Commentary

The Revolution Will Be Downloaded

For proof that the viewer wants to be in charge, look no further than the Summer Olympics. Not only did the opening ceremony in Beijing have a gigantic DVR audience of 3.25 million viewers, but NBC said 40% of its online viewers used the Web to view events they had first seen on TV.

In today's media environment, consumers have come to demand the flexibility of getting online content whenever they want, from TVs and personal computers to iPods and mobile devices. Brand and content owners basically have two options for packaging and delivering online content for viewer consumption. Each option requires different technologies, and each has its own place in the media ecosystem.

The first option is streaming, which fits well with consumers' PC-centric viewing habits. Streaming is ideal for watching instant clips and user-generated content, like YouTube videos, on a computer. With a broadband connection, streaming is capable of delivering smooth playback, and consumers love the immediate, "I can get it now" effect.

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While watching Michael Phelps repeat his gold medal wins from the comfort of a living room has inherent value for both consumers and advertisers, the real explosion in online media will take place when content can be consumed anytime, anywhere. This is the "always on" future, and the enormous popularity of the iPhone is a huge step forward in making it a reality. However, today's infrastructure cannot handle the streaming demands of consumers-at least not for portable content. A recent report by Canaccord Adams concluded that AT&T's network is reaching capacity due to heavy data traffic usage from the iPhone such that in some urban areas, consumers are having problems making a simple phone call. So, until infrastructure improves, publishers need to provide alternatives to satisfy consumers' demand for portable content.

This brings us to the second option, downloadable media, which picks up where streaming doesn't deliver. While not as immediate as streaming, downloadable media gives consumers the flexibility and control they've come to expect.

From the DVR to the iPod, viewers prefer downloading their content because it's more convenient. Downloading gives consumers the ability to time-shift and place-shift their programs -- not just short clips -- and watch them on their device of choice, when they want and with no Internet connection required.

This is why downloadable media offers the greatest potential for content owners. The question, as always, is finding a viable business model to support it.

Publishers often assume that downloading is akin to giving away the farm. As they see it, untethered media -- free from the restraints of distribution channels, time and space -- is (maybe) paid for once. A consumer who uses iTunes or LimeWire downloads content and then disappears into the content jungle, never to be seen again. No tracking opportunities, no way to garner additional ad revenue.

But revenue possibilities are actually far richer with downloadable media. Just look at podcasting. Podcasting may not get the attention it used to, but that's only because it's become an everyday activity -- eMarketer estimates that 65 million Americans will be using it as a distribution channel by 2012. Video and audio podcasts are simply RSS-enabled downloads that afford two big advantages: for users, it's an easy way to get fresh content automatically, and for publishers, it offers a built-in syndication platform that reaches audiences across the increasingly fragmented Web and device landscape. Podcast-related advertising opportunities are the next frontier.

New technology is making it possible for publishers and content owners to extend their revenue stream by inserting ads into, say, their podcast programming that are then embedded all the way to the device. Ads are played or refreshed each time the device is synced, until the ad campaign ends and the ad is removed from future downloads. Aside from gaining an additional revenue stream, brand and media owners can receive comprehensive reporting metrics that will allow them to track results and price future ads more appropriately.

With downloading, barriers to participation are low -- even with embedded ads. Consumers have signaled they are agreeable to short ads in return for free premium content, like an MSNBC program.

Podcasting is just the beginning. Once content providers can track and measure direct, untethered downloads, the media industry may finally be able to unlock all of that great content.

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