MTV pulls back on embedded videos

http://www.techcrunch.com/2009/02/14/mtv-pulls-the-plug-on-embeddable-videos/

MTV’s decision to limit redistribution through embedding videos highlights that the business model for ‘healthy’ online media services still faces a severe cost/revenue mismatch.

As described by MTVN’s corporate communication representative:

All of our online video is and will remain embeddable for end users, just like Hulu. That includes music videos, clips and full-episode content across MTV.com, VH1.com, ComedyCentral.com and our entire Web portfolio.

The only thing we’re pulling back is fully open access to our music video API, and it’s purely an issue of economics. Every music video we stream through the API costs us money due to our deals with the record labels, regardless of whether an ad is attached or not. So, allowing developers to use the open music video API can be a money-losing proposition for us. However, we’re absolutely open to extending the music video API to third-party publishers who are willing to work with us to monetize. It’s all about striking that right balance between innovation and commerce as we continue to move forward and try new things.

The strategic challenge raised here is interesting. 

On the one hand, offering API access to its music video service promotes viral adaption of the MTV’s offering as the defacto service for music video consumption.  It helps promote and propagate its brand on the web.  It also allows developers the opportunity to find creative ways to use and distribute the videos to consumers. 

On the other hand, MTVN is still saddled with the costs (highlighted here is the record label rights deals – interestingly, the communiqué fails to mention MTVN’s own storage and distribution costs which are likely substantial) even when the video is distributed virally through the API.

This highlights one of, if not the preeminent challenge facing all forms of digital media – how do services rationalize their cost and revenue structures in away which optimizes the user experience while still enabling profitability.  The jury is still out on cracking this important nut.