Spotify deja vu: is video killing the radio star again?

This article was originally published via The Guardian Media Network.

spotify-video adsOur world is being transformed by technology, but history, as the latest Spotify announcement shows, is destined to repeat itself.

In 1981, Viacom launched MTV. It used footage from the first moon landing and the song Video Killed the Radio Star to make it clear to the music labels and advertisers that it meant business. Before MTV, the music business (with the help of radio) was doing well. But video quickly took the industry to new heights. Fueled by the new medium, global music sales revenue quadrupled, before losing steam due to the new hip technology called the internet (and piracy).

Born in 2006, Spotify was the Swedish knight in shining armour using secret weapons like freemium and streaming to save the music industry from piracy. Last week, that knight called in the cavalry in the form of video streaming. Just like in the 80s, the music streaming business was doing OK (Spotify generated $1.3bn in revenue each year and is currently valued at $8bn), but the future was looking challenging – the company tripled its losses since 2012 and with Apple launching its own service in a few weeks – who knows when Spotify will turn a profit. For a company that is hoping to have its stock market launch soon, that’s an unbearable thought.

Spotify is trying to position its announcement as an evolution (not a revolution) of its business. Something along the lines of “music was just the beginning, now we will add TV clips and podcasts to create an entertainment platform”. One could say that Snapchat made a similar move a few months ago when it began offering video updates on top of its messaging app.

Spotify’s move, however, is quite different. Spotify is, first and foremost, a music service. Not just a distribution platform. If we know one thing about Spotify’s massive user base, it is that they love music. But interestingly, in the press event last week, where the video feature was announced – music took the back seat. When showcasing some of the new video content, Spotify chose to highlight short clips from comedy TV shows like Broad City and not music videos or interviews with artists that complement Spotify’s core offering. It seems as if in Spotify’s video realm, TV killed the radio star yet again.

The truth is that monetising music with a freemium business model is hard. Pandora, just like Spotify, is also sweating to make it work.

From a product design standpoint, there is something almost unfair in this story, since Spotify did a great job in designing a fantastic music experience: the catalogue is huge, the device support is superb, the playlists are great for sharing, the play queue is a cool tool for occasional DJing, the user profiles are what social discovery is all about and the recent announcement of Spotify Running makes perfect sense. And let’s not forget the best part – much of this is available for free.

But all of that wasn’t enough and so Spotify had to change focus and expand its content offering.

Maybe last week’s press event doesn’t mean that much and music fans have nothing to worry about. Maybe Spotify, just like MTV in the 80s, will take content streaming business to new heights with the introduction of video. Maybe Spotify, like MTV in its heyday, will be as innovative with TV clips as it was with the music streaming experience. Maybe it will even challenge YouTube’s viewing experience that hasn’t changed much over the years. But those are all big maybes.

One thing is clear – Spotify must make TV clips work with music. One will not work without the other. Just look at what happened to MTV once it lost all interest in music and its core fan base to focus solely on reality TV – it’s dying.

With millions of music fans who love Spotify and are looking forward to a bright new age for the industry, one can only hope that Spotify knows what it’s doing and that history will not come full circle.

Sling TV: the killer cord-cutting platform?

 

This article was originally published via The Guardian Media Network.

Every now asling tvnd then new services are introduced and make us change our behaviours so quickly that we almost forget that things were ever different. It’s those “did we really” moments that you have when trying to recall life before that service or product appeared. For example, did we really used to buy a whole CD just to get access to a single song? Did we really spend a fortune on DVDs only to watch them once or twice? Did we really agree to pay for hundreds of TV channels, only to watch the 10 we really care about? Oh, wait. We still do.

But the new age is already here in some shape or form. It’s called Sling TV – an over-the-top (OTT) TV service introduced by US satellite provider Dish that lets US users stream 12 live channels on multiple devices for $20 a month. This may not sound that groundbreaking. It may even sound like a bad deal. But almost a month after its launch, it’s safe to say that Sling TV is an important milestone for Americans who yearn for days when live TV will be as easy and cheap to consume as Netflix and Spotify.

Here’s why Sling TV is a milestone in this new era of TV experiences.

