From mediapost.com:
THE DEVELOPMENT AND TRIAL OF new business models that utilize digital interactivity to generate revenues is becoming sport at many media and entertainment companies. And everyone is playing to win. Even as television network and film studio executives wrestle with striking writers over payment for scripted material used in streaming, downloaded and other new media video, they are testing promising compensation models.
A series of up to three-minute shorts detailing background about the stranded characters of “Lost” are streaming for free at ABC.com. Created by the series regular writers before the strike, it took five months of negotiations to determine how they would be paid for the “Missing Pieces” vignettes, in addition to their established residual income from broadcast programs. Although ABC and Disney management said the new arrangement would not be binding to other new media deals, it most surely will be considered as a template for creative content pacts made for future new distribution platforms and devices.
The movement to create original product for the Web, in hopes that some of it might migrate to television, is slowly catching on. Former Disney CEO Michael Eisner was among the first to successfully explore this option with the creation of the 90-second episodes of “Prom Queen” by his Vuguru virtual production house, which has attracted more than 15 million online views. The eight-minute series “Quarterlife” on MySpace is headed for NBC prime time regardless of the writers strike, where it will continue to be supported by streaming video and social networking support. While they are not intended or expected to displace television profitability of hit programs, short online formats can “dramatically improve the ad to content ratio and facilitate product placement interests by lowering entry points,” according to UBS analyst Matthew Coppet.
Common to new business models is concern about their mechanics, measurement and methods. They include such sticky issues as configuring payments based on advertising revenues, user impressions and fees. Although many media companies contend it is too soon to know what most new media businesses will be worth, more metrics become available every day. Just this week, the media buying agency Starcom estimated that the four broadcast television networks will realize $120 million in ad revenues from their nascent online video ventures in 2007. Their corporate parents, including Walt Disney and News Corp., have acknowledged that each will make more than $1 billion in revenues from a variety of new digital ventures this year.
