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This paper was presented at the Association for Education in Journalism and
Mass Communication in San Antonio, Texas August 2005.
If you have questions about this paper, please contact the author
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Thank you.
Elliott Parker
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Emerging Media Business Models Worldwide:
A Study of Leading Webcasters in 13 countries
ABSTRACT
This paper reports the findings of a 13-country comparison of
webcasting business
practices, and the results of a test of the robustness of the
webcasting business model framework
suggested by Ha and Ganahl (2004). The globalness of the webcast
medium is also examined.
The study establishes the variety of business practices by different
types of webcasters, and the
domination of domestic webcasters and domestically produced content
in webcast services.
2
Emerging Media Business Models Worldwide:
A Study of Leading Webcasters in 13 countries
Television and radio media are no longer confined by the
electro-magnetic spectrum,
geography or license requirements. With the increasing use of
broadband Internet connections in
the world and the advancement of the streaming technology, the Web is
becoming more and more
popular either as the primary or alternative delivery medium for
television and radio stations.
For example, Home and Garden Cable Television Network began producing
dozens of threeminute
videos on best practices in homebuilding exclusively for its
hgtvpro.com web site
(Associated Press, 2005). The British Broadcast Corporation (BBC)
reported 6 million unique
visitors listened to 10 million hours of its streaming radio news via
the Web in October 2004
(Radio and Internet Newsletter, 2004).
The delivery of prepared video and audio content to Web users is
called Webcasting.
Webcast providers range from established television and radio
stations such as ESPN.com (also
known as clicks-and-bricks) to stand alone webcasting services that
exist only online without any
offline media counterparts such as Real Networks (pure-plays), to
Internet service providers
(ISPs) that also participate in the online media content delivery
business such as America Online
(AOL).
This paper first discusses the growing importance of webcasting as an
emerging global
medium in the context of increasing broadband penetration and the
inheritance of the
participatory culture of the Internet by the webcast medium. Second,
it addresses the importance
of technical characteristics for understanding emerging media and
reviews the research literature
on the business models for online media. Third, it demonstrates the
necessity of a cross-cultural
model that enables the globalization of a webcasting industry by
promoting the understanding of
the dynamics between online and offline media that transcend
individual markets. Fourth, it
presents several hypotheses and a research question based on prior
studies of online media
3
business models and media economics theories. Finally findings of an
original research study of
the leading webcasters in 13 countries are presented to test the
robustness of the online media
business model theory proposed by Ha and Ganahl (2004).
Significance of webcasting as an emerging global medium
The development of audio and video service on the Web is significant
to the consumers
and media industry at large. Unlike text-and-graphics-only web sites,
webcasts of audio and
video can transform a web site into an entertainment center providing
a full range sensory
experience to consumers. The delivery of such a rich and highly
accommodating media
experience, called fluidity in sciences, makes webcasting an
attractive medium (Lin, 2004).
Indeed, watching or downloading video and music and listening to
streaming audio, are activities
characterize broadband users (Internet Retailer, 2004). Webcasts not
only provide consumers
more choices, but also create a whole new landscape to the media
industry. Traditionally, the
consumption of audio or video content usually occurred at the users'
home. Now, consumption
of television shows can occur on transit (when people have wireless
Internet connection either
through their laptop or cellular phones) and at work. Computers are
increasingly common in the
work place, and much research reports the use of computers for
entertainment at work
(eMarketer, 2003). Webcasts can be a complementary service to
existing media companies, as
well as a competitor for revenue and audience's time.
Despite the academic widespread use of the term "emerging media,"
there is no clear
definition of what constitutes an emerging medium. We suggest that an
emerging medium is a
message delivery vehicle that is achieving higher utilization among
the general population, but
has neither universally accepted technical standards for content
transmission and display, nor
established operation models such as revenue sources and content
strategies. It is transient in
nature. All successful mass media technologies go through this
"emerging media" status in their
nascent stage. Webcasting is an emerging medium that demonstrates
these characteristics.
Webcast users are faced with incompatible and different file formats,
streaming media
4
technologies such as compression and decompression techniques
(codecs), different media
players for displaying audio and video files, and other software or
plug-in enhancements when
using webcasts. Due to the unlimited capacity and wide open structure
of a web site, usability is
very important. In particular, it is important for a consumer to be
able to locate what he or she
wants to watch or listen in a webcast that provides thousands of
videos or music playlists. This
study defines webcasting as an example of emerging media and examines
the various business
models used by webcasters in their efforts to survive financially. To
avoid limiting the study's
application to only one country or culture, it employs a
cross-country comparison. Using a crosscountry
comparison is an appropriate approach to test the robustness of a
theory (Livingstone,
2001).
