Can Hulu rescue TV (for nothing)?

November 3, 2009 § Leave a comment

Online Media Daily reports that Needham & Co. analyst, Laura Martin, was dispensing doses of reality to a packed house at the OMMA Video conference in Los Angeles last week. Referring to Hulu, she observed that it’s not especially difficult to take $3 billion worth of product (meaning, programming from Hulu’s participating owners such as NBC, ABC and Fox) and give it away successfully online to the delight of millions of users. The question is how to make money from that give-away which, Laura Martin suggested, could take the industry 10 more years to answer.

Actually, we can probably answer the question right now: Hulu won’t make money – not, at least, TV kinds of money. Some money will be made, for sure, but not TV kinds of money. So, if that means Hulu will end up squandering the equity of major media brands by offering $3 billion in programming online for free, better cut and run.

Unless Hulu is really saving TV by being free.

Consider that Hulu attracts 38.5 million viewers according to the measurement service, comScore. With such large audience numbers the business instinct is to, 1) charge for content, or 2)  insert commercials in front of those 38.5 million viewers as many times as possible. Laura Martin has ideas for both, with content fees for archived programming the most easily accessible. Other options that charge for new or existing content and/or rely on the routine of television commercials are more problematic, and Martin thinks it may take 10 years to successfully introduce those options with the audience.

With regards to advertising, Laura Martin estimates that Hulu inserts four ads per hour on Hulu. That compares to 32 30-second spots that are shown every hour on television for the same programming. It’s not clear from the Online Media Daily report if we’re meant to think that 32 commercial breaks per hour represents the model for Hulu, but the delta between four commercials an hour and 32 per hour implies plenty of revenue upside if the Hulu people would just get on with selling more of it.

Sadly (or not), they can’t. While there is programming capacity online to absorb $3 billion worth of inventory it is highly questionable whether there is commercial capacity to absorb the equivalent of $65 billion in video TV advertising, or even some reasonable fraction thereof.

For one thing, as noted by the Online Media Daily story, the average Hulu viewer spent one hour and 17 minutes watching videos on the site in the month of August, which compares favorably to 3.7 minutes for online video consumption, per viewer, across the rest of the Internet. Elsewhere, Neilsen reported that online video consumption in total had climbed to over three hours. These metrics don’t add together, but between the three of them it seems clear that the average amount of time spent consuming online video per month is still not the thing dominating people’s schedules.

In contrast, according to the first number I could lay my browser on (which happened to be at, in February the Neilsen Company reported television viewing at an all-time high of over 150 hours per viewer, per month which it attributed to the rise in the number of cable channels (“many, many more cable channels”) and DVR and TiVo devices.

In other words – as we’ve heard before – the introduction of more relevant programming combined with technology to avoid commercials is helping sustain and grow TV viewership. From this we could take it that 32 30-second commercials per hour is not the model, even where the model supposedly exists. People don’t like commercials. This is partly the reason they like Hulu.

While it may seem counter-intuitive, therefore, the brand equity impact of Hulu on the multi-billion dollar equity value of giant television media franchises may be very positive right now, and may go negative the more its caregivers try and transform Hulu into television by introducing more commercial messages.

As a way around some of these problems and possibilities, one can get the sense from talking to online video enthusiasts that they are waiting for the day when 150 hours of viewing time exists without regard to platform, Internet or television, and where screens are connected and become one. This is the “Eventually-the-Internet-will-become-television” argument in which Internet video strategy simply docks with television and its $65 billion in advertising review. It says that traveling at the vaunted speed of Internet time returns us to the spot from which we left. It’s a boring outcome, it ought to seem, for new media, and a rotten one, too, for consumers in a consumer-driven world.

For now, perhaps it’s better to think of the three-hours of time per month that viewers online devote to video as brand-reinforcing time. Contrary to the idea that $3 billion in free programming online is destructive, it may be that it is terribly important to driving programming loyalty and repeated use offline, on television, and to supporting a $65 billion business despite the corrosive effects of fragmentation and commercial-skipping technology.

Once again, new media provides for older generations.

New media, same as old, old media.

August 28, 2009 § 1 Comment

Nic Brisbourne, a partner at venture firm, DFJ Esprit, has an article in Paid Content talking about the future of news in a digital age. His view is that it will be, a) highly distributed, b) free, and c) forced into smaller packages. Says he:

“In the digital world, the news industry, like many others, will be radically smaller. This contraction is partly a consequence of much reduced distribution costs, but is also a reflection of the fact that the monopoly rents Fleet Street enjoyed in the last century are a thing of the past.”

A similar argument about the need for news (specifically, newspapers) to think small was made in this space earlier this spring.

