Using Video for Content Monetization and Channel Control
When it comes to deploying an online video ecosystem, if revenue is the objective, there are three areas in which many companies use digital media: content monetization, channel control, and customer conversion. These are all concerned with building top-line sales, either through the sale of the digital media itself or by using the digital media to increase the sale of any product, physical or digital.
Any company with digital audio or video that has intrinsic value should be building a digital media strategy to sell, or monetize that content over the Internet. The nature of digital media is that it does not degrade over time and that an infinite number of copies can be made from an original without affecting the quality of the original. The nature of the Internet is that any point can be accessed by another point, that it is pervasive and redundant, and that it is quickly becoming more akin to a utility resource like natural gas and electricity than a jumble of technologies. When combined, digital media plus the Internet means that an audio or video file with intrinsic value could be sold and delivered directly to anyone in the world with an Internet connection—more potential customers than could ever fit into even the largest of retail stores.
Aside from selling popular content to millions of people, the Internet’s reach also makes it feasible to begin selling niche content to small, specific groups. NASCAR racing has a large enough following to merit cable television broadcasts, but locomotive enthusiasts may be just as willing to pay to see footage of something much smaller in scale. The potential is such that anyone with content that is valuable to any group should be able to generate revenue from that content via the Internet. Keep in mind that monetizing content is not always about selling the content itself. Monetization can occur from selling advertising around the content, syndicating the content, licensing the content, selling sponsorships around the content and other outlets.
Any media and entertainment company operating today is looking to augment their existing distribution channels with the Internet. Some are even trying to circumvent their current distribution channels entirely. Movie and television production currently relies on local affiliates and cable television operators to get their content out to the public. Retail stores such as Wal-Mart and Amazon.com are the main avenues for customers to purchase music and video content.
Content producers and owners have seen the Internet as an avenue to regain control over the distribution channel. The Internet itself is collectively owned and operated by over different service providers, so that the content owner does not need to be beholden to any single service provider as a channel partner. Going direct to the customer can remove the wholesale costs and increase the average selling price of any individual product. Unlike distribution of physical goods, given that the content is digital, there are few efficiencies to be gained in terms of inventory holdings. The costs to hold the inventory do not change significantly from the costs to store the assets and intellectual property. However, channel management, co-marketing, and other fees associated with supporting a distribution partnership can be avoided.
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