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Selling Free Content

5 Apr, 2007 By: Jessica Wolf

A year ago, it was impossible to legally watch a popular TV show for free online.

Sure, plenty of hot shows were becoming available for sale at services such as iTunes, but the ad-supported video tier of the digital-downloading market was just a glimmer in the eye of networks and TV producers.

Last May, ABC and NBC launched their streaming sites, offering free full ad-supported episodes of top shows, and it was all growth from there.

Today, every broadcast network has an offering of nearly a dozen or more shows for free ad-supported viewing the day after the show's TV broadcast. Movies are missing from the ad-supported lineup, but plenty of services are ready to pick them up as the market expands.

BitTorrent is taking the ad-supported model to a new level with its partnership with YuMe Network, announced last week. YuMe purports to be the first dedicated advertising network created and optimized for broadband video. The companies will launch the first ad campaign that allows a marketer to insert video advertising that changes with time within downloadable content.

YuMe's technology measures “view-throughs,” rather than “click-throughs,” to report back exactly how many people viewed an ad and the number of times they viewed it, in addition to whether they clicked on it. This new metric measures and reports the viewer's behavior, which likely will become the new standard to determine how an advertiser pays a publisher for online video advertising, according to YuMe. Game manufacturer Edios is the first to use the new ad technology.

When BitTorrent launched its new Entertainment Network video download site last month, it already had an eye toward the ad-supported level of the business, said Eric Patterson, VP and GM of BitTorrent's consumer services.

Most sites offer streaming video with ads interspersed in the content. What BitTorrent wants to offer eventually is ad-supported downloads that consumers can store on hard drives and view as they like.

“If you download something and don't watch it for a month, when you do the ad will be refreshed,” he said.

Right now, Internet users who prefer downloading over streaming are being penalized for missing their shows, he noted. They're being forced to purchase a missed episode from iTunes, BitTorrent, AOL or some other service for $2, he said. “In theory, they saw it free on TV. Why not see it free on the Internet?” Patterson said.

What's Out There

When ABC launched its video player last May, it was supposed to be a two-month experiment. ABC.com now offers full-episode streaming of a dozen series, including “Lost,” “Desperate Housewives” and “Dancing With the Stars.” Last month, the company upgraded the service to provide high-quality, full-screen viewing — something that's missing from many other sites.

NBC.com's lineup of 13 available series includes “Heroes,” “30 Rock” and “Friday Night Lights.”

CBS.com has 19 series regularly available for ad-supported viewing, including “CSI: Miami,” “How I Met Your Mother,” and even soap operas including “As the World Turns.”

When the CW launched, merging the UPN and WB Networks, CWTV.com launched as well, jumping on the free-episode viewing bandwagon, slowly rolling out more shows as the network's inaugural season advanced, including “America's Next Top Model” and “Veronica Mars.”

In August 2006, News Corp. announced it will sell Fox TV shows on MySpace.com. That purchase option has yet to materialize, but MySpace does offer Fox on Demand, an area devoted to free ad-supported viewing of 12 Fox shows, including “24,” “Prison Break” and “American Dad.”

The juggernaut of Fox's TV ratings, “American Idol,” however, has been conspicuously absent from both the ad-supported video lineup and the catalog of download stores. Two weeks ago, the show launched a download service on its Web site, www.Americanidol.com, offering audio tracks of performances for 99 cents and videos for $1.99 alongside free-to-view clips from recent shows.

Obviously, pay cable channels and premium networks are not as apt to offer content for free ad-supported viewing over the Internet, but some are experimenting with the space.

Comedy Central's “Motherload” Web site offers free clips of such popular series as “The Daily Show,” “The Colbert Report,” “Mind of Mencia,” “South Park” and others in a YouTube-like interface.

Sci Fi Channel reaches out to its Internet fans with plenty of “extra” videos, two-minute video recaps of shows such as “Battlestar Galactica,” even free full-episode viewing of new series “The Dresden Files” as it debuted, presumably to spike interest in the series.

Similarly, Showtime peppered the Web two weeks ago in support of its new, sexy history-based drama “The Tudors,” offering the first two episodes of for free viewing on such sites as Yahoo and IMDb.com.

Who's Watching What and Why

It takes a pretty speedy broadband connection to satisfactorily watch streaming content on any of the network sites — at least 500 kbps for the smallest window and lowest-quality video. Buffering issues are common, especially in advertising, as providers continue to work out the kinks in the process. The total number of Internet households and broadband subscribers worldwide will grow to 883 million and 507 million, respectively, by 2011, media tracking firm iSuppli predicts.

According to February Nielsen/NetRatings tracking, ABC.com led the pack with 9 million unique visitors, with NBC.com right behind with 8 million. CBS.com had 5.6 million for the month. Fox.com, which houses exclusive clips and trailers for Fox shows, but not full episodes, grabbed 2.9 million unique viewers in February.

Making episodes available online hasn't cannibalized traditional broadcast viewership, said Albert Cheng, EVP of digital media for Disney-ABC Television Group.

For ABC.com, 77% of viewers said they watched online to catch up on a missed episode, and 84% said they remembered the advertiser who sponsored the online stream, according to ABC research conducted by Frank N. Magid Associates.

Only about 5% of ad revenue can be attributed to network Internet sites, and much of that still is tied to broadcast buys, according to research cited by TV Week.

The good news for the ad-supported sphere of the digital-delivery market is that consumers, especially American consumers, are well-trained and used to ad content, said Russ Crupnick, analyst with The NPD Group. However, Internet video watchers won't abide the same level of interruption or length of commercials as they do during TV broadcasts.

“But, if you're willing to share a little bit with ABC or whomever, if they know a little bit about you they can tailor the advertising specifically to you,” he said.

Studios Poised for Ads

The networks have an advantage over movie distributors in that consumers already are trained to seek out the network that matches their favorite shows. For movies, in addition to BitTorrent, services such as AOL Video, Amazon, CinemaNow, iTunes and MovieLink are key, and several of those services are prepped to step in to offer free ad-supported streams as well.

Viacom already has teamed with the beta test for upcoming Web TV channel Joost.com, planning to offer shows from its MTV Networks.

Also coming soon is the as-yet-unnamed venture between News Corp. and NBC Universal to create an ad-supported network that will be available on AOL, Microsoft's MSN, MySpace and Yahoo. The network will offer full episodes and clips from TV programs as well as movies.

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