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Professional content to boost new media sales

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CIOL Bureau
New Update

Kenneth Li

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NEW YORK: Sales of media on the Internet and on cellphones are expected to rise 23 per cent over the next four years, driven by TV networks and film studios putting more of content online, according to a new IBM study.

IBM researchers estimated new media sales to grow at nearly five times the rate of traditional media, with the biggest surge coming from the Internet syndication of professionally produced programming, which is expected to jump 33 per cent to $25 billion.

That growth comes from strategies such as Walt Disney Co. offering episodes of hit prime-time shows "Lost" and "Desperate Housewives" for free on ABC.com, or Sony Corp. offering a Star Wars-themed multiplayer game on its Web site.

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The IBM report is backdropped by Google Inc.'s stalled talks with US television networks to provide TV show programming to the top online video service YouTube.

Eyeing a potentially lucrative market to share advertising revenue with TV networks and Hollywood studios, the service has been in discussions for broader distribution deals.

Big media companies like Viacom Inc. and General Electric's NBC Universal are making their programming more widely available on the Internet, but have failed to land distribution deals with YouTube over deal terms and copyright concerns.

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Viacom in February demanded YouTube remove more than 100,000 video clips from the service. NBCU lawyers also demanded the removal of unauthorized content from YouTube, according to a Wall Street Journal report citing unnamed sources.

Still, the Internet syndication of traditional media companies' programming will be a small part of the estimated $655 billion of annual media revenue in 2010.

The IBM report estimated the music industry will have lost a staggering $85 billion to $160 billion in revenue between 1999 through 2010 after dragging its heels to meet the demand for digital media.

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"Doing nothing is not an option," according to the report's findings.

The growth rates are on a compounded annual growth basis.

The music industry's reaction to rampant piracy has become a cautionary tale in the media business, spurring big media companies like Disney and News Corp. to forge new strategies to reach viewers wherever they spend their time.

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"We're not moving from black and white to color TV -- from one steady state to another," Saul Berman, IBM's global media and entertainment strategy leader, said in an interview last week. "We're moving from an era of stability to an era of constant change."

Growth rates are higher for new media businesses, but traditional media sales will still play the biggest role with estimated annual sales growth of 5 percent to $340 billion by 2010.

So called "walled communities," or networks such as cellphone and cable networks that offer viewer-created programming and revenue from cable and satellite subscriptions and advertising, will rise by 10 per cent to $240 billion by 2010.

"New platform aggregators" such as YouTube and MySpace, which bring together myriad sources of user and professional programming are expected to rise by 16 per cent to $50 billion.

Slowing progress is a perception that returns on new media businesses are seen as more long term-focused compared to the "direct compensation" of existing businesses, Berman said.

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