Thursday, January 27, 2005

Let them entertain us

From the John F. Kennedy assassination to Janet Jackson's wardrobe malfunction, video clips this week suddenly became easy to find online at Yahoo. This engineering and marketing coup is one of a series of structural jolts that will unhinge the nearly $1 trillion global entertainment industry.

With video now as simple to search as text, advertisers can use this persuasive medium to connect directly with potential customers. They won't have to cram their messages into 30-second commercials scrutinized by network censors. They'll have room to spread out and tell the story they want.

Flush with the considerable sums saved by not buying pricey network commercials, advertisers will tailor highly-efficient custom spots to particuilar audiences like Hispanics, new mothers or cattle ranchers. With a little ingenuity, costs can be driven even lower by outsourcing ad production and placement to the customers themelves.

People who sell TV spots should worry about this.

A recent notable web commercial is the Red Cup video put out by Starbucks during the holidays. Designed to be passed along virally, it is not yet picked up in Yahoo's video index under "Starbucks," "coffee" or "Santa Claus" (despite Mr. Ho-Ho-Ho's cameo in the movie). As Yahoo gets better at indexing video -- and advertisers get better at tagging their stuff -- look for commercial "movies" to appear prominently in future searches.

In a world of quality home-video cameras, high-capacity computers, reasonably priced editing software and ample bandwidth, advertisers can encourage their customers to make spots for them.

General Motors is getting a free ride, so to speak, with an exhuberant video of a desert road rally produced by rattlesnake-braving Hummer fanciers in Southern California. In the future, GM could encourage Hummer-lovers to make more movies by awarding a huge prize to the effort with the greatest number of hits -- such as, say, a month of free gas.

Or, try this: If you are taping your daughter's volleyball game, why not superimpose a Nike swoosh, add a counter in the background, post the production on the web and collect an honorarium every time someone clicks the flick? You either can pocket the money or donate it to the school athletic fund.

Advertisers may worry about the appropriateness of content and click fraud, but these issues can be overcome. Videos can be screened in advance and monitoring metrics can pinpoint fraudulent activity.

A parallel phenomenon is the production of phony ads that spoof, or worse, malign a brand. Volkswagen has been trying to stop an unauthorized online video that features one of its cars in a simulated terror bombing. As VW is learning, rogue spots can't be stopped, but the producers of most of them would rather be paid to make legitimate commercials than toss bombs. After-the-fact litigation unfortunately won't work; co-opting the culprits generally will.

Searchable online video initially will manifest itself as more of an irritnant than a crisis at the networks. But the budgetary pothole will turn into a sucking sinkhole when the major studios start selling their product directly to consumers on the web via both pay-per-view and subscription.

A wholesale shift to online video distribution won't happen until the majors are confident their content is safe from bootlegging, but solutions are close at hand to provide a reasonable degree of control. Although institutional interia makes the studios reluctant to change their monolithic business model, they will be prodded to action by the hungrier independent studios.

In their eagerness to build sales and margins by cutting meddlesome middlepersons out of the distribution chain, the indies aren't nearly as worried about content protection as the big guys. With video search a reality, there is nothing stopping indie film makers from letting it all hang out. Their time is now -- and evermore.

Independent musicians will have to wait a bit longer for music search to be perfected, but help appears to be on the way.

The Meldex system, designed by the New Zealand Digital Library Project, allows a user to serach for a song by playing notes on the system's virtual keyboard, humming the song into a computer microphone or naming lyrics in a text query. If you type in "love," for example, you can hear the music to "I Gave My Love a Cherry" pecked out on a cheesy-sounding piano. Maybe Meldex is the answer and maybe it isn't. But something will be.

The bad-boy version of Napster showed consumers not only how to rip off tunes, but also how to cherry pick music to suit their individual preferences. iTunes and others are conditioning them to prefer buying songs by the "each." Improved music seach will give every musician equal shelf space in the online listening booths soon to appear at Google, Yahoo and other search meccas.

Yahoo's video-search scoop is a major victory in the three-way tussle among the entertainment, media and technology titans for the control of the Holy Grail: real-time, customer-driven, individualized home entertainment.

Combatants in the wide-ranging battle for your entertainment dollars will include, but not be limited to, the TV networks, the cable companies, the RBOCs, the studios, the electronics giants, the search portals, the software powerhouses and, of course, their platoons of lawyers and investment bankers. (To see whose skin is in which game, see the table immediately below.)

Because the stakes are large, the problems are difficult and the solutions are complex, the war will be characterized by many battles among an endless array of shifting of alliances.

So, pull up a chair, fix some popcorn and let them entertain us.


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