Blurry Profit Picture Clearing for Online Video, Say Executives

Nbbc, a joint venture of NBC Universal and its affiliate stations, is emphasizing “short-form entertainment, with a heavy lean toward comedy,” said Marc Siry, product design vp. Saturday Night Live clips “pull ahead of others,” and those of Sacha Baron Cohen as Borat pull “many orders of magnitude more than our dog-show content,” he said. Viewers want brief, self-contained segments they can watch at work and in similar contexts, Siry said. Videos by users show “a lot more creativity and a lot more taking chances” than professional work, and rating systems online mean “much more of a culling that happens very quickly” than in broadcast TV, where poor shows can survive quite a while, he said.

Paying even a pittance for videos raises their quality and discourages unauthorized submission of copyrighted material, said Metacafe CEO Erik Hochenburg. Metacafe’s Producer Rewards program pays $5 per thousand views over 20,000 and has been “a big success for us,” he said: “You start to attract… aspiring professionals.” Several creators have earned more than $5,000 each and “a couple” $10,000, Hochenburg said.

On-demand programming implies lengthier, more narrowly conceived, targeted shows, said Jay Adelson, CEO of Digg and of the video operation Revision3. That’s true whether it’s supplied by PVR, an on-demand pay TV service or an online operation like Joost, he said. Freed of broadcasting’s traditional limits, such material often runs at irregular lengths, Adelson said. Revision3, which aims its programming at techies and independent-music fans, finds “a strong desire for in-depth” shows, he said. Its programs are distributed mostly through iTunes sales and iPod viewing, but distribution via TV set-tops is growing fastest as better devices become available this year, Adelson said. In 3rd place after set-tops is viewing on computer screens, he said.

Despite its divergences from broadcast TV, Revision3 has found regular scheduling of new episodes important in building audiences, Adelson said. And the company has reverted to a revenue stream from early TV, he said: Single advertisers sponsoring entire shows. Its most popular offering, Diggnation, attracts about 250,000 viewers a week, Adelson said. As an interactive business, Revision3 gets great response rates in audience research, and has favorable numbers to share with advertisers, he said: 40% of viewers have bought products the company has advertised; 85% could identify sponsors unaided; and 70% said they would accept preroll advertising. But big media buyers are set in their ways, and it’s “going to take a while… before that trust exists between a show, a network and its advertisers,” worried about the shows their companies and products will be associated with in online video’s unregulated world, Adelson said.

Revision3 offers to create commercials for advertisers; given the niche audiences, it isn’t economical for others to make them, Adelson said. Nbbc’s Siry likes this, he said: “That model’s fantastic… Who knows your audience better than you?” Most online commercials are just chopped-down versions of TV ads, he said. Ad spending for online videos is rising, but it’s still a “pimple on the butt” of broadcast TV commercial revenue, Siry indicated. Adelson said preroll ads will persist online for some time though “the ROI isn’t proving it out to the advertisers.”

Wallstrip has found that making financial videos searchable by stock ticker symbol and other tags increases exposure, Ludzon said. Wallstrip draws 20,000-plus viewers a day on average, he said. The largest groups watch on the company website or through iTunes and iPods, Ludzon said. -- Louis Trager

Web 2.0 Expo Notebook

Google CEO Eric Schmidt mocked the team of giants aligned on antitrust grounds against his company’s proposed takeover of DoubleClick. “Did you say Microsoft?” he asked his questioner Tues. at the Web 2.0 Expo in San Francisco. “Did you say Microsoft and AT&T?… Come on, they're wrong. Give me a break. It’s false.” He said that with DoubleClick, Google would have 1% of the $3 billion advertising industry and that the companies are part of an “emergent business” in which customers have many choices. Schmidt suggested Microsoft and AT&T were sore losers in the bidding for DoubleClick. He acknowledged that advertisers, like consumers, are concerned about how much information Google has about them and how the company will use it. Two possibilities are that the company could offer an opt-out default and opt-in option for combining DoubleClick and Google data, or it could simply keep them separate, Schmidt said. “The company is kaput” if it loses the support of advertisers or end users, he said. He also exuded confidence about Viacom’s copyright infringement lawsuit against Google’s YouTube: “We fully complied with the law” -- gaining the protection of the Digital Millennium Copyright Act safe harbor by promptly taking down clips as Viacom demanded that -- and “second, YouTube traffic went straight up after that” removal. The suit is a negotiating maneuver that was prompted by Google’s bringing out its Claim Your Content tool for copyright owners to monitor use of their content, Schmidt said. He didn’t elaborate. Responding to a question about future acquisitions, Schmidt -- saying he couldn’t discuss possible purchases -- called “the mobile space” and local information the next big opportunities that Google sees.