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New York-based startup LongTail Video plans to put more pressure on traditional online video distribution platforms like Brightcove and Ooyala with the launch of a new freemium model that will let users distribute their videos for free. With the cost of bandwidth falling, the startup hopes to control more video distribution, which will let it cash in on more advertising.
Under the new freemium model, Bits on the Run will allow anyone to sign up for free and use the platform for distribution, so long as they stay under a certain limit for the amount of video managed and distributed. Users get 1 GB of platform usage (or about one hour of video) and 5 GB of video delivered (about 20 hours of streaming, depending on bit rate) per month.
Frankly, that’s not a lot of video at all, but it’s enough for some publishers to get started and try out the service without having to worry about being charged. Once they top those numbers, however, they will be charged on LongTail Video’s usual sliding scale for usage and distribution on a pay-as-you-go basis. Because payments are made on a usage-based model, there are no upfront costs or commitments.
This isn’t LongTail Video’s first time giving away its products to users: Its popular JW Player is open source and available for anyone to download and use. And it just introduced Longtail.tv, a cloud-based video platform that enables users to freely upload and publish videos, making them available as part of their own video library or through LongTail’s media gallery.
Like most open source companies, it made its JW Player freely available but made additional revenues from professional services and video hosting and distribution. It also made money from the 10,000 or so publishers that have used its Bits on the Run platform for video distribution so far. But massive declines in the cost of distribution have helped it to justify the freemium model: With CDN prices effectively falling to zero, there’s little risk involved in paying the upfront costs for video distribution.
More importantly, advertising continues to grow to the point where LongTail Video CEO Dave Otten says it has surpassed revenues from other parts of the startup’s business. As a result, LongTail Video’s plan is to get video publishers on board with its free products as a way to entice them to use its AdSolution video ad network for monetization.
By doing so it can further commoditize the video distribution market, which has seen massive consolidation as the cost of distribution continues to fall. That could put further pressure on other players in the market — like Brightcove and Ooyala. Offering up a free platform could also steal users away from platforms like Vimeo (s IACI) and YouTube (s GOOG) by giving users more enterprise-grade features essentially for free.