ESPN has left the box

The most significant draw of Sling is its sports channels: ESPN and ESPN2 (more sport channels are expected to be made available for an extra $5). Live sports were always the missing piece from any TV service that isn’t cable, as there have been no bargains, no easy shortcuts (read: not easy to pirate). However, Sling TV users can finally get access to live sports for cheap and they also get some control. For example, the local ESPN channels will usually only carry the games of the local team. But what if I’m a San Francisco 49ers fan living in NYC? There’s also the issue of blackouts in local markets. Sling TV could potentially help with both. Making sports more user- and budget-friendly is key to the future of OTT TV.

Disney is an agent of change

Since content is the most important piece in TV services, the Hollywood studios can determine the success or failure of any new service. Disney, which owns ESPN, the Disney channels and ABC, made four of its channels available on Sling TV. It also offers shortform content from Maker Studios, a network of YouTube creators that it acquired last year. If you add this to Disney’s apparent plans to offer a streaming service based on Marvel superheroes and a series of web shortsbased on Star Wars, we are seeing a Hollywood giant making very bold moves in the digital space.

Re-educating consumers

Dish is going after the 18-34 demographic that is moving away from traditional live paid TV. Some say this trend is happening at a stunning rate. According toDisney CEO, Bob Iger: “Dish’s Sling TV is designed to reach an estimated 12m households that subscribe to broadband, but not pay TV … We believe it’s a worthwhile experiment [to] try to convince younger people to sign up to cable when they either wouldn’t have signed up for it at all or might have waited.” In other words, Dish is trying to re-educate young viewers that there is a price point in which paying for TV can make sense, just like Netflix and Spotify make sense.

Re-educating device manufactures

TV devices are everywhere but they don’t seem to make our lives that much easier.

AppleTV is iOS only. Amazon is for Amazon customers. Chromecast has limited capabilities. The Google Nexus TV is tightly integrated with Google Play. Sony PlayStation has its own streaming service too. Wouldn’t it be great to have a piece of hardware that serves the consumer and not the manufacture’s eco-system? Sling TV takes a wide approach, just like Netflix, making it available on all these devices along with native iOS and Android apps. This is how TV in the 21st century should work.

What’s missing?

As promising as it is, Sling TV still has a way to go, especially when it comes to time shifted capabilities like rewinding live events and cloud DVR. This is where Dish could have captured the full essence of millennial TV viewers, but that would compete too much with its existing satellite service (and would compromise the entire industry’s business model). However, this is a feature that can easily be added later. When this will happen, we will find ourselves wondering “did we really not have cloud DVR on our internet TV service”?

When that day comes, our TV world will be a very different place.

Iddo Shai is director of product marketing at Kaltura. You can find him on Twitter@iddopop.

Social Media And The Celebrity Factor

This article was originally published in TechCrunch.

Kim-Kardashian-InstagramThe re/code mobile conference took place a couple of weeks ago, and among the speakers discussing the trends in tech were YouTube’s Susan Wojcicki, Instagram’s Kevin Systorm, Kim Kardashian West and… “Wait, what? Kim Kardashian is a tech expert now? Seriously???”

Many on Twitter were not convinced, and even Kara Swisher had to kickoff the interviewsomewhat apologetic going over Kardashian West’s impressive social footprint: 21 million Instagram followers; 25.2 million Twitter followers; and her iPhone game made her millions in the last year (and she does it all via a BlackBerry). If that’s not a savvy mobile tech powerhouse then what is?

Kardashian West is much more than a reality-show star at this point but in a way the reason she is a pioneer in using social media and developing her media brand, stems from the fact that she first got famous on reality TV.

Reality stars are good examples of artists that have massive appeal, great brand recognition and (for some) the talent to have successful careers after the show ends. However, when they are reality stars, they have no leverage over the show producers. If their show gets dropped, if their persona gets twisted in the editing room, their career could end before it even really started.

That is why social media outlets are key for these artists; they allow them to connect directly to their audiences. If E! drops Keeping Up with the Kardashians tomorrow, Kim will still be famous, because every time she’s online, she can connect with an audience more than twice the size of the average viewership of an episode of The Voice on NBC. Having this direct channel to her fans, she can now easily branch out to other ventures, like her mobile app.

Another social media powerhouse is Ellen DeGeneres. Ellen has about 33 million Twitter followers and about 100 million YouTube views per month. As a TV star, having her own video space seems vital. She recently launched ellentube, a website with an accompanying slick mobile app that allows fans to view her show’s highlights, additional clips and even upload their own cute home videos.

