While we hear a lot about the business of delivering video on the internet and shipping bits from point A to point B, one of the most important pieces of the video ecosystem is one that we don't hear much about: reporting and analytics. These terms tend to be used interchangeably in the industry, but in reality, they are really two completely different products that serve two different purposes. 

Since most content owners outsource their video delivery needs to a content delivery network, it's important for them to understand what the differences are between reporting packages and analytics packages and the importance these systems play in their business. After all, what's the point of spending a lot of time and money to create, capture, manage and deliver content if you don't have any way to measure your success? 

For starters, it's important to understand the differences in reporting and analytics from a feature set perspective, as well what can be expected from a content delivery network. Reporting is something all CDNs offer, although the functionality of the reporting systems tends to vary greatly from one vendor to another. 

Reporting is simply the data that is provided to the customer and gives them a very basic, high-level overview of what is taking place with their content. Most reporting systems give stats on the number of videos consumed, what files are most popular, what video formats are being watched, how many unique streams have been served, and a lot of other basic viewer data. 

All of the CDNs offering delivery services in the market today have this level of reporting, but there are many differences between their offerings. Most CDNs deliver this data in a web-based interface. Some of these interfaces are easier to use than others, and some may also deliver the data a lot more frequently than others. Some reporting systems are more granular and can provide details down to the geographic location of the viewers, while others can't. 

While it sounds like the word analytics could be interchangeable with the term reporting, it shouldn't be. Analytics packages take the raw data from the reporting systems and tell you how viewers are interacting with your content. Analytics tell you about your content business, show you how to monetize your content, tell you what is and is not working, and—when relevant—tie directly into online video advertising. It's great to have the raw data from reporting, but simply knowing how many streams were delivered or how many videos were watched is not enough. Analytics is really where you find out if you are having success with your online video offering. 

You can read the rest of this article from StreamingMedia.com's Think Series, sponsored by Internap, for free here.

I've only been on Twitter
a few months now, but I think it is by far the most over-hyped,
over-rated Internet application I've seen in the past fifteen years.
What a waste. While many Twitter users talk about how it allows for
such "meaningful conversations", that's a complete crock. The service
is down every few days, half my new sign ups each day are links to porn
sites and no business gets accomplished with the service. Not to
mention, why do people that we associate with only in the business
world think we want to know all about their personal lives?

If
this was any other company providing a real business communication
platform like your cell phone, email, or Internet connection, they
would have already gone out of business with all the outages they've
had. Twitter is NOT a real communication platform. The company survives
now purely on hype, with no real business model and can't even provide
a service that is reliable. Some my say I'm not getting out of Twitter
what I should since I'm currently not following anyone. They would be
right, if they mean getting spam, comments about people's love life or
all that other garbage you get each day from following people.

When
I first got on Twitter I was following people and it was a complete
waste of time. But what I think is really sad is that too many people
in the business world already rely on email far too much for
communication and it seems no one knows how to use a phone anymore.
With Twitter, many now think they can use the service as an even
shorter version of email. If anyone thinks that having meaningful
conversations based on 140 character blurbs is the way to get business
done, I think they are fooling themselves. I also tend to notice that
many of the power users on Twitter tend to be the same people who in
person, can't speak well, can't carry on a real conversation and can't
speak intelligibly.

I judge the value of any communication
service by the value it provides. If Twitter went away tomorrow, would
it have any serious impact on being able to get business done? Nope.
While it does have some value for marketing purposes, especially for
brands that want to be able to reach out to consumers, it's not a game
changer, but rather the biggest fad we've ever had in the Internet
space. So why am I on Twitter? I wish I wasn't. But some readers prefer
to use Twitter the same way some folks use Google Reader for RSS feeds. So if people want news that way, I'll deliver it, but I don't think Twitter provides any value.

While I love seeing research about the CDN market, I continue to see research reports about the space that have numbers and statements that make absolutely no sense. Anyone who has read my blog long enough knows that I question all numbers, market data and market sizing. While some might want to think I'm picking on folks when I do this, I'm not. It's nothing personal. I simply believe that people in our industry should be asking harder questions and trying to get to the bottom of what the real size of the market is, instead of just quoting something from a press release without actually thinking about it.

