The Business of Streaming Media

The Presentation inside:

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Webcaster An individual(s) misguided enough to think he/she can change the way the world is entertained and communicates

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Streaming Media is causing us to rethink the big media picture and face important issues We’ve come a long way in 4 years….

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#1 What is Media Media used to be defined by its spectrum TV by channels Radio by stations Not in a streaming media world All digital media is just a stream of bits Whats the difference between Digital Cable and Streaming Video ? Both are just streams of video sent to a computer output to a monitor ! Streaming Video can vary its bit rates Streaming Video can be inherently interactive Streaming Media is already dominant in the office. Only 9% of office workers can get TV while more than 95% can receive streaming media !

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#2 What is Content It used to be defined by its packaging capacity CD - 62 Minutes / VHS - 1 Movie DVD - 3.7gb Not in a digital world Content is now available live or on demand Its defined by its availability as a stream or transportability as a file Do I have to go to a website Can I send it as an email or take it on my Rio The amount of video content on the net far exceeds the amount available through any other medium

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#3 What is a Broadcaster ? Every company is a broadcaster Dell, GM, Intel, P&G… Everyone is a broadcaster For Free you can reach your friends using MP3 streaming or Windows Media from your home For 5k a month you can reach a niche audience using a provider This is just the beginning within 3 years there will be >1mm video channels within 10 everyone will have a personal channel

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#4 What is TV ? TV is an alternative to boredom Its what you do when you have nothing better to do Cable TV is a video monitor connected to a stupid computer (STB), connected to a wired network that is limited in what it can provide Streaming Video is a video monitor connected to a smart, but ugly computer, connected to a wired network that is unlimited in what it can provide When computers start looking like they belong in the living room, and broadband becomes more available, streaming will change the definition of TV

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#5 How do Corporations Communicate ? Real Time Communications is having a profound effect on the business world CEOs can now speak to their employees on a regular basis Product Introductions can be held online Quarterly earnings conference calls and Shareholder Meetings can now reach all shareholders Multimedia can be added to product descriptions Applications continue to appear and streaming is becoming mainstream in many corporations !

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But our progress is being hindered …. Not everyone is doing their part…..

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#1 Digital Millenium Copyright Act Webcasters have become the poster children for record label abuse. What they couldn’t get from Radio, they try to take in abundance from webcasters! We should have to pay copyright owners for their work. The question is how much RIAA is not asking for fair compensation

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#1 DMCA Economics RIAA is asking for as much as .5 cents per song from webcasters There 12 to 20 songs played per hour Using .3 x 15 songs = 4.5cents which equals $45 CPM per hour of listening This is CRAZY Pricing Or a Percentage of Revenue As high as 15% has been reported Penalizes those that have revenue, rewards those that don’t … Corporate Intranets have it even worse Company Intranet Radio stations and events could cost you a fortune !

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#1 DMCA Programming Politics Artist Complement Act Limits # of songs from an artist/CD that can be played in a time period Requires that pre-recorded loops be a minimum length Requires us to show title and artist Prohibits webcasters from pre-announcing songs None are hard, but all put us on uneven ground with traditional broadcasters Only makes it harder for us to compete with traditional media. They can run 24 hour Beatles, we cant This might have been OK 2 years ago when this was being negotiated, but with MP3s and Jukeboxes everywhere, its ancient, and it needs to change

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#1 What you should do... Talk to a copyright attorney about your options Join lists like the list to get educated Call your Congressman and Senator… Move your servers to Canada Laws are realistic They are supportive of webcasters They are looking for ways to create bandwidth flow OUT of Canada for a great example

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Deep Linking Linking directly to Media Files is a way for all of us to subsidize wanna-be portals. Direct Links Deprive webcasters of sales of Banner Ads, Interstitial ads, Sponsorship and Branding. This is not the same as linking to a webpage. The cost to deliver a webpage is negligible The cost to deliver a stream is not ASCAP/BMI DCMA - $30CPM Bandwidth Stream Licenses Server Capacity Support We need to stop this as an industry #2