So what are the main reasons to build such a unique brand experience and go, in Ellen’s case, beyond YouTube?

It’s about building a community; videos uploaded to ellentube are moderated, which is not a simple feat. It surely requires quite an operation in the backend. However, creating a safe environment is key for Ellen’s brand. If she is going to throw all her weight behind this, she must make sure her fans feel completely at home there. This feeling is going to encourage them to come back and participate. This environment, which marketers usually refer to as “brand safety,” is key to attracting large sponsors that usually worry about having their pre-roll ads before a cute kitten video. So if Ellen can make both her audience and her advertisers comfortable, this site has enormous potential.

It’s about owning the data. In her re/code interview, Kardashian West called her Twitter followers “an amazing focus group.” The ability to get direct, unfiltered responses from fans is priceless. Kardashian West often uses it to consult with her fans about which restaurant to go to, but she can also use that as a focus group when making business decisions. Netflix is using its fan base for that and HBO is looking to do the same.

In Ellen’s case, her producers can now make a calculated decision to air a user-generated video from the site, based on how many people liked it on ellentube.

These examples boil down to being able to call your own shots. Creating your own video site or gaming app isn’t easy; it takes investment, time and expertise. However, if you team up with the right people, the potential upside is enormous. It’s all about maintaining creative control.

These celebrities know their audiences better than any video or gaming expert out there. So if they are independent and can create their own experiences — as well as have a direct channel to their fans — their possibilities in the digital space are endless.

Forget YouTube, Ellen DeGeneres now has Her own digital video network, ellentube

This interview with me was originally published by Adam Flomenbaum in Lost Remote.

ellentube-og-1200x630Ellen DeGeneres on her show last week announced the launch of ellentube, her new digital video network (and app) that will host videos that are “fun” and not “mean spirited.” The site will allow users to send videos directly to Ellen – which will be reviewed by Ellen’s team – and ellentube will also host favorite videos, show clips, and exclusive content produced by the woman behind the selfie seen ‘round the world.

ellentube is powered by Kaltura’s open source online video platform, Kaltura, a New-York based company founded in 2006, has secured $100 million in financing and currently has over 300,000 publishers using its platform. ellentube is based on Kaltura’s MediaSpace social video portal, which can be deployed as an out-of-the-box application, with the ability for full customization and branding.

Ellen is no Oprah, but her following is sizeable, and more, she has proven to be more attuned to the digital generation. ellentube is not democratic – her team will carefully curate videos that are all-around positive and are thus good for Ellen’s brand. Using digital platforms for brand building is something that celebrities have already experimented with and will continue to do so. For more on ellentube, how it complements Ellen’s other digital undertakings, and whether this is something we will see more celebrities doing, we spoke with Kaltura product manager Iddo Shai:

Lost Remote: How is this a better experience for fans than YouTube?

Iddo Shai: The site perfectly mirrors the Ellen Show experience, which is always fun, open and positive. Unlike YouTube, ellentube is curated. YouTube has some great content, but it also has some not-so-great content. On ellentube the videos are always great, because there is an editorial team behind the scenes, making sure that only videos that meet the site’s standards are published. This means that fans can spend literally hours watching really fun content.

Curation helps making sure the content is good, and it also helps with content being appropriate for all age groups. This is not the case with YouTube. Let me quote Ellen when launching the site on the show “if you accidentally type in a word wrong, you are not going to stumble upon something that’s… bad or mean or… you know how that can happen. Everything on the site is fun, nothing is mean spirited.’

And finally there’s the interactive aspect. The show didn’t only build a site but also a native app that makes it extremely easy for users to upload their videos. Kaltura also helped make the reviewing process quick and easy. Doing that via the YouTube app would have been challenging and almost impossible”.

LR: How does this complement Ellen’s other digital undertakings. 

Shai: Ellen is really a pioneer when it comes to digital and social media. She holds the world record of the most retweeted picture, and she was also one of the first to interview the Twitter sensation #AlexFromTarget.

So it’s no accident that she is also one of the first celebrities to build their own video centric site, connecting directly with fans, asking them to register to the site and featuring their videos on her show. A few years ago, TV talent didn’t understand why the second screen was important, we heard TV producers worried about building a web entity thinking it would hurt their ratings. The opposite is actually happening. With these videos going viral, Ellen’s ratings will go up. And when people want to watch more content, they will got to ellentube, where the experience is all about ellen and she is not just another contributor in an ocean of videos. From there, the sky is the limit: exclusive content, selling merchandise and more – I am curious myself to see what’s next.

