Archive for the ‘Video’ Category

What exactly is the issue with online video?

Wednesday, November 28th, 2007

Go Slow SignOnline video may or may not be leading us down a path toward future Internet slowdowns, but there is no debate that the Internet’s infrastructure needs an upgrade to accommodate today’s online usage patterns and multimedia content. But what exactly are the technical issues that are causing the infrastructure problems?

The bottom line is bandwidth. Bandwidth is the amount of data that can be passed along a communications channel in a given period of time. It is typically measured in bits per second. The hardware that is used to transport the data has a limited capacity (bandwidth), which varies depending on the technology that is being used (Ethernet vs. dial-up vs. T1 line). It is this limited bandwidth capacity that is causing concern.

Michael Kleeman explains the bandwidth issue quite well:

“The problem is that we have reached a point of disconnect between the traditional Internet’s architecture and the needs of today’s customers. The traditional Internet’s architecture was not designed, nor can it be expected to handle, the demands being placed on it. Bandwidth demand is growing rapidly, outpacing supply. It’s as if every home in America suddenly needed 10 times more water at 10 times the quality coming out of the same size faucet.

“Today, the average home uses as much bandwidth as a major office park did a few years ago. Remember when you used Internet access for just e-mail? Now, chances are you e-mail photos, download music and watch videos, often all at the same time. The bandwidth consumed by a popular YouTube video, “The Evolution of Dance,” downloaded 54 million times, equals an entire month’s worth of data network traffic in the year 2000.”

Upgrading the infrastructure to support today’s bandwidth needs is going to cost a lot of money – $55 billion more than planned, according to Nemertes Research.

“The bottleneck will be where Internet traffic goes to the home from cable companies’ coaxial cable lines and the copper wires that phone companies use for DSL,” says the research firm (by way of USA Today). To fix this issue, cable, phone and wireless providers are going to have to run new high-capacity lines and rethink the way that they are set up to serve bandwidth to their customers. Currently, most Internet providers are “devoted to sending data to users — not users sending data,” says the USA Today article. “They’ll need more capacity for the latter as more people transmit homemade music, photos and videos.”

Some more YouTube stats

Tuesday, November 27th, 2007

I posted this story about online video yesterday, which included a number of stats about YouTube, but I just came across a few more today that I wanted to add to the discussion. According to Nigel Hollis at MediaPost’s Online Video Insider, who is citing stats from Jeben Berg, product marketing manager at YouTube:

– An average of eight hours of content is uploaded to YouTube every minute.
– That content comes from only 2% of the site’s user base.

Webby's 12 most influential online videos of all time

Tuesday, November 27th, 2007

Webby Awards logoI just saw a pointer to this over at Boing Boing. The Webby Awards site has posted a list of the 12 most influential online videos of all time. Included are classics such as 2000’s All Your Base Are Belong To Us and JibJab’s “This Land” (Chris made me watch this one more than once). Enjoy!

Video is not going to kill the Internet in 2010

Tuesday, November 27th, 2007

YouTube logoLast week, I posted my first video to YouTube. Like most videos that are uploaded to the site, mine was for friends, a silly inside joke wishing my friend Kim a happy birthday in a public and embarrassing manner.

But after posting the video – which was incredibly easy to do – I started wondering how many people have uploaded videos to YouTube since the site was founded in February 2005. It’s difficult to find stats about YouTube because the company (owned by Google) doesn’t often release information on its users, but this Reuters article from July 2006 claims that, when the article was written, 65,000 videos were being posted to the site per day. If that number is accurate, it’s also likely to be much higher by now. (Although another more recent article from TechCrunch estimates that the number of videos being uploaded to the site daily is between 10,000 and 65,000.)

Some more stats – Compete.com shows that the number of people visiting YouTube is 49,532,320, up 4.5% this month and 94% this year, placing the site’s audience more than double Facebook’s (24,264,850), and gaining on MySpace’s (65,210,800). And that Reuters article claims that in 2006, visitors were watching more than 100 million videos per day on YouTube – again, that figure has likely soared in the past year and a half.

From these stats, I think it’s safe to say that online video is huge – and remember these numbers are from YouTube alone. There are many other online video sites that are popular and gaining audience (Hulu comes to mind).

But all this online video watching isn’t going to happen without consequences, according to the experts. Recent and well-reported (see stories here, herehere and here) research from Nemertes Research shows that by the year 2010, there could be serious slow-downs in the Internet from all the bandwidth demands unless infrastructure is boosted to keep up. According to the report, Nemertes estimates “the financial investment required by access providers to bridge the gap between demand and capacity ranges from $42 billion to $55 billion, or roughly 60%-70% more than service providers currently plan to invest.”

