Is Online Video About To Enter An Era Of Exclusivity?
by Ashkan Karbasfrooshan , Monday, July 18, 2011
Content is a woman, distribution is a man.
In the online video arena, I’ve cut hundreds of deals with distribution companies. By and large, distribution companies
– never make any promises,
– have no-strings-attached offerings,
– make no commitments,
– rarely seek exclusivity, and
– when they do, it’s usually too good to be true.
Content owners, meanwhile,
– enter distribution deals with expectations,
– believe the promises they hear,
– expect a commitment, and
– want a guarantee.
As a man, I can’t help but admit that in the end, woman prevail and men have to come around if we want to play along.
As a content owner, it’s reassuring to know that.
While Content and Distribution are Both Important…
While I remain in the “content is king” camp, I realize that content is the yin to distribution’s yang and one without the other is actually worthless. In fact, I remind content owners that quality is subjective, no one owes you anything, and if you want to build a business without suffering from massive dilution or financial losses, then you have to hustle and value your content first if you want others to value it, too.
The Pipes are Built – Now People Want Content
That all being, now that the engineers and computer programmers have built the pipes, it’s time to fill them to get advertisers to spend real dollars online. UGC failed. Traditional publishers don’t have the economic incentive to embrace the Web.
Where’s the content going to come from?
While funding content has always been challenging, once created it’s even harder to monetize: the hyper-distribution approach of monetization has largely flopped. A great marketing strategy, hyper-distribution fails to generate revenue not only because it devalues your content, but because distribution is fragmented and clutter is widespread. Sure, it’s hard to convince an ad agency to work with you if your content is already on YouTube (whom they already work with), but more importantly, the supply of ad inventory has mushroomed to the point where standard revenue share deals fail to generate material revenue.
While distribution companies have begun to accept this, it’s hard to convince them to open up their wallets if the content is found everywhere else.
While “anyone with a camera and a Mac” can create and own content, not everyone will be able to build a real content business. Which content owners will prevail won’t be a black and white matter. While some will see a massive spike in demand for their content and growth in the value of their catalogs, brand and audience, many others won’t.
If you remain standing, it might be due to
– the scale your content provides advertisers. Or maybe
– it’s the unique editorial voice, or rather
– the sheer quality, variety and breadth of your content, or
– that other je ne sais quoi that makes music rock, food woo you or art stand out: it’s subjective.
This last bullet point is why the “techies” who built the Web and became the financiers have flopped at finding successful content “formulas” and video monetization solutions — and why the need to fill the pipes remains greater than ever.
Enter the Age of Exclusivity
Well, times have changed.
– Facebook is entering the news business, and it’s a matter of time before it moves away from being a pure “platform” to more of a curator an, eventually – dare I say it – a content owner;
– Google is increasingly acting like a publisher who wants to retain a higher percentage of its revenues, as it funds video content via its numerous emerging platforms for Super Premium and Premium content;
– Ad networks are morphing into media companies and content creators in an effort to become defensible and grow margins.
This won’t happen overnight, but you don’t need to be a soothsayer to read the tea leaves and understand that behind every great distribution company stands an amazing content strategy, and for content owners to really earn abnormal returns, they will need to embrace exclusive arrangements that incentivize cash-rich distribution firms to open up their wallets.