AOL Charts Syndie Distribution Model

Jan 22, 2007  •  Post A Comment

Eager to grab more advertising dollars in the online video market, AOL is planning to roll out a syndication strategy over the next six months that is geared to distribute more of its clips-accompanied by ads-on the Web.

The Time Warner online unit, which is trying to distance itself from its origins as a dial-up Web-access service, is entering a Web-video syndication market already occupied by Internet giants such as Google and entertainment titans including NBC Universal.

All of them are trying to create more spots on the Web for advertisers to place advertising linked to video. The online video market is expected to grow 89 percent this year to $775 million, up from $410 million last year, according to research firm eMarketer.

Broadband video syndication will draw a number of new competitors this year, said Will Richmond, president of research firm Broadband Directions. It’s too early to pick winners, he said.

“Those who succeed will combine access to great content with a widespread distribution network that is capable of generating incremental revenues for the content providers participating,” he said.

So far, demand for online video ads has outpaced supply, and distributing video to other Web sites is a way for AOL and other companies to bolster that inventory without the cost of producing new material. The competitors in online video syndication, most of whom have only been in the business for a few months, are exploring an infant industry that will push video content to the far reaches of the Web.

To carve out its sliver of that market, AOL will syndicate video online in three ways: letting consumers snag a piece of AOL Video content and put it on their own sites; forging partnerships with content partners who will make AOL their video distributor, and placing AOL’s video player on sites that partner with the company’s Advertising.com and Userplane.com units.

To populate the furthest boundaries of the Internet with video, AOL will look to link up with everyday users who maintain Web sites.

Currently, AOL lets consumers embed its video player, with accompanying music videos from major music labels, into their sites. AOL will soon give users the ability to embed other content, such as TV shows and clips, said Josh Freeman, senior VP with AOL.

To make that part of the Web syndication project work, AOL needs to build in more content-protection tools so providers can specify the types of sites they’ll let their video be embedded on, he said.

AOL will also tap its existing businesses to accelerate its video syndication project. AOL owns online network Advertising.com, which collects and sells inventory across thousands of Web sites. A version of the AOL video player and video content from AOL will be available to Advertising.com’s partner sites.

Also, AOL will allow Web sites to opt for a self-service model through AOL-owned site Userplane.com, which distributes chat, messaging and social networking tools to other Web sites and online communities. Userplane.com will expand those offerings to include AOL’s video and video player.

Overall, online video syndication has potential to boost sales and Web traffic for AOL.

“We see it as driving increased distribution and audience for our content partners and increasing monetization opportunities for us,” Mr. Freeman said.

AOL’s video-syndication business operates on a revenue-sharing plan, under which the company sells ads for the content being syndicated and splits sales with the site housing the material. Where the content providers set up the advertising deal, AOL takes a cut when it distributes the video.