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All newspaper and magazine websites, from The Sun to specialist titles like iVillage, will continue to be hurt by high VOD levies if a standardised audience metric isn’t universally adopted.

The Authority for TV On-Demand (ATVOD) has moved away from its former strategy of charging a blanket £2,900 fee to all VOD service providers in favour of a reduced, staggered fee structure (nma.co.uk 29 June 2011). The move means smaller providers will be charged a rate that’s more appropriate to the size of their business, while larger VOD providers will have their overall fee capped.

It’s a welcome outcome to what has been months of turmoil among content creators and publishers affected by the charges. Publishers including The Sun and The Telegraph had appealed to Ofcom that ATVOD’s remit shouldn’t extend to their sites after the association ruled that magazine and publisher websites that show clusters of videos on their sites qualify as “TV-like” services and should be subject to its fees (nma.co.uk 14 April 2011).

However, after speaking with ATVOD’s CEO Pete Johnson about the revised structure, it struck me that the co-regulator, although content with the reduced fees, is well aware that it’s only a short-term remedy.

The decision to charge depending on the size of the company is logical, but defining the terms based on the overall revenue of the service provider rather than that form the actual VOD service is far from ideal. For example, if BT Vision is to be billed according to the turnover made by its owner BT, that will surely damage the VOD service’s future revenues.

Johnson is aware of the pittfalls and said that in the future ATVOD hopes to develop the fee structure to apply to factors like audience size. But given there’s still no universally adopted way of measuring VOD viewing, its hands are tied.

UKOM’s launch of the first industry-backed VOD metric has been welcomed but it’s clearly still a long way from being universally adopted.

ATVOD must continue to drive and evolve the service and promote its existence more for the VOD industry to flourish. Otherwise it’ll be hard pressed to cut its fees further and the result will be that smaller VOD providers not yet securing high revenues will be crippled by levies.


Published 30 June, 2011 by NMA Staff

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