Commentary

The Deal Storm That Changed Us: Blip.tv, YouTube, FreeWheel

by Kendall Allen , August 24, 2009

Eyes on the grid, fingers on the pulse of the media sphere, most of us like to think we know what business deals mean at a glance, right when they are announced. Sometimes, even with the biggest deals, a little airtime and talk amongst ourselves is all we need to come to grips with industry happenings and go about our daily business.

But, occasionally, there is a meaningful confluence of suchbig deals in a short period of time, immediately floodlighting the future to come -- that we must stop, look and listen. As consumers and as media executives, we must know what time it is and expand our outlook accordingly.

Ponder the past few weeks: We have Blip.tv's content deal with YouTube; we have YouTube's test with FreeWheel. These deals are not only symbolic. They outright set the cadence of our footfall and broaden our path to the future. That is, a future where content production and distribution are not dependent on TV network affiliations and where we take a truly liberated, cross-channel view of the screen.

So what are the deals?

The Blip.tv Deal: The online video provider Blip.tv announced in July that it has added YouTube, Vimeo, NBCU Local Media NY, and Roku as content partners. Of particular interest is the relationship with YouTube. While Blip.tv could certainly place content on YouTube before, the deal includes ads placed by Blip.tv, which the video provider will then be able to track. The combined footprint, visibility and measurability are a boon to big-time growth.

YouTube's Test With FreeWheel: Around the same time, YouTube announced a trial with FreeWheel that will allow certain partners who sell their own ads to serve those ads directly into their videos on YouTube. Previously ads sold by these partners were still served by YouTube. In the company's own words on its corporate blog, "This will create a more centralized, streamlined process for partners in the test program, making it easier for them to sell ads and make even more money from their content." These words paired with actual action make the media progressive's heart sing.

In fact, a recent quote by Blip.tv CEO Mike Hudack illuminates his kindred point of view: "Our goal is to make web shows sustainable. The CBS TV network is about 68-years-old. The cable nets are about 25-years-old. They're designed for economy of scarcity and linear distribution. We're building our network for an economy of plenty and at a time when people can watch whatever they want, whenever they want. The majority of shows will come from independent, don't-have-to-work-with-TV networks, just as more of us are listening to music that is distributed independently."

It's starting to look as if progress is not so steeply dependent on TV executives shedding the dinosaur suits and "getting it." We are not waiting for that. Interests are aligning among us, and there is meaningful movement. These two deals don't just gripe at limitations and choke-points, they forge our way forward with solutions satisfying both the avid media consumer and progressive media enterprise.

Just like the long-running comparison to print distribution, it has always been true that online distribution generates only a smidge of the revenue and profit of today's incumbent cable, broadcast, and satellite distribution models. So, we've had to deal with TV models being stretched by TV executives, beyond their aptitude. But now, as Internet-based distribution gets traction, the shortcut of simply porting over aged TV models to digital will finally be acknowledged more broadly -- as lame. And these shortcuts will be usurped by more aggressive, imaginative deals that effectively begin to reconstitute models across the board.

The adoption of this kind of significant deal-making, partnering and alignment of consumer and business interests will effectively transport the media industry at-large.Some would say thatthe events of the past two weeks will be regarded as just as important in ten years as the passage of the Telecom Reform Act was to the growth of our industry back in 1996.

Previously, I could have rattled off all kinds of proof of progress in our world:

- New home-friendly entertainment formats besides TV.

- Incremental digital platforms like Hulu and YouTube.

- Fewer distribution choke-points over time, as Internet access has improved around the world.

- Our collective waking up to restrictive media business practices such as market-based control on viewing, limited live streaming, video library hording and expensive bundling practices.

But, these two deals tell us far more than that obvious list. These deals collectively and in themselves are proof of concept. And the "concept" is: fluid, consumer-led global content distribution is coming.

As we move more quickly toward this goal, it's important to remember a few things: The best content creators will succeed, regardless of affiliation. Leaning forward or leaning back is an irrelevant distinction, if we can choose our screens all day long. Dumb stays dumb and renders itself obsolete. And, consumer-friendly and clever on the dealio count an awful lot.

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6 comments about "The Deal Storm That Changed Us: Blip.tv, YouTube, FreeWheel".

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Todd Zander from healthline, August 24, 2009 at 1:05 p.m.
"Our goal is to make web shows sustainable. The CBS TV network is about 68-years-old. The cable nets are about 25-years-old. They're designed for economy of scarcity and linear distribution. We're building our network for an economy of plenty and at a time when people can watch whatever they want, whenever they want. The majority of shows will come from independent, don't-have-to-work-with-TV networks, just as more of us are listening to music that is distributed independently."
WOW - that has to be the best 'drinking your own kool-aid' quote i've read in quite some time. and let me guess - the online ad market is SOOO big that there's enough money to go around to the creators, producers and syndicators. oh yea, and these 'indies' will be the mainstream providers of media. and ya, they will be able to fund such compelling 'old school' productions as Planet Earth. and TV will be dead in 3 years because of Boxee and Hulu.
i can't wait to see this trillion dollar digital ad industry blossom. in 2010, right? sure.
oh, and most people listen to independent music? Mr. Hudack and his buddies must listen to the indies, but everyone? come on! put down the kool aid and take a ride to middle america. sit on a bench at the 6 Flags for an hour.
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Richard Monihan, August 24, 2009 at 1:10 p.m.

