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The widget wrapper is the key to clip syndication and vendor lock-in

August 10th, 2007

I recall a time when online video publishers were worried about people linking to their videos. They did not have a way to monetize “deep links” and they were worried about high bandwidth costs without a clear return on their investment.

Now folks are using Flash and Silverlight as a way to distribute the video with a protective wrapper that provides enhanced reporting capabilities, allows them to insert ads, exposes their logo, and leads the viewer to new content with embedded post-roll recommendations. It also makes it easy for folks to embed these as “widgets” by simply pasting in a snippet of HTML.

This capability is enough to drive premium content owners to “syndicate” their video with these wrappers to anyone who will embed them on their websites or blogs. The publishers are able to reasonably control and monitor the playback of their content and monetize it as they see fit even when the wrappers are published on third-party sites.

The good news is that we will see more and more premium content online as clip syndication with these wrappers will enable several viable business models including impression advertising, pay-per-click recommendations, and possibly pay-per-view.

The bad news is that the dominant wrapper technologies are controlled by Adobe (Flash) and Microsoft (Silverlight) which means that these vendors can choose to restrict the distribution of this technology to suit their larger business strategies. This could include excessively charging for the authoring tools or disabling the client on competitive platforms like the Mac.

So far Adobe’s Macromedia team has been willing to develop and support a Windows, Mac, and Linux client for Flash. Microsoft has recently released both a Windows and a Mac beta client for Silverlight. We can expect Microsoft to support the Mac client for a while since they have just entered the market and Adobe still has a commanding position in it.

However, I recall a similar situation in 1999 when RealNetworks had a dominant marketshare of streaming media clients and supported a Windows, Mac, and Linux version. Microsoft entered the market and initially supported a Mac version of their client. After about five years, Microsoft had replaced RealNetworks as the dominant vendor and stopped supporting the Mac soon after.

I expect the same thing to happen again. Microsoft will aggressively seek to dominate this market with massive industry subsidies, like their previous “broadband jumpstart” initiative, free tools, free server software, and perhaps even free video hosting bandwidth. Then, once they have a dominant position in the market, they will align their efforts with their larger business strategies which could include shutting out the Mac or locking in their own advertisements or requiring a license for premium capabilities like DRM.

What are the alternatives? Open source is one. Another is standardization and licensing through a consortium of vendors and organizations that will commit to keeping the technology accessible to all platforms and devices. This is what the MPEG has consistently done for digital video technologies, including H264.

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