Execs eye extinction of digital freebies

MIPTV panel addresses future of online revenue

CANNES -- Digital revenue may be small, but it is beautiful and growing and the era of free giveaways is over, execs at MIPTV said Monday.

"I have a pretty strong point of view that new-media rights should be viewed as a separate window, not just a throw-in," said Ben Pyne, president of global distribution at Disney-ABC Worldwide Television and Disney Media Networks. "It should be monetized. I think you are making a mistake if you just give things away."

Pyne said that Disney has established a strategy of monetizing on-demand and catch-up television through VOD, subscription VOD licenses and the launch of its own ad-supported video player. It's a strategy that's paying off -- somewhat.

"It is not a lot of money but it is an amount of money, and it sets the right principle, which is that even if its free to consumers, it is still part of a relationship that is monetized through a distributor," he said. "The bottom line is that there is value to the content."

At a panel addressing the subject of online revenue, YouTube's European director of video partnerships Patrick Walker pointed to the rapid growth of online video-related revenue.

"At Google, we think of online revenue as something that could eventually exceed search. There's a lot of experimentation in the types of different advertising formats being used, and there's been an enormous shift in the amount of money being spent around online video," he said, pointing out that online video revenue globally was forecast to grow from about $200 million in 2008 to $2.5 billion in 2012.

From an admittedly low base, online video advertising grew 81% last year compared with a net 1% decline in the U.S. television advertising market, Walker added.

"A year ago, Jeff Zucker referred to the 'digital pennies' as far as revenue; just recently he referred to 'digital dimes.' That's a business that's 10 times bigger in just a year," Starz senior vp digital media Marc DeBevoise told a packed room of delegates.

"Most industries don't grow that fast. And that's why we think there's real growth to come in digital media, but companies need to be patient and let them develop," he said.

It remains to be seen, however, whether the slowdown in global advertising as a whole also means that the nascent market for online content would also take a hit, said Joe Michaels, senior director of MSN Entertainment.

"We're past the crawl phase, and are in the walk phase," he said. "All the key areas are now in place -- so now the question is do we have the stomach to live through the growing pains we are going through with the economy today."
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