In arguing that news will come (is coming) in well-distributed, niche packages Nic Brisbourne is setting-up his contention that a new sort of journalism will emerge to organize ongoing news and story-lines by curating the bits and pieces and providing insight and commentary on top. Huffington Post is mentioned as an example. So are TechCrunch and Perez

Mark Cuban was recommending a similar deal to Rupert Murdoch recently, proposing that he aggregate News Corp content from around the world into custom packages if he really wants to try and charge for it. Nic Brisbourne isn’t persuaded that charging for content will work. But, still, there is a sort of consensus between them that aggregating and curating information unlocks value.

News has become abundant, Brisbourne says, at a cost of zero. Indeed, hasn’t all information? Music has become abundant. So has art, sports, travel, cooking (question: can there possibly be as many recipes in the world as appear available online? Answer: Of course.), pet care advice, child care advice, media and advertising advice, etc.

Information is abundant and free and Nic Brisbourne’s argument is that coallating the threads of its different parts becomes the scarce source of value.

Excellent. It may interest us all to know, now, that this was the premise of Time Magazine when it was founded. From the web site:

TIME, founded on the notion that a surplus of news existed which had to be licked into usable shape, felt no need to gather its own news until the 1930s.
From The Story Of An Experiment
Mar. 8, 1948

Aggregation was behind the great networks NBC and CBS when they got going thanks to the invention of radio. It is the premise of my favorite new magazine – one that actually seems to be working – The Week.

This means Nic Brisbourne is definitely on to something, which is that the future of news and information is largely the same as it has been. New media will evolve (is evolving) around the specialized aggregation of information and content (e.g. Huffington Post: breaking news and opinion; PerezHilton: celebrity gossip; TechCrunch: new Internet companies and technology).

This is different from the generalized aggregation of audience – as everyone with a portal model found out early into the Internet revolution. But don’t blame them for missing the point; they were mimicking what seemed like the successful model that main stream media had become. Wrong. Not successful. Almost impossible to sustain at super-size levels. Per Nic Brisbourne :

“The great tragedy of the newspaper industry in the late 20th Century was that, in the pursuit of profit, quality journalism became a dying art. Budgets were reduced, journalists were asked to write more stories per day and were given less time to check facts. At the same time, editors were instructed to avoid stories that might create controversy and the expense of lawsuits. The result was more and more bland articles recycled from paper to paper, more politically motivated editing and the collapse of public trust in the newspaper industry.”

When I think about media over the last 30 years I think about the gradual dumbing down of content in order to appeal to a lower and lower common denominator. Fundamentally, we may regard the Internet as a total re-boot to what it was when pamphleteers dotted the media landscape.

Will history repeat? One hopes that the vastness of the new media landscape and its minimum barriers to entry for would-be publishers will postpone that possiblity into the very, very distant future.

Aggregation aggravation

August 12, 2009 § Leave a comment

MediaPost’s “Around the Net in online media” picked-up Mark Cuban’s open letter (blog?) to Rupert Murdoch with advice on how to sell content online. His advice has two parts: 1) create editorial scarcity by blocking the aggregators that point to News Corp content and, then, 2) reassemble and repackage News Corp content from around the world into useful bundles that might appeal to news junkies or sports freaks, etc. Essentially, Cuban says to Murdoch, aggregate your own content on your own terms; put the fact that you own a media empire to work for you and make the people pay for that value.

Mark Cuban’s unsolicited advice was presumably inspired by Murdoch’s assertion to the markets last week that News Corp will start charging for content in July 2010. He has that long to figure out how. If he heeds Cuban’s advice the time between now and then will go to weaning his media empire off its addiction to the aggregators in order to create the scarcity value for News Corp content. I’ve relied on a few aggregators just to get this far in this blog post – “Around the Net”, of course, plus Media Bistro (which led me to As a drug, they are wonderful alternative to the real thing. The danger to News Corp and others, of course, is that without them reality may bite.

But there is something fundamentally positive in the talk about value and value creation online. The whole third-party aggregation thing is being scrutinized not just on the content side, but on the advertising sales side with the thought that it’s time to start kicking some of these habits. I don’t think many companies are going to be successful charging for content. Cuban talks about the Wall Street Journal as an exception and that may be true. But if companies can’t charge for their content they may want at least to ensure their exclusive rights to sell advertising against it.  

In that regard, we live in the ad network space here at Burst Media where there has been much gnashing of teeth over the last year among web publishers – principally branded publishers such as any of those in the News Corp stable – who are trying to cut down their reliance on third-party ad networks. We have mostly stayed out of the fray by avoiding relationships with publishers that aren’t willing to work with us transparently – meaning, fundamentally, all the brand publishers with their own sales forces. If today those publishers are plotting their escape from unwanted third-parties, we won’t have a dog in the fight and we can choose to root for the value the publishers may win back as result. (And why not root for value?)