Proponents of Internet TV (e.g., Noam Groebel & Gerbarg, 2004) and other media
researchers (e.g., Chang, Lee & Lee, 2004) contend the Internet is an
efficient new distribution
outlet for video programs. By nature of the economic properties of
video products, the Web is an
ideal video delivery medium of the future. Digitizing video content
is becoming easier and
demands much less bandwidth requirements. The online music business
has become a major
challenge to the established record labels, and many new Internet
radio stations were launched in
recent years (Perebinossoff, Gross & Gross, 2005). Indeed, the most
recent report released by the
Online Publishers Association and comScore Networks reveals U.S.
consumer spending on
entertainment and multimedia sites (excluding game sites) reached
US$413.5 million in 2004, a
90 percent increase over the previous year. It now ranks the second
among online paid content
categories, following online dating and relationship services
(McGann, 2005). Accustream
(2004b) forecasts subscription and stream-based advertising revenue
in the United States will
reach US$864 million in 2005.
The absence of government controls and the ease of two-way communication have
created a participatory culture on the Web. This participatory
culture, coupled with other
commercial, social, and political interests, can transform the ways
individuals and organizations
5
disseminate audios or videos to worldwide audiences. With an almost
unlimited capacity, the
Web can become open depositories of audio video content made by both
professional and
amateur producers. Although webcasting for business use is another
important application of
webcasting, it is beyond the scope of this study. The focus of this
study is on consumer
webcasting.
Successful consumer webcasting requires the establishment of viable
financial models
that support the emerging medium. There are many studies that examine
the adoption of new
media by consumers primarily based on Rogers' (1995) diffusion of
innovation paradigm.
However, consumer perception of the medium is influenced by the
medium's business models
and its dissemination of content to consumers. The medium's business
models can be decisive to
the acceptance of the medium. Currently there is a lack of theories
that explain how emerging
media choose business models, and the models' influence on available
content within the
emerging media. This study examines possible theories that help
answer this important question.
Literature Review
Technical Standards and Consumption
One key characteristic of emerging media is the presence of competing
technical
standards in consumption of the media content. Such competing
standards can cause confusion
among consumers and create barriers to adoption. As Rogers' diffusion
of innovation theory
(1995) posits, only when the technology is simple to use and
compatible to the life-style of
consumers will it be adopted by the masses. To view or listen to a
webcast, a webcast consumer
must have a compatible media player that can display the file format
used by the webcaster, and a
broadband connection to receive high quality digital videos and audio
files. Currently there are
three main media players (Windows Media Player, Real Player, and
Apple Quicktime) and
dozens of proprietary media players that display audio or video
content. Next, in order to locate
the channel or clip to watch, they must know how to navigate web
sites which vary greatly by
designs and arrangements of the playlists or content (Ha, 2004).
6
Additionally, there are four different commonly used file
transmission methods for
webcasting: 1) Downloading on demand, 2) Streaming on demand, 3) Live
streaming, and
4) Push (Ha, 2004). Each method provides a different format for a
consumer to use the content
service. Downloading on demand allows the user to download the media
file to the user's hard
drive, so the user can store it and open it for later use. It is
similar to a videocassette or DVD that
is owned by the consumer. Streaming on demand utilizes the file
compression technology to
display the file during transmission. The files are stored on the
webcaster's server. Users can
retrieve at any moment the content on demand, however the streaming
does not constitute
ownership because content was never saved on the users' computer.
Live streaming most closely
resembles the traditional terrestrial broadcast. There is a fixed
show schedule that users must
follow in order to view or listen to the content. Push is a
technology that automatically delivers
the content to the user's Internet reception devices through common
computer applications such
as screensavers or e-mail programs. Users do not need to take the
initiative in locating and
consuming the content. They are given the content passively. The
program update of Microsoft
Windows is a common example of the use of the push method. Thus the
webcaster's choice of
transmission method determines the way that consumers can enjoy the
webcast content. While
peer-to-peer file sharing of audio and video content is another
technology growing in popularity,
because its content transmission is not under the webcaster's
control, it does not constitute a
media service that assembles content to its users.
Apart from the technical knowledge of installing the media players
and knowing how to
locate the content, cost is another barrier to webcast adoption. The
initial cost includes the
broadband Internet connection subscription, the purchasing of a modem
and a multimedia
computer or Internet reception device. The eventual costs can include
paying webcast content
services on a subscription or pay per view basis if the user chooses
services that charge
consumers.
7
Online Media Business Models
Many consulting companies, such as McKinsey & Company (2002) and Accustream
(2004a), offer proprietary research on their forecast and analysis of
online media business
models. Their focus is on profitability rather than the larger impact
of various webcasting
business models on the society. The academe's strong interest in
online media business models
is demonstrated in a recent special issue of the International
Journal on Media Management
dedicated to business models of traditional media and the Internet.
It received 45 manuscript
submissions. The various online media business model theories
discussed in published research
address two major issues: whether consumers are willing to pay for
the online media
content/services (e.g., Chyi, 2005), and whether the online presence
of offline media will
cannibalize their offline media's revenue (e.g., Fetscherin and
Knolmayer, 2004).
