Video on Web News

01 June 2006

ITV Interview: Mika Salmi, Founder and CEO, Atom Entertainment

on [itvt] News Blog, May 31, 2006

Multiplatform VOD and games company, Atom Entertainment (note:the company--which was founded in 2001 via the merger of AtomFilms and Shockwave.com--offers short films and animated titles on its AtomFilms.com broadband VOD portal and a range of games on its Shockwave.com portal; it claims that AtomFilms attracts a monthly audience of 5 million consumers), recently revamped its AddictingClips Web site to support uploads of user-generated content, including videos, animation and Flash-based games. Atom founder and CEO, Mika Salmi, recently spoke to [itvt]'s Tracy Swedlow about the company's strategy for user-generated content, about the emerging importance of user-generated and short-form video, about the company's future plans, and more.

[itvt]: You recently revamped your AddictingClips Web site to allow uploads of user-generated content…

Salmi: That's correct. Actually, AtomFilms has taken user-submitted content since we were founded. We just haven't always had an automated way to do it, and we've always filtered the content we've gotten. Over our history, we've taken less than 1% of what we've received--of course, we also proactively go and look for content, too. But AddictingClips is now basically another avenue for content to get to AtomFilms. We pick the best stuff from AddictingClips, and make it available on AtomFilms. In some ways, AddictingClips is like a farm system for AtomFilms. It also allows you to upload games--so it's also serving as a farm system for AddictingGames and Shockwave.com.
User-generated content is a great fit for AtomFilms. This is because it's not in a silo for us. A lot of these user-generated content Web sites are just standalone propositions, and they're still trying to figure out how to make money out of what they do. But our user-generated content Web site actually feeds our other Web sites--whether it be with content or traffic. And it could also work the other way around: our other sites could maybe feed traffic and advertisers to AddictingClips. So it's very synergistic with our other Web sites. In some ways, I would question the value of it, if it were just a standalone user-generated content site. But we've actually made it very much a part of our ecosystem of entertainment sites.

[itvt]: What's the business model for AddictingClips? It's advertising-supported, correct?

Salmi: Like I said, primarily it's a feeder. So advertising wasn't the main reason we created it, and we aren't necessarily banking on advertising to fund it. Having said that, though, advertisers really love user-generated content. But they can't figure out what to do with it. Advertisers seem to feel comfortable with AddictingClips, because of the way that we've positioned it--and also because of how we've placed the ads on there. So we're getting a lot of interest, and actually, we're going to start putting more and more ads up there. But we didn't start off thinking of it primarily as a way to generate more advertising. Nevertheless, as I said, it's actually been panning out quite well as an ad-supported site. It's producing quite a bit of revenue from advertising.

[itvt]: Content from AddictingClips has already been tapped by AtomFilms, correct?

Salmi: Yes. If you go to AddictingClips, you'll see that there's a box on the site promoting a program called "Cash for Clips." If you click on that box, you'll see a list of clips that have been chosen for AtomFilms: if you click on the links next to those clips, you can watch them on AtomFilms, and visitors to AtomFilms are now reviewing them. The makers of the clips that have been chosen for AtomFilms get $250 each: we're also making their clips available for the various distribution deals we've done; so we're probably doing to program some of them on Verizon's V CAST service and on the various VOD platforms where our content is available.

[itvt]: And the makers of those clips will only get a one-off payment of $250, however widely their clips are used?

Salmi: No. At AtomFilms, we always pay our content creators something upfront and then royalties on top of that. So, if we want to use a user-generated clip from AddictingClips on AtomFilms, we convert the content creator's AddictingClips upload license into an AtomFilms contract, and the content creator makes at least $250 and potentially more. So AddictingClips users whose clips are chosen become part of the AtomFilms system, as it were.

[itvt]: How do you determine how much money content creators get for their clips on AtomFilms?

Salmi: We like the idea of people marketing themselves, so with AtomFilms, the way we pay our royalties is by popularity. The more popular your clip is, the more money you stand to make. We put all of our advertising revenue into a pool, and the content creators share in that pool by popularity. So back when we had JibJab, which got something like 80 million plays over a few months, they got the bulk of that pool, because they were the most popular, by far. Normally, though, you can actually influence how much money you make by marketing your content on AtomFilms. If your content is being watched more, you will make more money.

[itvt]: How do you distribute that money?

Salmi: In quarterly checks. We tally up all the revenue we made in that quarter, put it into a pool, and share that revenue with the content creators according to their popularity.

[itvt]: Are you doing anything to make it easier for content creators to market their offerings?

Salmi: Yes. A lot of our filmmakers already market their own content, and we want to make it even easier for them to do so in the next version of AtomFilms. So, among other things, we'll be making it easier for them to send out links…there are lots of ways to do it.

[itvt]: Why did you decide to call your user-generated content site "AddictingClips" rather than by a name that was some kind of variation of the AtomFilms brand?

