Extracting Dollars from Content

One of the biggest questions asked by attendees and exhibitors at Streaming Media Europe 2000 this week is "how can we make streaming content pay?" Not only content producers, but also the suppliers of production tools and hosting, encoding and delivery services are concerned about how streaming content will ultimately draw substantial revenue.

How do you make money faster than you can spend it? Is it a good idea to pay high-profile Hollywood producers to create streaming content at this point? And is it worthwhile, in this million-channel universe, to try to be all things to all consumers? Or should we be focusing on a million tight niches - say, the diesel mechanics' channel, or the parrot-grooming channel? Those were some of the key questions posed to speakers on a panel focusing on revenue-generating content business models.

Subscription and pay-per-view models were on the priority list during the discussion. Danni Ashe, CEO of Danni's Hard Drive, maintained that aggregating as much content as possible is the key to driving consumers to pay for subscriptions. She also suggested that there is progress to be made with online subscription. "As soon as there's an alternative subscription model -- to watch video's for 50 cents apiece, for example -- then we'll see a greater adoption of the subscription model," Ashe said. But she also stressed that narrowcasting - satisfying a specific audience with targeted content - remains essential.

Content business models based purely on banner and pop-up advertising are going quickly out of style, as they have failed to produce meaningful revenue, panelists said. "Advertising is the bottleneck," said Steve Rosenbaum, president and CEO of CameraPlanet.com and BNNtv.com.

However, all four guests on the panel, which also included Nigel Walley, managing partner at consulting firm Decipher, and Mike Demko, senior vice president and general manager at Net36, agreed that new technologies that enable precisely targeted advertising within audio and video streams, as well as product placement within clickable video, represent new hope for the advertising model.

The question of the viability of live webcasts - as opposed to on-demand streams - also took center stage during the panel session. Demko - citing the widely viewed Victoria's Secret webcast last year -- suggested that a live event, when marketed well, can rise above the noise of Internet content to great success. Walley added that live soccer game webcasts have garnered a substantial following among British viewers living overseas - viewers who could not otherwise watch the games.

However, panellists also pointed out that live webcasts can be expensive propositions that draw few viewers during the "live" time period. On-demand video, they said, has the potential to pull in a larger number of viewers over time, often at a lower cost and market risk.

A large part of those costs is associated with hosting - costs Demko said are unnecessarily high and which form a considerable obstacle for content providers. "We [infrastructure providers] need to be driving costs down to help content makers make money," he said.

When asked to offer advice to content companies working to make a name in the market, Ashe stressed the importance of building a compelling content offering before spending large amounts on marketing. Ashe began building her adult entertainment site in 1995 with minimal capital, and today enjoys a profitable online business with major streaming components.

The overall message was that, while the streaming content sector is facing formidable challenges, real solutions are emerging. The solutions, speakers say, must not simply be geared toward pleasing venture capitalists and investors, but engineered to build a framework for an online entertainment and business communications industry that is dynamic, is able to sustain itself, and, above all, that satisfies the consumers and businesses it targets.