Despite the strong interest of both commercial and academic entities
in online media
business models, the discussion of online business models is
inconsistent and includes no
common components for comparison. For example, Picard (2002) defines
media business models
as an architecture that accounts for "the resources of production and
distribution technologies,
content creation or acquisition, and recovery of costs for creating,
assembling, and presenting the
content"(p.26). Business models are modes of practices, and are
different from strategies which
are the means to attain the business goal. Product offering,
consumer, revenue, pricing and
delivery are proposed as the five vital components of a business
model (Fetscherin and
Knolmayer 2004).
Ha and Ganahl (2004) offer a framework to analyze webcasting business models.
Transmission methods, content strategies and revenue sources are
identified as the three common
components of a webcasting business model. They propose a
parsimonious taxonomy of
ocontent aggregator and branded content as the two general business
models for webcasting. The
content aggregator model refers to the operation of the webcaster as
an entertainment or
information portal that works like a cable system operator. The
webcaster assembles content
8
from a wide variety of competing content suppliers. The branded
content model refers to the
operation of the webcaster as a media brand with unique image and
content. Its business success
is based on specialized content or a well-known media brand. The
content can be original or
repurposed (i.e., shown before in another medium), however, content
from another media brand is
not available. Content aggregators provide much more content variety
than the branded content
business model. They need to make site navigation and content
location easy to prevent users'
loss and confusion amid the huge amount of available content from
various sources. Users of
branded content webcasts are generally familiar with the webcasters' content.
In their study of South Korean and American leading webcasters, Ha
and Ganahl (2004)
demonstrate that webcaster types (clicks-and-bricks and pure-plays)
have different content
strategies because of varying competitive advantages.
Clicks-and-bricks such as TV networks or
radio stations have the advantage of brand recognition and the
ownership of media content. They
are likely to simulcast their content or repurpose previously aired
content. Pure-play webcasters
can freely select content sources from a variety of competing content
providers. They can also
provide original content to create uniqueness without the worry about
jeopardizing offline
media's image. Additionally, webcasting's technical characteristic of
different transmission
methods can determine the type of revenue sources and diversity of
revenue sources of the
webcaster. For example, the on-demand streaming method facilitates
subscription and pay-perview
revenue sources because it provides users flexibility and convenience
of using the content
whenever they want. Also the choice of content is not limited to
scheduled programming.
This study defines webcasting business models as the patterns of
operation that an
organization uses to offer its customers audio and/or video services
on the Web that utilize one or
a combination of file transmission methods, content strategies and
revenue sources for the
purpose of achieving its business goal and sustaining the
organization's survival. This definition
applies to both for-profit webcasters and non-profit webcasters.
9
Among the studies of online media business models, Picard (2002),
Chan-Olmsted and
Ha (2003) both argue for an evolutionary development of business
models. Picard (2002)
describes the development of online media business models as the
evolution from the earliest
videotext model to the current portal model. Chan-Olmsted and Ha
(2003) assert there is a
learning curve that media companies must go through. When existing
media have developed their
knowledge about the Web and are able to generate Web revenue by
meeting consumer needs,
then they will be able to sustain a profit-making business model.
However, their online media
business models are for existing media such as TV or radio stations.
These studies are not able to
explain the various types of webcasters that exist on the Web without
offline media counterparts.
Other studies on media business models illustrate the issue of
cannibalization by showing
the influence of basic economic factors such as ownership on online
media business models. For
example, in Arampatzis's (2004) study of the web sites of British and
Greek media organizations,
public broadcasters are more likely to experiment with new features
than commercial
broadcasters. Kolo and Vogt (2004) argue that online media can exist
independent of their
offline media because there is little overlap between audiences. The
media executives' fear of the
"free-rider" Internet culture supports Fetscherin & Knolmayer's
(2004) proposal that the risk of
cannibalization depends on the proportion of online free content and
the degree of content overlap
between online and offline media.
Studies that define media business models as simply revenue sources
focus on the
audiences' willingness to pay for content. For example, Mings and
White (2000) proposes four
business models based on revenue sources: 1) advertising, 2)
e-commerce (transactional), 3)
subscription, 4) bundled (partnership). Chyi (2005) concludes that
the subscription business
model will not work in Hong Kong because most consumers are not
willing to pay for the
content. Bartussek (2003) contends that consumers will be willing to
pay for content if media can
provide content that is exclusive, user-friendly and customized, with
other additional benefits to
10
the existing media content service. The revenue sources of online
media will differ greatly from
offline media. Table 1 compares the published online media business
model studies.
Insert Table 1 Here
The current discussion of online media models is limited by the
number of markets or
settings where empirical data or anecdotal examples can support the
theories. The models may
not be applicable to other countries without a rigorous
cross-national testing of the theories.
Researchers have employed the multi-country approach to test the
universality and robustness of
a theory such as cultural fit of advertising appeals (Zapour, 1994)
or advertising as a mirror of
society (Albers-Miller and Gelb, 1996).
Ha and Ganahl (2004) proposed a cross-national framework of business
models that
customizes for the webcast medium. Thus this study tests their
proposed framework. The
purposes of the current study are: 1) to test the robustness of the
cross-cultural webcast business
model framework suggested by Ha and Ganahl (2004), 2) to provide a
picture of the webcasting
practices in the world's most developed webcast markets, and 3) to
examine the globalness of the
webcast medium.
