Microsoft to Become a Television Producer. Again.

Microsoft has snapped up Ben Silverman -producer of shows like The Biggest Loser and The Office- for a one year deal to produce web pilots for MSN.

The company has been down this road before and it has lost a lot of money. MSN produced onriginal TV style content in 1996 and 1997 and cites bandwith as one of the several reasons the initiative did not take first time around.

This time around could be different. Could be different. For a start more people have the bandwidth now. Also the idea that you can watch television over the internet is no longer so freakishly nerdy it makes sane people laugh.

A lot of it depends on how they are planing to monetise it. If the revenue is simply coming from display advertising on the MSN sites and the odd pre-roll before a clip then it stands a chance. If you have to pay to download it then it will be strike two for MSN the producer. According to Lorne Manly's New York Times article, Silverman is a master of product placement. I imagine Microsoft will want to make use of that as a revenue stream as well.

I am cautiously optimistic, however. It doesn't appear there are any plans to charge for the content -and considering they are less than two months away from total war with competitors Yahoo and Google this is a good move. It is all part of their campaign to get people to stay on their sites longer than it takes to complete a search or start up a web browser. Marketers and advertisers need users that stay on a site for a good long period of time. Microsoft plans to offer them those kinds of users.

Other causes for optimism: They are being a little bit cleverer this time around. The video content is web focused. It will be based around things people look for on the internet and how they use the internet. For instance Face Off -which is apparently going to be a pop culture debate/ talking heads style program- while have the most searched entertainment enquiry as its topic of the day. If they pull that off it well it could prove to be really popular. It would definitely be somewhere near the top of my video podcast list.

There will also be comedies, more reality shows involving chefs and programs about famous musicians. The usual stuff audiences seem to have a ceaseless appetite for. And good content if you are planning to monetise product placement.

What I find most interesting about new development is that Microsoft is fully prepared to migrate any particular show to our televisions. It's media convergence swimming in the opposite direction. The possibility that I could see a Microsoft logo at the beginning of a television program has me intrigued. I will write more on this.

iTunes Downloads Keep Flat Rate

Apple has renewed contracts with the four largest music companies to continue offering songs via iTunes at the same flat rate.

Why is this blog worthy? Because the music companies were trying to end Apple's flat rate pricing scheme and charge more money for their various artists of the moment.

Steve Jobs says the flat rate is essential in weaning end users of illegal downloading or filesharing. He is right and I am mad.

No sooner does a workable business model for delivering online content appear than the ineptitude of the record companies threatens to kill it. It is truly appalling for them to be crying poor over internet piracy while sneaking in the back door to jack up the price of those of us that are doing the right thing.

Only Universal had not pushed for a variable pricing model that would maximise revenue from the more popular artists.

This is a further example of old companies brining their outdated business models into an environment where they won't work. The record companies are seeking to have iTunes look like any given record store: Two dollar recordings of dead artists like Louis Armstrong at the door and forty dollar 'special edition' new release albums by the counter.

At the moment, legal downloads constitute about 5 per cent of industry revenue. If you want to grow that you do not go about it by price gouging. You drop the price of portable media players and you offer added value content for free via iTunes and other sites (acoustic versions of chart topping songs, video of the artist in the studio, etc). Growing the business means making end users aware of the value of using your services to access your artists.

And as for Steve Jobs: well aren't you an interesting fellow? Here is someone using their monopoly powers for good. Now if we can just do something about the price of iPod accessories then maybe I won't be tempted to boo you off the stage whenever you show up with your jeans and headset. (Yes, we get it. You wear jeans. You are very casual.)

This is a concerning development. How long do these contracts last? Will Apple be able to brow beat them down next time? Hopefully, because otherwise I am going to run up my jolly roger and set sail for the nearest P2P safe haven.

Disney Trials Interactive Advertisements

No sooner had I finished blogging about the potential of free/ad-supported online content than I read a Reuters article about Disney's plans for abc.com.

The company is going to trial a single interactive advertisement in lieu of a bundle of thirty second slots per ad break when it makes available some premium programs like Desperate Housewives and Alias via the internet this month.

This is a fantastic development and -for once- we are seeing a network trial things in a realistic sense. Gina Keating mentions in her article that 'Disney officials said they do not expect abc.com to replace tv advertising or even provide a meaningful revenue stream in the near future.'

What the company is trying to do is figure out how consumers use interactive media and where the capacity to monetise it lies. According to the article this information will be made available when ABC unveils its fall schedule in New York on May 16.

This is exactly the kind of exploration the industry needs. Firstly, unlike newspapers, they have not walled their content behind payment barriers. Secondly, they have recognised that online video is not just re-packaged television but an entirely new area with its own set of as-yet untested rules. Thirdly, there is a willingness to trial these different methods at a monetary loss. It was not so long ago that you couldn't even download a trailer of an upcoming movie -you had to stream it because miserly studios would not realise material from their white-knuckled death grip.

And finally; interactivity -in the web 2.0 sense- is what each of these companies should be aiming for. It is now an expectation of sophisticated web users. This marks a very important step away from the broadcast model, especially as users are given the option to continue interacting with the advertisement beyond the thirty second slot should they so desire. Gone are the days of scurrying for a pen to catch a phone number you saw in a tv ad.

This model clearly has no long term future but that is not the point of trialling it. The point is to start testing the waters so that we end up with a workable online content industry That does not butcher its tv parent or fall prey to piracy. Disney recognises this. Snaps for Disney.