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Audience Reporting We have got to stop playing this game of my webcast is bigger than yours As an industry we are starting to look more clueless than the reporters who write about these events A hit, stream served or visitor is not a UNIQUE user. All of these terms have been misused to mislead #3

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Audience Reporting May I suggest, that if you choose to report on the size in terms of users to an event, that we employ the following metrics # of Unique Users Ave. time spent on each stream Its not hard to capture, its all right in our logs This will at least demonstrate that as a medium we understand our own statistics and we are able to convey the reporting advantage of streaming - actual usage And to help keep us honest... #3

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Audience Reporting There are 3rd party ways to at least qualify numbers to some extent All 3rd party streamers include a defining URLs in their presentations Media Metrix tracks these URLs Media Metrix ratings/uniques per mo. 6.0 - 3.7mm 1.4 - 864,000 Intervu.Net .7 - 438,000 - not enough - will be interesting All URL driven webcast audiences show up #3

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Vendor Issues Real, Do Not Mislead Users to a Paid Player Too many users are mislead into thinking they must pay for a player because they cant find the free one. It makes the users mad at us, not you Its time to offer some server management tools, any tools Its not that we cant create them we can. But every time you change your software, client and server, which is often, our tools and services are immediately out of date Then we spend far too much time figuring out what to change to match your changes ! #4

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Vendor Issues Stop making ridiculous player download claims. They are meaningless and misleading Let us know what percent of new PCs are shipped with your product to alleviate download fears If you say you are compatible with a particular operating system, please release compatible versions on a timely basis. We are tired of being told we just upset an entire company because we upgraded a server and their players are no longer compatible Real, please pick a consistent pricing plan. Its no fun to compare notes with friends and find out that pricing is all over the map. We don’t mind paying for streams nearly as much as we hate the fight we go through to buy them ! #4

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The Business of Streaming Media Some Observations…..

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Webcasting -The Business Side This industry is just beginning. It is probably about a 250mm business in 1999 I expect it to grow to 750mm the following year, and at least triple each of the next 3 years Streaming media will be expected as part of almost every major website The base of revenue will be services EVERY company and website in the world can benefit from real time streaming communications 80% of revenue will be streaming services 20% will be advertising around content #1

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Growth will be Incredible ! We will see the number of events broadcast over the web EASILY TRIPLE each of the next 5 years. But this will only increase audience fragmentation per event. The number of Victoria Secret size commercial webcasts of more than 1.5mm UNIQUE users will number less than 5 per year. Only breaking news will surpass Vic Sec on a regular basis Service companies should focus on selling services and events, NOT in pushing bandwidth Value added services will mean profitability Selling needs to be a core competency Customers wont show up at your door, you need to go find them The Sky is the limit #2

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Profitability is King ! Webcasters must operate for profitability Everyone is a genius in a bull market, But the market wont stay hot for ever Nor will VC funds always be available Within 12 months it will be put up or shut up time Investors will have been able to see what webcasting models work, and which don’t. We are starting to see the impact of this with the lagging valuations of streaming related stocks and companies like AudioHighway ForeignTV They are all underperforming other internet stocks or private company equivalents #3

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Advertising Supported Content Sites will have it Rough. The toughest asset to create on the net is traffic. Generating traffic for original content without any inherent demand is the hardest of all Without critical mass traffic its impossible to generate any level of revenue Audience fragmentation will make it far harder to create hits on the net than on TV The best original content model ? The 1 minute video that can be sent as an attachment with email #4

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Picking Who Streams Your Content Finding the Best Solution

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The Decision Criteria Can your provider help you generate demand ? Will your provider stay in business ? Can your provider scale ? UniCast Networks Multicast Networks Number of Streaming Events #7

