This morning, via an e-mail to Web Services customers, Amazon announced a new content delivery offering under development that they expect to make widely available before the end of the year. While the initial content delivery offering won’t compete with the major CDNs like Akamai and Limelight when it is released, it has the potential to down the road if Amazon adds some specific product functionality.

Over the past few months, I have been speaking to Amazon about the content delivery market as a whole and about their new offering. As a result, I am under NDA and am not at liberty to disclose many of the details of the new offering, which Amazon will release when the service is available in a public beta shortly. That being said, there are some details I can talk about now including some of the functionality of the product.

When released, the yet to be named product offering will offer HTTP only delivery for objects, both video and non-video related. The offering won’t support streaming, live broadcasting, or provide many of the other products and services that video content owners need. While those are potential features that Amazon may offer down the road, they real story here is that Amazon is going to offer a high performance method of distributing content with low latency and high data transfer rates. The service will be cheap, rock-solid and targeted to the masses, just like the other AWS products are. While I can’t release any details on pricing, the new service will be like S3 and EC2 in that it will require no contracts, no commitments and customers will only pay for what they use. My opinion, customers won’t be complaining about the price.

Objects must be stored on S3 and initially, the service will not be able to pull content from origin storage on another network. For some, this will be a deal breaker. But for the average customer Amazon is targeting with this, the S3 offering is cheap and reliable. The network will deliver content in North America, Europe and Asia and additional details on the number of POPs and locations will be released by Amazon at a later time. Amazon is "currently working with a small group of private beta customers" for the new service and will provide more details on the offering very shortly.

While the new Amazon offering won’t take any business away from any of the major CDNs for the time being, it will make a real dent in the smaller regional service providers, many of whom focus on HTTP delivery, smaller sized customers and don’t support streaming either. For the major CDNs who are helping to not only deliver video, but also supporting functionality like live broadcasting, Flash, Silverlight, transcoding, authentication and reporting and analytics specific to video, the Amazon service won’t compete with them, yet. But if you are in the CDN business, you better take note of what Amazon is doing and keep a close eye on their CDN offering as it evolves. If Amazon adds additional video specific functionally down the road and provides the kind of support that large content owners need, specific to video, this could get very interesting.

Even with Amazon not going after the really large business that the major CDNs have today, Amazon clearly will be able to dominate the video specific business that requires no complex needs, only requires downloads and needs quality delivery at a cheap price. There are two kinds of CDN customers for video delivery today. The major ones all need a lot of additional services and support and don’t buy on price alone. But the other kind of CDN customers are those who have very commoditized requirements and typically buy solely on price, which is exactly the kind of business Amazon can win.

While there are already over 50 CDNs in the market today (www.cdnlist.com), Amazon is the most recent entrant who really has the ability to shake up the market and make content delivery a very straight-forward and easy to use service, for a large segment of customers. I’m excited to see what Amazon does with the new offering and if they can act as the catalyst to really push content delivery to the next growth level, which would be good for all vendors. I know some will worry that Amazon will simply take business from other CDNs, but think of the bigger picture here. That’s the story, the long term impact Amazon could have on the market.

Below is the e-mail sent to AWS customers.

Dear AWS Customer:

This new
service will provide you a high performance method of distributing
content to end users, giving your customers low latency and high data
transfer rates when they access your objects. The initial release will
help developers and businesses who need to deliver popular, publicly
readable content over HTTP connections. Our goal is to create a content
delivery service that:

• Lets developers and businesses get
  started easily – there are no contracts, and no commitments. You will
  only pay for what you actually use.
• Is simple and easy to use – a single, simple API call is all that is needed to get started delivering your content.
• Works seamlessly with Amazon S3 – this gives you durable storage for
  the original, definitive versions of your files while making the
  content delivery service easier to use.
• Has a global presence –
  we use a global network of edge locations on three continents to
  deliver your content from the most appropriate location.

You’ll
start by storing the original version of your objects in Amazon S3,
making sure they are publicly readable. Then, you’ll make a simple API
call to register your bucket with the new content delivery service.
This API call will return a new domain name for you to include in your
web pages or application. When clients request an object using this
domain name, they will be automatically routed to the nearest edge
location for high performance delivery of your content. It’s that
simple.

Sincerely,
The Amazon Web Services Team

By now, many sites have all reported that BitTorrent has raised another round of funding, this time totaling $17 million and putting their total raised to date close to $50 million. You really have to wonder what these VCs are thinking, putting more money into a company that has no clear business model or product offering. For all the talk of how many players BitTorrent has installed or the "platform" they have, peple still don’t seem to realize it’s not about how many players you have in the market and they are incorrect to think of BitTorrent as a "platform".

BitTorent is simply a protocol and is a method for downloading content. You don’t make money with BitTorrent just like you don’t make money with HTTP or FTP. It’s simply a protocol. BitTorrent is a means of distributing software, games or video and it’s that content that is being sold as the way to make money. You are making money from the content, not from BitTorrent. Or you’re using it for promotion purposes to get trailers and demos in the hands of consumers.