Salmi: Well, we bought a company called AddictingGames last fall. Addicting Games has about 8 or 9 million unique visitors a month. It's basically a directory of games, plus some hosted games. It's a Web site where there are a lot of people who happily link out to other Web sites, so it's just an incredible traffic engine. We thought that the way AddictingGames worked made it a better sister-brand to AddictingClips than to AtomFilms. As you probably know, you can post games, as well as films, on AddictingClips; and so we're also looking at AddictingClips as a feeder farm for games on AddictingGames. Also, the AtomFilms brand--as far as our advertisers and our distribution partners and Hollywood and everyone else is concerned--has a very high-level image. So we didn't necessarily want to associate that too closely with the kind of chaotic image that user-generated content has. However, we do obviously talk about AtomFilms on AddictingClips, so it's not as if we're shying away from associating them. But we simply thought that, as far as brands are concerned, AddictingClips was a better match with AddictingGames than with AtomFilms.

[itvt]: Now AddictingClips allows you to upload video directly from your mobile phone, correct?

Salmi: Yes. We've started doing more and more with mobile. As you probably know, we have a deal with Verizon's V CAST now, and we have other mobile deals in the works. So we wanted to position ourselves as a company that's on multiple screens. We thought that it was important to allow people to upload video from their mobile phones, because a lot of people are shooting video on their phones, now. We thought it would be advantageous for us to take the lead on that.

[itvt]
: Are you planning to offer a user-generated content service on V CAST?

Salmi: It depends on Verizon. They have a very controlled channel there--for AtomFilms and everything else. We've definitely had discussions with them and other phone companies about user-generated content elements. But right now, they prefer to have professionally produced channels.
However, we are definitely planning on putting some of the content we've accrued through AddictingClips' "Cash for Clips" program onto the AtomFilms channel on Verizon. So you will see some of those things making their way over there. But I don't think at this stage that you're going to see the full raft of thousands of clips that have been uploaded to AddictingClips appearing on V CAST or on another mobile phone service. However, I wouldn't doubt that it may happen at a later stage.

[itvt]: What were the challenges involved in allowing people to upload video from their mobile phones to AddictingClips?

Salmi: There definitely were some challenges in figuring out how to allow users to send videos. Because some mobile operators don't allow you to upload your videos, and there's also the question of how you can do it so that as many users as possible can have access to this functionality. However, once we cracked those problems and figured out some of the transcoding elements--because the format coming from a phone is very different than the format used on your PC--it was pretty easy after that. This is something that we expect other companies will figure out, too--it's not a proprietary, patented thing. We were just the first ones to figure it out and launch it.

[itvt]: Could you talk us through how the process works?

Salmi: The transcoding takes place on our Web site: you just send in raw video in whatever format your phone took it in; we receive it on AddictingClips; and then we have to transcode it into Flash. It's an automatic process. If you have an account with us and you want to upload movies, you're presented with an "Upload a mobile video" option, which gives you an email address to which you can send video from your phone. It's quite seamless: if you were to take a video right now of whatever room you're in, you'd simply put that email address in there and hit "Send." Within moments, it would be on our Web site.

[itvt]: Did you develop this capability in-house or was it provided by a vendor?

Salmi: It's kind of a hybrid. We developed all the specs and the features and a lot of the technical stuff having to do with email, but we used some outside consultants from a company called Reality Digital to help us put it all together.

[itvt]: You also provide people with the ability to embed video into their Web sites, correct?

Salmi: Yes. When your video has been uploaded, it gets its own page. You can see how many views it has gotten, and see the various comments that people have made. Also on that page is a box that says, "Embed on your Web page" It gives you the HTML code, and you just have to cut-and-paste that. You just highlight it, copy it and past it in. It will then embed that exact video onto your page. Then, when it's embedded, if you're good at HTML, you can actually choose what size you want it to be: small, big or huge.
Once it's on there, all you see is our video box. It's a very plain, white box. You see a little AddictingClips logo in the right-hand corner, but other than that, it's a very plain box and it's very simple. It actually looks really good on pages, because it's so simple.

[itvt]: Now, AddictingClips also allows users to get feedback on the content they upload, correct?

Salmi: Yes. Users can easily track the performance of their clips. If you click on a screenshot of a clip to watch it, underneath the video window it says how many views there were--so you can see in real time how many times it's been watched--and there's also a place for people to make comments about your clip.

[itvt]: How are consumers using the site's comments feature? Are communities forming around the site's content?

