In 2009 television advertising revenue fell by 17% which has panicked broadcasters into questioning their future. After spending 3 days at the RTS Cambridge Convention this week Moray reports on how Google claim that they can save the day.
“I’ve just spent three days at the RTS Cambridge Convention, the gathering every two years of some two hundred people who own or run the UK’s TV industry… Sessions led by the likes of Mark Thompson, Peter Bazalgette, Culture Secretary Ben Bradshaw, Andy Duncan and Dawn Airey, worried over the future of the BBC and the commercial broadcasters. But the big question lurking over every session was, ‘where will the money come from?’… Then, like a deity summoned from Olympus, Eric Schmidt appeared on a live satellite-link to answer questions from the delegates and give the word of Google. If Larry Page and Sergey Brin thought up Google, the most successful start-up in history, Eric Schmidt is the Chief Executive they brought in to run and grow it. And Google is aiming to be the god of all television.
I’ve just spent three days at the RTS Cambridge Convention, the gathering every two years of some two hundred people who own or run the UK’s TV industry. The mood certainly wasn’t self-congratulatory, if anything, the tone was typical of that set by Phil Redmond, creator of Brookside and Grange Hill, when quoting screenwriter, William Goldman, ‘nobody knows nothing’.
Sessions led by the likes of Mark Thompson, Peter Bazalgette, Culture Secretary Ben Bradshaw, Andy Duncan and Dawn Airey, worried over the future of the BBC and the commercial broadcasters. But the big question lurking over every session was, ‘where will the money come from?’
The BBC’s income is the most stable source in the business for now, but the entire industry can’t depend on the licence fee.
Spot advertising is on the wane, but still brings in hundreds of millions of pounds every year and subscription works wonders for Sky but can it last?
Micro-payments for individual programmes sound good, but Sky Chief Operating Officer, Mike Darcey, claimed that, “micro-payments lead to micro-revenue”. The revenue question matters to you and me, because that money is what ultimately pays our fees and wages.
Then, like a deity summoned from Olympus, Eric Schmidt appeared on a live satellite-link to answer questions from the delegates and give the word of Google. If Larry Page and Sergey Brin thought up Google, the most successful start-up in history, Eric Schmidt is the Chief Executive they brought in to run and grow it. And Google is aiming to be the god of all television.
Schmidt says that the user-generated content experiment is largely over; home videos aren’t the future of YouTube (bought by Google in 2006) . Instead, it plans to be the place that we will look for any long-form professional content, be it documentary, drama, entertainment or any other genre. This will come into its own as our televisions and computers merge as terminals for the same web and broadcast content.
Currently, Google/YouTube gains up to $6 billion a year from Ad Sense, the paid-for links at the top of your searches and down the side columns. Schmidt predicts that YouTube video content will be a much more lucrative source of income than plain website search.
To this end, Google has already devised new software to deliver TV adverts personalised to your needs and tastes via set-top boxes, which will be worth far more to advertisers per viewer than blanket coverage, and Google plans to split the advertising revenue with the owners of that video content.
If you attach Ad Sense to your own online content, then you get a cut of Google’s advertising revenue. If you make films or programmes that get a lot of viewers, then you may get a lot of revenue from Ad Sense without ever having to deal with an advertising sales house.
Google’s promise is that as advertising continues to migrate over to the internet, producers and intellectual property owners will still get paid. Schmidt says that Google has already developed software to ensure that only the owners of video content, or those with their permission, will be able to keep their content up on YouTube. Google won’t become a commissioner of programmes and it won’t directly subsidise or pay for productions, it will accept whatever people post on YouTube.
But its strategy for the future is to earn advertising ‘in partnership’ with producers, and give them a percentage. If they pull it off, the potential is that Google will control how and where we watch television.
You may think this prospect of YouTube dominating TV delivery is exciting, or terrifying. Either way, it is coming to a screen near you. And soon.”