This year's model

There's money to be made in streaming. That's what the industry is claiming, and it has good reason. While the rest of the IT business languishes in self-pity, streaming shows the greatest potential for growth.

For those companies with high-value content, such as those in media entertainment, there are opportunities to address niche markets with revenue-generating, pay-per-view and subscription business models.

For corporates, with the need to disseminate large amounts of information concurrently and to a global audience, there are significant cost savings to be achieved through streamed presentations and online learning.

But there is a certain reticence from customers to get involved in high-cost projects that are, as yet, unproven.

Sales manager for northern Europe at Akamai Alex Gibbons says: 'Trying to get people interested in streaming is like trying to get turkeys to vote for Christmas! People have argued about technology for too long - it's time now to start seriously thinking about business models.'

So, what makes a good streaming media business model?

It is easy to see how the public might be persuaded to part with hard-earned cash to watch certain high-profile sporting events on TV or rent a movie, but the concept doesn't directly translate into the internet world. Who wants to pay to watch a feature-length movie for two and a half hours on a PC? In the corporate world, nobody is going to pay to view what is little more than 'brochureware'.

'Content is king!' said CJ Stumpf, chief technology officer at Digital Island, in her presentation at Streaming Media 2001. Stumpf was referring to the fact that it is content that is the key driver in determining what business model will work. What the actual content is determines whether it will be a revenue-generating, two-way, transactional-based business model, or a one-way, non-revenue-generating one. In addition, methods used to store, manage and deliver content are critical to success. As is fast delivery on a secure, global network and an intelligent and well thought out set of business rules to set the parameters of the service. Archived content, for example, can be stored and managed at centralised datacentres, away from the end user. Time-critical, high-value content -- such as streamed daily news headlines -- needs to be distributed to the edge, as close to the end user as possible.

In Belgium, for example, a partnership between KPM, Digital Island and Belgian television station VTM has resulted in the streaming of the popular reality TV series Big Brother. Viewers pay 81.25 per 15 minutes to view the service, by dialling a 0900 telephone number. They are given an access code and asked to specify their preferred method of payment. Luc de Clerk from Streamcase wouldn't be drawn to reveal viewing figures, but he said that the service was yielding significant profits for those involved.

Since 11 September, many businesses the world over have campaigned to cut back on business travel. This is bad news for the airline industry, but good news for streaming media. Yahoo! Enterprise Solutions says that it has seen a significant rise in streaming business since that date. Typically, a single web cast costs under $50,000 compared to $370,000 for a one-off sales training meeting for 500 worldwide delegates brought together in one location, according to Gartner research.

But Steve Boom, director of Yahoo! Enterprise Solutions, says that streaming should be viewed just like any other medium: 'This is just one more weapon in the arsenal of marketing campaigns,' he says. 'Streaming may not be showing the same success as email or text yet, but it is one way to communicate better.' Streamed content can help to retain customers, as well as increase brand loyalty.

The cost of moving large files around on the internet is still high and the internet is slow, which impinges on viewing quality. Until high-bandwidth becomes mainstream, that will continue to be the case. Companies such Akamai, Digital Island and Yahoo have built networks enabling them to move content closer to the edge, others are using caching to speed up the last mile, some are working on peer-to-peer connection methods. But all this adds to the cost of delivery. Stumpf believes that lowering this cost will be a major driver towards success.

In the media entertainment world, streaming is giving rise to a whole new raft of material: 'It's to do with choice,' says Richard Leslie from storage solution provider Black Ink Media. Internet technology gives users the ability to choose and select what they want and reject what they don't, which means that content providers are having to be extremely creative to come up with material that people will pay for. Short clips are the order of the day, an example being 'SalmonDays', a live action video strip, specifically tailored for the web, which is the result of a collaboration between Akamai and video encoding supplier, Culturejam. The two operators are keen to prove that web video business models can make money, although they admit that SalmonDays is not yet, they are confident it will as the cartoon strip on which it is based already has a massive following.

The first episode of SalmonDays was delivered free to visitors along with subsequent 30-second trailers. Thereafter, viewers paid 20p for each full episode (between three and five minutes long), either via BT Cellnet or Vodafone accounts or a premium rate phone line.

Another key factor for influencing the success or otherwise of streaming business models is quality. Viewers are used to broadcast quality and so expectations are high. However, narrowband internet on its own cannot live up so numerous solution providers are coming up with software that enables them to monitor and track performance and usage. In terms of performance, however, if the example of the World Wide Web is anything to go by, users will not tolerate poor performance - they will simply 'click off' and monitoring, therefore, will be rather like shutting the proverbial door in the wake of a galloping horse. Performance monitoring should to go hand in hand with automated performance maximisation.

However, managing assets and tracking digital rights are important elements in the streaming media business model. The music industry has already had its fingers burned by the Napster debacle, but if nothing else it galvanised action and now there are specialist solution providers who concentrate purely on this area.

Streaming will only work if the content is what people want, so good business models revolve around that. If Lenny Kravitz fans are given the opportunity to download the artist's latest video and burn it onto a CD, at a nominal cost, chances are, they will. The demand is already there.