Rethinking Your Bandwidth Bill - Steve Rosenbaum - MediaBizBloggers

Cover image for  article: Rethinking Your Bandwidth Bill - Steve Rosenbaum - MediaBizBloggers

If you remember a time when telephones had a rotary dial, then you remember the phrase, "Shhh, he's on the phone looong distance!" Long distance was expensive, and precious, and needed to be rationed and treated with care.

That was then.

Today - long distance, short distance, global distance - it's all the same thing: cheap.

Because as the network has matured, competition came in and costs came down. And today almost everyone is on a fixed price plan and many folks are using their broadband connections for free audio and video conversations.

The simple point is: bandwidth continues to get cheaper and faster, and that means you need to be looking at the cost of video on your Web site in a whole new way.

Video should not cost anything. Rather, it should power revenues, pages, engagement and profits. If it isn't, it's time to rethink your bandwidth bill and turn video from a cost center to a profit center. Folks are doing just that.

So here's a quick five-point checklist as you rethink your cost of bandwidth:

1. Can you tie your costs to revenue?

2. Does your editorial/content creation team consider your current solution a help or a hindrance?

3. As your traffic grows, do you fear that your investment will outstrip your income?

4. Could a 'hit' viral video be a cost containment disaster for you?

5. Are you locked into a "walled garden" eco-system in multi-source world?

Here's a 'cheat sheet' for the checklist:

1. Can you tie your costs to revenue?

This is a tough one, because odds are you can't understand your bandwidth bill. Your eyes glaze over. Megs and Gigs and Encoding and HD and blah blah blah. The bottom line is - like most folks - you probably get your bill and go "ouch." It's never less than you imagined, and it's often more - sometimes much more. That's because bandwidth bills are always backward looking, which means by the time you get the bill there's not a whole lot you can do about it.

Tying cost to revenue is essential - and that means that if you know that you're selling pages at a remnant rate of a $2 CPM and you've got 3 ads on a page, you need to spend less than $6/CPM (cost per thousand pages) in order to have your video costs be at breakeven.

2. Does your editorial /content creation team consider your current solution a help or a hindrance?

This is one of those questions you don't want to know the answer to. But you do. Because the truth is, people don't use tools they don't feel comfortable with. Or if they do, they use them with a level of fear and trepidation that means that content is being deployed slowly, and conservatively, and perhaps in a way that doesn't match your visitors' appetites. Think of it like a word processor. Would your team write well if they had old manual typewriters rather than good quality word processing software with spell check? So ask the questions: Is it easy to get a video encoded? Is it easy to get a video uploaded? Does a video get live on your site in 5 clicks, or 10, or 20? Because every bit of effort that it takes to find, organize and publish content is effort that isn't going into making and curating editorial. You're looking for a clean, easy to implement solution that can be deployed with speed and a bit of joy. Heck, fun even.

3. As your traffic grows, do you fear that your investment will outstrip your income?

One of the challenges of bandwidth billing is that it's often invisible till it's out the door. So you may have a great month of page views, and even a great month of revenue, but if folks watched tons of long videos (or worse yet, downloaded a progressive stream but didn't watch them) you could have a bandwidth bill that will blow your mind. With a CPM billing relationship, you've got control of your costs right out of the box. If there's a 'runaway' video on your site that is costing more than you're going to earn in ad revenue or useful audience engagement, you can simply take it down, or re-direct the traffic. In the fast moving world of Web video, you want to be able to make decisions about traffic and costs in real time, not in hindsight.

4. Could a 'hit' viral video be a cost containment disaster for you?

The good news is that it shouldn't be, not if you have real-time reporting. By having a unique CID (content ID Number) you are able to take incoming link traffic and point it where it needs to go. So, if a video created by you and your team has a pre-roll in front of it, you can drive traffic till the cows come home. If the same video isn't generating income, then why not point traffic to YouTube, or one of the third-party video hosting sites that are willing to cover your traffic? Often providers will 'split' traffic with you, and give you the ability to generate some income, and share some pages - but not have to cover costs.

5. Are you locked in to a "walled garden" eco-system in multi-source world?

Now you're asking yourself, should I bring traffic to my videos on my site, or put my videos out in the world so they can be found and viewed by Web searchers? The answer is "yes." You should do both. Think of it like a clothing brand. Should Levis be in Wal-mart, or only in Levis Stores? Or in the Levis area of Macy's, or in the Discount Outlet shopping center? The answer is clearly, you must go where the customer wants to find you. Sure, you'll get better margins if you bring customers to your store (your home page), but that isn't going to be the only way to reach customers. So, upload, host, share, distribute - but get your videos out there... walled gardens are so 1997.

Times are changing. Bandwidth shouldn't be a cost center, it should be a profit center. The more you invest in making, curating, and publishing content the more your customers will connect with your brand and your message. Video is no longer a 'nice to have' option, it's fast becoming a core offering for marketers and sites -and the good news is it only ads value.

Steven Rosenbaum is the CEO and Co-Founder of Magnify.net - a fast-growing video publishing platform that powers more than 50,000 web sites, media companies, and content entrepreneurs to aggregate and curate web video from a wide variety of web sources. Currently Magnify.net publishes over 50,000 channels of Curated-Consumer Video, and is working closely with a wide variety of media makers, communities, and publishers in evolving their content offerings to include content created by, sorted and reviewed by community members. Rosenbaum is a serial entrepreneur, Emmy Award winning documentary filmmaker, and well known innovator in the field of user-generated media production. Rosenbaum Directed and Executive Produced the critically acclaimed 7 Days In September, and his MTV Series Unfiltered is widely regarding as the first commercial use of Consumer Generated Video in US mass media. Steve can be contacted at steve@magnify.net Follow Steve Rosenbaum on Twitter: www.twitter.com/magnify

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