If you are reading this blog, you are probably someone who is involved with content or digital media. When we analyze the content/media business as a whole it’s all about distribution. The content can be OK (i.e. Britney Spears) but if the owner has the means to distribute, it can be monetized.
As content becomes increasingly cheaper to create and polish, many more people have the need to create distribution channels. Since traditional distribution channels can only handle so many pieces of content, we need to innovate how we distribute our content.
To give an example of old-school distribution, let’s use the music CD. Historically, CDs from major record labels would be shipped to Walmart, Virgin, Best Buy, Target, etc – and with a little marketing expenditure from the label, people would begin buying the album (demand). These stores may have a massive footprint, but they cannot hold every album. This is why Amazon and CDNow emerged and increased the typical music store inventory that is available to consumers. Because of these virtual stores (CDNow now defunct), consumers have the ability to buy the current hits and also, the long-tail of most content.
If we look to the television model, we’ve got 4 top networks (ABC, NBC, CBS, FOX) accounting for most television viewing and advertising dollars (a combined total of $22.7bln in 2006). In television, if you do not have enough eyeballs viewing a particular show, it doesn’t become cost effective to keep it on air.
I hate to break it to you but in the content business, it’s not always about the quality of content, but it’s about the quantity of eyeballs who are viewing it.
There are quite a few content verticals out there that are extremely popular amongst people but for whatever reason, they cannot attract a large enough audience on television to substantiate the reason to keep them on air (not enough ad dollars for major network television). As part of the digirati, you and I both know that we do not just want video content on television, but we watch it on different mediums such as the Internet, PSP, iPod, mobile, etc.
While television may still be the dominant medium to view video content, the playing field is being leveled quickly.
If history is any forecast for the future, innovation doesn’t normally occur from the industry titans but it occurs from little garage companies who then either a) grow quickly and build a sustainable business which forces the market to adapt or b) get gobbled up quickly and become the new strategy for the titan. In the case of television, the titans control the networks and the former primary way to view content.
Since the playing field is being leveled, the video content industry (inclusive of television networks) is going through a radical transformation. The most interesting change is what I call, hyperdistribution. I spent a lot of time above talking about distribution and how it’s changing but the simple premise here is that video content is agnostic from it’s viewing device. As a consumer, I do not care whether or not I view my content on my MacBook, my Samsung 64″ HDTV, my iPhone or even my PSP. I want my video as part of my life conversation. The conversation is going to go on with or without me, so I might as well have technology adapt with it.
Grab your time-remote, and rewind to 20 years ago. If I wanted to watch the Cosby Show, I would have to sit in front of television at 7:30pm on Wednesday evening or else I would miss it. My Wednesday evening revolved around the Cosby Show. Isn’t that amazing?
Should my lifestyle be distrupted by the content I want to view? Why shouldn’t the content be available to me where and when I want it?
Here in New York, there’s a bullish startup named Next New Networks (NNN) who are creating the next new network, no pun intended. They are founded and believe in this very premise: just because content doesn’t exist on television doesn’t mean it’s not good, and that you don’t need to have a single place to watch video content, it can be distributed all over digital mediums.
If we look at the image to the left, we see Fast Lane Daily. This show, executive produced by my brother Kenny, is one of the shows on their automotive network. Just like any other piece of content, you can view it on it’s natural state (it’s own webpage) or you can view it on one of many hyperdistribution partners including YouTube, Veoh, MySpaceTV, Joost, Tivo, MetaCafe and many others.
Next New Networks realizes that if you allow your content to be freely distributed, it can be watched my exponentially greater amount of viewers than if it just existed on it’s own singular website. Because the content is fairly decent (they should replace their executive producer…. just kidding), they got top slots on these particular distribution partners. Some of their shows are getting millions of views… not bad for non-network television distribution.
NNN also allows anyone to grab the embed code of a video/network, and embed it on their own blog or webpage. If I wanted to, I could add another tab on the top of this blog and have Fast Lane Daily displayed. Readers of this blog could not just read my every day rants, but they would have the option to watch Fast Lane Daily as well.
From a business perspective, NNN wants to monetize these videos through advertising dollars and they know that they need eyeballs to do so. I wrote about the Eyeball War last week, but they are clearly chasing their slice of the pie. Video is an extremely hot segment for advertising dollars as the CPMs are higher than most other digital areas and television advertising has the largest share of overall advertising expenditures. NNN knows that building top destination sites for their videos on a regular basis is almost impossible and overall expensive, but smartly understand that if they can strike deals with multiple distribution partners and leverage their platforms, they can gain hyperdistribution and win the game (get eyeballs).
From my personal perspective as a media agency guy (this is the first time I’ve publicly said it on this blog), I like it a lot. I know that if I were to spend my money on a NNN produced show, it would be hyperdistributed and it would attain a lot of exposure across the digital medium. Unlike other innovative technology companies who come to me for ad dollars, they don’t have the distribution. At the end of the day, the content has to be good and it needs to be out there. If you’re a content or IP owner startup, make sure you have a distribution plan for your property. If you’re looking for advertisers to add it to the media mix, you need to show that it will have viewership.
Fred Wilson said that business development may die (in not exactly those words) and I totally and fundamentally disagree. Unfortunately (or fortunately), business is usually done through relationships and friendships and if you have the ability to secure great placement in distribution channels, it could make or break your company. This is done through a business development deal. Yes, there are APIs and other ways to technically integrate your product with another, but when it comes to premier distribution, getting on the phone certainly helps.
Tying in to another post of mine about letting go of your brand, if you let go of your content, the people who derive value from it will start spreading it. Note: only the people who derive value. Just because you have highly polished content doesn’t mean that people will automatically enjoy it. If you have quality content that people want, they will promote it. It doesn’t just pertain to video. Look at RockYou’s dominance. Put it out there and let consumers control the distribution. There are more of them then there are of us. Don’t be afraid to let go. Hyperdistribution wins the game.