Wednesday, December 17, 2014

Face The Video

Most users will add video to Facebook by linking it from YouTube. This must be galling for the social network since they are not only hosting a rival technology, they are also promoting advertising for a rival platform.

So, it's not surprising that Facebook have been keen to break this situation and encourage users to upload directly to their network, where they can monetise the content. 

Twitter and Tumblr have a similar predicament and Pinterest doesn't currently support video.

This matters since the rates for video advertising are significantly higher than those for ordinary banner type ads.

But video brings with it problems on a different scale to anything else. YouTube, for example, will enable users to upload files of up to 128GB (theoretically) and making money back on the upload, encoding and storage costs of files this size is very difficult. Of course, YouTube count on the majority of their content being short form, and then the sums may stack up. 

Google do not break out figures for their YouTube division and it's clear that the service is attracting serious advertising dollars. However, the costs associated with delivering the service must be astronomical. The server capacity to encode the video is itself breathtaking. A hundred hours of video are uploaded a minute. Taking that they are using computers that are capable of encoding in an approximate 1:1 ratio, each of which would need a very high specification, that's 6,000 servers, with redundancy and improved latency, I suspect they're using the equivalent to 20,000 servers.

Even more expensive is the bandwidth, since that's not a sunk cost (Google has to pay for outgoing bandwidth). Forbes reckons that a single video (OK, it was Gangam Style) had estimated cost for running the servers of $296,360 and estimated revenue from the ads of $348,285. This is a pretty thin margin for their most popular video and this has to subsidise the cost of encoding and storing those millions of videos that have few or no viewers.

So, Google is vulnerable if Facebook limits the length of videos on its network, gets more users to upload directly and sells out its video ad inventory.

Tuesday, December 09, 2014

Stop Price Gouging For Broadband

I received a letter today from Virgin Media informing me that, on top of relentless recent price increases, they are adding another £4.95 to my bill.

I've now left the property that has this service, so I won't be price gouged, but Virgin is doing itself no favours. Our forum, for one of the wealthiest streets in Britain, has been discussing how to leave Virgin, despite the fact that they are clearly the best internet option in the area.

Now, if you have four million subscribers, with a sunk infrastructure, this fiver amounts to a clear quarter of a billion pounds windfall! Liberty Global can easily chomp up ITVI and start bidding for sports rights with this kind of profits.

The key point here is what people are willing to pay for good, reliable broadband. The consensus in my former street is that Virgin deliver around 12Mbps at peak demand on a service they market as 120Mbps.

So, let me make a simple proposition, since the Internet is now essential in a world where banks, post offices, shops and pubs are disappearing from so many communities.

Stop these package prices and charge as other utilities do. How about metering the lowest bandwidth charged at £1 per Mbps on average per month. So, if you want and get 120Mbps then you will pay £120 and always get 120Mbps, but if you're in the village where I have a home in Wales, regularly getting 20Kbps, you will pay 2p per month until the price gougers invest more in the infrastructure.

Thursday, December 04, 2014

The Return Of The Dinosaurs

Watching a feature on dinosaurs on this morning's breakfast TV got me thinking about the telecoms industry (I wonder why ?).

It's deja vu all over again as BT mulls a bid for its former mobile business, O2. Of course, in the US AT&T was broken up and then, like some mythical creature, put itself back together again.

In the global media market nothing works like scale, but the key question is how to scale ?

Some organisations, such as Comcast, look to offer and control more and more of the same patch: it is a company that has shown very little interest in expanding beyond its US cable base, but has by default become involved in the global content market through massive acquisitions such a NBC Universal.

Others have built vast international networks - UK telco Vodafone and Spanish telco Telefonica among the most prominent of these. And these companies keep on threatening to enter the media market in a serious way - Telefonica once upon a time bought and then sold Big Brother company Endemol.

Now there is talk of Vodafone buying European cable giant, Liberty Global, or Liberty Global buying ITV, or BT buying EE, which itself was formed from the merger of T-Mobile and Orange in the UK.

Are you keeping up ? I'm not sure anyone is. Apart from a bunch of specialist investment bankers who must be looking forward to 2015 with glee (or literally with Glee in some cases).

Tuesday, December 02, 2014

Beware The Cloud Snake Oil Salesmen

We've been working with cloud providers for over seven years and I'm getting convinced that cloud computing is to technology what mortgage derivatives were to the finance industry.

Mortgage derivatives were packaged, obfuscated, repackaged, sold, refinanced, obfuscated and then split and resold again. In the end everyone was selling toxic packets where no one understood the risk.

With computing you used to know what you got. A dedicated server cost x per month, and x + 1 with more RAM and x + 2 with more RAM and a faster processor. All of the moving parts were understandable and it was pretty easy to calculate one provider against another. The trouble was that with this transparency came competition.

In the cloud world things are very different. Trying to fathom and predict how Amazon or Microsoft charge for their services demands an ouija board and quite a few glasses of the hard stuff. In fact, scrub that, stick your finger in the wind and select a figure. Then double it and then double it again.