There are two types of people in the world: those willing to engage their entertainment, and others who want it delivered to them.

For the first group, the brave new world is well designed to suit their needs - and advertisers have to start recognizing that these people ingest their news and information differently. As a result, the ads will have to be slightly different. The mode of delivery (pre roll, :15/:30 second) will probably not change, but the message does need to be altered.
The second group tend to be much larger and are the reason why the standard networks will survive for years to come.

It's worth noting that blacksmiths still exist today. And many make a very good income. This seems incongruous, since so few of us ride horses...but is in fact a reality that while markets shift, they rarely completely disappear. Those who remain in these markets, if they are capable of recognizing how the shift is taking place, will benefit greatly.

To that end, consumer-led content has been in existence for years. After all, programming on the networks tends to be geared toward ratings - which are a form of consumer interest. What is changing isn't so much the nature of the content, but simply how it is being discovered and ingested.

Before, we used TV Guide and a remote control (and to some degree we will continue to use it). In the future, we will use word of mouth, viral email, and social networks to disseminate the latest desirable video product.

The real question in this alteration of consumption is whether or not quality will suffer. In some ways, no - people will simply be getting more of what they are really looking for and that's a good thing. In other ways, however, the answer is yes it will suffer since it seems that much of the consumer provided content is really not that interesting and will be lacking the long life span that real quality programming has.

In the end, nothing will really have changed that dramatically, except the way we talk about how we're reaching the people we want to reach....and whether or not we want to work with the product provided.

Stanford Crane from NewGuard Entertainment Corp, August 24, 2009 at 1:59 p.m.

Lots of interesting thoughts on all sides. How about the idea of actually combining the broadcast interests with the digital interests and deploying additional content which doesn't necessarily fit into the defined time slot? We leave some of the best stuff on the cutting room floor (or in disk drives), so why not deploy it on the web and monetize that as well? I realize Discovery has their own slant and it is working well for them and Mr. Zander is right, content creators need to be compensated for their creations. A hybrid might work well, even at Discovery.

Ned Canty from New York Television Festival, August 24, 2009 at 2:32 p.m.

As always, a very concise and insightful analysis. I was thrilled to see the Blip deal happen, and since I spend most of time working to help emerging artists make it to the next level, I agree with the tone and tenor of the story.

There is a second factor potentially at work, though--one which was related to me by a number of artists working in the space during Internet Week NY and at the Open Video Conference. Namely, is there such a thing as barriers being set too low? It may be a heretical thing to state, but there are fringe benefits to a system with some barriers--or in this context perhaps better to call them filters.

For instance, I look at a series from the "golden" days of TV like "Your Show of Shows", which had a writing room with Mel Brooks, Neil Simon, Larry Gelbart and Carl Reiner, among others. The barriers/filters of the day meant that very few people could have a TV show, so only the best (or luckiest?) made it to the top. Without those barriers, would those ridiculously talented people all have gone off to make their own shows? Perhaps. The situation forced them to work together, to collaborate and compromise. If all talented writers, directors or producers set off to do their own thing, does that lead to a watering down of the content? Quite possibly so, especially in a collaborative art like TV. The best TV shows often have a single strong visionary at the fore, but a staff below them of incredibly talented folks, each waiting and hoping (perhaps in vain) that one day they will get to be top dog.

As I write this I feel like a bit of a wet blanket, or a contrarian, which is not how I intend it. I could not agree more with you that the best content makers will always rise to the fore--I've based the past five years of my life on that prospect. But I do occasionally worry that eventually there will be too many generals and too few soldiers to get the kind of creative ferment that so much great storytelling comes out of.

But to end on a positive note, I believe that an environment that mitigates risk will always lead to some amazing discoveries, and I hope that the new freedom will encourage artists to seek each other out and help one another, so that all may rise.

Gian Lombardi from YuMe Networks, August 24, 2009 at 7:04 p.m.

Kendall,

I'm equally excited about the decentralization of video distribution that we're currently witnessing, and all the possibilities such democratization enables, but what's really happened here with these two "coincedental" deals?

YouTube finally allows some testing of 3rd party ad sales and 3rd party ad serving into their distribution environment.

This does speak to the possibility of increased decentralization on the monetization front. I say possibility because after all, YouTube could balk after the 'test' and go back to business as usual.

That said, if this is truly the watershed event you make it out to be, the bigger story behind the story just might be that YouTube has officially replaced the oligopoly on video distribution that the TV networks enjoyed for so long. The king is dead. Long live the king.

Doug Knopper from FreeWheel, August 25, 2009 at 12:54 p.m.

Kendall, you clearly understand the direction in which this new video world is going. Consumers are the primary beneficiaries in that they get to watch their content wherever and whenever they want --- professional, independent and in between.

The resulting fragmentation across the monetization value chain makes it less efficient for the players to receive value for their efforts. This could be a blocker, as Todd indicates above, or it could open up an even bigger ecosystem in which more players have the ability to make more money from better content than ever before. We designed our platform with the flexibility to create value this very fragmented ecosystem, and early results indicate that we’re on to something well beyond simple ad serving and management.

Kudos to you, Kendall, for seeing what a sea change these deals represent... something that YouTube and Blip clearly understand. Today it's all about online. But, what will we be watching five years from now and what will we be watching it on? That’s where this gets really interesting!

Doug Knopper
www.freewheel.tv