That said, I'm not immune to the scrutiny either. As a Principal Analyst with Frost & Sullivan, I expect people to question the data I present and encourage people to ask questions about any numbers I put out in the market. I believe we all still have a lot to learn about the CDN market, myself included, as well as many other facets of this industry.

No doubt, the CDN market is hot, but I also get the sense that many folks think they have to put out a report on the CDN market just because many others have. I can't remember another time in the industry when so many CDN reports came out in the market so close to one another, all of which cost thousands of dollars each. The two most recent CDN reports that have content I have to disagree with come from In-Stat and Yankee Group.

What I don't understand is how any report can be published with so many names of the vendors in the market spelled wrong or formatted wrong. I know it seems like I am nitpicking, and I've written about this on my blog before but it's important. If you are telling someone to spend three thousand dollars on a report, how can you expect them to think of your company as an expect on the topic when the vendors names are spelled wrong? In the In-Stat report and even the press release, the names of RealNetworks, CDNetworks, Highwinds and Alcatel-Lucent are all formatted wrong.

RealNetworks and CDNetworks are all one word, not two. Highwinds does not have the word "CDN" in the name of their company. If the report is attempting to use the product names from Highwinds network offering, it would be "RollingThunder", not CDN. And Alcatel-Lucent should have a hyphen in their name. Those issues aside, just the press release alone about the In-Stat report doesn't make a lot of sense to me. While I don't have a problem with the projected growth of the market, I question what market they are referencing? Reading the report, I don't see them define what "content delivery network services" are? The press release talks only to video delivery, but the vendors mentioned in the release include non video related companies. So what type of content is included in the $2B by 2011 prediction? Why can't any report define what they classify as CDN, what content it includes and what vertical market it is addressing? The term "CDN" is very generic. Are they talking about video? Small objects? Application delivery? Software downloads? Ecommerce? Or all of the above?

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StreamingMedia.com is conducting its annual research in the area of content delivery network pricing and trends. This survey has only 12 questions and should take you no more than two minutes to complete. Highlights of the data will be shared with all respondents once the results have been collected. TAKE THE SURVEY

All respondents will be entered into a drawing for a free Apple iPhone 3GS. The winner will be announced on September 14, 2009. Last year we had over 1,000 companies fill out the survey and we're aiming for even more this year.

With Apple having already announced their plans to build its new $1 billion data center in Maiden, North Carolina, folks I have spoken to inside Apple told me that once the new data center is completed, Apple plans to have a more active role in doing their own content delivery.

While this won't be happening anytime soon, since the data center won't even be completed this year, it does indicate that over time, third party CDNs like Akamai and Limelight could very well lose a large portion of Apple's business. While it's way to early to speculate what kind of content Apple will deliver and in what volume, this strategy is nearly identical to what we've seen Microsoft do over the years.

In 2007, third party CDNs delivered more than 95% of Microsoft's traffic. But only three short years later, Microsoft projected that third party CDNs will only account for about 40% of their traffic. While this might scare some investors into thinking that a new trend is taking place, whereby content owners start building their own CDNs for delivery, that's not the case. There are very few companies the size of Apple, Microsoft and Google who can spend hundreds of millions of dollars to build out a CDN with the scale and performance that they need, especially when it comes to video.

It is however something to keep a close eye on as we know that Apple has been a long time customer of Akamai and recently, started using Limelight as well. What we don't know is how much business is potentially at stake with these companies since neither of them will comment on their business with Apple or the size of their deals. But it's also something to keep an eye on for another reason. We keep hearing the CDNs talk about Blu-ray quality streaming and more HD quality video coming online and how it will help fuel the growth of their business. While I agree with them that it will help fuel the growth of the CDN industry, I disagree with them that it will be a catalyst anytime soon.

