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 When it comes to understanding how new technologies will affect the media markets, entertainment executives strive to find parallels between the music and sports industry, writes Will Muirhead, chief executive of PA SportEV (pictured right). We tend to evangelise that the sports media industry understands its product better, aggregates its rights more professionally, defines its new media windows with more care and protects itself from potential rights infringements more effectively. When it comes to the delivery of delayed sports video clips online, however, I think there is something to learn from the music industry.
The next three years will be critical. Sports media executives have been presented with a unique opportunity to create products that could be as valuable as television rights. The global online advertising market is set to double over this period to a spend of $65bn. The UK’s most popular website is a pure video clip site. UK online advertising revenue has already surpassed that of print media and, by 2010, is expected to overtake television advertising spend. These trends are being replicated worldwide. Over this timeframe, we are likely to see online sports video highlights become more profitable than their conventional television cousins.
The FA Premier League, once again, is leading the way. For the first time in its 15-year history, the Premier League has aggregated its online video clip rights and sold them centrally to outlets in every market worldwide, reportedly generating in excess of $80m. Given that Premier League television broadcasts touch over 8% of the world’s population, $80m seems to be a very small fraction of the global online advertising spend forecasts. The ability for fans around the world to access every goal from every game on multiple websites and to build social networks around this fresh, high-quality content, will change the face of the current Web 2.0 ‘FaceBook’ model. Content, once again, is becoming central to the success of online businesses.
The Premier League and its online partners look certain to follow an advertiser-funded, non-exclusive model. I expect to see Premier League branded channels appearing on all the major internet portals, from MSN and Yahoo to BBC.com and ESPNSoccernet.com, in each territory globally. I expect the Premier League and its agents to build centrally managed advertising sales departments and I expect global brands, like Vodafone and Coca Cola, to find new partnerships with the Premier League online to deliver the kind of globally accountable reach and demographic that they fail to reach through other media. These advertisers will know who is watching, where they’re watching, how often they’re watching and have absolute transparency on the effectiveness of their multimedia campaigns. Billions of Chinese and Indians are waking up to broadband internet connections and advertisers understand that the most cost effective way of talking to this new audience is through online content partnerships. This new demographic wants to consume bit-sized video content and to socialise online. This new demographic doesn’t have the time or patience to watch long-form, scheduled television programming.
 So…..what’s the problem?
Piracy For the past 10 years, the music industry has been fighting online audio piracy. Individuals have been rampantly copying tracks, uploading them to file exchanges and sharing them with a global audience…. for free.
The music industry was slow to respond and when it did, its initial response was wholly unsuccessful. The major labels thought that the best thing to do was to take legal action against everyone from the file exchanges themselves and the Internet Service Providers to individuals. Legal action proved slow, cumbersome and ultimately succeeded in alienating the new online audience, who were driving the market. The labels needed to listen to the audience. The audience wanted digital downloads.
Despite artists and labels resenting [Apple CEO] Steve Jobs selling iPods off the back of their music and setting the price of a digital download at a level often thought to be too low, the industry recognised that his efforts to make high-quality recordings available online in an easily manageable form hit the right chords.
Since Jobs’ pioneering efforts the model has moved on. Whilst iTunes has been successful in selling billions of digital downloads, the piracy factor has not disappeared. The music industry continues to suffer from the key demographic finding free downloads too easily. As a result, new models are breaking through. We7, a new venture backed by musician Peter Gabriel, has launched, offering advertiser-funded, free music. No doubt, iTunes will soon extend its advertiser funded free podcast service to conventional digital downloads as well. Compare and contrast  Certainly, the sports industry creates digital products that are far easier to protect than audio tracks and the industry has certainly made the right moves by creating official and high-quality digital video downloads before online video piracy gets totally out of hand, but, there are still lessons to learn.
Legal action in the online world is proven to be ineffectual. Sports rights holders should concentrate on working with all online video entities. The business model is clearly advertiser-funded, so there seems little sense in restricting the number of partners that should be sought after. Furthermore, all online video entities are open to working with sports rights holder partners to clear rights infringements.
It seems sensible to learn from the wasted years that the music industry spent pursuing litigation and forming label owned consumer-facing solutions. It seems sensible to embrace the advertiser-funded, non-exclusive model and, most importantly, to embrace the pioneers of the online video world. The market is alive, well and growing rapidly. There is no harm in holding a legal stick firmly in one hand, but it will be the carrot that proves more effective.
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