Now Serving: The Media Microchunk
How content companies stand to profit from breaking programming into bite-size pieces.
by Erick Schonfeld

(Business 2.0) - Andy Samberg, a rising star on Saturday Night Live, owes his success to short video clips. After all, Samberg was discovered by SNL producers who saw his comedy sketches on TheLonelyIsland.com--a website he started with two friends (who also got hired by the show). So it was fitting that his career really took off in December, when a spoof featuring Samberg and SNL co-star Chris Parnell rapping "The Chronic(What?)cles of Narnia!" was posted by a fan on the video-sharing site YouTube.com. It has since been downloaded more than 5 million times.

Call it the new era of video distribution: With digital tools and the Internet, consumers can now surgically remove the pieces of a TV program they like and share them with friends. Ever smaller bits of video content--what Internet strategy consultant Umair Haque calls "microchunks"--can be e-mailed, linked to, searched for, downloaded, remixed, and made available in a thousand places at once. Of course, short video and animation clips, from the dancing baby to "All Your Base Are Belong to Us," have been all the rage since the early days of the Web. But now media giants are learning how to play the microchunk game--and they hope to start making a lot of money at it.

The first important microchunk produced initially by a major media company dates back to October 2004, when a 13-minute clip of CNN's Crossfire, in which Jon Stewart lambastes the show's format and ridicules co-host Tucker Carlson, quickly became the most viewed video on both the AtomFilms and iFilm websites. Now Crossfire is dead (killed in part by Stewart's critique, admits CNN's president of U.S. operations), and Comedy Central is enjoying a brand-new revenue stream: making Stewart's Daily Show available on its website, in chunks no larger than the Crossfire segment.

Comedy Central's clip service, called MotherLoad, offers one take on how a microchunk business model might work. It's entirely free, but it plays in a pop-up window alongside a giant ad. (Short commercials also play before some segments.) In operation for only a few months, MotherLoad makes Daily Show clips available the morning after they air; hot ones have been watched, e-mailed, and blogged about hundreds of thousands of times in subsequent days. Instead of coming to the network's website twice a month, the average visitor now shows up three times a week. "The real revelation for us has been the demand for having the segments online very quickly," says Beth Lewand, Comedy Central's vice president for digital media.

Of course, microchunking requires a radical transformation in the way media companies do business. In the past, consumers were content with media bundles: bulky newspapers, full-length albums, three-hour prime-time TV lineups. A flurry of recent digital distribution deals, however, is all about unbundling. MTV Networks is reorganizing itself into two parts, one that focuses on short-form video and one for longer shows. ABC and NBC are selling Desperate Housewives and Law & Order episodes for $1.99 a pop to video iPod users. ABC's news clips with ads are available free online and through iTunes. CBS and NBC are selling on-demand reruns for 99 cents via cable and satellite. America Online and Warner Bros. (both, like this magazine, owned by Time Warner) are streaming old shows like Welcome Back, Kotter for free, hoping to make money from the ads.

According to Fred Wilson, a partner at Union Square Ventures who sat on the board of bookmark-sharing startup Del.icio.us until it was sold to Yahoo (Research), there are rules for distributing content in the future. First, of course, microchunk it: Reduce entertainment to its simplest discrete form, be it a blog post, a music track, or a skit. Second, free it: Let people download, view, read, or listen without charge. Third, share it: Let consumers subscribe to content through RSS- and podcast-style feeds so they can enjoy it wherever and whenever they like. Finally, the moneymaking part: Put ads and tracking systems into the digital content itself.

Already, a startup called Brightcove is helping media giants implement those rules. Based in Cambridge, Mass., the company can deliver video content as individual shows or chunked-up segments, attach ads, and syndicate the video. All video is served from Brightcove's network, but to viewers it appears to be coming from AOL or any of dozens of other branded sites.

If microchunking--with all its inherent network effects--is harnessed correctly, it could one day prove more profitable than the old centralized media model. Which is why investors are watching the rise of ad-supported video chunks closely. If the TiVo generation can put up with the occasional commercial, Samberg and Stewart won't be the only ones smiling.

Erick Schonfeld is an editor-at-large at Business 2.0. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.