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Press
Releases
11/09/05
Microsoft
teams with AP for online video venture
By SETH SUTEL
AP Business Writer
NEW YORK (AP) -- Microsoft Corp. is teaming with The Associated
Press to offer an advertising-supported online video news
network in the first quarter of 2006, the companies announced
Wednesday.
Microsoft will supply the technology, video player and advertising
support to the network, while AP's broadcast division will
provide the video, which will feature about 50 different stories
per day. AP, the world's oldest and largest newsgathering
organization, originally announced plans to develop the venture
after a board meeting in July.
Jim Kathman, the head of strategy for the AP's broadcast division,
said the network would be offered free of charge to AP's 3,500
newspaper and broadcast members, who would share in the revenues
generated by the network based on how much traffic they generate.
Online video has become a hotly competitive market as more
advertising dollars move online and as improving compression
technology and the spreading use of broadband connections
has made it easier for more people to watch video over the
Internet. TV networks now provide video over their Web sites,
and some networks such as Viacom Inc.'s MTV have launched
online-only offerings of video.
Jonathan Hurd, an analyst at Adventis Corp., a Boston-based
consulting firm, said one of the reasons for Internet video's
growing popularity is customer dissatisfaction with broadcast
television. "People ideally want video on their own time
frame and in their own place," Hurd said.
Microsoft and the AP did not provide specific financial details
of the agreement such as what the revenue split would be or
how much investment was being made.
Kathman said AP member organizations will be encouraged to
contribute video to the network by the end of next year. They
could then sell advertising and receive compensation if their
video is used elsewhere on the network.
The AP currently sells video clips to nonmember organizations
such as Yahoo Inc., and those arrangements won't change, Kathman
said. He said the video clips on the new online network will
be the same as those sold to nonmembers, but he said the non-network
video sales won't have to carry ads supplied by the network
or have other conditions attached.
Each news clip will run about a minute, preceded by a video
ad of 15 to 30 seconds, Kathman said.
The online video network will initially be targeted at the
AP's member news organizations, but Kathman left open the
possibility that others could join as well. "We want
to make it as large a network as possible," he said.
The network will use a Windows-based media player and sell
ads through Microsoft's MSN business. For Microsoft, the deal
extends the software company's drive to develop more free,
advertising-supported online services. Microsoft executives
have been looking at a number of ways recently to bulk up
the company's roster of Web-based software and services, to
better compete with companies such as Google Inc. and Yahoo.
Joe Michaels, director of MSN business development at Microsoft,
said the company was attracted to this deal because it already
offers ad-supported video on the MSN Web site. Under the deal,
Michaels said Microsoft can't forge a similar partnership
with another news organization but could strike a deal to
provide similar services for a non-news product, like a television
show.
The AP, a not-for-profit cooperative owned by U.S. member
newspapers and broadcasters, also sells text and other news
content such as photos, graphics and interactive Internet
material to nonmember organizations such as Yahoo and Time
Warner Inc.'s AOL unit.
The video will come from AP's worldwide video newsgathering
service, APTN, which was launched in 1994, as well as AP's
expanding domestic video news operation. APTN distributes
news video to more than 500 broadcasters, major portals and
web sites.
___
AP Business Writer Allison Linn contributed to this story
from Seattle.
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