FreeWheel and the new wave of on line advertising.
Friday, May 8th, 2009 by Giuseppe PiersantelliVideo content distributors and aggregators, like YouTube, are currently looking for new, profitable business models in order to monetize the million videoclips distributed everyday for free. The current ad-funded models, most of them based on the display of some advertisements, banners and sponsored searches, aren’t helping video portals to pay the bill of servers, bandwidth, distribution and storage (not to mention some major legal issues).
Reporetedly, News Corporation’s Mr. Murdoch said today that in the future some on line newspapers won’t be available for free anymore: readers will turn to subscribers if they want to access content like news and videos.
Personally, I believe that many other websites and companies will follow Mr. Murdoch’s advise; users will be supposed to pay some bucks in order to get quality and premium content. But on the other hand, new sets of ad-insertion systems will be developed for video content.
A good example is FreeWheel, a on line video advertising service and technology which looks very similar to AdSense.
According to multimedia consultant Phil Leigh
The FreeWheel service provides four functions.
- First, it identifies sales rights. That means that it determines what companies have the right to sell a piece of content. It assures content owners that their ads are not pre-empted by ads sold by others.
- Second, it pinpoints the right ad to run. Given a number of ad sellers, CPM rates, and display platforms, FreeWheel pinpoints the ads that will drive the highest possible yield. All this happens in milliseconds.
- Third, it serves the ad. The FreeWheel ad server can accommodate any video format and works with any video player.
- Fourth, it automates the financial accounting. Content owners, distributors, and third-party sellers are automatically assigned their rightful share of ad revenue.
Let’s face the reality: most of the future of web content is all about video. People are increasing their consumption of video content on the web. More than 60% of the data traffic on our IP infrastructure is generated by video content, which is progressively replacing still pictures on many websites and newspapers.
Despite of its dramatic increase, it is now very hard to monetize videocontent on the internet. Content providers, service providers and TLC operators are sharing similar difficulties. People are not willing to pay for video content, specially when it comes to short clips and UGC. Aggregators can’t monetize the little adverising they display on websites. Carriers must invest a lot of money in their network infrastructure to satisfy the increasing bandwidth demand but they are not getting any extra revenues in exchange.
For these reasons, many players in the digital imaging ecosystems are searching new ways to monetize their assets. As far as I am concerned, I believe that in the future we will see a mix of subscription-based model and ad-funded models, mixed together: this propbably will allow people consume premium video content, and providers and carriers continue distrbuting and aggregating videos making some profits.
Tags: advertising, Business models, video
May 9th, 2009 at 12:41 am
I am not sure I share your ideas about the predominance of video over the other content.
When we say that 60% of the traffic on the Internet today is video we are basically saying that the video is a minuscle fragment of all the content sought on Internet.
Let’s work with numbers. Suppose that an average clip is just one minute in lenght. That correspond to at least 1 MB if you think at a very small window with poor quality. If we were to look at HD video, one minute means 200 MB! It is probably a fair assumption (given that a significant portion of the traffic is peer to peer video download) assuming that the average video content downloaded is 10 MB.
Well, an average page with text and pictures is probably less than 10 KB. Hence we have that one content of video would correspond to 1,000 content of normal pages (and we are erring on the conservative side….).
Saying that 60% of data is video means that for every 60 video content accessed we have today 40,000 normal text/picture content. Looking at it this way gives a completely different impression.
In the future I would expect to see much more data traffic related to video, partly because we will have more video content and people will download more video but “most” of it will be because of the higher quality of video produced and downloaded.
It will still remain a fraction, a tiny one, in terms of content instance accessed.
May 10th, 2009 at 11:45 am
I think the solution is basically a system that seeks to regulate a potential Business on a complex ecosystem but it’s based on process control and not able to manage complexity.
I mean is Freeweel a solution that can enable new Business Models based on Business Ecosystems in the video market?
My opinion is no, for two reasons:
-It may be difficult to aggregate business actors on a voluntary basis because this solution is based on processes and rules that must be respected and shared before; in a context like that of videos where creativity and spontaneity are very important this setting can be a barrier (see Business Ecosystem vs Value Chain);
-The Business model is not very scalable because each time I must do agreements with other players. How is it possible to manage it when we have million of producers and aggregators? What are the transaction costs?