Comcast’s recent announcement that it will start streaming authenticated content through its iPad Xfinity app raises the bar on what’s possible with TV Everywhere. DISH recently unveiled a similar app for Android-enabled tablets. Consumers obviously love the idea of more content, available on more platforms and—at least if they already subscribe to multichannel services—getting it as a value add. But the somewhat mixed response from content owners has been a telling sign that not all is well on the authentication front—at least when it comes to the business rules that will ultimately determine how smoothly TV Everywhere integrates itself into the content consumption lexicon.
 
To be sure, some big content names have raised a few red flags, namely that some of the rights issues around authenticated content remain unresolved. (For more details, check out Anthony Crupi’s piece in MediaWeek this week).The truth is that a lot of existing licensing contracts aren’t exactly clear when it comes to this stuff. That’s to be expected, as authentication is a relatively new concept that in two or three short years has gestated from an idea to a real, working product. Meanwhile, content owners have all kinds of outstanding deals with the likes of Hulu, Netflix, iTunes and others involving content usage, streaming and downloads. It’s a messy world. And the introduction of Comcast’s high-profile Xfinity app—smack dab in the middle of its efforts to win government approval of its merger with NBCU—create an interesting dynamic. Authentication isn’t yet a smooth ride. And it probably won’t be for quite some time.
 
As usual, technology has moved well ahead of the business rules. That often happens. It happened when Napster turned music on its head. It happened when YouTube users started uploading copyrighted content. And even in the more structured and legitimate environment of authenticated content, the IT wizards have created wonderful apps to stream the content before the business rules are completely clear. But isn’t this different, you ask? Isn’t this content that for which people have already paid? What’s the harm in letting them view it on an iPad or Android device? It’s authenticated! True, but here are just a few of the issues that parties must work out if authentication is to go forward unimpeded in 2011:
 
  1. Can authenticated content reside both at a distributor’s portal as well as content-branded sites? And if certain content is streamed through one site, does all of the same content need to be available at the other?
 
  1. Assuming authenticated can stream everywhere, then how is advertising handled? Does the distributor simply sell ads at its branded site while the content owner sells its own ads at its branded site—essentially putting the two in competition? (Sounds great for a media buyer seeking leverage, eh?). Or does the distributor and content owner work together to sell run-of-site ads and split the revenue? If so, how is it split?
 
  1. If authenticated content can only stream through the distributor’s site, how is the ad revenue split in that situation? Does the distributor need to cut the content owner in on ads that run on the same page as the streaming video but aren’t actually embedded in the video itself? And for that matter, does the content owner get to keep any revenue from pre- and post-roll ads it embeds directly in video streams—even though the hits are flowing through the distributor-branded site? What about brand integrations, sponsorships and product placements? Who gets that money and how much?
 
  1. If the distributor at some point charges an extra fee for subs to access all or select authenticated content, must it cut the content owner in on a portion of that revenue? If not, can the content owner demand higher license fees because the distributor is deriving new, unforeseen revenue from its content beyond the fees it collects for the linear program tier?
 
We could go on and on with these kind of questions. In the end, these are all business negotiations that are already underway. In some cases, variations of these questions (and hopefully answers) have weaved themselves into more recent license renewals. We’re certainly not privy to those deals and what business rules they may have already created. But the reactions from content owners about recent apps to stream authenticated content suggest that there’s still a lot of work to do within meeting rooms, conference call lines and perhaps on the golf course. But with so much at stake, it seems obvious that parties will slowly, painfully and ultimately successfully work out the details. Consumers, however, can be impatient. It’s best not to make them wait too long, lest they turn to the increasingly abundant choices from over-the-top providers.
 
(Shameless Plug: CableFAX will tackle the above questions and more in a Webinar on authentication on Jan. 19 from 1:30-3pm. Register HERE).
 
(Michael Grebb is executive editor of CableFAX).

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