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Executive Summary
At the height of the Internet bubble, media and entertainment (M&E) companies
glimpsed a promise of the business opportunities afforded via the Internet.
Unfortunately, most companies were unable to profit online for a variety of reasons:
too few consumers were willing to pay for content, security technologies were immature
and ineffective, and Web site technology development and maintenance costs were
too high for companies operating on razor-thin margins. In 2004, however, profitable
online business models are becoming a reality.
With real potential for a profitable online business, M&E companies are now trying to
define the business model that will generate the most margin and offer them a competi-
tive advantage. But not all the challenges have disappeared: companies must experiment
with online business strategies while minimizing their technology investments. All this
adds up to an exciting and sometimes intimidating time for M&E companies.
Content Delivery Networks (CDNs) enable M&E companies to deliver large downloads,
music, and video files and streams over the Internet, and thus realize the potential of
digital media and streaming distribution.
This paper explains Akamai Technologies’ CDN, which offers both standard CDN
technology and numerous advanced technologies, allowing M&E companies to
confidently deliver and generate revenues from their online content while realizing
tremendous return on their existing e-business infrastructure investments.
AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
Table of Contents
Section 1
Broadband-Driven Digital Media Opportunities . . . . . . . . . . . . . . . . . . .1
Section 2
Why Media and Entertainment Companies Choose Akamai ...... 5
Section 3
Benefits of Using Akamai’s Solution ............................... 7
Section 1
“ Sales of digital music are projected to hit $270 million in 2004, more than double
from last year, with sales of online music expected to hit $1.7 billion by 2009.”
—Jupiter Research
These security technologies, most notably digital rights management (DRM) provided by companies such
as Apple, RealNetworks, and Microsoft, offer more protection than previously allowed. By ensuring a
connection between a song or video and a single PC or other computing device, DRM effectively prevents
hyper-distribution, that is, illegal and indiscriminate redistribution of digital media assets.
“ Half of online consumers use their PCs to listen to music or watch videos,
and most prefer downloading to streaming.”
—Forrester Research
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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
Hyper-distribution is a key concern of the major studio houses. In early 2004, the Recording Industry
Association of America (RIAA), on behalf of the major record companies, filed suits against over 500 individu-
als—including students at 21 universities—who were offering copyrighted music files for free over peer-to-
peer networks (so far, the RIAA has filed more than 2,500 lawsuits against users who have misused file-
sharing programs). To date, four of the most recent lawsuits have ended with the offenders paying fees
ranging from $2,000 to $10,000.5
With security technologies effectively minimizing the risk of intellectual property theft, studios are now
increasingly open to online distribution of content. And site visitors are just as eager to consume it, presenting
companies with the possibility of generating revenues from subscriptions, pay-per-use, and advertising. Recent
online media successes, such as iTunes and college digital music subscription services (e.g., Ruckus Network),
have demonstrated the potential for safely generating new revenue streams. With others such as Yahoo!
(which recently acquired MusicMatch) and Real, entering the music download space, analyst expectations for
growth in these areas are high: Jupiter and Forrester Research both predict that the music and video down-
load and subscription business will increase 100% per year over the next few years.6,7 Other innovative M&E
examples include ESPN’s Motion service which inserts 10- to 15-second commercials into video clips, and
the use of exclusive online content to supplement the Big Brother TV show as a way to engage viewers and
promote show loyalty. At $20 per thousand streaming advertisement impressions delivered, both of these
businesses can generate revenues through their onsite advertising venues.8
“ The market [for both streaming audio and video advertising] is forecast to grow by 121%
in 2004 to $230 million dollars, and by another 56.5% in 2005 to $360 million dollars.“
—AccuStream iMedia Research
“ expect to see the expansion of digital and online subscription services not only begin
to lift the music industry…, but also positively impact segments such as film, video games
and business information.“
—Wayne Jackson, Global Leader of PricewaterhouseCoopers’ Entertainment & Media Practice
As recently as two years ago, the costs of hardware and bandwidth required to support an online distribution
strategy were so high that they effectively eroded any profit margin. However, the costs have come down to
such an extent that they now account for only 1-5% of total achievable revenue. This improvement extends
to the distribution of larger media files, such as movies that tend to be 200-300 times larger than music files
and therefore 200-300 times more expensive to deliver. Now the associated hardware and bandwidth costs
are only 5-10% of the overall revenue.
