Welcome Remarks
Andrew Susman, ICSC Chairman and President, Studio One Networks
October 20th, 2009

Welcome to the first-ever ICSC Summit. Studio One is proud to sponsor this event, and I would like to take a moment to thank our media partner, Pheedo.

More importantly, thank all of you for coming. As thought leaders, we really appreciate you being here for this discussion. You have the opportunity to shape the syndication business at a turning point. I encourage everyone to share their knowledge, explore the issues and think about better ways of doing things.

At a minimum, everyone will gain knowledge as a result of their participation today. And the best that can happen is we will leave here with tangible solutions to make the Internet better for advertisers, publishers, content creators and -- most importantly -- users. And hopefully, we will all make some new friends.

Internet content syndication is an industry that is not yet well known. However, it has the potential to solve some of the most critical issues facing the Internet today.

Until recently, Internet ad revenues were growing very fast. But even before the recent slight downturn, the number of Web sites, not to mention pages within them, was far outpacing the advertising dollars available to sustain them. In 2008, Internet ad revenues grew by more than 10 percent -- but the number of Web sites grew at double that rate, up 20 percent to 186 million. Then it grew faster; as of July it was up to 239 million -- a 27 percent increase -- even as ad revenues declined by 5 percent.

Numbers like these are the basis for Bob Garfield’s “Chaos 2.0” scenario. While the Internet is contributing to the decline of older media by drawing away its audiences, it cannot replace them in marketers’ media plans because it is simply too fragmented.

So we have the potential for a crisis in the Internet that is similar to that being faced by older media. Audience fragmentation leads to insufficient ad revenues to fund content creation.

That is leading to a call, both within the Internet and without, for users to step up and pay for the content they consume. But the Internet audience is famously averse to paying for content, so for most providers, advertising is the only recourse.

So what is Internet content syndication? And how does it help us deal with these problems? It is an Internet version of a system that has been used in other media -- since 1768 in the Journal of Occurrences which was syndicated by a group of Boston Patriots. In fact, it is also used in other industries. It is based on a simple notion -- what one cannot afford, many can by pooling their resource.

Newspapers have long had syndicated columnists and comics. Syndication’s greatest gift to the newspaper has been that it gave small-town newspapers and their reader’s access to big time talent. In television, too, the syndication of shows to local stations has always been the primary source of profits for the major TV studios.

In the Internet, syndication fulfills the same function, giving web publishers access to high-quality content that they could not afford to create themselves. As with other media, Internet syndication involves content being distributed across multiple destinations in order to aggregate a large audience. However, it has some characteristics that are unique to the Internet. In fact, a major reason for the creation of the Internet Content Syndication Council has been to cut through the confusion concerning what is, and what is not, Syndication.

"Internet content syndication is the controlled placement of the same content on multiple partnering Internet destinations"

There are some key words there. "Controlled Placement" means that the content itself in placed and presented on the destination sites. Syndication is not linking; rather, it is giving -- giving the publisher valuable content for his own site.

"Partnering Destinations" is the other crucial distinction. Partnership is at the heart of Internet Syndication. It means that the content owner has entered into agreements with the destination Web sites in which each provides value to the other. The publishers get high-quality, often professionally produced content that will attract and keep viewers. In return, they remunerate the content owner in some way – either by paying a license fee, sharing ad revenue, or carrying advertising sold by the content owner.

We have set up today’s meeting to look more deeply at some of the issues I have touched on. In our first panel, we will hear from some major advertisers who use Internet syndication. We will also get new information from research expert and winner of the Advertising Research Foundation Great Minds Award Bill Harvey. In our third panel we will look at different revenue models -- licensing versus advertiser-support. Then we will go deeper into the issue of viral versus syndicated distribution. And finally, at our lunch panel, we will debate user-generated versus professionally-produced content.

It is our hope that you will come away from today’s conference with a better understanding of what this industry is, and how it can be a powerful generator of the original content that the Internet needs to remain vital. Again, thank you for coming, and I encourage you to get involved, ask questions and help us come up with solutions to improve the quality of information online.