For example, I've just spent an hour on Azure's lovely looking new portal. I was looking for how much storage, in GB, we are using on their service. You can find information about obscure s**t like peer resources, containers and queues (who cares ??) but not the most important metric pertaining to storage - how much you're storing. Please point to a single piece of useful information from this screen:

This madness is shared by the other cloud providers. Obfuscating is the order of the day.

What I can tell you is that a test system on Azure is costing us four times what the equivalent dedicated servers are costing for a similar product and getting the same performance is a major issue. What the cloud service is great at is quick deployment and management.

I think that the cloud platforms are reasonably developer friendly, but they really need to up their act where business decision makers are concerned and provide clear data that is comparable to that available from existing dedicated and managed servers.

Thursday, November 27, 2014

Champions League and Sky popular with the high audience pirates

Our Sentinel systems were active last night and captured some Champions League action pirate style. We have included some relevant audience figures from Alexa which shows how large these pirate sites have become. The preferred source was Sky Sports.

To view the quick 3-4 minute video click here

The sites featured are all now established brands within the piracy world.

Wednesday, November 26, 2014

The Net Is Closing In

With power comes responsibility and it seems that Google, YouTube and Facebook are waking up to realise that this morning.

Let's face it, all three companies have run roughshod over the rules that normal publishers and broadcaster have long had to follow, but it seems that the chickens are coming home to roost.

Most serious, perhaps, is the allegation that Facebook could have prevented the murder of a British soldier by a Islamic extremists. The implications here is that a publisher (and I use that term advisedly) like Facebook should have some responsibility for what is published on its network.

The new regime at the EU is finally gunning for Google's pretty much absolute monopoly over search and advertising and is threatening to even look at requiring the company to divest.

YouTube's vloggers have been told that they must clearly label any promotional videos and the burden of doing this may well fall on the video site.

It is pretty amazing how unchecked these companies and their practices have been, but I suspect that there are now more and more political points to be gained by attacking Big Internet (notice how that term has crept into the common lexicon).

Tuesday, November 18, 2014

Why YouTube Is Not Your Video Strategy

The Rise of Video Marketing

Video is now a mainstream part of the marketing mix. It is being used in more and more brand communications. One of the major reasons for this is that distribution of video is now both cheap and easy.

Gone are the days when you needed to duplicate VHS tapes or DVDs and then mail them in their hundreds or thousands.

(The cost of producing video has also declined as more people become skilled and tools of the trade become much more accessible and cheaper).

But, just as with every other part of the marketing mix, you need to think about content and context. Just as you wouldn’t produce an ad and place it in just one publication or use a Facebook page as your website, you need to be able to distribute to multiple outlets, platforms, apps and online systems and maintain your branding and the user experience.

And this is the issuer with YouTube. Sure, you can use it to conveniently upload and manage videos and then to create embeds or built in tools to distribute, but this is like using Facebook as your webpage or placing all your ads in one publication.

The reality is, if you’re serious about video marketing then you need a purpose built professional platform to manage and distribute your productions.

However, the purpose of this document isn’t to dismiss YouTube – it has an important part to play in your video marketing strategy. It’s just that it shouldn’t BE your video marketing strategy.
Let’s look at some of the issues.

The Context

Sometimes it’s worth considering the bigger picture in life. Very few major content owners trust YouTube with their main content: this is because people who value their content see YouTube as a real danger. YouTube is part of Google, a company that has installed itself, cuckoo-like into the media industry and makes its money from intermediating content without investing in content production.

You may be comfortable with this, but what about all those dodgy videos, the pirated content and all of your competitors’ content that will end up next to your productions and logo ?

Piracy is rife on YouTube and downloading the videos is just so easy (eg .

Do You Care About Your Brand ?

Start by asking yourself the following questions:

       Are your corporate colours red and black ?
       Do you care about pasting YouTube branding over your own website ?
       What does your use of YouTube convey to customers (too cheap to do this ourselves ? Incapable of doing technology yourselves ?)
       Are you happy to have little or no control over your branding ?

This is what highly customised pages on YouTube look like:

And this is how a properly branded online presence with your own channel might look like (of course, you should be able to manage both of these from a professional online video platform):


And then there are further issues when you look at your mobile presence. Here you are part of the vast YouTube universe and are represented, once more, by their logo:

Moreover, if you decide to invest in native apps for iPhone, iPad and Android devices, you cannot use your YouTube videos to power these.


Now, you would imagine that if you’re using YouTube as your video platform this would benefit you in search results on both that platform and within the greater Google ecosystem. However, our research shows that this is far from the case, especially for generic content. This is partially because your content simply gets treated on an equivalent basis to all the other content on the platform and you do not have opportunities to differentiate your content.

