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Who's Paying for Internet TV

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By: NMK Created on: November 29th, 2007
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Kate Modern, Bebo’s hugely successful teen drama has showed the industry that web-based TV can be free, successful and profitable. Tim Hoang looks at who is paying for these shows and how they are paying for it.

The Internet has brought both as many challenges as opportunities for all industries: high street travel agents have had to compete with budget priced online counterparts, the mass media has adjusted their operations to cope with citizen journalism and the broadcast industry is still stumbling, as the Internet takes up valuable viewers that would be more beneficial for generating TV revenue through advertising.

Almost everything useful we access on the web is free. From BBC Online to Google, from Facebook to Football365, the amount of free content and information is staggering. The challenge for the broadcast industry is whether they can make profit in this web 2.0 world, where content is bite-sized, audiences fragmented and advertising easily ignored or skipped.

A Modern Idea

There is a general consensus that the most effective way of profiting from television shows made specifically for the web is through product placement, with other forms of advertising seen to alienate its audiences or be ignored completely.

Bebo, Britain’s most popular social networking site has had brands such as Disney and Gillette incorporated in some shape or form into the storyline of its hit teen drama, KateModern with sponsors paying around £250,000 for the privilege. The show is about the life of a 19-year old British college student, her friends and the events that surround their lives. It allows fans to influence key points in the storyline. With 25 million views since its launch, KateModern has proved a huge success for Bebo paving the way for shows of similar ilk, including the Endemol produced reality show, The Gap Year which will follow a group of Bebo-ers as they back pack around the world.

The broadcast industry is well aware of the challenges of the Internet. Bebo has also recently announced its Open Media platform, which will allow media groups such as CBS, Channel 4, the BBC and BSkyB to provide content for the site. With this model, the media groups keep all the advertising revenue while Bebo benefits from the increased traffic to the main site and higher advertising revenue.

The BBC’s own download service, the iPlayer will be fully launched before Christmas with a full version incorporated into its Bebo offering. According to Jane Weedon, head of business development, new media, BBC, content spread over multiple channels will be beneficial for all parties. "Making our shows accessible on websites including YouTube and Bebo means we get more viewers, and it becomes easier for people to access high-quality BBC shows."


"Broadcast TV is already dead; it just doesn’t know it yet"

Neil Fairbrother CEO of online television station pod3.tv has not been impressed so far with how traditional media has embraced the digital world. Speaking to NMK, Fairbrother said he believed that the myriad of incompatible media players will prove to be the downfall of broadcast media’s push for new audiences.

"All ‘legacy’ TV is now available in the UK as download in one form or another, but it’s all too complicated and mostly platform specific with custom built players. I think broadcast TV is already dead, it just doesn’t know it yet," said Fairbrother.

The channel, which has just launched its second generation offering, sees 12,000 downloads a month. pod3.tv uses a mixture of traditional advertising and product placement in order to recoup its investments in programming. Fairbrother underlined the interactivity of web based television as a key factor in pod3.tv’s success in generating revenue.

"We carry click through sponsorship on our website and ezine but the main business model is in-podcast advertising, i.e. embedded adverts within our shows. Advertising can be straight forward thirty second slots like on broadcast TV, and we also offer product placement in shows such as our gardening show. Both of these can be fully interactive so you can click on a wheelbarrow and end up on a website where you can purchase the wheelbarrow," he said.


What’s on tonight?

Simon Woodward, CEO of ANT plc, a company which enables broadcasters to deliver digital media content, believes that there is still life in broadcast TV as an advertising medium. The company develops bespoke user interfaces in the same vein as the Electronic Programming Guides (EPG) used by BSkyB which can be branded without interference on the programming. It develops for a range of platforms from, IPTV & Cable to mobile phones and sees this as a way of avoiding the issue of intrusive advertising.

"With the age of the Internet, the world of advertising has to evolve to cope with disparate audiences who are becoming difficult to target with traditional advertising models. Advertising needs to take into account the more community-lead function that social networks provide and which TV is losing grip of," said Woodward.

Following the news of MySpace and Facebook’s highly targeted advertising models, the company also believes that there is opportunity for advertisers to become more efficient and target specifically those that matter.

"Technology is now available that can log every single button press on the remote control providing highly valuable information for advertisers and marketers. The opportunity is there and advertisers must embrace it or face a continued decline in their revenues," he said.

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