Another case of disappearing content: Hulu cuts popular TV show

January 15, 2009

In an unusual — and very welcome — case of transparency, Hulu CEO Jason Kilar this week posted a frank blog entry apologizing for removing several seasons of episodes of It’s Always Sunny in Philadelphia. This FX Networks’ comedy was pulled down at the network’s request, presumably because it hopes to build some momentum for it’s official Sunny site where many episodes can still be seen. Hulu viewers complained, Hulu asked FX for an extension, and FX granted it. (It may help that FX and Hulu are both connected to Fox, which owns the former and has a hand in the latter). The episodes are now back on Hulu through the 25th of January.  

Two quick things to learn from this experience:

1 – We’re still making this up as we go along. FX, Hulu, and the viewers are all still very new to this idea of watching TV online. FX changed its mind half way through the season, Hulu is required to comply, and viewers are left picking up the pieces. Kilar’s approach — the frank apology — is as disarming as it is astute. That kind of transparency is helpful when negotiating the tricky bumps in a relationship. It doesn’t ultimately solve the problem, however, that content has been disappearing from sites for the last several months as content owners continue to change their minds about their strategies. 

2 – Consumers feel like they hold the ultimate trump card: piracy. If you read the comments from Hulu viewers on the Hulu blog post, you’ll find that most of them — although pleased with Kilar’s openness — are more than willing to threaten piracy as a solution to the problem. This is the same kind of response I get from commenters on my blog when these issues come up. It’s hard to say whether they represent most of us — as I posted before, we know that only 10% of US adults have ever pirated video via bittorrent. But we also know that online piracy will only get easier (and better) until eventually the US will have to contend with it they way some other markets (like Korea, China, etc.) already have. 

The comment I added on the Hulu blog is fairly direct: isn’t threatening piracy akin to telling your spouse that if he/she doesn’t want to be intimate with you that you’ll just sleep with someone else? I have a feeling it doesn’t encourage the behavior you really want! I have been in meetings with studio copyright lawyers when they hear of threats like that and it just blinds them to their more strategic alternatives. This may be one of the reasons that Netflix is succeeding in getting more and more content approved for its streaming service. The subscription model satisfies the studios’ desire to get paid and the consumer’s desire for a convenient, uninterrupted experience.

Is there a future Hulu subscription model hovering on the horizon? What do you think?


Video piracy will shift from downloads to streams in 2009

December 18, 2008

Early in the month I wrote a piece for Forrester’s clients called How To Keep Casual Video Piracy At Bay In 2009. (Yes, I enjoy inserting little images like the idea of “pirates at bay” into my writing — I consider it a minor victory.) 

The premise of the report is that the video industry has yet to feel the heat of video piracy because, frankly, it’s just too much of a pain to pirate video. Only 10% of US online adults have ever downloaded video files via a P2P application. That’s because you need big storage, mega bandwidth, and you need to be conversant with a whole range of P2P hosting  sites that are not easy to navigate. In short, it’s inconvenient.

If you know me, you know I believe that convenience is everything in this or any business. That’s why piracy is about to get a lot worse: it’s about to turn from downloading to streaming.

That’s much more convenient. I didn’t have to download a single application in order to watch the opening minutes of Madagascar 2 on Megavideo.com just last week. (Note: I won’t post a link not only because the file has been taken down since then but because I don’t advocate piracy of any kind. I watched until the opening credits just to verify it was there and then stopped. I don’t download illegal video files or MP3s and when people email them to me I delete them. It’s not a high horse, just a personal ethic.)

More and more, people will be able to stream the stuff they want to steal rather than risk downloading it. That’s why the right solution is to make it easier to get legally than it is to steal. As I wrote in the conclusion of my report:

MAKE LEGITIMATE VIEWING EASIER THAN PIRACY AND LEGAL FORMS WILL TRIUMPH

Crushing illegal streaming will be even harder than crushing P2P sites. We don’t recommend that the industry give up, however. Instead, we think automated content identification systems from companies like auditude and Vobile, Inc. do an increasingly reliable job of finding infringing content, making it easier for studios and broadcasters to respond quickly to pirated streams around the world. However, erecting barriers to piracy is only one half of the equation. While they make it hard for the people who sponsor piracy, the best long-term solution is one in which consumers’ fundamental desire for easy access to top content is satiated through legal means.  

