research cited in the report, however, shows that online news audiences are highly differentiated: Readers exhibit widely varying behavior and widely varied levels of engagement with the publisher’s content.

The vast majority of the unique visitors to most online news sites, for instance, is composed of search-directed “flybys,” who typically have little investment in the publisher’s brand and generate only a fraction of total page views. Most page views tend to be generated by a small slice of highly dedicated readers.

Share of total monthly unique visitors by type of visitor, U.S.

Source: Scout Analytics

Share of total monthly page views by type of visitors, U.S.

Source: Scout Analytics

Those differences have significant economic implications for publishers. Extensive consumer research on related online content industries — music, video, gaming — cited in the report shows that engagement level correlates closely with willingness to pay for content and with the respective levels of price sensitivity among the different groups of users.

Willingness to pay is not a fixed quantity, however. Consumer research and the experiences of related industries show that users who may not be willing to pay full price for an all-access subscription may still be willing to pay for a select bundle of content if packaged and priced appropriately. Racing enthusiast publication Autosport, for instance, offers its subscription content on an à la carte basis online for $1 per article. The pay-per-use offer has led to a 75–80 percent increase in first-time paid users.

Even among those willing to pay, moreover, online content consumers can be highly sensitive to the purchase experience, suggesting publishers could have greater success at converting readers into paying customers by paying closer attention to the online checkout process.

Some of the techniques publishers are finding most effective for converting online content users into buyers, in fact, more closely resemble traditional retail merchandising and e-commerce than they do subscription sales.

By carefully researching the interests and behavior of its online readers, for instance, the Dallas Morning News was able to create a new paid-content revenue stream by packaging all of its high-school sports content into a stand-alone product and offering it separately from subscriptions to the rest of the site.

Finally, not all paywalls need to be consumer-facing. Putting content behind a paywall is a critical first step toward fostering robust business-to-business commerce between content originators and downstream aggregators that would allow all to share fairly in the online news ecosystem. While the platforms and tools to support that market-making function do not yet exist, there is a significant long-term opportunity for entrepreneurs to begin developing them.

For the full in-depth analysis and strategies for monetizing online content, please see the full report at GigaOM Pro (subscription required).

GigaOM Pro will host a webinar, “Building a better paywall,” on Wednesday, Sept. 14. All attendees will get a complimentary copy of the report.

Image courtesy of flickr user Matt Callow

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