Although there is no inherent superiority of one business model over
another business
model, some business models are more appropriate to one organization
over another because of
differences in core competencies and existing assets. For example,
clicks-and-bricks have the
advantage over pure-play webcasters of popular recognition and
offline brand equity. But they
also carry the burden of their own proprietary content, unlike
pure-plays that can choose to carry
competitors' content as a content aggregator (Ha & Ganahl, 2004).
Commercial media are more
reluctant to try new Web features because of possible bottom line
threats (Arampatzis, 2004).
The following three hypotheses are based on the propositions of Ha
and Ganahl (2004)
that focus on content strategy, the interplay between file
transmission methods and revenue
sources, and the usability and technical capabilities of the two
webcast business models.
11
H1. Clicks-and-bricks webcasters are more likely to employ the branded content
models, while pure-play webcasters and ISP webcasters are more likely
to employ
the content aggregator model.
H2. Clicks-and-bricks webcasters are more likely than pure-play
webcasters and ISP
webcasters to repurpose or simulcast their audio-video content online.
H3. The more diversified the file transmission methods, the more
diversification the revenue sources.
H4. Content aggregator webcasters score higher than branded content
webcasters in usability.
Globalness of Webcasting
Cultural discount is a media economic theory that posits the
preference of local
consumers for local media content (Hoskins, McFadyen & Finn, 2004).
Such cultural discount
creates a barrier to foreign media's market entry. Only when the
foreign media provides a much
superior content that has no domestic media substitute will the
foreign media earn a stronghold in
the foreign market. In particular, if the domestic market is strong
and big such as the United
States, cultural discount acts an important market entry barrier to
foreign media. Also
domestically owned webcasters know the market demand better and
should be able to offer more
appealing content to the consumers. Therefore, in this cross-national
study, even though the Web
can reach across the globe without much barrier, we expect that
domestically owned webcasters
and domestically produced content are likely to dominate among
leading webcasters.
H5a. Most of the leading webcasters within a country are domestically owned
webcasters.
H5b. The majority of a country's leading webcasters utilize domestic
production for most
of their content sources.
Research question
12
In addition to these hypotheses, this study intends to provide a
picture of the types of
webcast business models being used by leading webcasters in different
countries. This
knowledge will facilitate the further research in the areas of
business models in emerging media,
and provide a benchmark for tracking the development of webcasting
business models
worldwide.
RQ1. What kind of webcast business model is more prevalent across
leading webcasters in the
world?
Method
Sampling
The content analysis method is employed to examine the hypotheses and
the research
question on the business model practices of leading webcasters in 13
Asian, European and North
American countries that have a high number of broadband users:
Australia, China, Canada,
Germany, Greece, Hong Kong, Japan, the Netherlands, South Korea,
Spain, Taiwan, the United
Kingdom, and the United States. This study is limited to leading
webcasters because a random
sample of webcasters may yield many hobbyists that do not have
sustainable business goals at
this nascent stage of the webcast industry's development. Also,
leading webcasters serve as
trend-setters and role-models for other industry newcomers. They
represent the mainstream
webcast industry and have much more impact on society than small webcasters.
The study's first sampling step identifies the leading webcasters in
each country. It is
impossible to achieve complete equivalence among the countries in
sampling because the webcast
industry development and web audience measurement research vary
widely across countries.
Hence, the authors use the informant method and interviewed the
countries' experts in the
webcast industry. These sources include webcast association officers,
editors of magazine on
Internet and streaming media, and authoritative web audience
measurement research reports
available in the various countries. Because of market size
differences, we allocate a larger
sample (20) for Australia, China, Canada, Germany, Japan, South
Korea, Taiwan, the United
13
Kingdom, and the United States, and a smaller sample size (10) for
the remaining countries. As a
result, the sample consists of 220 leading webcasters.
Leading webcasters are defined in this study as the most popular web
site services
offering prepared audio or video contents accessible to the public
for free or by payment These
webcasters include terrestrial broadcasters that already have an
offline TV or radio
station/network and an additional service online; or established
organizations with an online
presence (clicks-and-bricks). They can also be organizations that
provide audio and or video
service online with no other counterpart offline (pure-plays). They
can also be Internet service
providers with their own audio and video content services in the
Internet service (ISPs). There
was no quota for each type of webcaster. The only criterion of
selection is the perceived
popularity of the webcasters based on the informants' knowledge or
audience traffic
measurmenets based on web audience research companies. The only
exception is Comcast.net, a
cable Internet service provider in the United States, which ranked
10th in the Accustream's
(2004a) iBroadcast report in total video streams served. It is
excluded because its service is not
accessible to all consumers. Only those residing in their service
area have access.
