VastVideo: Video For Every Website

If you have a web site and are looking for video to add to your site, you have a few options. One is syndication from the likes of iSyndicate or Screaming Media. Another way is to go with VastVideo (http://www.vastvideo.com) which is pushing "private label" informational videos. The company has compiled a library of 11,000 videos that they've digitized and indexed into short clips. Along with the clips, VastVideo delivers a customized player window with e-commerce links and targeted ads.

VastVideo, which hasn't fully launched yet, was founded late last year by Nathan Leight of Terrapin Partners. Neil Braun joined VastVideo as President in May 2000. He was previously president and CEO of iCast, an entertainment destination site that CMGI launched earlier this year.

Braun believes the sweet spot for Internet content is in informational videos, not entertainment. He believed it so much, he left his job at iCAST in November 1999 over a dispute with the direction of the company. This move away from entertainment is a departure for Braun, who was an NBC executive and chairman and CEO of Viacom Entertainment Group earlier in his career.

Here, Braun speaks about what VastVideo is doing and about his feelings about Internet entertainment sites.

Q: What does your company do?

A: We're a turnkey, end-to-end solution for any business that wants to put on their web site, a video on demand channel that would be relevant to their audience. That's the simple explanation.

Q: Ok, that's the one sentence answer--

A: That's the elevator ride description.

Q: [Laughs] So essentially you take original content or do you--

A: I'll give to you a few different ways. We're three distinct assets. We're building a huge library of informational video clips. We've already licensed almost 11,000 special interest video titles and we're editing them down into clips that are long enough to answer a query but not so long as to make it a unpleasant end user streaming experience. So it could be 30 seconds, it could be long as eight minutes but the sweet spot is between a minute and two minutes. So we have a 11,000 titles under license and we believe that will generate over 100,000 clips. And we are continuing to license titles every day.

Q: Ok, I'm with you so far.

A: We're then tagging each clip with metadata that fits into a taxonomy we've created so that we can find relevant clips on the fly very quickly.

Q: And to do that, do you use any tools, or search type companies?

A: We do it with human beings. And the answer is because of the kinds of existing edit tools that sense scene changes and do things automatically—they do not work when you try to convey information. So we have very experienced film and television editors who have developed a template for us to make the edit rules. For example, here's how every VastVideo should begin, this is the content it should contain and this is how it should end.

So, the second thing is, we are having conversations with Akamai, Enron and Digital Island and running a test with all three so that we can essentially store, host, serve and deliver our video streams in the highest quality to the last point of presence before the end user. That is so we can provide that service as a turnkey for any of our clients. So we're basically going to have a wide area network by buying large volumes of capacity wholesale for one or two of those three companies.

Q: And what's the third asset?

A: The third is what we call a contextual assignment system (or CAS). That is software that reads the metadata of our clips and then on the fly, as the clip is being served, speaks to whoever the ad server is and where ever the e-commerce engine is. It says, "This person is now looking at a video clip about acupuncture in a site about China travel. Let's populate the media player window with all the relevant commerce and advertising opportunities for a person that is thinking about that at this moment in time."

Q: So it reads the data and knows what's being shown.

It reads the data of the clip and correlates e-commerce and advertising. So unlike a cookie, you don't have to really know anything about the end user, all you have to know is that, at this moment in time, the end user is thinking about acupuncture in the context of China travel.

Q: But isn't it also useful to know demographic data (age, zip code) for each end user?

A: It is. We'll do all the things that we can do, but the whole cookie issue is an "issue". If we can use [cookies] we will. [In any case] whatever happens on the [cookie] privacy issue we will have a very interesting way to build a contextual commerce and advertising based on the context of a clip.

Q: And this is software, you're saying. Can you envision licensing this out to other companies that might want to use this? It sounds pretty useful.

A: Yeah. I think that we would.

Q: Is that part of the plan?

A: No, but the question's been asked before so I'll give you the same answer. It's not part of the business model.

Q: So where do you get the videos for your library?

A: Nathan Leight [the founder of the company and current CEO] bought a company called The Video Learning Library, that is the foremost catalog distributor of special interest video. So literally this is a company with database of 30,000 special interest videos, it publishes a catalog that it sells to educational institutions and libraries and other companies that want to order very highly specific video information. And it has relationships with 1,100 suppliers. So he bought that company and we've systematically been going back to those suppliers and lining up the digital online rights.

Q: Do you sell them too?

A: The other thing from a content point of view, is that Barnes and Noble.com has made us the de facto merchandiser for special interest videos as they roll out their new video sales on their site.

When it comes to special interest videos--which is pretty much everything except what they get from the studios--it's not movies, it's not concerts. Its really How To's, travelogues, informational things. So when B&N.com gets a call from a producer who owns titles, they refer them to us.

Q: So that's another revenue stream?

A: That's a revenue stream but more importantly it gives us an important value we can provide to content providers. In other words, we're the merchandisers of what gets sold on Barnes & Noble.com's special interest video category. It's a reason for special interest video suppliers to do business with us.

Q: Since I started asking you about revenue streams, can you tell me what they are?

A: There are really four different types of revenue; one is services and I'll give you an example of that. Our first paying customer is DressBarn.com. They're paying us an upfront setup fee to create a customized private label media player. And when I say media player it's really just a daughter window that wraps around whatever player is already on the end user's machine. If they're using Media Player, Real or QuickTime, basically we sniff out what they've got, call it up, and stream in the right format. There are no downloads of anything from us.

