AOL big four media deal tramples long tail

Comment AOL has become the latest service provider to deliver one in the eye for the long tail theory and sign a deal with big media, trading guaranteed hits for market share.

AOL will deliver TV shows and full-length movies from 20th Century Fox, Sony Pictures Home Entertainment, Universal Pictures, and Warner Brothers Home Entertainment Group through AOL Video, the company announced Thursday.

Consumers will purchase and download "more popular television content from leading brands" like Fox including 24, Bones and Prison Break, Buffy the Vampire Slayer, Hill St Blues and (we're promised) "many more" classics through the AOL Video portal. Also in the pipeline, are two new channels from Sony Pictures featuring more even dated material like Charlie's Angels and Starsky & Hutch.

Also promised are "popular movie titles" from DVD releases to "a large selection of movies" spanning all genres for purchase and download to PCs and other compatible devices. Pricing starts at $9.99 and will run to $19.99 per movie - more than the price for the average cinema ticket or movie DVD on Amazon.

AOL joins the growing list of providers doing deals to deliver content from media conglomerates to consumers who are turning to the internet for their entertainment and turning away from TV, cinema, radio, music singles and albums.

On music, US phone companies Sprint and Verizon are already in bed with EMI, Universal, and Sony. Apple's iTunes is already home to much of the faire AOL is promising to deliver from Fox, while also carrying content from Fox's TV competitors such as NBC and CBS.

The large media companies are now going a step further in evaluating social networks as a possible route to market, with CBS using Google Video and Warner and EMI in discussions with YouTube to deliver music videos to this fast-growing content posting and creation site.

The crux of all these deals as far as the service providers seems to be concerned is to offer exactly the same material as the competition. Or rather, don't risk not offering the same hits, in case you lose traffic - it's the same approach that regional TV affiliates and cable companies have followed for decades in the US.

The ultimate goal in this latest battle, of course, is to take chunks out of iTunes' market leading share, which has been enabled through first-to-market content deals, savvy pricing and a sexy and ubiquitous iPod (for all its battery and hard drive issues).

For big media companies like Fox, deals help spread the bets guaranteeing their long-term survival. Declining cinema attendance, TV audience numbers and music purchases are raising uncomfortable questions over their ability to survive in the internet era.

Such deals, though, will stir up potential problems for service providers who are all rushing to embrace exactly the same content. One reason audiences have been turning off the TV is because of the mindless repetition between channels and franchises (not to mention the endless, endless commercials for poorly targeted products). Once the initial thrill for consumers of getting what you want online is over and the revenue growth curve starts to flatten, service providers will need to look for new ways to compete and differentiate through packaging and promotions, or risk going out of business.

The real loser in all of this though will be the long tail theory. As The Reg has noted before, the long tail argues that the web is turning traditional laws of supply and demand upside down, as products that are not hits, which are low in demand or have low sales volume can collectively make up market share of best sellers over the long term.

In short: cult shows like Greg the Bunny beat Kiefer Sutherland once we've all got bored with 24 and moved on.

Deals like the one AOL reached with four of the world's most powerful media companies clearly demonstrate service providers are placing their bets on guaranteed hits to win. In the race for market share and traffic against both free and charged-for online rivals, service providers cannot gamble on an unproven theory and are clearly placing their money on winners - the 20 per cent of the market or products that generate 80 per cent of the revenue or traffic in this case.

Long tail is a nice theory that might work over at Berkley or pay off in the long term, but - honey - they don't call the entertainment business a "business" for nothing. ®