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.

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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.