The (Small) Business of Streaming Media

This article first appeared in the 2006 edition of the Streaming Media Industry Sourcebook.Click here to subscribe to Streaming Media magazine and receive the 2007 edition of the Sourcebook.

Tom Keller had a problem. His Bluegrass on Broad Street program had just reached a milestone, streaming the last night of a summer music series on the Web, and the audience response—both physical and virtual—had been better than expected.

But his plans to expand beyond the local area and its crowds of thousands to introduce his hometown of Kingsport, Tennessee—and his hot dog shop where the whole series started—came to an abrupt halt when faced with the minimum costs presented by the streaming service providers contacted in the wake of his initial success.

"The minimum dollar amount I could find was around $1,000 per month," Keller says, "and I only make about $2,600 during that same period of time on the show, after paying the bands and factoring in food costs in the hot dog shop. I’d love to do this, but the minimums don’t make business sense for me."

Keller’s story is typical of the catch-22 faced by small businesses and startups that want to use the Web to get the word out, often in unique ways, but cannot afford the price of entry. They also often cannot afford the price of success: should their marketing content catch the interest of even a small percentage of the Internet audience, the costs associated with meeting the demand can be staggering. As demand for a particular piece of content spikes, small businesses may find themselves faced with a Hobson’s choice of shutting down their own servers and risking a customer backlash or paying a Tier 1 or 2 CDN a significant amount of money to handle the spike.

During interviews conducted for this article, CDN representatives acknowledged the issues facing small customers, and at the same time offered potential workarounds that meet the needs of both the small business owner and the CDN.

We’ll explore the suggestions provided by CDN representatives later in the article, but first let’s look at the hurdles.

Crossing the Chasm
Small businesses hoping to use streaming as an effective marketing and sales tool face six hurdles, each of which must be addressed in order to understand the total cost of small-scale streaming. The hurdles are listed in logical order and include the following:
- Format choice (for production and streaming)
- Production value
- Conversion process
- Compliance (508, closed captioning, etc.)
- Distribution
- Tracking

Format Choice
The advent of digital video was supposed to lessen the confusion about formats; instead, small business owners find themselves facing a wide variety of digital formats, some of which are good for acquisition or production and some of which are best used for streaming. As a rule of thumb, video captured in the MiniDV format (also known as DV25) on a three-chip camera is often more than adequate for editing and conversion purposes. In fact, in good light, many single-chip DV consumer cameras provide acceptable video quality, although the audio quality on these cameras can be somewhat lacking.

For streaming formats, four primary options are available: QuickTime (led by the new high-quality codec called H.264 or AVC), Real, Microsoft Windows Media, and newcomer Flash 8 (or VP6, as it is referred to by its license holder, On2 Technologies). Each of these options provides acceptable or exceptional video at various data rates and can be used for either streaming or progressive downloads. DivX is another up-and-coming codec that can be used for progressive downloads as well as select DVD playback.

Production
While many small businesses choose to have a professional graphics designer create their logo, letterhead, and business cards—the general "look and feel" of their business—these same business owners often resort to in-house creation of brochures, flyers, and other printed materials that use the same professionally-designed logo in a less-than-professional appearance. This is often done because the perceived value of a professionally designed brochure, flyer, or poster is outweighed by the cost.

This same cost issue is exacerbated when it comes to video projects; too often "Uncle Joe" is called in to create an inexpensive and, inadvertently, unprofessional marketing or advertising tool. The content may look acceptable to the business owner when it is viewed on its own but completely unacceptable to the same business owner when viewed side by side with other commercials or advertising.

This side-by-side comparison is not merely an act of aestheticism: the early computer truism garbage in, garbage out also applies in streaming. For every 3 dB of noise (or snow in layperson’s video terms), the size of the streaming video file is increased twofold. So, for small businesses, it really pays to invest in proper production values up front.