Accountability & Legal Issues

Perhaps the most concerning aspect of using YouTube as a video platform are around the legal conditions and terms of usage. To sumamrize:
       YouTube can turn off any of your content, or even your whole channel tomorrow
       You have no SLA
       No guarantee of services
       No control
       You just trust that it works
       And what happens when it doesn’t ?
       You Tube streams regularly fall off – we reckon their availability is around 98% - we offer 99,99%. That’s three hours a year against seven days

So, let’s look at these issues in more details by going through the current YouTube terms of service (Nov 2014)

You can’t commercialize it:
you agree not to use the Service (including the YouTube Player) for any of the following commercial uses unless you obtain YouTube's prior written approval:
  1. the sale of access to the Service
  1. the sale of advertising, sponsorships or promotions placed on or within the Service, or Content;
  1. the sale of advertising, sponsorships or promotions on any page of an ad-enabled blog or website containing Content delivered via the Service unless other material not obtained from YouTube appears on the same page and is of sufficient value to be the basis for such sales
prohibited commercial uses shall not include (i) uploading an original video to YouTube, (ii) maintaining an original channel on the Website in order to promote a business or artistic enterprise, (iii) showing YouTube videos through the YouTube Player or otherwise on an ad-enabled blog or website, subject to those advertising restrictions set out in 5.1(E)(iii) above; and (iv) any use that is expressly authorized by YouTube in writing;

You can’t really customize it:
if you use the YouTube Player on your website may not modify, build upon or block any portion or functionality of the YouTube Player including but not limited to links back to the Website;

You have no access to your viewer information
you agree not to collect or harvest any personal data of any user of the Website or any Service (and agree that this shall be deemed to include YouTube account names);

You can’t use it to promote your company
you agree not to use the Website or the Services (including the comments and email features in the Website) for the solicitation of business in the course of trade or in connection with a commercial enterprise;

They can change things without telling you
YouTube is constantly innovating in order to provide the best possible experience for its users. You acknowledge and agree that the form and nature of the Service which YouTube provides may change from time to time without prior notice to you.

They can just stop the service at any time
As part of this continuing innovation, you acknowledge and agree that YouTube may stop (permanently or temporarily) providing the Service (or any features within the Service) to you or to users generally at YouTube's sole discretion, without prior notice to you
And you lose control of your rights
When you upload or post Content to YouTube, you grant:
  1. to YouTube, a worldwide, non-exclusive, royalty-free, transferable licence (with right to sub-licence) to use, reproduce, distribute, prepare derivative works of, display, and perform that Content in connection with the provision of the Service and otherwise in connection with the provision of the Service and YouTube's business, including without limitation for promoting and redistributing part or all of the Service (and derivative works thereof) in any media formats and through any media channels;
  1. to each user of the Service, a worldwide, non-exclusive, royalty-free licence to access your Content through the Service, and to use, reproduce, distribute, prepare derivative works of, display and perform such Content to the extent permitted by the functionality of the Service and under these Terms.

In particular YouTube does not represent or warrant to you that:
  1. your use of the Service will meet your requirements,
  1. your use of the Service will be uninterrupted, timely, secure or free from error,
  1. any information obtained by you as a result of your use of the Service will be accurate or reliable, and
  1. that defects in the operation or functionality of any software provided to you as part of the Service will be corrected.

Commercial Restrictions

If you’re looking to monetize YouTube as a platform, you may well be better off taking a different approach. Payback from YouTube is notoriously low, For rights:
Ellen Shipley, the co-writer (with a 50% share) of Belinda Carlisle's Heaven Is a Place On Earth reported receiving $38.49 for the 2,118,200 streams the track had accumulated on YouTube in the last quarter. For the over 330,000 hits her 'N Sync track I Drive Myself Crazy had on the video site, she received $4.31. "I can't even buy a pizza for that," she pointed out.
(source: The Guardian)

And for advertising:
 On YouTube, the average rate for pre-roll ads, those 30-second commercials that you must watch before seeing a video, is $7.60 per 1,000 ad views, down from $9.35 in 2012, according to TubeMogul, a video ad-buying software company. The same pre-roll ad on a broadcaster’s site, like that of CBS or CNN, would cost more than $20 per 1,000 views.
(source: NY Times)

There are also restrictions for most content owners on other forms of commercialisation:
       No channel subscription
       No pay per view
       No pay per download
       Advertising limited to automated Google model with low CPM rates
       Conversion rates for vCommerce are low


Research is increasingly showing that platforms such as Facebook are more engaging context for video than YouTube.


It might appear that 11.3 billion views is a lot, but if you know that around 650 million videos are loaded onto the platform every year (source: Google), then that’s an average of 20 views per video per month. You can do better by spreading your video around many sites, channels and distributors.

What Others Are Doing

Moreover, major YouTube studios such as Maker Studios (recently bought by Disney) and LoveLive are building their own platform neutral markets. They must have sound reasons for doing this and not just sticking to the platform that they previously used.

But On The Positive Side..

YouTube provides an excellent social medium for the delivery of video. We would encourage all of our clients to add short form content to it which is linked back to their own branded and controlled channel. Think of it as the pre-show you see in the cinema – trailers and promotions, not as the cinema show itself: that’s where the money is and what you should control for your brand.