Traditional Media Benefiting from New Media, NATPE Told
LAS VEGAS -- Though a shrinking audience threatens the broadcast networks’ established business model, new media distribution platforms offer unique opportunities for content providers and advertisers alike, speakers said at NATPE Wednesday. Unlike passive viewing in broadcast, the Internet makes viewers proactive, which demands new ways of doing business, said Yahoo Sports Vice President James Pitaro. “In today’s world, Internet users are too sophisticated to accept anything but openness. Putting a wall around your content won’t work… From the consumer perspective, there is a willingness to pay. We haven’t seen a shift towards a demand for free content which would push toward more advertising models.”
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Exploiting online distribution gives older media new revenue streams and access to hard-to-reach viewers, speakers said. Joost Executive Vice President Yvette Thijm said: “What the networks are finding is that by licensing content to an online service they attract a new audience they never thought would want their material… Look at cable where there are more and more niche channels. I think the same is true for online viewing. If you give people more options, there will be more viewing.”
Online partnerships also offers viewers access that broadcast can’t, said Jordon Hoffner, YouTube head of content partnerships: “That is a fundamental difference between TV and Internet. The tools are there to find what you want on the Internet.” The problem is that content owners don’t always achieve their full potential online, Hoffner said: “In terms of the rights, 30 percent of the traffic we have is the U.S. If you are a content owner and only clear U.S. rights, you're leaving 70 percent on the table.”
Web video is one of the hottest growth areas, but the business requires more than producing a webisode and uploading it, said Generate CEO Jordan Levin. “One of the hurdles for professional producers like ourselves -- we have to carry errors and admissions insurance, whereas some people make their own stuff for $1,000,” compared with the $15,000 an episode that Generate spends. “When you're competing against people with no liability, and they're willing to take that risk, you have to let your clients know the difference.”
Yahoo TV’s Peter Clem said, “I would love to create a Web series that turns into a TV show, but I don’t see that happening anytime soon.” Internet advertising, local and national, has become a multibillion dollar a year business. Adam Gordon, chief revenue officer of WorldNow said: “It used to be a $25,000 deal was huge. Now we've come to million dollar ad deals online.” Analyst Gordon Burrell added: “There is tremendous growth in local online advertising, whether web advertising or search advertising. In 2007, $8.5 billion was spent by local advertisers. The biggest gainers [of online ad money] are station groups.”
Increasingly, advertisers are providing their own Web video, said Interactive Initiative Vice President Michael Hayes: “They produce videos and link them to clients. Some are looking for buzz and some are looking for performance… More advertisers [concentrate] on the buzz/awareness building metric.”
Content providers have different agendas, Hayes said: “We have a good number of clients who would be interested in professionally produced webisodes with content like drunkenness and making out. We'd love to get beyond that and integrate product placement, among other things. I think Web video is here to stay and it’s only going to keep growing.”
- Kathleen Tracy, Heather Huettl
NATPE Notebook…
“The business model of cable is much stronger than the business model for broadcast,” said Jeff Gaspin, president of Universal TV Group. “You have two streams of revenue, plus you have advertisers supporting as you have in broadcast. Cable is experiencing one of the best times it’s ever had in terms of profitability and creativity.” The writers’ strike has been an ad boon for cable, he said. “Cable is seeing a tremendous benefit,” he said. “I'm seeing scatter pricing I haven’t seen in ten years.” Garth Ancier, president of BBC Worldwide America, said the U.K. paid $2.8 billion in license fees last year for U.S.-scripted shows: “International sales to countries like the U.K. and Germany are funding the deficits of U.S. primetime series more than they ever have before.” Roma Khanna, NBC Universal International president- global networks and digital initiatives, said there’s been “a renewed interest in international television” the last 12 months. “To buy into established markets like Europe is expensive. But emerging markets aren’t. It’s exciting for places like India, Russia, Asia and China. If you wait, it doesn’t mean you won’t get in,” Khanna said. “You'll just pay more when you do… You want to be fully local but you need to trust your team and it has to meet a global standard, not just a local standard.” Attorney Blaine Kimrey, speaking on media liability claims against content creators, said “there’s a patchwork of standards all across the United States so you can have hugely different jurisdiction applying vastly different standards. In situations where the law is not clear, get SRI insurance. And have a really good relationship with your counsel and bring them in during the creative process.”