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How will you generate demand This is the greatest challenge for any content provider Everyone thinks their event is the next Victoria’s Secret The reality is that most events don’t reach 1,000 simultaneous users You must be realistic in setting expectations The right partner will assist you in determining how to acquire the most relevant & largest possible audience It’s the key to a successful event, and for content based businesses, it’s the key to financial success. A content based site without eyeballs, wont be in business very long For DiskJockey.Com we increased their audience by more than 500% in less than 5 months ! #7

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Will Your Provider be in Business ? The best providers establish long term relationships with their customers We get to understand our customers business We invest in our customers and provide ongoing support and resources We have customers that have been with us for four years ! Many providers are in business to play the stock market rather than show a profit Is your provider profitable ? Or are they showing ever increasing losses ? Yahoo is one of the most profitable companies on the net and Y!Broadcast is a profitable contributor ! Before choosing a vendor, make sure they will be in business ! #7

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Scalable Networks - Unicast The greatest challenge to Streaming Service Providers is NOT scaling unicast audience size. Anyone can add servers and buy bandwidth Regardless of what city the servers are in If you connect them in any way to the top 20 networks they will work until you run out of bandwidth or servers At Yahoo!Broadcast we pass 1gbs of unicast streaming traffic on normal weekdays #7

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Scalable Networks - Multicast True Scalability for Streaming Media will come from Multicasting There is no limit to audience size True Broadcast Model The Problem with Existing Distributed Servers Networks is that they are not MultiCast Capable Multicast Streaming is thriving at Yahoo!Broadcast Yahoo!Broadcast is the only provider with experience at multicasting at all bit rates, all streaming vendors Yahoo!Broadcast is the only Commercial, Multi-Network, MultiCast enabled Network in the world With more than 50 MultiCast Enabled Partners We can reach more than 1mm simultaneous users on multicast networks ! Yahoo!Broadcast has done thousands of 100% multicast broadcasts As many as 40k simultaneous multicast users ! #7

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Multicast Affiliates 52+ and growing Accesscom ACI ATMLink BorderNet Carrier1 Cais CharmNet CoastLink CyberZone DirecPC dotSTAR Electric Lightwave FlashNet Galaxy Star Great Basin Internet Services IDT IIJ Information Highway InLink InMotion InReach Insync Jato Jump Net Level 3 Lightspeed Megsinet MicroCore Midwest Web Mobile Star NetCarrier NetConcept Network Internet Nortel Nova PIXINet South West Plains Communication Splitrock Sprint SysNet Teleglobe Telepak The Internet Connection The-OnRamp.Net Transport Logic UniComp uniView Verio WebNet ZebraNet ZipLink #7

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The Real Scalability Challenge The reality of the streaming market is that the # of live streaming events is exploding. But most live events are narrowcast events that are designed for under 100 simultaneous users Distance Learning, Corporate Presentations,etc Most require multiple BitRates and Multiple Streaming Formats The challenge is to be able to cost effectively deliver thousands of simulaneous events, each with top level quality, with out any failures The cost issues for doing many events, with multiple bitrates are very different than doing a couple large events #7

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The Cost Breakdown of a Broadcast A typical live broadcast today requires the following bitrates to be streamed 20k, 32k, 100k, 300k, 1mbs In total 1.452mbs In two formats, WMT and Real Total encoded bits sent to servers - 2.9mbs Send these streams to 20 distributed servers across the net and you are using 58mbs just to reach the servers before you have served a single stream to an end user ! Now imagine if you are streaming 1000 of these events at once. You would be using 58gbs of internet bandwidth before serving a single end user ! Its hard to make those economics work #7

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The Benefit of a Centralized Network At Y!Broadcast the links between the encoders and servers are localized to one of 2 networks in Dallas, or a 3rd Redundant location in San Diego This gives us the lowest cost to deliver the greatest number of events, large or small It removes any Internet Risk of the encoded stream not reaching a server It allows us to leverage our multicast network to scale audience size We can deliver any any bitrates, from 6kbs to more than 1mbs with the equal ease and reliability. So, when chosing a service provider, consider all the issues, not just meaningless capacity claims ! #7

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