So far, the industry gets this, but as I have documented on this blog, there are some exceptions, such as when Warner Brothers TV pulled down episodes of The Mentalist from CBS.com. Interestingly, on the CBS.com fan forum for The Mentalist, one concerned viewer posted links to a variety of sites where you can stream the show illegally. Networks, even human ones, have a way of routing around blockages.


Why Joost canceled its P2P application

December 18, 2008

joostendLike me, you may have received this friendly email from Joost this week politely informing you that the original Joost application will no longer function as of December 19th.

That’s fine with me, I uninstalled it a long time ago in favor of Joost.com.

For those of you unfamiliar with Joost’s roots, this is a rejection of the Peer-2-Peer (P2P) model that Joost originally built itself on. In early 2007, P2P was going to be the bomb. BitTorrent (the company, not the protocol), was positioning itself as the most cost-effective way to deliver HD content; Joost was launched in the same fervor as the brainchild of the founders of P2P network Kazaa . Back then, delivering video streams cost between 25 and 35 cents per gigabyte depending on your deal with Akamai. P2P was billed as a way to cut costs down to 5 cents. 

Fast forward to today, where CDN competition and great volume deals have gotten streaming down to between 6 and 8 cents per GB. Not as cheap as P2P, but darn close, and with better control over content. Plus, your viewers don’t have to download resource-hogging P2P apps.

Streaming is the proverbial wave of the future. With 61% of the population connected via broadband, with the rise in quality of streaming, streaming is the way that the lion’s share of online content will be delivered for the next few years. By cutting its P2P app and going all .com, Joost is merely accepting the facts and trying to build an audience for itself using the simplest method — an open website. And looking at Joost’s site metrics in the few months it has been available as a dot com, it’s clear this friction-free delivery method is working for them.

In fact, streaming is so easy, we expect piracy to shift from downloading via bittorrent to streaming from sites like megavideo.com.


Apple MacBook won’t let you watch iTunes movies on some displays

November 19, 2008

This one is slowly bubbling to a frenzy. The new aluminum MacBook has turned up the heat on how aggressively it will protect iTunes video content from being output to an external display. In plain English, if you hook your new MacBook up to a display that is not DPDC-compliant, you will get an error message and you will not be able to play the movies you bought on iTunes. For technical details read this excellent summary from Ars Technica, always a reliable source. 

There are many angry posts going around online, including on Apple’s user forums where people are, appropriately, miffed that they can’t watch content they’ve paid for on legitimate devices (notably, projectors and older TVs, anything that requires a conversion from a digital to an analog or non DPDC-compliant digital signal).  My favorite comment on the user forum was from Al Knowles, who said:

Same problem here as well. I guess they want to be sure we HAVE to buy an
Apple TV.
Not gonna happen.
I’ll buy DVD’s at my local retailer before that happens.

Talk about drastic measures! As easy as it would be to flay Apple for this one. I have to point the finger at the people behind this: the movie studios. They are certainly the ones forcing Apple to do this, since Apple has created a very open platform for video that requires downloading entire files in order to view them. Files which the industry fears are then subject to offline manipulation and sharing. This is in contrast to Netflix streaming, which never lets a complete copy of a movie make it onto any device. 

The industry fear is obvious: you’ll rent an HD movie on iTunes, connect it to your DVD recorder instead of your TV and output a permanent copy for your library archive. Or worse, you’ll then make copies for all your friends. So they figured they can just rely on technology to prevent you from connecting to an unapproved device. The rub comes when you find out how many “unapproved” devices are still legitimate — at least from a consumer’s perspective. And in the end, it’s the consumer’s perspective that will determine whether people turn to alternate means to scratch the video itch. And yes, under alternate means I am including piracy.