Salmi: Well, with the games, for example, people will say what their high score was. They like to compare high scores. Then, with the clips, they offer up comments like "Good job!" or "Is there any more of this?" So people often tend to have little conversations going on around the clips. Sometimes, if a clip is controversial, you'll see a back-and-forth conversation with five to 10 people talking about it.
Here's a good example of how community plays into the content we offer: we have an unusual game on AddictingClips, called "Don't Shoot the Puppy," which for a long time was a real conundrum for people. They simply could not figure out how to play the game. So people used our comments feature to talk about how to play it. Basically, it's a trick-game where, once you hit "Start," you don't touch anything: if you move your mouse or you touch your keyboard, it shoots the dog. And, of course, the game continually tries to lure you into touching something. People are going to love it or hate it, because it's kind of an evil-Zen game. But, for a long time, people couldn't figure it out, and when they did, they were all asking, "Where did this thing come from?" It generated a lot of discussion.

[itvt]: Are you seeing content uploaded to AddictingClips by international users?

Salmi: Yes. We've seen quite a few Japanese clips, and also a lot of content from Latin America. What's interesting is how, if you go to the site in the middle of the night--or some other time when people in the US are asleep, but when it's the middle of the day in some different time zone--you'll see all the different types of clips getting posted from the countries in that time zone.

[itvt]: What are your thoughts in general on the user-generated content phenomenon?

Salmi: I think user-generated content somewhat mirrors the reality- television craze. I think it is the ultimate reality TV--it's like personal reality television.

[itvt]: But you're getting all kinds of content--humorous clips, scripted amateur movies, and the like--that don't seem very similar to reality television…

Salmi: Yes. But reality television tends to be voyeuristic, and watching user-generated content--seeing what your fellow users can come up with--is voyeuristic in a sense.
I also think that the user-generated content phenomenon reflects the fact that people simply have a huge appetite for interesting video content--an appetite that's so huge, that the content doesn't have to be professionally produced. I think that a lot of people in Hollywood and in the major media companies are quite perplexed by this, and are asking themselves, "Does this mean that we shouldn't be spending so much money on production values?" They're trying to figure out how the phenomenon fits into the landscape of high production values and big budgets that they've carved out over the years. People definitely seem happy to watch less polished video content, provided it's interesting.

[itvt]: Are you seeing any interest from Hollywood in what you're doing?

Salmi: Yes, more than ever. What's interesting is that, when we first started, everyone in Hollywood and a lot of other people said, "What's the deal with all this short-form content? No-one wants to watch short-form content?" I think they had a pre-conception of short-form as being some kind of arty medium that wouldn't be appealing to a mass audience. We would respond that short-form could be anything from a music video to a short animation, but they just couldn't get their head around it.
But then, about six months ago, I heard Peter Chernin say--and I'm paraphrasing here--something along the lines of: "Consumers are jonesing for short-form content." Of course, I have to say that I thought it was quite funny that he used the word "jonesing." But I also thought, "Well that's great." Because what it meant was that short-form is finally no longer relegated to the dustbin, and is finally front-and-center. Everyone's talking about short-form.
Actually, the reason we're called Atom Entertainment is because atoms are small, but powerful. All the content we have is atom-like--even our games are short. Everything we have is in quick, bite-sized snacks. Of course, now that everyone has come around to doing what we've been doing all along, we're obviously in a much more competitive environment--whether the competition is News Corp. or the latest user-generated content site du jour.

[itvt]: Do you plan to give people content-creation tools on AddictingClips--editing tools, for example? Are you interested in being in the service business as well as in the content-hosting business?

Salmi: I'm definitely very interested to see how some of these online video-editing tools do--to see if they garner some interest. I think that simple editing online would be a great tool for people. If those kinds of tools prove successful, I think we could easily add that feature to AddictingClips. However, I don't see it as a be-all-and-end-all: more as a feature.
Actually, I do think we need to have a feature on AddictingClips that would provide users with tips on shooting and editing video. We've talked about it. We just haven't gotten around to putting it up yet.

[itvt]: The comments on AddictingClips don't appear to be moderated. Why is that?

Salmi: Well, according to the Digital Millennium Copyright Act, a site like ours has to be a passive conduit. We cannot be monitoring it or actively moderating it. We do have some filters set up, to stop people swearing. And if users tell us that they see something they don't like--whether it be a comment or a video--we'll take a look at it. But we take a hands-off approach in order to let the site just live its own life.

[itvt]: Can you talk about the new features you'll be rolling out on AddictingClips over the next six to 12 months?

Salmi: The reality is that we have a massive number of features in the works, and we have a lot of ideas. The question for us is, "What are we going to do first?" I think that's going to be the challenge for us. I can tell you that this site is going to be continually evolving. Six months from now, it won't look the way it does today.

[itvt]: The projects you're working on right now, are they more marketing-oriented or technology-oriented?

Salmi: Both. We're talking to partners. We're looking at technologies. We really want to build what we're doing across all our different brands: we don't think of our sites as standalone propositions, so it's very important for us to think about how AddictingClips, for example, fits in with Shockwave.com or AtomFilms.com or AddictingGames.com.

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