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Consumers Turn to Web for 'Media Snack' Fix

By Robin Schreier Hohman TechNewsWorld ECT News Network
Jun 8, 2006 5:00 AM PT

A growing number of user-generated video Web sites are supplanting iTunes and Google Video as the place to go for so-called "media snacks," bite-sized tidbits of fun that satisfy today's need for entertainment on the go.

Consumers Turn to Web for 'Media Snack' Fix

The sites -- which include Metacafe.com, YouTube.com, Vimeo.com, Heavy.com and ifilm.com -- compete for millions of viewers without cost, although some sites are starting to run very short ads.

"Consumer-generated content [such as] YouTube is the millennial version of 'America's Funniest Home Videos,'" said Jack MacKenzie, senior vice president of Frank N. Magid Associates, a media research firm. However, now it's portable and offers users a huge community to interact with.

Charlie Todd, 27, posts to video sites because he enjoys "the ability for your users to rate and comment on your work," he said. He also posts because he doesn't have the server space or bandwidth to host memory-intensive video. Todd is the founder of Improv Everywhere, a New York-based improvisational comedy troupe that organizes heavily planned "missions" around the city to make people laugh, and then posts the results on the different video Web sites. They garner high ratings in the process.

Attracting Eyeballs

Higher ratings means more views, which push the videos onto the front pages of the sites, which then guarantees more views. If it's good, it stays on the home page, said Arik Czerniak, CEO of Metacafe. At Metacafe, a top video could get half a million views in 24 hours. "You don't need to get lucky ... because we've streamlined the viral process, if something is good it will be noticed by the community. You don't need to have 1,000 people on your mailing list," he said.

Hollywood-generated content such as reruns of "Survivor" or "Desperate Housewives" is available for US$1.99 a pop on sites such as iTunes or Google Video. (Google Video offers both a pay site like iTunes and a free site like YouTube.) NBC is offering reruns of some of its sitcoms for free.

Most, but not all, of the content is viewed on computers. You can watch some iTunes and Google Video programming on your computer, or you can download it onto portable devices such as iPods and Sony PlayStation Portables. With the rise of portable devices and increasingly sophisticated cell phones, eventually "multiple platform distribution will be required by this next generation," MacKenzie told TechNewsWorld.

Video Web sites have been growing quietly in the background for the past few years. In December, though, something happened that made people realize just how viable Internet video is. Someone digitized a "Saturday Night Live" music video parody called "Lazy Sunday" and posted it to YouTube. The site exploded from about 600,000 daily users to three million overnight, according to MacKenzie.

More importantly, "it was the huge viral breakthrough," MacKenzie said, because tens of thousands of people were sharing the video with tens of thousands of other people.

"Viral" is the holy grail of Internet communication because it's the fastest way of exposing the most amount of people to your product for the least amount of money. Viral has been around since the forward button on e-mail, but it's grown exponentially with the pre-existing social networks such as myspace.com and the video sites.

Cultural Shift

These sites may be loaded with viewers now, but do they have sticking power? "It's not a fad, not a craze, it's a very major cultural shift that's happening," Czerniak said.

Metacafe, one of the fastest growing video Web sites, certainly has the numbers. For April, Metacafe averaged more than 600,000 unique visitors per day, and that number is rising. Like most of the competing sites, the numbers have increased substantially since January, the month after the Lazy Sunday video ran.

Even though the videos are generally very short -- one to two minutes -- there are thousands of them at any given time, and video takes up a lot of bandwidth. In April Metacafe saw 300 million video transfers, according to Czerniak. The site relies on over 100 servers just for processing the data and information needed to run. On an average day Metacafe runs millions of lines of codes at 4 GB per second, or 40 terabytes of traffic per day over its content delivery network, which relies heavily on caching.

In fact, there's starting to be some talk that the Internet backbone won't be able to tolerate the drain from these Web sites.

All this heavy equipment takes money, and Metacafe is about to go into its second round of financing. The three-year-old start-up, which first got $5 million seed money from Benchmark, the founders of eBay, received another $15 million at the end of May.

The big question now is, is there money to be made from free video? There are several ways to make money off this: advertisement, selling the content, or being bought.

Achieving Monetization

For Metacafe, being bought is not the goal. Rather, Czerniak wants to "create a business model where you license your materials hand in hand with users." He said if the site would run 30-second ads today they would make $20 million a month, but that would alienate their users. The way to advertise to an audience with a short attention span is "monetizing on the traffic, but trying to be gentle about it."

Richard Lent, CEO of AgencyNet, an interactive solutions agency that creates advertisements for the Internet, agreed. "We feel the more the brand integrates themselves directly with the content the less it looks like advertising," he said.

There is also the issue of selling to different demographics, the 80 million-strong millenials currently between the ages of 10 and 28, said MacKenzie.

"Like any generation they're not all equal but what they want is increasing convenience. They've come to expect their ability to dictate what they do and when they do it and I mean that broadly, not just in TV, but it relates to news & information," MacKenzie said. Most importantly, "they believe they will rule the world and it turns out they probably will."

One thing's for certain: For now, advertising seems to be the way to go. "All significant human behavior finds an advertiser," MacKenzie said.


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