Coding
The coding scheme is based on Ha and Ganahl's (2004) study and adds
other items
including webcaster ownership and content origin. Categories were
modified based on the input
of native country collaborators to accommodate the idiosyncrasies of
different markets. All
research project participants used the same coding sheet except in
countries where English is not
a common second language. In those countries, such as Japan, the
instrument was translated by
native co-researchers. All codes and definitions of the categories
were given to the coders. For
any uncertainty about the categories, a common explanation was given
to all the co-researchers of
the study at the same time to minimize discrepancies. The coders were
all native researchers of
the country of study. They used high speed Internet connection in
their country to code the sites.
Coding was conducted during the first two months of 2005. To assess
coder-reliability, 20% of
14
the sample were double-coded by another native coder. Perreault and
Leigh's (1989) intercoder
reliability coefficient (Ir) is used to compute the coder reliability
and the overall reliability of all
items is 0.91. For key variables such as webcaster type and ownership
origin of webcaster, the
reliability coefficient is 0.94. The reliability coefficient of
business model is 0.82.
Findings
Sample Profile
All three types of webcasters--Clicks-and-bricks, pure-plays and
ISPs, are present in the
leading webcasters sample of the study. As shown in Figure 1, there
is quite a different
distribution of webcaster types among the countries' leading
webcasters. The figure listed first
the North American countries and two other English language
countries, then the European
countries and then Asian countries. United States and Japan, the two
large media exporters with
well-established media industries, have the lowest proportion of
clicks-and-bricks (or established
media) as leading webcasters. In contrast, leading webcasters in
Germany, Australia, Greece and
Hong Kong are largely dominated by clicks-and-bricks. In Hong Kong,
no pure-play webcaster
is on the top 10 list. There are no Internet service providers in the
leading webcaster list for
South Korea, Greece, Spain and Germany.
Insert Figure 1 Here
Content Strategies
Ha and Ganahl (2004)'s taxonomy of content aggregators and branded
content is applied
to all webcasters in the sample. There are 111 content aggregators
and 109 branded content
business model users. The first hypothesis posits that
clicks-and-bricks webcasters are more
likely to adopt the branded content model. Table 2 demonstrates this
hypothesis is supported as
almost three quarters of the branded content model users are
clicks-and-bricks webcasters. Pureplay
webcasters and ISP webcasters are more likely to use the content
aggregator model. Almost
70 percent of the content aggregator model users are either pure-plays or ISPs
(c2=41.9, df=4, p < 0.01).
15
Insert Table 2 Here
The second hypothesis tests the difference in content strategies
among different
webcaster types. Clicks-and-bricks are expected to carry more high
cost content and to be more
focused in content genres than pure play and ISP webcasters. They are
also expected to be more
likely to simulcast or repurpose their content than pure-play and ISP
webcasters. Table 3 depicts
mixed support for this hypothesis. More clicks-and-bricks (56%) do
carry high cost content than
pure plays and ISPs (45%), but the difference is not statistically
significant. All leading
webcasters have similar strategies of providing a wide variety of
program genres to the audience.
Clicks-and-bricks score even higher in the number of program genres
(mean=7.8 genres) than
pure-play and ISPs (mean=6.2 genres). However, in terms of the number
of channels, pureplay/
ISP webcasters (mean=15 channels) far outpaced clicks-and-bricks
(mean=5 channels).
Overall, repurposed content is the primary source of content of all
webcasters. Contrary to the
hypothesis, clicks-and-bricks have a higher percentage of original
content (23%) than pure-plays
and ISPs (21%), but they have lower percentage of repurposed content
(40%) than pure-plays and
ISPs (50%). But consistent with the hypothesis, clicks-and-bricks
have a significantly higher
percentage of simulcast content (24%) than pure-plays and ISPs (15%).
Insert Table 3 Here
Revenue Sources and Transmission Methods
The third hypothesis postulates a positive relationship between the number of
transmission methods and the number of revenue sources. The data show
that webcasters
average almost two transmission methods and two revenue sources.
On-demand streaming is the
most commonly used file transmission method while push is rarely used
by webcasters (Table 4).
Insert Table 4 Here
Advertising is still the most common revenue source. Almost 70% of all leading
webcasters have advertising as a revenue source. But it is not as
dominant (90%+) as reported in
other previous online media business model studies such as Ha and
Ganahl (2004). E-commerce
16
seems to be quite important as a revenue source for webcasters.
Almost 40% of all leading
webcasters support e-commerce on their sites. The products sold on
the site are either mediarelated
such as music or program dowload and the sale of the videos, or
commercial products
(both are present in 75% of all e-commerce sites). Subscription is
the third most popular revenue
choice used by one third of the leading webcasters in the study.
Insert Table 5 Here
A bivariate regression of the number of transmission method on the
number of revenue
sources shows a significant positive relationship between the two
(b=0.18, p< 0.01). Thus,
hypothesis 3 which predicts that more transmission methods will
facilitate more diversification
of revenue sources is supported. But it should be noted that the
coefficient is not very high.
While the relationship does exist, it is not strong.