LR: Will this be something we see more celebrities doing to engage fans?

Shai: I believe so. And I believe ellentube will show many of them the way. I think this will make a lot of sense for celebrities that are highly engaged with video content. And now it is easier than ever with tools like our MediaSpace product – an out-of-the-box social video portal, which ellentube is based on. Kaltura MediaSpace can be launched as is very quickly, or further customized to the customer’s liking.

They can create video communities, where users come to watch but also participate. We at Kaltura have seen bands doing live streaming for fans while being on the road, for example. Some of this stuff you can do on free platforms, but not everything. And especially for celebrities that can get a massive audience, splitting the revenue with Google makes very little sense. If you are giving it for free, you can at least ask for your fans’ email address. You can’t do that on YouTube.

LR: Anything else?

Shai: We are seeing a strong trend with user generated content. Remember, this is the selfie generation and there’s huge potential in creating TV shows and also marketing campaigns that ask people to submit their own content. With smartphones and apps it’s easier than ever and it creates an infinite feedback loop. This is what social TV is all about and this is what good marketing campaigns are all about.

We have seen one good examples of that when one of our customers called Visalus did a weight loss challenge and had people document themselves every step of the way and then others voted for them to win a nice prize. Creating truly unique interactive video experiences for communities with common interests is difficult to do well on a mega-site like YouTube, where one size fits all.

Why is YouTube brand Maker Studios worth more than Marvel to Disney?

This article was originally published via The Guardian Media Network.

maker-studios-logo-lWe are all used to seeing movie and TV stars being promoted in the subway. Well, YouTube now feels that if you have at least 1.4 million registered fans – you are worthy of an ad campaign as well.

Hollywood is clearly taking note of the potential of YouTube talent. About a month ago, in one of its biggest deals in recent years, Disney bought Maker Studios for roughly $1bn – or about £600m (half of it in cash and the rest in Disney stock). Maker Studios represents many popular YouTube talents and help them to produce and monetise their content.

This deal reminded me of the deal in 2009 in which Disney acquired Marvel. When comparing the valuation of Marvel and Maker at the moment of purchase, the difference is staggering. In 2009, the year it was acquired, Marvel did about $670m in sales. Disney paid $4.94bn for Marvel, which gave it a valuation multiple of about seven.

In the case of Maker Studios, the revenue numbers were not public knowledge. But we do know that Maker was evaluated at $300m about six months ago, when it went through another round of funding. Even if we assume that Maker got a very generous valuation back then (say 10x), its revenue couldn’t have been more than $30m. Given that Disney bought it for $500m (with up to $450m in performance-based earn-out), Maker basically received an evaluation of between 16x and 31x. What makes Maker Studios worth at least 220% – and possibly as much as 440% – more than the people who brought us Spiderman?

Much of it is about the number of YouTube subscribers. Maker’s revenue may be small but its reach is massive. It claims to have 5.5bn monthly views and 380 million subscribers. In that sense, Maker’s acquisition is more similar to Facebook buying WhatsApp for $19bn. WhatsApp had 450 million users at the time, which means that Facebook paid about $42 per user, while Disney paid about $2.60 per user. So maybe Maker’s price tag makes sense after all.

“Eyeballs valuation” is another sign of technology and entertainment convergence, where every content property can be easily measured. But what happens now? How can the Maker acquisition drive much higher revenues for Disney’s stockholders?

Maker will start by fostering and monetising its biggest asset: the direct relationship with subscribers. The first stage will be to cut out the middleman – YouTube. Maker recently launched its video site, called Maker.TV (powered by the Blip player that Maker bought last year). While the YouTube channels will still be operated, I assume much of Maker’s energy will now be directed towards moving its fans to Maker.TV. This is strategic for Maker for several reasons:

Ad revenue – YouTube takes about 30%-45% of any ad revenue. In addition, Maker has to work with YouTube on selling its ads and it has much less flexibility with advertisers.

Sponsorships – Maker needs to be able to create more branding and sponsorship opportunities around its original content. This is extremely hard to do within YouTube’s unified design.

