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Rory Cellan-Jones

Web video - who can make it pay?

  • Rory Cellan-Jones
  • 28 Apr 09, 15:36 GMT

What's the most powerful force on the web right now? No, not - still a minority interest - but video, in all its forms.

In the last couple of weeks we've seen three examples of the popularity and importance of moving pictures on the internet. But each of them raises a few more questions about the economics of web video.

Susan BoyleWhen Susan Boyle first appeared on Britain's Got Talent, 11 million people watched her on ITV. But within a day or so, , and a fortnight on, her various clips online have given the 48-year-old singing sensation a bigger audience than even Barack Obama achieved.

So has that produced a windfall for ITV, which could certainly do with a boost to advertising revenues right now?

As well as looking at YouTube, viewers could also go to for and it has certainly seen a big boost in its traffic.

But on YouTube, there is no advertising to be seen near the Britain's Got Talent clips, and there's not much on itv.com. Even if there were, each online ad viewer would be worth a fraction of anyone catching commercial breaks on the television.

For another media outlet, a different kind of web video hit. by police at the G20 protest - or rather the video acquired from a member of the public - was a major scoop.

But did it do much for the sales of the newspaper? I doubt it, because most people will have seen the video - either on the Guardian website or more likely on television news broadcast the night before.

The pictures will have driven plenty of traffic to the Guardian's site - but again, the advertising rates there will not match what is achieved in the newspaper. Video content on newspaper websites is becoming more and more important, but is still struggling to find a business model.

One online video service which doesn't need to make money, of course, is the ±«Óãtv iPlayer. Last week it went HD, making it an even more attractive alternative to live television.

But an HD iPlayer is also more expensive - for the ±«Óãtv (how much, I'm told, is commercially sensitive), for some viewers who may have to buy extra bandwidth from their internet service providers, and for those ISPs, who've already complained about the strain the standard definition version places on the network.

Still, the iPlayer - along with the online services from , and - is proving why we might need to build a faster broadband network across the UK, as more and more television viewing migrates onto the internet. So that leaves us with only two simple questions to answer.

Who will pay to bring that HD-capable broadband network to every home - because, as we know, and only plan to cover half the UK with super-fast broadband - and who can work out how to make money by pumping video along it?

Update: Many thanks to Shravan Nagraj in the comments for pointing out that our friends at the ±«Óãtv Internet Blog are hosting a conversation about how these issues relate to ±«Óãtv iPlayer in their Open Post.

Comments

  • Comment number 1.

    Nice issue raised....
    The solution to the problem of paying for internet Video lies in the Internet itself. As I have raised the issue in the ±«Óãtv Internet's Open Post Blog, for the ±«Óãtv iPlayer as for all channels, it could be a good idea to have their content made available overseas as well over the internet.
    I am sure that there would be many people who would be willing to pay a suitable fee to watch content in good quality (or even better if it is HD). Many would believe that it would be better than watching 10 min clips on youtube, endorsing piracy by downloading it using P2P torrents or having a remote chance of finding the full video on veoh.com.
    The reply on the Open post blog was that there could be regulatory issues to solve across different countries and that the iPlayer is funded by license fee players in the UK so it is restricted to them. Agreed, but broadcast regulations (like rights, taxes and duties on payment and content classification and censorship) can always be sorted out. It is always better for the boradcaster to try and get to the viewer directly and try to make money rather than succumb to the (if I may call them so) the online video bosses like youtube as the music industry has had to (as reported on this blog some time ago). Spotify (again reported by this blog) is a good example of getting the money directly from the audience.
    To address the issue of traffic on the ISPs, the broacasters can have clones of servers across different countries from which the media is streamed rather than having a single one in the UK. This would reduce the load on the ISPs and the broadcaster's servers as well as inprove the delay and latency problems for the viewers.
    To finish, in the near to medium term future, the mrimary way of reporting news and broadcasting programmes will remain the Newspapers (for the likes of the Guardian) and Television) for the likes of the PSBs in Britain). But what the internet can do build a worldwide brand by addressing a larger audience and also gain some more money to pay for the quality of journalism and entertainment programmes.

  • Comment number 2.

    Nice to see the obligitary and completely pointless mention of Twitter here, just in case you question its dominance or importance in today's internet.

    Sadly, video is nowhere near the most important force on the internet today. Especially if you consider how lightly it is used by the majority. I'm afraid the most important service on the internet is still very much a tie between email and the search engine. Note, 'most important' here doesn't mean 'most lucrative' or 'what makes ISP's cry enough in order to garnish a popular news article'.

  • Comment number 3.

    Just trying to link this..

    One online video service which doesn't need to make money, of course, is the ±«Óãtv iPlayer.

    ..with this..

    But an HD iPlayer is also more expensive - for the ±«Óãtv

    Now I know it's all to do with unique funding and all, but whatever the models and efficiencies and opportunities, when it comes to 'expensive', who does the bill end up with again? And yet the books are 'commercially sensitive'? What's that all about?

  • Comment number 4.

    Just wondering why the Phorm comments have suddenly been closed?
    Is it that the ±«Óãtv don't want to upset Phorm Inc. over the mass rejection of their system?

  • Comment number 5.

    There are two costs to consider here.

    a) content creation
    b) content consumption

    The latter is easy enough to figure out..we the users pay via our broadband charges.

    On the question of content creation, we have to stop thinking about production costs and instead think of market value.

    When rock and roll became a global success, it was thanks to the platform that made it commercially successful, namely commercial radio. They recognised that an audience (for adverts) could be maintained via popular music. The value of pop was nothing to do with how hard a song writer had worked, and everything to do with how many adverts they sold.

    The same is true for video, namely that it's value is down to what people will pay, and right now that's not much. The fact that a guardian video release doesn't drive revenue for the guardian is not the fault of Youtube..it's the fault of the revenue model. The guardian hasn't figured out how to create some sort of premium for this content...but I'm sure it will..you only have to look at the likes of spotify etc. to see evidence that users will pay something..provided you get the right model.

  • Comment number 6.

    "Who will pay to bring that HD-capable broadband network to every home - because, as we know, BT and Virgin Media only plan to cover half the UK with super-fast broadband - and who can work out how to make money by pumping video along it?"

    The consumer will pay, with increased charges, as per usual. Quite frankly though I believe that with the amount of profit that companies like BT and co. make they should be the ones paying for a HD capable network to every home without hiking up prices, which will be an inevitable, but unnecessary, side effect of upgrading our infrastructure.

    They have been bleeding the internet users in this country dry compared to those of other countries and we are very far behind other countries because our ISPs and telecoms companies will not invest, but are quite happy to take our money in the meantime.

    And am I the only one with the simple view that media on the web does not have to mean making money? Oh wait silly me the internet is run by big business now so anything for non-profit is a miniscule part of it...

  • Comment number 7.

    I'm dreading the day that online TV demands an 'online TV license' or something similar... but we all know it will happen.

  • Comment number 8.

    "Web video - who can make it pay?"

    Blinkx.

  • Comment number 9.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 10.

    Great, put more adverts in Web-video .. perhaps the reason why web-video is so popular now is because of the LACK of adverts in it? Fill it full of ads and more and more people will turn away.

    Why is the race for (more) money ALWAYS top of agendas? The greed of the human race will be its downfall. You don't see ANY other animal on this planet doing each other in for a quick buck.

    If "online TV" demands an "online TV license" then I'll go offline. I would rather be off the grid then pay more for something I wouldn't use. As it is now, I am forced into paying a TVL just because I use a large screen TV as my PC monitor. Disgusting.

 

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