- The Zango Double-dip ?
This piece is not one of those. Instead of talking about the Zango software, I would like to have a brief look together at the theoretical business model that drives Zango.
Some relevant snippets from the Zango site:
Web publishers, content creators and providers aren't able to earn a living from their products. <Snip> online consumers have proven reluctant to pay a monthly subscription fee for access to online content and entertainment. <Snip> Zango has developed a unique solution to this economic dilemma. <Snip> With the Content Economy model, consumers are able to access and enjoy web content and entertainment for free, because when they search or browse online for products and services, they see ads from Zango advertisers. <Snip> Web publishers and content providers get paid by Zango for distributing their creative assets. Zango earns revenue from online advertisers, and thus, keeps this new Content Economy alive and thriving.I see! Visitors will never pay to see online content, so the content creators will never get to see a dime from their work.
So Zango's self-proclaimed raison d'etre is to provide these starving "long tail" creators/artists with some income so they can keep producing the content that everybody likes, instead of needing to beg for spare change at a mall entrance.
Surely, that's a noble cause, no? Let's see...
Required background reading
For those of you who have not heard about "Revver", a small primer. It's fairly similar to things like "YouTube", but with a twist.
Here's a hypothetical (all names where made up by me) scenario:
- Michelle, "content producer" uploads a movie of her cat doing funny moves onto Revver.
- Tony, who owns a website neatopetsandstuff.com, signs up for Revver as a "publisher" and embeds the "Revver player code" onto some of his web pages.
- Alex, is surfing neatopetsandstuff.com and moves to the video page.
- Revver embeds some ads into Michelle's cat video and streams it to Alex.
- Alex, watches the movie, has a few giggles, and clicks the ad that was embedded in it.
- CrazyCatfoods Inc., who's ad was shown and clicked on pays Revver a fee for the click.
- Revver pays out 20% of the fee to Tony, 40% to Michelle and pockets the rest
- Everybody is happy and goes on their merry way.
Whether this business model is sustainable or not, only time will tell. While I am no particular fan of ever-present advertising, this seems to be a fairly acceptable way of rewarding content providers. Besides, it smells like Google, who recently purchased YouTube a similiar model , and we all know that they "aren't evil".
The only beef I have with Revver is that their license/member agreement seems to be genetically engineered to be hard to read . My nose and ears started to bleed before reading halfway through it, so I gave up. Let's keep that story for another time.
On with the story...Let's examine some of the inner workings of this "Content Economy" in detail.
Looking for gigglesLets assume an average user is browsing the Zango site, looking for something funny. Scanning through the listings on the homepage, he skips over the screensavers and celebrity nude stuff, and finds "Karate cat casts a spell", which seems to be good amusement for a few minutes. He clicks the big "Watch" button and moves to a comfortable position in his chair.
Geek mode onOn a technical level, here is what happens in the browser:
- The destination page is loaded by the browser. Scrolling over some external includes, we find this at the top of the page.
In short, this "protects" the content page from being seen by anybody who hasn't been "Zango-ed".
- Scrolling further down the source, we come to the actual delivery of the movie:
Wait a minute...Lets have a closer look at that URL again:
- Blue: This indicates that the movie is being served from Revver, not any Zango related server.
- Green: This number indicates with movie we are talking about.
- Red: This is the Revver affiliate/publisher ID. (This is how Revver identifies "Tony" in our previous story)
So Zango is an affiliate of Revver, and gets paid for ads clicked in movies played.
- Zango was not involved in the creation of this "content". They did not create the movie, they did not pay for its creation. They just used an API to retrieve the information off the Revver site. The tagging and indexing was done by Revver as well.
- Zango did not pay for the bandwidth costs of streaming this content. The content (and even the accompanying thumbnails) are served directly from Revver's servers.
- Zango did not pay a license fee to show this content to visitors. Revver does not charge anything to become a "publisher".
- Zango gets paid whenever a visitor clicks an ad in a Revver video on their site. This occurs regardless of whether the user has the Zango software installed or not.
Questions for Zango
- Since (I assume) the Zango software only gets installed once on an end-user's computer, and that end-user may visit and consume thousands of other "free" content, how do all those content creators benefit?
In other words, if I'm a content creator and use the Zango Cash Gateway system to monetize my content, and the visitor already has the software installed, will I get paid at all?
Given that "Zango has more than 20 million "opt-in" users and an average of 200,000 new consumers opt-in every day" (Ref: Zango) and that the number of US Internet users is about 200 million (Ref: Nielsen), that does not seem like an unlikely scenario, right?
- Does Revver know the exact details of this setup? Is this in accordance with their "member agreement" ?
- All the "install Zango pages", (e.g. http://www.zango.com/destination/catalog/contentGateway.aspx?pid=5639) link directly to http://static.zangocash.com/Setup/Zango/Setup.exe, without any parameters being passed to indicate which movie enticed the user to download your software.
If you don't track which movie initiated the install, how can you ever pay the creator of a movie for an installation generated on your site? (And yes, I did check the cookies too)
- Given this example, how exactly does the creator of this content benefit from Zango software being installed to view their video? Are they getting paid at all? (Don't talk about any Revver payouts, because that is not your doing.)
- In this very particular case, I would like to hear how you are going to send a cheque to somebody who sent in their "cat movie" to a Chinese TV station's "funniest home videos" show, in 1993.