Advertisers – mostly ad agencies – are also strung-out on the whole third-party aggregation thing and are devising 12 step programs of their own to get back in charge. At a glance, their goals appear different than the publishers that are engaged in cleansing their systems, but who should be surprised? It has always been thus. The torment affecting everyone online has been a lack of differentiation, and it is that demon causing all the aggravation over aggregation.

Content wants to be free. Advertising wants to be accountable. It’s a tough time to be a new media child.

June 4, 2009 § Leave a comment

The story in Daily Finance reporting on Jonathan Miller’sspeculation that one day Hulu may charge for content has ricocheted around the news forums and digests. Boy, I’ll tell you, every time media companies take a step or two towards the invisible fence line surrounding the free content playground online the dog collar starts spitting electrodes. Posters to the column on Daily Finance were quick to jump on Miller’s comments:

“The fact that executives are still trying to figure out a way to charge for content online is mind boggling to me. It doesn’t work. Hulu was an ingenious idea. Since people were watching shows online for free anyways, why not create create an online platform and shift power back to the networks.”

“Another exec with no clue. I love Hulu in its current incarnation, and would certainly abandon it if it wasn’t free. What an idiot.”

Most of the 60+ posts were like that. The first poster (above) linked to a survey on a related topic at EngadgetHDthat asked, “How much would you pay for HULU on your TV?” When I took the survey the score was pay “Nothing”, 4,590 (76.6%), to pay “Something” (there were a few options), 1,401 (23.3%). I was among the “nothing” crowd.

Michael Kinsley’s article eight years ago in Slate, “It’s not just the Internet”, is still the best thing that’s ever been written on the subject of content economics. It should be required reading for media professionals. The truth is, content for a consumer audience is free, offline and on. If it’s not for free, it’s for darn near nothing. It’s underwater. It’s in the red. It costs the producer, not the consumer of the information.

So, of course, advertising has foot the bill for content for 30 years, maybe more, and grew weary of it at the start.  Despite their carrying costs advertisers got no input into the editorial products, little input into the position of their messages, and only some insight into how much of their investment reached its target – which was maybe half. Advertising has wanted a little money back, too.

The Internet, consequently, has grown-up in the midst of a stormy relationship and the impact on its personality has been profound. If ever there was a child that needed a little play time, it has been the Internet.

Listen to the shrill voices of it’s guardians: Be accountable. Don’t skulk. Answer me! Act responsively. You get nothing until the work is done. Why can’t you behave like a grown-up? What’s it worth to you? What’s the matter with you? Why are you crying? Here, try this. Try this. Try this! 

Michael Kinsley said in his 2001 article, “Information has been free all along. It’s the Internet that wants to enslave it.” Funny how that statement rings true as it pertains to the other partner in the relationship, the advertiser. Do you hear the echo? It resonates through the whole matter.

It’s a tough time to be a media child. You really have to wonder about the parents.

An Appellation Control for Engagement online

May 12, 2009 § Leave a comment

A piece by Tameka Kee in Paid Content yesterday about “engagement” brings back memories of when the industry use to talk about “stickiness.” Stickiness is what led Yahoo! to essentially hand-over its brand position as the leading search engine in favor of life as a content destination (eventually, “Portal”).

I fear the same slippery (sticky?) slope with regards to the issue of engagement, which is that there will be a sudden rash of contrivances designed to lure and hold audiences that then get sold to advertisers as the genuine article. I fear a sudden surge of engagement peddlers on every corner pushing pamphlets in my direction as I walk by.

Media engagement is found at the intersection of quality and relevance and should be allowed to happen with as little extra fiddling as possible. It does not necessarily add-up to time spent, described at one point in the Paid Content article as the “go-to metric.” Time spent in one place may be substantially less than time spent in another, but the audience engagement in both places may be the same. Take most of the blogs of the world today, for instance, including Paid Content, which are designed to offer news and content in short hits that make reasonable demands on a reader’s time. Frequency, if it is not the same as time spent, is equally important as a measure of engagement. Is Paid Content part of your daily routine? Or just an every now and then media event? Engagement is also about loyalty.

Engagement is one of the most important of media virtues, and exists in abundance online. Let’s avoid the fillers and additives this time, however, and make sure that what gets delivered to advertisers is the real engagement item.

If the Content Matters, So Does the Advertising

February 18, 2009 § Leave a comment

PaidContent reports today on the results of research by Addvantage Media for YouGov that people don’t pay much attention to advertising online on large general interest sites. Only 12% of web users pay attention to ads on large web site. However, the power of interest-based long tail publishers is much stronger.  According to the report, 73% of users say they pay attention to the ads on specialty sites. A stark contrast.

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