MONETIZATION

The music industry has seen its revenue models turned upside down with digital music availability and piracy. So, how would a musician popularize his/her songs and monetize the song? Let me take an example from Bollywood, where free downloads shattered the traditional music business. Before the invasion of the Internet and YouTube, the marketing of songs in India was tied to movie releases, and therefore the success of a song was closely tied to the success of the movie. As a movie was released, hundreds of millions of moviegoers evaluated the fate of the song. Often, the songs carried the movie or never rose to popularity because the movie flopped and most of the potential audience did not get a chance to hear the song. However, with the rise of the Internet, social media, and digital recordings, the Indian music industry is going through a cataclysmic change.

The “Kolaveri” song by Dhanush presents an interesting story of how Twitter, Facebook, and YouTube became its marketing and monetization instruments. The song was written in Tanglish (a combination of Tamil and English) and leaked in an early recording. With its poetic lyrics, catchy beat, and the informal nature of its launch, the leaked video rapidly became a marketing sensation. At that time, the music publishers were not even considering YouTube as a possible publication medium. Yet due to the song’s viral success, they decided to officially launch it on You Tube on November 16, 2011. It might seem that Sony acted fast, sealing the deal within 13 days of the video’s upload. But by then, the song had already clocked 9 million views. Had Sony managed to monetize those views, it would have made an additional $4,000 (Rs 200,000 at the prevailing rates in 2011), based on YouTube’s $1 cost per 1,000 impressions (CPM) assuming a 50 percent revenue partnership. The song rapidly became a big sensation among youth in India and recorded the highest number of Twitter hits in India in record time. The song received an unusual amount of attention from celebrity movie stars and singers. It was Facebook that emerged as the main driver for “Kolaveri,” accounting for 80 percent of social media mentions, followed by Twitter and YouTube, according to Social Hues.17 Sony has since been collecting revenues through the YouTube views, which totaled over 70 million by fall 2013.18 The song was created for the movie “3,” which, unfortunately, did not succeed at the box office.19 Had the song used the movie to promote it, as the Indian movie and music industry had done for so many decades, its success would have been tied to the success or failure of the movie.

“Kolaveri” is nowhere close to the top of viewed YouTube videos, however. The video “Gangam Style” from the Korean group Psy was the first to hit 1 billion YouTube views.20 Television viewership is actually declining among teens and youth. YouTube and other online channels have snatched market share from the conventional media. While many of the big brands are rapidly discovering YouTube as a publication medium, it has also spawned a large number of amateur content providers, and is used as well for sharing videos among family and friends. Content providers are able to employ YouTube as a platform for publication and advertising. It has also prompted entrepreneurs like Lisa Irby to teach others how to monetize using Google Adsense.21

Google took an early lead in monetizing the online search with its innovative clicks-based revenue model. It rapidly led to a social media monetization program across many sites. However, many social media communities have remained advertising free and do not have a goal of making profits, for example, Wikipedia and Craigslist.

So far, we have discussed advertising revenues from content distribution. But how about storing and analyzing customer data that comes from content viewership? From a big data analytics perspective, a “data bazaar” is the biggest enabler to create an external marketplace, where we collect, exchange, and sell customer information. We are seeing a new trend in the marketplace, in which customer experience from one industry is anonymized, packaged, and sold to other industries. Fortunately, Internet advertising came to our rescue in providing an incentive to customers through free services and across-the-board opt-ins.

Internet advertising is a remarkably complex field. With over $20 billion of revenue in the first half of 201322, the industry is feeding a fair amount of start-up and initial public offering (IPO) activity. What is interesting is that this advertising money is enhancing the customer experience. Take the case of Yelp, which lets consumers share their experiences regarding restaurants, shopping, nightlife, beauty spas, coffee and tea, and so forth. Yelp obtains its revenues through advertising on its website; however, most of the traffic is from people who access Yelp to read customer experiences posted by others. With all this traffic coming to the Internet, the questions that arise are, how is this Internet usage experience captured and packaged, and how are advertisements traded among advertisers and publishers.

Terence Kawaja has been studying this market since 2009, when he created a chart to explain the emerging online advertising market. To date, slide versions of his chart have received more than 350,000 views online, from people in 116 countries. Sure, compared to YouTube videos of cute babies and cats that rack up millions of views in a matter of days, 350,000 is quite small. But given the obscure nature of the material (a chart full of ad tech acronyms such as “SSPs,” “DSPs" and “DMPs”), it is a fairly impressive number.23 I have used his charts in my books. In most of my presentations, I could measure the maturity of the audience by the number of LUMAscape acronyms they were familiar with. “Terence Kawaja has a new way for potential investors to visualize it" says Wall Street Journal writer Amir Efrati. “The market involves hundreds of small and large companies that help advertisers reach consumers and help web site publishers, mobile-application developers, search engines, and other digital destinations generate revenue through advertising"24 Over the years, Kawaja has added different charts to represent various markets—display, video, search engines, mobile, social, and commerce. For the latest LUMAscapes, visit Kawaja’s web site: www.lumapartners.com. A number of intermediaries play key roles in developing an advertising inventory, auctioning the inventory to the ad servers, and facilitating the related payment process, as the advertisements are clicked and related buying decisions are tracked. I have been following the LUMAscapes for over two years. A number of my clients have mentioned LUMAscape as their source of data for finding companies to work with. In chapter 4, I will describe the mechanics and benefits of real-time bidding in more detail, and in chapter 7, I will discuss further the roles of different players and how they participate in the advertising process.

In addition to Internet advertising and usage data, a number of other markets are rapidly emerging for data monetization. Telecom companies have been experimenting with the monetization of location and device usage information. However, a couple of regulatory and customer privacy preference concerns have kept them in check. For a typical telecom provider, the potential revenue from monetization is insignificant in comparison to the revenue from telecom usage. A backlash could potentially set them back in comparison to the competition. In addition, various regulations hold them responsible for customer data privacy.

 
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