Chicken LittleThe bandwidth demands on the Internet’s infrastructure are clearly rising. But the sky is not falling. Although you would think it just might be from the recent coverage that this research has sparked:

Internet Might Collapse in 2010
Internet to go down in 2010?

And my personal favorite:

Back to Soup Cans and String?

Does this remind anyone of anything, like, maybe a technology issue that was supposed to cripple business a decade ago? To me, this is really starting to sound a lot like Y2K.

Granted, the coverage will have to continue for months and the fear, uncertainty and doubt will have to rise significantly to reach Y2K levels. But in its early stages, the rumblings are the same. And I would like to suggest that we will see the same result.

The Nemertes report claims that to avert the crisis, an extra $42 billion to $55 billion needs to be invested into the infrastructure of the Internet. To put this in context, in preparation for Y2K, “the United States government spent $8.8 billion dollars on Y2K fixes. Private U.S. businesses shelled out an estimated $100 billion dollars to prepare for the bug,” according to an article by CNN.

There is money to be spent when it’s needed. And there is time to correct these issues before they cause us to revert back to soup cans and string. Even the folks sponsoring the research agree. As Internet Innovation Alliance (IIA) co-Chairman Larry Irving told USA Today:

“We’re not trying to play Paul Revere and say that the Internet’s going to fall. If we make the investments we need, then people will have the Internet experience that they want and deserve.”

What's next for Internet advertising

Thursday, October 11th, 2007

Look into the futureGoogle revolutionized Internet advertising in 2000 when it launched AdWords and the pay-per-click (PPC) model. This program was ground-breaking not just because the small text ads that ran alongside Google search results were served up based on relevance, but also because, for the first time, marketers paid only for an action (a click on their ad) – they didn’t have to pay for the thousands of impressions that were not clicked. With AdWords, performance-based media was born.  

Once advertisers demonstrated that they were willing to pay for any click, it was a short leap to believe that they would be willing to pay even more to know exactly who it was that was clicking. Today, lead generation and pay-per-conversion models (Google calls this cost-per-action) have joined PPC as viable business models, providing even more information to marketers who are trying to reach their customers.

 

Lead generation and cost-per-action pricing models are already popular in the B2B world. In the IT market, for example, Web Buyer’s Guide, KnowledgeStorm and Bitpipe are providing lead generation services to the biggest technology companies, which pay anywhere from $20 to $120 per lead to reach the specific individuals that they think are most likely to buy their products.

The Internet advertising market is going to continuing to move from static advertising to performance-based media. According to the just-released IAB Internet Advertising Revenue Report, approximately 50% of 2007 second-quarter revenues were priced on a performance basis, up from 47% reported for the second quarter of 2006. Lead generation revenues accounted for 8% of the 2007 second-quarter revenues or $408 million, up from the 7% ($284 million) reported in the second quarter of 2006. Contrast those statistics with the fact that approximately 46% of 2007 second-quarter revenues were priced on a CPM or impression basis, down from 48% for the same period in 2006.

Performance-based media is the future. We have already seen the movement with traditional Web content. Blog content, podcasts and video are all moving toward incorporating PPC pricing models, as well. I think the next move for these newer content formats is lead generation and cost-per-action. Let’s take video as an example. Silicon Alley has a write up about how advertisers are starting to take video more seriously, but that CPMs are declining. There is a debate going on around how money is going to be made on video advertising – what kind of ads will be used, the length, the format, etc. Applying the move toward performance-based media, I believe that someone is going to develop a lead generation engine around online video that will provide advertisers not only with the information on what videos were watched and how many times, but by whom and what their demographics are. Web Buyer’s Guide has a product on the market that does this, and I think it’s just a matter of time until one of the major video providers offers this type of advertising package.

And looking even further down the road – what’s the next wave of performance-based media? Right now companies pay for leads, but what if in the future companies begin to pay only for customer acquisition, and after an individual makes a purchase the lead provider gets a percentage. A large percentage. Sound like the affiliate programs that are widespread in the consumer market? Sort-of. But what happens when the technology is developed for a video provider to track an individual from the first video that they watch that peaks their interest in a product, all the way to the buy, and the video provider gets a portion of the sale?

Now that’s performance-based media worth talking about.

Disclosure: I used to work for Web Buyer’s Guide.

 

~ Foggy Autumn ~