Online video

Online video use has grown rapidly in the past few years as home broadband Internet access has increased from 32% in 2003 to nearly 89% in 2008 (Website Optimization, 2008). 9.2 billion videos were watched on the Internet in September 2007 alone (comScore, 2007). It is unsurprising then, with the growth of online video use, that corporations are eager to find ways to profit off this development.

Top U.S. Online Video Properties* by Videos Viewed
Total U.S. – Home/Work/University Locations
Source: comScore Video Metrix
Property	Videos	Share (%) of
	(MM)	Videos
Total Internet	9,211	100
Google Sites	2,608	28.3
Fox Interactive Media	387	4.2
Yahoo! Sites	381	4.1
Viacom Digital	304	3.3
Time Warner Network	198	2.2
Microsoft Sites	194	2.1
Disney Online	92	1
ESPN	89	1
Comcast Corporation	52	0.6
CBS Corporation	48	0.5

Google, which makes a majority of its profits through related text advertising, launched a video form of its ad service AdSense in February of this year. This service adds related graphical or text overlays to videos on YouTube (a Google property), Google Video, and a host of other online video sources. Many in the industry had anticipated the release of video AdSense as a prime and necessary revenue source for Google after its $1.65 billion acquisition of YouTube has been questioned due to significant infringement liabilities. In February 2007, media giant Viacom filed a $1 billion lawsuit against YouTube for alleged infringement of over 160,000 unauthorized clips. A few months later, NBC Universal joined with Viacom in a friend of the court brief opposing Google’s attempt to dismiss litigation brought by 1992 L.A. riot observer Robert Tur. The outcomes of these cases will have great impacts on legal interpretation of the DMCA.

In March 2007, NBC and Fox joined forces to develop Hulu, an online video on demand site that provides full episodes and clips from NBC and Fox programming, including shows aired on the networks’ cable properties. Unlike YouTube, which succeeds largely due to user content and uploads, Hulu is simply a content provider with little interactivity in comparison to YouTube. NBC, Fox, CBS, and ABC each maintain individual ad-supported streaming video services through their respective websites.

Apple’s iTunes is another major player in online video. Unlike YouTube and Hulu, which offer free streaming content, iTunes gives consumers the ability to purchase video for $1.99, including TV shows, feature films, and music videos. iTunes recently announced a deal with major film studios and premier independent film studios to make new DVD releases available for download the same day they are released to traditional retailers. New films are priced at $14.99 and catalog films are priced at $9.99. Apple’s DRM technology also allows for movie rentals through iTunes, priced at $4.99 for new releases and $3.99 for catalog films. This agreement hinged on the promise of 60-70% profit margins for the movie studios, which is reportedly double the margin of traditional DVD sales.

To summarize: how does corporate power exert its influence on online video? It is clear that major content providers (studios, networks, conglomerates) wield power through advertising, copyright protection, and threat of litigation. The outcomes of current litigation against Google/YouTube will have a profound effect on the future of the medium.

Related links:

http://www.apple.com/pr/library/2008/05/01itunes.html

http://valleywag.com/386323/obscene-itunes-profit-margins-finally-win-hollywoods-heart

http://www.google.com/ads/videoadsolutions/index.html

http://newteevee.com/2008/02/20/google-finally-launches-adsense-for-video/

Web Content/Social Networking

When considering the Web and social networking sites, a distinction can be drawn between professionally (corporate) produced content and user generated content. Recently, however, the lines between these two types of content and the platforms on which they are hosted are being blurred. Take a look at YouTube, for example. Professionally produced content, such as the Dove Real Beauty ads, is being posted by users. It is no longer exclusively the corporations who are sharing their content. In addition, this content is mixed in with user generated content, such as lonelygirl16’s video blog. This co-mingling of content demonstrates that the corporate sphere has collided with the amateur sphere and this has been made possible by new media technology.

The collision between corporate and individual power may spell trouble for corporations. BusinessWeek states that the user generated content available on the Web means that traditional news and media sources are no longer the gatekeepers of content. The article quotes Michael Arrington, chairman of edgeio.com and founder of techcrunch.com, as saying, “Power is shifting toward the individual, operating at the edge of the network and away from the giant companies at the center of the network…It’s a paradigm shift for everyone on the Internet.” So it seems that traditional media corporations are losing their power over what content is distributed and through which channels. If they expect to maintain their power they will have to change their methods and adapt to the new media environment.

Internet companies and new media corporations, such as Google, Yahoo, MySpace, and Facebook, are leading the way in exercising corporate power in this new environment. They are laying the foundation on which traditional corporations can become involved in the online world and extend their power. What is this foundation? Advertising. The business model for companies such as Google and Yahoo revolves around advertising. The business model for social networking sites such as MySpace and Facebook also revolves around advertising. Advertising means money and money means control. Corporations may have lost their influence on content, but social networking sites show that they will retain their financial control and power.

Advertisers, such as Interpublic Group, are the first major group of corporations to realize that they can use the fact that “user-generated content is exploding in popularity, as technology puts more power into the hands of individuals and communities” (BusinessWeek) to their advantage. Facebook and MySpace are leveraging their communities of users to advertisers in return for ad-based revenue. Facebook not only has advertisements on the sidebars of its pages, but it also features branded applications. Users can “sell” or recommend corporate products to their friends. This capitalizes on the community aspect of social networking sites so that advertising appears to be more word-of-mouth. Many corporations have pages on Facebook and MySpace. They are infiltrating these online communities in order to sell their products and establish a young, cool brand identity.

So why does this matter? We are familiar with corporate power in traditional media – why is corporate influence in new media a cause for concern? The primary reason that it is a cause for concern is that many people are unaware of the corporate influences in their social networks. They see the online environment as a place where they are able to dictate the content and choose the media that they are consuming. People’s barriers are down and they fail to realize the extent to which corporations affect their online behavior, such as directing traffic flow to certain websites. The second reason that corporate power is significant online is that there are new privacy issues inherent in online advertising. Corporations that pay to advertise on social networking and other websites will have unprecedented access to your preferences, your location, and your online activity (WireTap Magazine). Corporate power over content may be waning, but corporate power backed by advertising and revenue generation is alive and well.