User targeting – Maker needs to know everything about its users: their email addresses, viewing history and engagement levels. It also needs to be able to track viewing trends. This data is worth money. If Maker can offer more targeted ads, it can receive higher CPMs from advertisers and deliver them better click-through rates. In addition, data is key to offering appealing content recommendations. On YouTube, Maker has little control over the suggested content. On its own site, it can push its original content and record – and subsequently act on – the data on what’s working and what’s not.

Now that online video distribution and social media marketing make content more accessible than ever before, we are likely to see more content makers following Sesame Street’s lead and creating their own holistic website experience, in addition to their YouTube channel. This is vital to creating a direct relationship with viewers, which is what is driving today’s eye-watering acquisitions in technology and entertainment.

New Technology Promises to Unify a Fragmented Video Ad Market

This article was originally published via The Guardian Media Network.

onlinr video adsA few weeks ago I stumbled upon an article titled Why the Pipes Are Broken in Mobile Advertising. If you are an advertiser or a publisher dealing with online video, the challenges the article mentions would sound all too familiar: fragmentation of mobile devices, a dearth of good analytics, a lack of ad format standards and too many isolated solutions that only work for specific devices or streaming method. But guess what? That article was actually written in 2011 – before all the great devices such as connected TVs, tablets and Chromecast had caught on.

Is it really possible that no advancements have been made in almost three years? In reality, much has changed.

Specifications such as VAST (Video Ad Serving Template) and VPAID (Video Player-Ad API definition) have set the standard for online video ad types as pre-rolls, video pods and overlays. As a result, it’s much easier to integrate with multiple ad networks and maximise one’s ad inventory. Cost per thousand page impressions (CPMs) and real-time targeting are also far better than they used to be, thanks to improved cookies and real-time bidding.

All of these factors have made online video advertising smarter. Online video ads are far more effective than banners because user engagement can be tracked, allowing advertisers to know if the skip button was clicked or if the ads were muted by the viewer. In many ways, online video ad tools are much smarter than those used to track viewing of traditional TV commercials.

And while online video advertising is clearly a great way to monetise content online, we are not out of the woods yet. In some ways, the landscape is more challenging than it was back in 2011 – mainly due to increasing device fragmentation.

While online viewing is booming, an increasing number of viewers are using “closed” devices such as connected TVs and games consoles that are notoriously hard for publishers and advertisers to target. For example, on some of these devices, a pre-roll can be run pretty easily, but a mid-roll (i.e. a video ad that runs in the middle of the video) throws up challenges. As a result, the classic TV ad experience (2-3 ad breaks per programme) can’t be offered by online content providers.

Fortunately, a combination of two ad serving technologies that reduce the challenges posed by device fragmentation are starting to make an impact: native player ad delivery and server-side ad stitching.

Native player ad delivery (or “smart ads”)

These are used today on desktops, browsers on Apple devices, and native applications on iOS and new versions of Android. With this technology, once the user clicks the “Play” button, the player calls for an ad.

By using the native player, the ad is much “smarter” and advertisers have more options: the ad can be configured to be skippable or non-skippable and can include a strong call to action and an option to click on it. This approach also allows improved targeting based on the age, geo-location and the context of the ad environment (eg website, article) and improved analytics.

Server side ad stitching (or “dumb ads”)

These let publishers reach pretty much any device that can be used to stream video – almost all Android browsers, connected TVs, Xbox, video aggregation mobile apps and Chromecast. It even helps with some ad blockers. This approach “stitches” the ad to the video file, removing much of the work that would otherwise need to be done to specifically integrate with a device’s native player. If the device can play the video, it can play the ad. Ad stitching is consequently a good option for campaigns focused on reaching a broad audience and can help to significantly drive fill rate.

That said, it does have a few limitations. Stitched ads don’t have easy-to-set-up skip buttons. Some stitched ads are very easy to skip, by simply skipping forward using the scrubber but in most cases the advertisers will not even know the ad was skipped. In addition, user targeting is limited and publishers have much less intelligence about how the ads perform.

Online video monetisation – whether via smart/dumb ads or via other payment models – is a hot topic this year. And while we have yet to solve some of the critical online advertising pain points that were present back in 2011, significant progress is being made. Dumb ads are a good tool – albeit perhaps a temporary one. The future will probably see more smart ads coming to the fore, regardless of how they are delivered to the device.

As we move into a more personalised web, the ability to get maximum insight into end users’ viewing habits and interests is key. It’s essential to keep that top of mind when approaching today’s monetisation challenges.