I get the sense that people are missing the point that you can’t make money with a client. If you have an entire platform that allows you to create, ingest, manage, store, deliver and track your content, that’s different. But that’s not what BitTorrent has. Simply having an open source client is not a means of generating revenue.

And for all the talk of how many players BitTorrent or any other company has installed, the number of installed players is not the metric to measure success or market opportunity by. RealNetworks has a lot more players installed than BitTorrent, but what has that gotten them in the video world? The size of your player installs is not as important as many in the industry make it out to be. Most users will download a new client if they want the content bad enough, so the idea that you have to have a lot of players already out in the market before you can deliver your content in that format is just not accurate. Look how many major broadcast studios started distributing their content using Move Networks when Move was just starting out and had very few players installed.

The bottom line is that BitTorrent does not know what it wants to be, does not have a clear product offering and right now, is not delivering any message to content owners on what they can offer. I speak to many large content owners all the time, see tons of RFPs and I have yet to see BitTorrent included in any of those RFPs. Content owners who want to deliver video specifically are not considering BitTorrent.

If BitTorrent made their offering into more of an Amazon type service, explained what it offers, how it works and published pricing for the service right on their website, they could generate some interest. Maybe not enough interest to translate into sizable revenue, but it would be a very clear offering in the market, and would give them a starting point.

Next week, all of the keynotes at the Streaming Media West show by Amazon, Roku, YouTube, Disney/ABC and EQAL are open and free to everyone. And if you needed even more reason to attend, StreamingMedia.com will be giving away FIVE Roku Netflix Set Top Boxes on Wed. Sept. 24th, after Anthony Wood, the Founder and CEO of Roku is done with his keynote presentation.

Simply register online for a free exhibit pass and be at Anthony’s keynote presentation for your chance to win one of the five Roku boxes which will be given away in-person.

StreamingMedia.com has two upcoming webinars I will be participating in, including answering questions from attendees during the event. The first, sponsored by Limelight Networks, is this Thursday, Sept. 18th at 2pm EDT and is entitled “Successful Live Event Streaming“. You can get more details and register for the free webinar here.

And on Thursday, Oct. 2nd, Internap is sponsoring a webinar entitled “The CDN Ecosystem: Going Beyond Content Delivery“. You can get more details and register for the free webinar here.

If you have any questions on either of these topics, you can e-mail them to me in advance or put them in the comments section below.

I get a lot of calls and e-mails from content owners of all sizes. Aside from the major broadcasters, many of those who contact me are smaller content owners producing their own online content and are trying to figure out their distribution, syndication and advertising strategy. In the past 12-18 months, niche video networks or micro video networks as some call them, such as For Your Imagination and Next New Networks have ramped up their offerings for small content producers trying to gain their business. At the same time, video platforms like Babelgum and Brightcove are also competing for these same content owners and the differences between a network and a platform continue to confuse people.

These types of aggregators and networks offer content creators a promising new vehicle for syndicating and monetizing content that would be hard to do on their own, but many of those content owners keep asking what exactly the niche video networks offer and how the business relationship works? Much more info is needed on how these services actually operate and whether they might be good partners for content owners looking for an effective channel for distribution and monetization. As an industry, we talk about the value the networks provide, but from a very high-level with few details. As a result, content owners don’t know where to start and I get the same frequently asked questions all the time.

To try and shed some light on this for content owners, I asked Revision3, Next New Networks and For Your Imagination amongst other, on how they explain their business model to content owners and how they set customers expectation properly on licensing, syndication and ad revenue.

The first question I am always asked is are these networks looking to license content, or are they primarily interested in acquiring and owning content? From those I spoke with, the consensus was that most networks look for a non-exclusive licensing type agreement that is based upon an advertising rev share, which is what most of the video sharing networks offer today. Some destination type sites may ask for an exclusive license for a fee upfront with no rev share, but those are less common. Another model might be the opportunity for a content owner to produce exclusive new content for a destination type site which works as a work for hire type of relationship.

Of course, content owners also want to know how is ad revenue generated and shared with content owners? Generally, rev share is some kind of a split of net revenues, maybe as much as 50/50 for on network and some three way split if it is on a publisher network. Net revenue is calculated by taking gross revenue minus any network costs for your content and the ad campaign, such as operations, management and hosting. Those costs usually amount to about 25% of the gross, with the remaining balance split with the content creator. While it sounds easy enough, the problem is that there is no "average" split of net revenues. The only true way for a content owner to know how much their split would be is to get an actual quote from the network.

Another question often asked is what demographics are networks interested in reaching? Only 18 – 30 yr. old males, or a wider audience? Each network has a different focus and target vertical, but for the most part, the wider and more generic the network the more broad the demographic reach is. The niche networks can get more specific and as a result should be able to offer better rev share models, but it may end up content owners get less revenue because the traffic is smaller. Targeted should mean better CPMs, but that’s not always the case and it’s nearly impossible to get the networks to tell you their CPM average across a certain type of content or niche vertical.

