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Essay: The End of Exclusivity

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Video aggregator veohhulu.jpgVeoh last week started playing Hulu — a.k.a. FOX, NBC, and their partners’ — content. Veoh, as Chris put it, “pulled an OpenHulu,” integrating Hulu’s content into its index without signing a deal for it. It’s unclear whether that’s going to fly with Hulu — after turning a blind eye for a few weeks, the company sent a cease-and-desist letter to OpenHulu (though that was mostly a trademark concern; in OpenHulu’s front-page notice about the C&D it says it’s moving to a new domain), and today it told paidContent rather unspecifically that Veoh is violating its terms of use.

Also last week, MSN launched a new video guide to showcase Hulu content as well. Neither the video offerings nor the presentation are particularly differentiated from Veoh — to the point that people forgot Microsoft was actually a Hulu partner, with a formal relationship that preceded the startup even having a name. It’s the same content, with (once the kinks were worked out) the same ads, on two different high-traffic portals. MSN had a deal, Veoh didn’t, but nobody seemed to notice the difference.

That’s because Hulu defies its own “closed beta” status by giving any registered user the ability to share its TV shows and movies in full by embedding a few lines of code on their web sites, social network profiles, or blogs. Embeddable video is an underrated innovation. It’s the most successful web “widget” to date and was key to YouTube’s ascendance. And of course, it’s a way for users to participate in content without actually generating it themselves. More importantly, it’s putting an end to the practice of locking up content in distribution deals, even in cases in which the hoity-toity television networks are involved.

facebookhulu.jpgEmbedding a video drops its original context, bringing only the player it can carry on its back. People happen upon the video in the places they like to frequent — whether that’s Facebook (which also has an unauthorized Hulu viewing app, though it was made by an outside developer) or Veoh or MSN or their best friend’s blog. Parsing out content in a single location at a certain time doesn’t make technological or even business sense any more.

What’s Lost Gets Findable

OK, so embedding is kind of nerdy — but these trends are fully mainstream. Two years ago, you couldn’t legally get network TV shows online (ABC was first to experiment with streaming its shows in April 2006). Now every network has an ad-supported web video player of its own — Lost, in fact, just released its entire archive in HD on the site. The bigwigs may tell the Writers Guild that digital video is just a promotional experiment, but I’m convinced that it’s the future of watching television. Being able to cue up a show while I multitask in another browser window is simply a preferable experience for people like me who are constantly in the presence of their laptops and speedy Wi-Fi. And according to various surveys, some 16 percent of U.S. Internet users are already watching TV online.

huluembed.jpgThe next step is watching content where you want to watch it — not just in some rinky-dink player locked up on a certain site. MTV Networks is heading down that path by publishing clips — not full episodes — from hits like The Daily Show for embedding around the web. CBS sends its shows out to web portals galore via its “Audience Network” (which includes, funnily enough, Veoh). Hulu ratchets this all up a notch by allowing people to embed its content on the open web. Suddenly, everyone’s a self-serve local television affiliate, with the incomparable reach of the Internet. Personally, I’ll take embeddable video over the closed environment of Hulu rival Joost any day. Beyond TiVo, beyond Sling, this is the ultimate acknowledgment that broadcast channels are a convention whose determining factors are obsolete.

Still, the issue of control doesn’t disappear. Online content has to be hosted somewhere, and it can be turned off or limited. Viewers outside the U.S. can’t view Hulu content, or for that matter any other major network’s online content. When a video gets taken down, all the embeds across the web go dead, and the bread crumbs leading to the original generally disappear, too.

To that end, content owners should be enabling their clips to go viral; the content has a far better chance of being seen. And it makes for a more rewarding experience for the viewer if they can easily find what they’re looking for, rather than being stymied by crappy navigation and load times and firewalls. Although I’m happy to praise the networks for putting their shows online, I wouldn’t wish on anybody the frustration of negotiating their sites to find those streaming episodes.

Super-duper Distribution

Of course, the move away from exclusivity and formal deals is bad news for aggregators, because they don’t get to stand out from the competition by imprisoning the best content within their walls. But hey — more often than not, video search sucks, so there’s still a reason for aggregators to exist. And even the most dedicated creators don’t want to publish to 15 different web sites every time they make a new video.

How will hosting companies and portals stand out when they can’t claim the best content? By differentiating themselves in terms of interface and portability, as well as community and the social experience they provide around their content. Hulu may be forward-thinking for now, but it’s not going to be the be-all end-all because it’s refusing to include non-professional content. Kicking out users that are seeking access to “amateur” content or to produce and watch their own videos is just dumb.

lg15shirt.jpgAlright, you say, but someone’s got to make money — someone’s got to own the intellectual property. Well, embedded videos and video players can include ads, and product placement is needling its way into more content each day. Vendors are still cautious because MySpace used to aggressively condemn commercial activity by outside companies on its pages — e.g. embedded video ads — but that trend is definitely reversing itself. There will always be value in providing DVD extra-type features, context, full archives, et cetera. Go out into the world and build your fan base and soon, they will come to you. And buy your t-shirts and mugs once they get there.

Let Your People Go

So is this trend a good thing for the content creators themselves? That’s a little harder to say, but I think so. Right now some creators are enjoying the ability to command a higher toll for their work by creating throwback windowing strategies — making their video more valuable by releasing it in one format or location first. MTV, for example, successfully employed a similar tactic with the highly popular video of Britney Spears’ spellbindingly lackluster performance at the VMAs last year. But as an overall strategy, that just doesn’t make sense — if people can’t get access to the content, they’re going to rip it off, when they would happily rack up another view and another ad impression for you if you allowed them to do it legally.

More than that, it both annoys and confuses would-be fans, as you’ll see in the comment sections of show sites like quarterlife and Prom Queen that hold off on new episodes on their own sites while MySpace, in both their cases, gets first dibs on new episodes. We’ll have to see what distribution tactics get employed by the coming rush of Internet content shops being set up by striking writers and VCs. If they’re smart, they’ll push along this trend and reap the benefits of openness.

14 Responses to “Essay: The End of Exclusivity”

  1. Good essay. I would disagree that watching video on your PC is the future of content consumption — wait till your TV and your PC become fully integrated, a process that’s emerging right now with the growing number of set-top box makers, XBox downloads, etc.

  2. Excellent essay. I wonder about windows of exclusivity, and if that is sustainable as a distribution content. It seems counter-intuitive, but seems to be the direction the online video world is going (though only briefly, perhaps?). More than that, geo-tracking and blocking access via IP addresses will only frustrate international viewers, though it seems to be working for Afterworld.

    I’m torn, because I see it working on TV right now, for example, I can’t wait for CBS to show dumbed-down versions of Dexter because I don’t have Showtime, and I bet I’m not alone. That’s a “window of exclusivity” that is already working… on me!

  3. Nice essay, Liz.

    Embeddable video is the biggest reason YouTube went
    “viral”, but that is 2006 news for us in the online video space. :)

    IMO, The next phase will be “Portable Video” – i.e. being able to take video anywhere you want, on any device.