However, while online distribution costs now appear reasonable, developing the right business model can
prove challenging. As companies develop an online business plan, they must experiment with various business
models and therefore incur a variety of additional costs associated with the creation, transformation, licensing,
and management of digital movies, videos, songs, and articles. At the same time, companies often need to
overprovision hardware and software to ensure they can serve peak traffic caused by promotions or new
releases. Addressing all these requirements can result in a significant investment in both time and infrastruc-
ture – an investment that may prove misplaced should the company’s digital media business model change.
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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
While these challenges may seem daunting, M&E companies cannot afford to ignore the online channel,
as it will likely prove to be the most effective way of reaching a new, younger audience that increasingly
turns to the Internet for media and entertainment. “More than any other age group, 18 to 34 year olds
consider the Internet to be one of the most important sources of entertainment available to them. They
use the Internet both as a primary source of entertainment and as a resource for entertainment news
and information…Beyond just visiting entertainment and music sites, 18 to 34 year-olds are more likely to
engage in downloading, sharing and burning music and videos online and are more avid consumers of
online video content than any other age group.”10
Revenue-generating opportunities
• Ad insertion: Enables targeted advertisements to be inserted into on-demand or
live audio and video.
• Subscription: Provides content at pre-defined intervals in exchange for pre-payment.
• Pay-per-use or view: Allows one-time viewing or use of video or audio files for a fee.
• Syndication: Supports distribution of licensed content across multiple Web sites.
• Territorial rights: Limits geographical content distribution via licensing rights.
• Digital rights management: Protects and encourages payment for digital content.
Aberdeen analyst Kent Allen theorizes that "with so many consumers now having 4-5 years
of online experience, today’s buyer is smarter, faster and more demanding than ever."
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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
As M&E companies evaluate the various CDN providers, they should ensure the solution can:
• Guarantee a quality storefront or homepage experience. A rich and engaging experience
supported by an always available and highly-performing Web site is critical to keeping visitors on
the site, where they can purchase goods or click on advertisements. According to Jupiter Research,
site performance dramatically impacts the ability to capture online sales—a 50% degradation in
site performance can lead to a 25% reduction in paid conversions. The site must provide good
performance for all visitors, regardless of their location. It must scale to handle high traffic load
during peak seasons and events, and it must be available 24x7, no matter what the network
conditions on the Internet. Equally important, companies must protect their sites from threats such
as hacker attacks, viruses, worms, and intrusions without provisioning cost-prohibitive technology
that cripples site performance.
• Provide services that help secure content and generate revenues, e.g., DRM and secure
streaming. To safely deliver subscriptions, pay-per-view files, and exclusive online content, M&E
companies need security technologies that prevent theft of intellectual property and protect against
media rights violations. These technologies should also enable businesses to charge users for the
right to access the content.
• Offer a cost-effective and flexible alternative to infrastructure buildout. Rather than building
out and managing infrastructure, M&E companies’ efforts and resources are best spent developing
content and promotions and events that drive traffic to the site. At the same time, these companies
need an infrastructure that offers the flexibility to support a wide range of digital media business
models. M&E companies should seek out a CDN that enables them to extend their existing infrastruc-
ture, limit capital expenditures and oversight, and instantly accommodate changes in business strategy.
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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
Section 2
“ There is tremendous interest in baseball and the content of baseball, and we are looking
forward to the start of another exciting season. Our relationship with Akamai supports
our efforts to provide baseball fans all over the world with a consistent high-quality online
experience at all times. MLB.TV features over 250 live games per month. Akamai’s proven
network is ideal for handling this extensive amount of content.“
—Joe Choti, Senior Vice President of MLB Advanced Media
The following case studies are just four examples of the many Akamai M&E customers that have realized
success via the Akamai network and digital media solution.
“ We couldn’t be more pleased with our experience using Akamai’s services. Not
only has MTV Networks been able to save money, but our businesses are reaching
profitability— this is due in large part to no longer having to sink money into an
infrastructure that doesn’t meet our needs. Instead, we can use the Akamai
EdgePlatform to extend and control our infrastructure to deliver the innovative
content we’ve become known for.“
—Nick Rockwell, Manager, Interactive Technology and Software Development,
MTV Networks
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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
“ This migration [to Akamai EdgeSuite] allowed The Seattle Times to get out
of the ISP business and substantially cut bandwidth and engineering costs.“
—Kyle Getz, Systems Support Manager, New Media, The Seattle Times Company
“ [if MSNBC had opted to build out its site infrastructure] We would have had to
have ten times the capacity sitting idle for 364 days of the year, which is ridiculous.