What about you: bad call for Apple? Is this just the big, bad movie studios? Do you think Apple will have to relent in response to user outcry?


Making money from user-uploaded video: Auditude, MySpace, and MTVNetworks

November 3, 2008

This is an important announcement, but it’s one that’s hard to understand if you don’t follow this business every day — I found that out last week when trying to speak to reporters who were having trouble with this. One reporter who gets it is Jessica Guynn of the LA Times. Her piece on Auditude, quoting me, ran today

The basic explanation goes like this: A viewer captures a clip of a Colbert Report segment and posts it to MySpace. Auditude’s system checks the clip against a massive database of clips and properly identifies the video as a Colbert Report segment from Thursday, October 30. Auditude checks that content against MTV Networks’ list of content that can be monetized, finds it is approved, then matches an ad to it based on who has paid to sponsor the Colbert Report. When that video gets viewed on MySpace after that, viewers see the clip, with an overlay from MTV Networks promoting the show’s website and airtimes, this is followed by a brief “sponsored by” overlay from the advertiser. MySpace gets to please its visitors, MTVNetworks gets promotion for its popular show, an advertiser gets an interested viewer, and some money greases everybody’s palms, from MySpace to MTV Networks to Auditude. Win, win, win and win.

The prior solution didn’t work. It involved trying to discourage posting of copyrighted materials by taking them down quickly but also by providing the same content in high quality directly from the content owner. For example, Tina Fey’s hilarious interview with David Letterman on October 17th to talk about Fey’s Sarah Palin impersonation, was posted by CBS the day after. It has since earned 156,339 views. But the presumably illegal posting from a random viewer of the same interview went up the night before (the same night as the interview) and has since generated 588,934 views, nearly four times as many (with a much lower quality clip).

Taking those successful videos down means they don’t do anyone any good. Making money from them is a better idea. 

This is really needed for the user-posted video market which up until now had no hope of every making real money. I say real money because advertisers don’t want to touch all the video genuinely created by average people, because: 1) it’s often inappropriate, and 2) no one knows how well it engages viewers. In contrast, professional content like the MTV Networks clips that often make their way onto MySpace are advertiser-friendly. Once we can monetize those millions of video views, there’s a chance that revenue will rush into that vacuum, helping the market hit its online video advertising goals

Long-term, this becomes a standard approach. More networks will sign on to work with MySpace, they do all their learning and experimentation. A few will also work with YouTube (probably CBS, which has always had a cozier relationship with YouTube than the rest) in the meantime. At some point, best practices evolve and YouTube lawsuits get resolved and this becomes a standard practice.


So YouTube Will Make Money With, um, Retail?

October 8, 2008

For those of us who have been waiting impatiently for YouTube to effectively monetize its traffic, it came as a bit of a surprise that the the most recent effort to cash in on millions of video views is, surprise, to sell MP3s and videogames. The official Google Blog announced this yesterday (with a teasingly apropos title, by the way, “I clicked to buy and I liked it”).  

It works like this: For content provided by EMI, Electronic Arts, and others, these partners will be able to add “buy this” links for sites like iTunes and Amazon. Easy enough.

Where this really gets cool is if the music labels use Google’s automatic Content ID system to identify and monetize when someone uploads a video with a label’s music as a soundtrack. 

Google/YouTube’s goal is to train content providers to think, “user-generated content=source of revenue” instead of “user-generated content=evil pirates who should be cast down to infernal realms.” This is the right idea. But, sadly, it’s not something content partners are excited about, precisely because rethinking UGC is tough for the media companies, whether on the music side or the video side. The anti-piracy vigil is strong, rightly so, but it’s also unreasonable from time to time.

The next step for automated Content ID is in video: once media partners allow Google to identify user-posted versions of its video content, they will hopefully see the wisdom in letting Google place some ads adjacent to or on top of the videos, sharing the revenue with the content provider. That’s when YouTube will really make money off these millions of viewers.