Usability
Hypothesis 4 which predicts higher usability among content
aggregators than branded
content webcasters is only partially supported. If usability is
measured by the presence of search
engines or directories that facilitate users' navigation and location
of content, then this hypothesis
is supported because 78% of content aggregators have search engine,
while only 63% of branded
content have search engines or directories. However, if usability is
measured by other
dimensions such as provisions for file size and description to users,
the elimination of additional
software installation to display the content, the availability of
connection speed choices, the
accommodation of multiple media players, and the presence of
participatory content, then there is
no significant differences in usability between content aggregators
and branded content
webcasters. Table 6 depicts almost 70% of both business model users
do not require their users to
install additional software to display their content. Slightly less
than one half of the leading
webcasters accommodate users' different Internet connection speeds.
Most of the webcasters try
to accommodate more than one media player. On average, they supported
1.4 media players. The
most common media player is Windows Media Player (58%), followed by
Real Player (29%) and
17
Apple Quicktime Player (7%). File formats also follow the media
player preference. Windows
Media Player-compatible formats ASF/WMA/WMV/WM and ASX/WAX/WVX/WMX/WPL are
the most commonly found file formats (44%), followed by Real
Player-compatible formats of
RA, RAM and RM (21%), WMP (15%), and MP3 (12%).
Insert Table 6 Here
This study also illustrates the participatory culture of webcasting.
More than 60% of all
leading webcasters have some sort of participatory content features
such as chat rooms, message
boards, video ratings, and polls, etc. Many sites also encourage
members to submit their own
videos to be viewed by other site members.
Globalness of the Medium
No webcaster achieves a leading position in more than six countries
in this study. Only
four webcasters are identified as leading transnational webcasters
that rank as the top 10/20
webcasters in more than one country. These four are all US-based
webcasters. It should be noted
that all transnational webcasters have their web sites' localized
versions listed as the host
countries' leading webcasters, not the US version of their sites.
Yahoo is the most transnational
webcaster, ranking as the leading webcaster in six countries (United
States, Canada, United
Kingdom, Australia, Japan, and Taiwan). The second most transnational
webcaster is Microsoft
Network (MSN). It is ranked as the leading webcasters in five
countries (United States, United
Kingdom, Germany, Japan, and Taiwan). America Online captures leading
spots only in three
English-language countries including the United States, Canada and
the United Kingdom. Real
Networks ranks as a leading webcaster in both the United States and Japan.
Even though some transnational webcasters rank as leading webcasters
in a foreign
country, the majority of leading webcasters are still domestically
owned webcasters. Hypotheses
5a and 5b predict the domination of domestically owned webcasters and
domestically produced
content and based on the cultural discount theory. Both hypotheses
are supported. Hypothesis 5a
is overwhelmingly supported as 82% of all leading webcasters are
domestic webcasters.
18
Hypothesis 5b is supported as almost 80 percent of all leading
webcasters carry either solely or
mostly domestically produced content.
Figure 2 shows the distribution by country of the country of origin
of the webcaster
ownership. The cultural discount effect is most pronounced in large
markets such as the United
States and China where none of the leading webcasters are foreign
webcasters or joint ventures
with foreign webcasters. Australia and Germany, two other large
markets, have no pure foreign
webcasters on their leading webcaster rosters. Japan and the United
Kingdom, both island
countries, are the only two countries with almost half of their
leading webcasters coming from
foreign countries. But as noted earlier, the foreign webcasters in
Japan have all localized their
content to meet the needs of the Japanese consumers.
Insert Figure 2 Here
Figure 3 compares the 13 countries' webcast content origins. Most
webcast content
originates in the native country. The pattern of content origin
mirrors the pattern shown in the
country comparison of webcaster origin. Webcast content in China is
either primarily or only
domestic content. Leading webcasters in Germany and Japan also employ
primarily or purely
domestic content. The United Kingdom is the only country that no
leading webcaster uses solely
domestically produced content. But still a majority of the British
leading webcasters' content is
still domestically produced content.
Insert Figure 3 Here
The business models of webcasters are compared by country in Figure
4. In general, the
distribution between content aggregator models and branded content
models is quite different
among countries. The content aggregator model is the most prevalent
among Japan's and
Taiwan's leading webcasters. The branded content model is the most
dominant in Hong Kong,
Greece, Spain and South Korea.
Insert Figure 4 Here
19
Discussion and Conclusion
The findings of this 13 country-comparison of webcasters' practices
demonstrates the
webcasting business model framework proposed by Ha and Ganahl (2004)
is quite robust in
different market environments. All webcasters can be categorized by
the content aggregator or
branded content model. Their prediction that clicks-and-bricks
webcasters are more likely to
adopt the branded content model, and that pure-play media and ISPs
are more likely to adopt the
content aggregator model is also supported by the findings. The
number of transmission methods
is indeed a facilitator of the diversification of revenue sources.
But this study's findings also demonstrate the limitation of this
framework. For example,
in terms of content strategies, some of its predictions are not
applicable to this study's 220
leading webcasters. Although the framework is still able to predict
the higher probability of
clicks-and-bricks webcasters to carry high cost content such as
full-length movies and sports, and
that pure-play webcasters have more channels than clicks-and-bricks,
it is unable to predict the
diversity of program genres and similar proportion of original
content between the two webcaster
types.
