Interviews with Digital Media Thought Leaders
Is Napsterization of Video at Hand?
Podcast Video | Posted by Phil Leigh on March 4, 2009
Download to Computer, iPhone, or iPod
If you are curious to know whether the video industry is at the threshold of “Napsterization” much like the record label business was ten years ago, this video is for you.
It is hard to believe that it was fully ten years ago that Shawn Fanning unleashed Napster P2P software that forever changed the record label business. Napster demonstrated beyond any doubt that the Internet was going to become the natural distribution platform for all Digital Media files. In order to prosper, or even survive, the established business models would have to adapt. It was obvious that the record label industry was the “canary in the coal mine” and that ultimately there would be a day of reckoning for the video producer as well.
That day of reckoning has arrived for two reasons.
First, pirated Websites are now available that offer movies and TV shows as streams instead of downloads. That means that anyone who can master the simple skills needed to watch a video at YouTube or Hulu can watch pirated video from streaming media websites. There is no requirement to download files, locate them on the computer, and then select them for playback. Streaming sites offer click-and-watch simplicity.
Comscore’s January tabulation of video sites reveals that one such website in China has entered the list of top-ten. Users of the site spend twice as much time monthly watching video there as does the average YouTube user. Moreover, the site’s year-over-year traffic growth is 500%.
Second, as consumers increasingly connect their laptop computers to HDTVs their appetite for Internet Video increases significantly. This is because the technique provides a lean-back viewing experience that is much preferred. While the methodology is entirely legal it feeds demand for more Internet Video. If reasonably priced legal alternatives are not available, some consumers will be tempted to visit the pirated sites. If the experience of the record label business is any indication, the simplicity of streaming pirate sites could induce a flood of traffic much like the simplicity of Napster catalyzed the growth of file sharing.
The most effective way for video content providers to combat impending Napsterization is to remove the incentive for piracy. That can be accomplished by either (1) distributing content at ad-supported websites, or (2) pricing the content low enough to motivate consumers to avoid potential malware risks that may exist at pirate sites.
Confessedly, ad-supported sites must do a better job of optimizing revenues. One way is to use computer controlled ad-insertion much like Google does with AdSense. Business managers must seek the vendors providing the best algorithms and then trust the algorithms to optimize results based upon dynamic interaction with the viewer.
This is Third Generation Television.
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Categories: Podcast Video
Tags: digital-media, Digital-Video, Future-of-Television, Internet-video, Napster, record-labels, Shawn Fanning, YouTube
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