WGA's Next Hurdle: Count the Money
By Jon Heller -- Broadcasting & Cable, 3/23/2008 8:00:00 PM
The day will soon come when consumers get what they want: access to free, advertising-supported video content across the Internet. When they want it and where they want it. More importantly, this will transpire with advertisers, content creators and owners, and content distributors, all receiving their share of the ad revenue. That could become a market worth billions, more than enough for all parties to share.
Revenue sharing from digital marketing was at the center of both the Writers Guild of America dispute and at the heart of many of the problems faced by the music industry in recent years. Part of the problem faced by the music industry remains its failure to develop a profitable model for digital music and its reliance on Digital Rights Management (DRM), which focuses on ownership and copyright, not on revenue or monetization rights.
Increasingly, as the digital world pervades, it is vital that anyone in the business of monetizing content think in terms of managing the ecosystem that content will live in. Those who don't get on board the innovation train that is driving the digital media world are truly doomed to get run over and transformed into something that looks very different, as has happened to the music industry.
Monetization Rights Management (MRM) provides a structural solution because it offers an end-to-end online video ad management technology. The difference between DRM and MRM is that the latter focuses on who owns the content and who owns the right revenue shares and the former just concentrates on the content. MRM creates an open environment in which multiple content owners and distributors can unlock the value of their content via advertising while streamlining the monetary attribution process, simplifying the task of managing video ad sales, ad serving and ad sales rights across widely syndicated distribution channels. MRM systems enable widespread distribution of content where all relevant parties are compensated for the advertising revenue generated, avoiding the vague accounting practices that will continue to be at issue in future disagreements between content creators and content owners.
Each time the WGA raised concerns about residual income from content—in 1988, 1996 and again this past fall—the Alliance of Motion Picture and Television Producers (AMPTP) has claimed that the market for home video and “new media” was unproven or, alternatively, not a major source of revenue. Key to the last strike was the WGA's claims for residuals from new media, essentially the same concerns the WGA raised in '88 and '96.
This time, the AMPTP could not claim that new media represents an insignificant portion of its future revenue. In its December 2007 Online Insights report, Burst Media found that more than 70% of adult U.S. Internet users viewed online video content. The survey also found that men between 18 and 24—a key entertainment marketing segment—view online videos most often, with more than a third reporting that they watched once a day or more.
Nielsen's online video survey last fall found that half of all Americans consume online video, and that 32% of 35-49-year-olds and 42% of 45-55-year-olds visit online video and movie Websites. In fact, the only portion of our society not watching online videos more often and in greater numbers are older, less affluent and less well-educated Americans—and when was the last time Hollywood targeted any television show or movie to 65-and-over individuals who make less than $40,000 a year?
The totality of online video data supports the writers' demand for residuals from new media. Perhaps what the AMPTP has really been worried about is the death knell the Internet has sounded for the music industry. The film and TV industry is worried that without total control over Internet revenue, it will suffer the same fate many music studios now face. According to eMarketer, digital music spending growth has not offset the decline in music CD revenue.
Only time will tell if the recent agreement reached by the studios and writers will continue to meet the needs of both parties as their audience and technology change. However, if movie and television studios could use a single platform from which any publisher or content owner could manage all syndication and publishing relationships, no matter how the ads are sold or what platforms their partners use, while also automatically paying the writers' residuals, why wouldn't they? Here's betting that they will.
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