The next model is content syndication. This is fairly self-explanatory. Somebody pays us simply for delivering the content to their site. And they get to monetize it however they want. The third is targeted advertising and a fourth is e-commerce.

Q: Do you charge for hosting videos too?

A: Well, we basically do everything from end to end. So in the DressBarn situation, the setup fee includes a lot of that. The setup fee is a fairly substantial fee and then the cents per stream covers the marginal costs.

Q: But won't this per stream fee end up costing DressBarn lots of money, if they get lots of visitors?

A: Yeah, but what we're doing for them--they're using our library as secondary content. In the DressBarn example, they create fashion shows and video to introduce a new line to their salespeople. They also have a print catalog business. So what we're doing on their web site is re-purposing their video assets and linking to the offline fulfillment of their catalog business. We're going to turn their web site into a video catalog. So their cost per transaction should be significantly less than their cost per transaction of a print catalog sale.

Q: Can you name another customer?

A: There's another client we have called Intermurals.com that administers the intramurals programs for -something like 500 colleges and universities. And we're giving them the content for free. We're providing the intramural sports video channel to their site for free because we get to monetize all the real estate around the video player.

Q: So who's your typical customer? Are these examples your typical customers?

A: I use those two example because they really define the two ends of a continuum. One, where somebody is paying us and we don't share in the revenue at all--meaning, if they end up selling a lot of clothes on their web site, we don't share in those transactions.

We believe every business with a web site has messages it wants to communicate to stockholders, employees, and customers. What we have to do is help each one of them figure out the best messages delivered in video. So, think about a corporate client with very high customer service costs and they can identify the 100 most frequently asked customer service questions. Imagine a group like Ikea (they're not a customer of ours) having these two-minute videos on their web site that show you how to put together the 100 most popular items. I think the customer service applications are very big.

Q: Since you do only pre-packaged videos, will you ever do original videos?

A: Oh, absolutely. And it'll be sooner rather than later. I think some companies will have videos answering their 100 most frequently asked questions, but most companies won't. We don't see ourselves as a production company, but we will manage the production so that we can provide the entire solution for them. Think about MTV having been founded on the promotional videos of music companies, TNT being founded on the MGM library , and Nick at Nite founded on reruns of old television shows. It's a very natural progression for video media to start with the repositioning of high quality production already in the can and then, over time, move increasingly towards original production.

Q: And that's interesting since your background is in TV. From a high level perspective, what do you see going on in the streaming media content arena?

A: I made a few very conscious decisions. I spent almost a year starting iCAST with David [Wetherell, CEO of CMGI]. He and I got together were going to figure it out. The reason I left is because he and I couldn't agree on a business model. We had very different takes on what we were doing. And the very strong hypothesis I came away from--I have two very strong feelings. One is that building a destination site around content was the wrong model. I think it's going to be very, very hard to build a broadband destination site based on content. It doesn't mean nobody will do it, but a lot like the movie business, more people will fail trying rather than making profitable movies.

Q: Do you think it might be some big Hollywood companies that might win, then?

A: I won't even guess who. It just won't be me. [Laughs.]

Q: Or iCAST?

A: Well, I'm in litigation with them so I can't talk about iCAST. So thinking about building content for other people's web sites rather than building a destination was a much smarter model. The second thing, I am a long way from convinced that there is a huge entertainment genre about to be invented on the Internet. I basically said to myself, 200 million Internet users are pretty convincibly telling us that they use the Internet for information, communications, and transactions. If we can figure out how to utilize video to help enable information, communications and transactions, that will be the sweet spot of broadband. Then I met Nathan and he had acquired the library and wrote the business plan about creating video on demand private label channels for other people's web sites, and I thought that was the big idea. And I still do.

Q: So you don't see your company going into the entertainment space in the future?

A: Entertainment is in the eye of the beholder. So let's put it this way. First of all, if a client wants us to do it, we'll do it. We have under license some extreme sports tapes, which are relevant for sports clients that we're cultivating. So these clips are incredibly entertainment, but they're very contextually relevant footage for the traffic of that site.

Q: Will you do pay-per-view, like downloadable or secure streaming format to see clips or whole videos?

A: We have the pay-per-view rights for virtually our entire library. So when that becomes a technical reality, we will definitely be in that business.

Q: So you're not a big fan of convergence? I've heard the company talk of "divergence". What do you mean?

A: Technology is converging, there's no doubt about that. Digitization means that technologies can all talk to each other. But I don't think technology is going to fundamentally change this aspect of human behavior. I think for the foreseeable future, people are going to the television primarily for entertainment, and yes being able to access the web on their TV will allow them to drill down for information. But the primary reason they go would be entertainment. When someone wants to find the answer to something, I think it's a long time before they go to their TV to find the answer.

What I really love about the model we're pursuing is that people already go to the PC for information. If we can give it to them in video, that's the sweet spot. And number two, by building this contextual assignment system, we should be able to monetize it by providing them with very targeted messages.

Q: So what do you think about these latest rounds of failures and job cuts at content companies? Does it just reinforce your feelings?

A: I'm not rooting against anybody. And I'm also not so presumptuous to believe that somebody other than me can't figure out entertainment on the web. But it does confirm my belief that entertainment on the web is not the natural evolution for broadband.