With all the talk in the industry of the costs to deliver video online, many content owners also ask if the networks pay for the bandwidth of delivering content from the website, or does the content owner foot the bill? If you are using a platform, like Brigthcove, the content owner foots the bill. If you are using a network, it can go both ways. For Your Imagination says that when they embed a video with blip.tv, Viddler or Revver player for example, those companies cover the delivery costs of the video in return for the right to sell ads on the videos and to share the revenue with For Your Imagination. For Your Imagination says this is super important because even though a show may not make a lot of money, at least they are no video delivery fees which for some shows can be expensive, easily over $1000 a month.

As for the question of what’s the duration of and standard provisions offered in a typical contract? All of those I spoke with said their is no "typical" contract as so many variables are taken into account. That being the case, I have yet to see any niche video network publish a list of all the factors that are taken into account that determine their contract terms with a content owner. I understand if you don’t want to publish your rates, but wouldn’t it be nice if content owners had some idea of what factors affect the revenue share numbers?

A lot more work is needed by the nice video networks and video platform providers to make their pricing and business terms easier to understand for content owners. If it was made easier to understand, content owners wouldn’t be so confused and the market would grow faster. We’d see more adoption and more usage of online video and we’d have a better chance of content owners not having to struggle to figure out what the pricing is, how it works and what their cost would be. And it’s just not the networks that have this problem, the platform providers as worse. Last week I was trying to help a content owner review pricing from both Brightcove and thePlatform and trying to decipher what the terms are that they use is confusing even for me. On one hand, many of these video platform providers say you pay one price to use the platform, but then charge you for "software platform fees", bandwidth, the number of media clips you have, storage, use of APIs and the number of "user accounts" you have. Come on guys, this needs to get easier.

I don’t get to as many conferences as I use to, but I still get to at least half a dozen or so outside of my own. The more conferences I go to and the more agendas I look at, I can’t figure out why so many of these conferences are not including online video topics in their programming?

For example, the INTERACT 08 show taking place in DC later in the year says it will gather together the top creative, strategic, and tactical
marketing minds to speak about proven methods for Interactive Media. They have topics on social media design, evolution of advertising models, bunch of Web 2.0 subjects and some topics that sound pretty interesting that meld the topics of design, creativity and advertising together. The problem is, aside from one session entitled "Creating Rich Internet Applications" which probably will contain a lot about video, none of the more than 25 sessions on the agenda speak to video at all. In fact the word video is not even used in any of the session titles or session descriptions across the agenda, on both days. Now maybe they just don’t want to include video, but personally, it sounds like a pretty good conference to me, and some interesting topics. But it will be very hard to discuss them and showcase "interactive media" without a strong video component.

And what about the Web 2.0 Expo that starts today? They have over 112 sessions across three days and other than two sessions, one by Adobe on RIAs and one about the video ecosystem, there are no other sessions focusing on any aspect of online video. And at this year’s NAB show, while it was all about video, almost none of the sessions were about online video. Topics about broadcast video, mobile video, video editing and IPTV ruled the agenda with a few topics around TV content online.

Am I the only one seeing this trend? Are you visiting non-video/entertainment specific shows and seeing any of them include online video topics in their agenda?

I just had three last minute cancellations for the below sessions at next week’s Streaming Media West show. If you are interested in filling any of them, contact me ASAP. Customers and end users get first priority, but all are welcome to submit for the spots. If interested, you must send me the speakers name, title, company, bio, e-mail address and postal mailing address. Only complete requests will be responded to.

Tuesday, September 23, 2008 – 11:30 a.m. – 12:30 p.m.
Online Video Publishing and Marketing Strategies
In the world of video publishing, how do you get started? How do you create compelling content? With so many options for live and on-demand video, how do choose your distribution platform? How do you find your niche? Build your audience? Establish your brand? How do you create a sustainable model to monetize your content and generate income? This is an opportunity to hear some of the most well known and respected online video publishers discuss online video publishing and marketing strategies.

Tuesday, September 23, 2008 – 11:30 a.m. – 12:30 p.m.
Best Practices in Enterprise Streaming for Communications and Learning
Use of online video in the enterprise has evolved well beyond the special-occasion, rudimentary talking-head videos that characterized early adoption. Whether webcasting executive briefings across the globe or capturing and archiving rich media presentations for training, marketing, sales, and compliance, a growing number of organizations are capitalizing on the capabilities of Web 2.0 technologies. This session will show examples from Fortune 500 organizations of best practices in integrated online video for communications and learning.

Wednesday, September 24, 2008 – 4:15 p.m. –5:15 p.m.
Planning & Executing Successful Webcasts
No longer just a conduit for corporate communications, webcasting offers exciting ways to engage targeted audiences. Whether it’s for internal purposes like training, sales, and marketing or consumer-facing entertainment events, effectively reaching your audience requires understanding the strengths and weaknesses of existing technologies, following guidelines for assembling event resources, and selecting the best channel for message delivery. Hear several case studies from webcast events and gain valuable insights into webcasting best practices.