Akamai is a very elegant solution when compared to throwing money at hardware
that you’d have to leave 90% turned off most of the time. Using Akamai EdgeSuite
means that MSNBC.com is there for every one of our viewers, every minute of
every day. Akamai is critical to our viewers, which translates ultimately to the
success of our business as the leading online news source.“
—Steve White, Chief Technology Officer, MSNBC
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PAPERPAPER Best Practices In Digital Media Delivery
Results:
• Expected increase in converting visitors to registered users ultimately translates into greater revenue
• Near-term reduction and future avoidance in infrastructure and related management costs that
would otherwise be required to support continued business growth
• Supported nearly four times as many site visitors as in previous years for the 2003 NFL season
opener, and served nearly 6 million page views during the game
• Experienced 100% uptime, while nearly every other competing sports Web site experienced
performance issues during the 2003 NFL opening weekend
• Saved approximately $150,000 in scaling costs during the NFL opening weekend
• Increased traffic has also led to increased advertising and fantasy-league revenues
For more details on these and other Akamai customer successes, please see
http://www.akamai.com/en/html/customer/case_studies.html.
Section 3
The range of capabilities afforded by the Akamai network and digital media solution allow M&E companies
the freedom and flexibility to implement any online business model without investing large amounts of
capital. With Akamai, M&E companies never have to worry about being victims of their own success—the
capabilities and capacity of the Akamai network ensure that even when traffic surges due to developing
news and promotional events, Akamai delivers a high-performing user experience that drives online
conversions and advertising impressions.
As broadband access and online media consumption grows, companies must maintain a nimble core
infrastructure that allows them to adapt rapidly to change and be prepared to take advantage of promising
revenue-generating opportunities. Akamai provides the necessary worldwide network with advanced
features to help ensure high performance, secure digital assets, and an always available Web site to help
M&E companies reduce costs, enhance the consumer experience, and increase revenues.
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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery
About Akamai
Akamai® is the global leader in distributed computing solutions and services, making the Internet
predictable, scalable, and secure for conducting profitable e-business. The Akamai on demand platform
enables customers to easily extend their Web operations—with full control—anywhere, anytime,
without the cost of building out infrastructure. Headquartered in Cambridge, Massachusetts, Akamai
serves hundreds of today’s most successful enterprises and government agencies around the globe.
Akamai is The Business Internet. For more information, visit www.akamai.com.
References
1.Nielsen/NetRatings, U.S. Broadband Connections Reach Critical Mass, August 18, 2004
2.Federal Communications Commission, New Figures Show Broadband Deployment Accelerating in the U.S.,
September 9, 2004
3.Nielsen/NetRatings, U.S. Broadband Connections Reach Critical Mass, August 18, 2004
4.Forrester Research, Broadband Produces Smart Shoppers, February 20, 2003
5.USA Today, College students sued over music downloads, March 23, 2004
6.Jupiter [Alberto—need the name of this Jupiter report]
7.Forrester Research, Commentary: For downloads, things are looking up, February 4, 2004
8.AccuStream iMedia Services, Streaming Advertising and Subscription: A Complete Market Analysis 2003-2005
9.PricewaterhouseCoopers, A New Era for Content: Protection, Potential, and Profit in the Digital World, 2003
10. Comscore, Marketers Take Note: The Elusive 18-34 Year-Old is Habitually Online, March 29, 2004
11. Yankee Group, Digital Media Shakes Up Traditional Cable Programmer Market Dynamics, August 14, 2004
© 2004 Akamai Technologies, Inc. All Rights Reserved. Reproduction in whole or in part in any form or medium without express written permission is prohibited.
Akamai and the Akamai wave logo are federally registered marks. EdgeSuite is a registered trademark. EdgeComputing, EdgeControl and SureRoute are Akamai
service marks. Other trademarks contained herein are the property of their respective owners. Akamai believes that the information in this publication is accurate
as of its publication date; such information is subject to change without notice.
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