One possible reason for this is the presence of non-profit webcasters
in some countries
within this study. In many European countries and Canada, public
broadcast is still the dominant
ownership mode of electronic media and their webcasts reflect their
non-profit and diverse
programming mission. In Hong Kong, three of the leading webcasters
are funded by the
government. Two of them webcast for educational and marketing
purposes: The Edcity and the
Trade Development Council. They are special types of
clicks-and-bricks because they are not
media organizations, but governmental units that utilize the Webcast
medium to disseminate the
audio and video content. Also, some webcasters, such as NHK and Anime
Express in Japan,
view their webcasts as a tool for self-promotion, a customer service
or an intelligence gateway of
audience's feedback and information as discussed by Chan-Olmsted and
Ha (2003). These web
sites may not directly apply a profit generation mode when devising
their content strategies.
20
Their decisions regarding content offerings are not based on bottom
line considerations. Another
possible explanation is that the increasing intensity of competition
for audience forces more
clicks-and-bricks webcasters to diversify their webcast program
genres to compete with pure-play
media. For example, in the United States, the declining audience
share of clicks-and-bricks
webcasters has been documented by Accustream's (2003) streaming
traffic report. The report
shows that broadcast and cable TV brands used to capture 86% of the
streams served by the top
10 sites in 2001, but their share fell to 5 percent in October 2003.
In general, all leading webcasters in this study offer a large
selection of content to its
Web users through multiple program genres that are packaged into a
variety of channels or
playlists available on-demand. But identifying these many webcasters
and locating the specific
content is a challenge to consumers. Most leading webcasters address
this problem with search
engines and directories. Sill one third of them do not provide site
search tools. Many do not
require that users install any additional software.
But there are still some accessibility problems to the webcasts. Less
than half of the
webcasters have file size and description information for the users
about the video or audio
program, connection speed accommodations for users with different
Internet connection speeds.
Without knowing how much time is required for the program, many users
may be reluctant to try
an unfamiliar title, especially when the user is faced with hundreds
and thousands of clips or
programs to choose from. Additionally, coders reported problem
accessing to about one fifth of
the leading webcasters' content using high speed Internet connection.
These include garbled
images, incomprehensible audio, and broken transmission. These
technical problems can also
become obstacles to webcast consumption and reduce the consumers'
willingness to pay for the
content.
There is a clear trend in the diversification of revenue sources by
leading webcasters in
this study. Webcasters are still searching for different ways to make
their sites financially viable.
Most webcasters use two or more revenue sources. Indirect consumer
payment revenue sources
21
such as advertising and electronic commerce are still the most
popular choice. This reflects the
webcasters' acknowledgement of the consumers' unwillingness to pay
for webcast content.
Revenue that is directly linked to media content such as subscription
and pay-per-view are still
moderately used. It is particularly interesting to note that apart
from government or corporate
funding, there are also many creative ways that webcasters generate
revenue such as consulting
and web hosting service.
The presence of participatory content in most of the webcast services
constitutes a
distinct feature of the webcast medium, making it superior to the
traditional broadcast medium.
The encouragement of video submission such as iFilm and AOL makes the
webcast medium an
amateur producers' paradise, and will foster a new generation of
producers with alternative and
diversified viewpoints and style.
The difference in popularity of the branded content model and the
content aggregator
model across countries indicates that one model is more accepted than
the other. The
development of the webcast industry also varies among the countries
under this study due to
different broadband penetration levels, media production industry
maturations, and technology
gaps among webcasters. These are areas to be further explored as
determinants of business
models. Future research on business models of other emerging media
such as digital video
recorders and interactive television can modify the framework
proposed by Ha and Ganahl (2004)
on specific items such as specific content strategies. The emphasis
of the interplay among the
transmission method/technical standards (accessibility), content
strategies and revenue sources as
components of emerging media business models will facilitate the
tracking of the development of
business models of emerging media.
Finally, this study also demonstrates the limitation of webcasting as
a global medium.
Despite the ease to achieve a global reach and the lack of license
constraints or ownership
requirements in most countries, webcasting is still primarily a
domestic medium dominated by
domestically owned webcasters offering domestically produced content.
The study not only
22
reaffirms the cultural discount theory, it also indicates that the
"global" audience of a webcaster
may concentrate among the peripheral groups of different countries,
and not in the countries'
mainstream. Government regulation is another factor that will affect
the globalness of webcasters
in some countries. For example, in China, to set up online video and
audio business, webcasters
need to have official approval from the government authorities, and
only domestic webcasters are
allowed to access to webcasting business. Hence future research that
attempts to examine the
globalness of the Web medium in countries with ownership regulation
must take both the cultural
discount and the absence or presence of government regulations into
consideration to better
explain the country origins of media content and ownership.
23
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Table 1
Online Media Business Model Theories
Study
Arampatzis
(2004)
Bartussek
(2003)
Chan-Olmsted
& Ha (2003)
Fetschein &
Knolmeyer
(2004)
Ha & Ganahl
(2004)
Kolo & Vogt
(2004)
Mings & White
(2000)
Picard (2002)
Empirical method.
