The music and video content industry has just entered a new era of changes with the exponential developments of the digital and dematerialized content consumption and new usages, facilitated by the new Web 2.0 trends and sharing technologies. These changes have for example recently resulted in one of the most noticeable event of the last view months in the dematerialized music industry: the beginning of the end of the DRM protection on downloadable music tracks, move having been initiated by Apple on iTunes.
This general introspective atmosphere is leading major players, should they be right owners, editors, content providers or aggregators, to try to find new ways of creating value and generating revenues and of being innovative in developing new business models and strategic partnerships, or even calling for public authority’s political support and legislation.
Not all of these attempts and initiatives are completely successful though…
Adapting Business Models to Usage Trends
Many streaming media content platforms realize that their economic model, solely based on free access to the media content and ad-generated revenues, does no longer make it for them to cover all the infrastructure costs.
As a result, a combination of free services and charged services has been implemented. For instance, streaming music platforms such as last.fm or Spotify offer several levels of services. The latter allows the user to choose between free music financed by advertising and either a day pass or a monthly subscription for unlimited streaming music, both of which are ad-free; the former allows the user from some countries to listen to 30 titles for free before subscribing to a premium service.
Developing Strategic Partnerships
In all cases, since content is the key feeding element for these streaming media platforms, strategic partnerships going far beyond the usual right owners are crucial. These players have lately shown creativity in diversifying their business partners: production studios, distribution channels, telecom operators….
For instance, a digital media content streaming platform such as DailyMotion has recently signed agreements with French Mobile operator Bouygues Telecom, French production studio Tetra Studio Media.
For the deal with Bouygues Telecom, DailyMotion re-formats its media contents in order to insure right fit to the mobile usage constraints (small screens, mobile access…) and make access to DailyMotion sites easier to Bouygues Telecom customers. On the other hand, the deal with Tetra Studio Media ensures that the professionally produced contents (TV shows, sitcoms, TV series) will live up to some degree of quality and justify premium services. As a matter of fact, the same kind of agreement has been signed by the French DailyMotion with Time Warner in the US, where DailyMotion has started to challenge YouTube on its own homeland. DailyMotion will be able to provide for instance high range news content through CNN news productions.
Last but not least, DailyMotion has, in the US, also just signed an agreement with another media streaming platform, the very hot buzz Hulu. DailyMotion and Hulu will put in common something like 40 000 contents, extending both platforms respective catalog.
Hulu may be seen as a potential competitor in the US, as it is actually competing with YouTube in the US, however, Hulu is not exactly positioned on the same segment, since Hulu is not User Generated Content and provides essentially TV shows and series. Whatsoever, this deal is a way for DailyMotion to go one step further in competing with YouTube in the US.
Speaking of YouTube, the latter along with Universal Music have signed an agreement in order to offer video clips viewing. This provides YouTube with the opportunity to offer high-end premium contents and better monetize the advertising space.
Not so successful partnerships – Harsh negotiations…
However, all the partnerships are not so easy to seal and are not always successful, proving that finding the right business model and agreement is the one toughest task of the Media industry in the upcoming years.
For instance, YouTube used to have the same type of deal with Time Warner, but this has not been extended, because of an unsolvable divergence in the revenue share expectations.
Another recent example involves YouTube again. On March 10, YouTube blocked all access to the music videos and tracks that are produced by the British Music Major, PRS of Music. Again, the two parties did not agree on the revenue share distribution, leading to YouTube blockage and resulting in passionate reaction from not only the majors themselves but also the artists, through the Featured Artists Coalition (FAC).
The press media is also encountering difficult times on the web. After Google acquired DoubleClick, Google started to display rich media advertising links on its news pages (aka Google News) in the US and is now planning on extending the experience to France. Whereas it used to be sufficient for news press media to have clickable headlines on Google News pages, with automatic link transfer to redirect traffic to the press groups’ own pages, these press groups’ appetites seem to have been tickled by Google News success and prospective revenues. Indeed, French group of online service editors (GESTE) now wants to modify the business model and want their own share of the cake, advocating that Google News would not even exist if they did not provide Google with the news content that is the source of traffic and monetization.
It is to bet that this story will not end here and new developments will occur and possibly new business model declinations as well.
While media platforms are developing their strategic partnerships with the various players of the industry, ranging from the production studios to the right owners or the telecommunication operators, some right owners are finding innovative and off-beat approaches. The Norwegian public TV broadcaster DRK’s initiative is not quite a partnership per se, since no counterpart has yet been identified to carry any kind of negotiation; however, it uses today’s available tools and trend to develop their business. Typically, DRK has started to make its TV shows available on the P2P Bit torrent network. This bold initiative provides a small TV network from a small country with a much larger scale exposure than a more traditional approach, as long as the media content made available matches some minimum quality criteria, which seems here to be the case (notorious shows, HD quality resolution, DRM-free…).
When politics and legislation come into play… The French exception case…
And while many Internet and Media industry players around the globe are adjusting their businesses to cope with the new Web 2.0 and Media 2.0 consumption society, the French Authority is currently striving to implement regulatory laws in order to fight cyber piracy and illegal downloads. The HADOPI project is meant to allow gradual legal penalties to people, who have been found guilty of intellectual right property infringement, penalties ranging from an Email warning message to the Internet access cancellation. While this law project is currently under discussion in the French parliament, many parties have expressed their opposition to this project, including the European Parliament.
On one hand, the European Parliament feels that Internet access should be considered as a fondamental right, and therefore should not be resigned by national justice court decision.
In particular, it has been technically demonstrated that hacking and stealing an IP address and therefore navigating through the Internet under somebody else’s IP address, was relatively easy. However, the HADOPI project seems to include in its official text the obligation for any internet user to be responsible for implementing appropriate security protections in order to prevent such intrusions… no matter how proficient in computers and technologies you are supposed to be.
Then, recent events may make the HADOPI law project already obsolete even before its adoption. Indeed, a justice court decision has just released a man from any charge of internet piracy, on the basis that the man’s guilt could not be established with certainty on the sole base of his IP address…
The right owners of the Media industry in France may have to find new ways to preserve their traditional business models…. or just start adopting brand new business and political approaches….
written by Son Nguyan Quang.
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