But what happens if Apple and Microsoft start producing higher quality content, like they will, yet start doing a lot of that delivery of it themselves? What impact will that have on the CDNs? While Microsoft and Apple clearly aren't the only two content creators who can help fuel the growth of the industry with higher quality content, they are two of the largest. It's something to keep an eye on and I expect we'll know a lot more details around this come next year.

Related Posts:

– CDN's Delivered 95% Of Microsoft's Traffic In 07', But Only 40% By Next Year

– What's The Barrier To Entry In The CDN Business? A Few Hundred Million

– Apple Moves To Dual CDN Vendor Strategy: Now Using Limelight With Akamai

Each year I write a featured story for Streaming Media magazine that takes a look at the future of the CDN market and what I expect to happen in the near-term. This article is from the Aug/Sept issue of Streaming Media magazine, which should be arriving in subscribers mailboxes this week. You can sign up for a free subscription to the magazine here.

As viewers consume more video, more often, for longer periods of time, at higher quality, and on more devices, the content delivery market is as hot as ever. In the past 2 years, we’ve seen the number of CDNs coming to the market jump from about a dozen to more than 50 at its peak (www.cdnlist.com), and combined, they have raised almost half a billion dollars. While all of this growth is great for vendors, content owners, and the industry as a whole, the reality is that the number of CDNs in the market is going to decrease a lot by 2010. The market is not big enough to support dozens of vendors. And even with all the new entrants in the market, you can count on one hand the vendors that have the vast majority of the market share based on revenue.

As we look to what the CDN market will be like 12 months from now, it’s clear that many vendors won’t be able to sustain themselves. The fact is, the CDN industry has been through this cycle before. In 2000, about 50 CDNs of all shapes and sizes existed. Two years later, in 2002, there were only about a dozen CDNs; in 2004, that number was only five or six.

Many people are predicting consolidation in the market. It will happen, but not in a positive way for most of the CDNs and the investors who pumped a lot of money into these companies. Most CDNs don’t have enough revenue, customers, patents, applications, or intellectual property to make them worth more money than they spent to launch in the market. We’ve already seen some CDNs such as Panther Express and Grid Networks run out of cash and be forced to merge with others—and more deals like this are on the way.

While some might suggest this will be bad for the market as a whole, I’ll take the opposite stance and say that having fewer vendors would actually be good. In any market, it’s hard for companies to get their messages heard above the noise when there are so many players all pitching the same services. This is especially true in the CDN space, where so many vague terms are used to describe services. The number of vendors that have flooded the market in the past 2 years is one of the main reasons the CDN industry is still so confusing for many. With fewer vendors, companies will be forced to refine their messages and be more transparent, and they’ll actually have to define a lot of the vague words such as “quality” and “performance.”

The bottom line is that today, the CDN business is not a profitable one for the vast majority of the vendors in the space. The only way for any CDN to be cash-flow positive is to take advantage of the economies of scale, which requires either an investment of hundreds of millions of dollars or becoming a CDN that is very focused and happy to go after a specific segment of the market, such as medium-sized customers or resellers.

While many vendors have talked about giving Akamai or Limelight a run for their money, the fact remains that fewer than five CDNs will make more than $50 million this year in total CDN business. (Akamai, Limelight, Level 3, CDNetworks) In order to become a real player in the CDN space and make more than $100 million in revenue, you have to spend two or three times that amount to build the business. While some companies are still in a position to spend that kind of money—e.g., telcos—the reality is that most CDNs will never raise enough capital to make $100 million a year in revenue. That said, not every CDN needs to be that large, and content owners need many different solutions in the market provided by small and large CDNs that fit different needs. But the real key point from all of this is that 12 months and even 24 months from now, a handful of companies will still control the vast majority of the market.

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I've been bombarded with calls and e-mails all morning asking me if I know anything about the the rumor that AT&T is looking to take over Akamai. For the record, I have not heard anything substantial and every few months we keep hearing a rumor like this. Funny thing is, you never seem to know where the rumor started or who it was started by. It seems that every quarter, for at least the past two years, rumors have circulated that AT&T, Cisco, IBM or Microsoft is going to take Akamai out of the market. Sure, it could always happen, (well not Microsoft) but I don't know of anything currently taking place.