Country.
Interviews/Case
studies.
Greece, United
Kingdom
Anecdotal examples.
Surveys.
U.S. Broadcast TV
Stations
Surveys.
European and U.S
newspapers and
magazines with both
offline and online
versions.
Content analysis.
United States, South
Korea
Secondary Analysis.
Germany
Analysis from industry
press.
U.S. online
newspapers.
Anecdotal examples.
26
Theoretical Propositions
Without worrying about the bottom line, public
service media are more innovative than commercial
media in offering online media services. Other than
innovativeness not much difference in business
models between old media and online media.
Online media need to adopt a different business
model from parent offline media. Consumers'
willingness to pay for online media content is based
on exclusivity, added benefits and user-friendliness
of the online content.
Development of Internet competency over time and
evolution of business models from 1) online
competency development, 2) enhancement of the
value of online products and 3) generation of online
revenue.
Risk of cannibalization is determined by the
percentage of free digital content and the percentage
of content that both offline and online media overlap.
The higher the percentage, the higher the risk.
Clicks-and-bricks and pure-play media adopt either a
content aggregator or a branded content business
model with different transmission methods, content
strategies and revenue sources and these elements
influence one another. More transmission methods
leads to more revenue sources and content strategies
are different between clicks-and-bricks and pure play
media.
Online media have their own distinct users. They are
destination sites relatively independent of their
offline media counterparts. Their business models
should be different from the offline media
counterpart.
Proposed 4 online media business models based on
revenue sources : 1) Advertising, 2) Transactional, 3)
Subscription and 4) Bundled (partnership).
Online media content services business models
evolve over time, with the best model adopted by
most providers at the time. Four abandoned models
are the videotext model, the paid Internet model, the
free Web model and the Internet/Web ad push
model. The current model is a portal model and the
emerging model is a digital portal model.
Table 2
Business Models by Type of Webcasters
Clicks-and-Bricks
Pure-Plays
ISPs
c2= 41.9, df = 4, p < 0.01
model. The current model is a portal model and the
emerging model is a digital portal model.
Content Aggregator
N=111
29.7%
50.5%
19.8%
27
Branded Content
N=109
72.4%
23.8%
3.8%
Table 3
Content Strategies by Webcaster Type
Clicks-and-bricks
N=111 N=109
Source of content
Original
Repurpose*
Simulcast*
High cost content1
Average no. of program genres* 7.8
Average number of channels* 5.6
1full-length movies, popular TV shows, sports, news
* p < 0.05
28
Pureplays/ISPs
23.6% 21.5%
40.3% 50.2%
24.0% 15.4%
45.0% 56.0%
6.2
15.6
Table 4
File Transmission Methods by Business Models
Content Aggregator Branded Content
48.6% On-Demand Downloading
77.5% On-Demand Streaming
45.0% Live Streaming
8.1% Pushing
Note: Multiple Response Items
Mean number of transmission methods=1.8
29
35.6%
77.9%
59.6%
6.7%
Table 5
Revenue sources by Business Model
Content Aggregator Branded Content Total
Advertising
E-Commerce
Subscription
Pay-per-view
Content syndication
Tip-Jar/
Voluntary Contribution
Other
(e.g., government/corporate funding)
Note: Multiple Response Items
Mean number of revenue sources=2.0
N= 111 N=109
72.4% 67.6%
38.1% 40.5%
28.6% 37.8%
14.3% 25.2%
22.9% 12.6%
3.8% 1.8%
25.7% 12.6%
30
N=220
69.9%
39.4%
33.3%
19.9%
17.6%
2.8%
19%
Table 6
Usability and Technical Capability
Presence of search engine and directories*
Text description of content with estimated
file size
Have connection speed choice
No need to use additional software
Average number of media players accommodated 1.49
Presence of Participatory Content
(such as video ratings, chat rooms)
*p < 0.01
31
Content Aggregators Branded Content
63.8% 78.4%
36.2% 36.9%
45.7% 44.1%
63.8% 67.6%
1.33
65.7% 60.4%
Figure 1
Profile of leading webcasters in this study
32
Figure 2
USA
NETHERLANDS
SPAIN
COUNTRY OF STUDY
Webcast Ownership Origin by Country
CANADA
UNITED KINGDOM
AUSTRALIA
GERMANY
GREECE
HONG KONG
CHINA
JAPAN
KOREA
TAIWAN
0
Count
10
33
webcast ownership
foreign webcaster
joint venture
domestic webcaster
30 20
Figure 3 Webcaster's Content Origin by Country
34
Figure 4
35
business model
branded content
content aggregator
30 20
Webcast Business Models by Country
USA
CANADA
UNITED KINGDOM
AUSTRALIA
GERMANY
NETHERLANDS
SPAIN
GREECE
HONG KONG
CHINA
JAPAN
KOREA
TAIWAN
10 0
Count
COUNTRY OF STUDY
|
