AKAMAI ® WHITE PAPER

Best Practices In Digital Media Delivery

Executive Summary
At the height of the Internet bubble, media and entertainment (M&E) companies
glimpsed a promise of the business opportunities afforded via the Internet.
Unfortunately, most companies were unable to profit online for a variety of reasons:
too few consumers were willing to pay for content, security technologies were immature
and ineffective, and Web site technology development and maintenance costs were
too high for companies operating on razor-thin margins. In 2004, however, profitable
online business models are becoming a reality.

Increased broadband penetration, consumer willingness to purchase music, videos,

songs and other content online, advances in security technologies, and lowered digital
media distribution costs have combined to enable new revenue-generating
opportunities.

With real potential for a profitable online business, M&E companies are now trying to
define the business model that will generate the most margin and offer them a competi-
tive advantage. But not all the challenges have disappeared: companies must experiment
with online business strategies while minimizing their technology investments. All this
adds up to an exciting and sometimes intimidating time for M&E companies.

Content Delivery Networks (CDNs) enable M&E companies to deliver large downloads,
music, and video files and streams over the Internet, and thus realize the potential of
digital media and streaming distribution.

This paper explains Akamai Technologies’ CDN, which offers both standard CDN
technology and numerous advanced technologies, allowing M&E companies to
confidently deliver and generate revenues from their online content while realizing
tremendous return on their existing e-business infrastructure investments.
AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

Table of Contents

Section 1
Broadband-Driven Digital Media Opportunities . . . . . . . . . . . . . . . . . . .1

Advances in Security Technology ................................... 1

The Costs of Digital Media Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

How to Succeed with Digital and Streaming Media . . . . . . . . . . . . . . . 3
A Practical Solution—Content Delivery Networks ................. 3

Akamai’s Solution—Delivering Digital Media Success ............. 4

Section 2
Why Media and Entertainment Companies Choose Akamai ...... 5

MTVi’s Online Properties Reach Profitability with Akamai . . . . . . . . . . . . . . . 5

Seattle Times Boosts Viewership and Revenues with Akamai Services . . . . 6

MSNBC Offers Huge Opportunities for Advertisers . . . . . . . . . . . . . . . . . . . . . . 6

FOX Sports Networks Keeps Site Visitors and Advertisers Satisfied . . . . . . . 6

Section 3
Benefits of Using Akamai’s Solution ............................... 7

About Akamai ....................................................... 8

AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

Section 1

Broadband-Driven Digital Media Opportunities

Over 50% of U.S. and international households now enjoy broadband access, with usage in the
U.S. alone tripling over the past three years.1,2 As broadband access continues to grow by double-digits in
the U.S. (growing 47 percent year-over-year3), site visitors are increasingly taking advantage of the ability
to consume rich media without suffering through the long waits associated with dial-up connections.
Access to high-speed, always-on Internet connections has heightened the expectations of consumers,
who now seek an engaging online experience. A recent study of broadband consumers found them
spending more time online, more likely to participate in high-bandwidth activities such as downloading
and purchasing software and music, and spending more money online than their dial-up counterparts.4

Broadband users spend more

money on digital media

Advances In Security Technology

Many M&E companies did not initially dare to engage in online business due to threats and fears of
intellectual property theft and a poor online consumer experience. However, recent advances in security
technologies and the acceptance of their use by consumers have contributed to the growing numbers
of media distribution business models. Music fans purchased and downloaded more than 100 million
songs from the iTunes® Music Store in less than one year, resulting in $100 million in sales.

“ Sales of digital music are projected to hit $270 million in 2004, more than double
from last year, with sales of online music expected to hit $1.7 billion by 2009.”
—Jupiter Research

These security technologies, most notably digital rights management (DRM) provided by companies such
as Apple, RealNetworks, and Microsoft, offer more protection than previously allowed. By ensuring a
connection between a song or video and a single PC or other computing device, DRM effectively prevents
hyper-distribution, that is, illegal and indiscriminate redistribution of digital media assets.

“ Half of online consumers use their PCs to listen to music or watch videos,
and most prefer downloading to streaming.”
—Forrester Research

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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

Hyper-distribution is a key concern of the major studio houses. In early 2004, the Recording Industry
Association of America (RIAA), on behalf of the major record companies, filed suits against over 500 individu-
als—including students at 21 universities—who were offering copyrighted music files for free over peer-to-
peer networks (so far, the RIAA has filed more than 2,500 lawsuits against users who have misused file-
sharing programs). To date, four of the most recent lawsuits have ended with the offenders paying fees
ranging from $2,000 to $10,000.5
With security technologies effectively minimizing the risk of intellectual property theft, studios are now
increasingly open to online distribution of content. And site visitors are just as eager to consume it, presenting
companies with the possibility of generating revenues from subscriptions, pay-per-use, and advertising. Recent
online media successes, such as iTunes and college digital music subscription services (e.g., Ruckus Network),
have demonstrated the potential for safely generating new revenue streams. With others such as Yahoo!
(which recently acquired MusicMatch) and Real, entering the music download space, analyst expectations for
growth in these areas are high: Jupiter and Forrester Research both predict that the music and video down-
load and subscription business will increase 100% per year over the next few years.6,7 Other innovative M&E
examples include ESPN’s Motion service which inserts 10- to 15-second commercials into video clips, and
the use of exclusive online content to supplement the Big Brother TV show as a way to engage viewers and
promote show loyalty. At $20 per thousand streaming advertisement impressions delivered, both of these
businesses can generate revenues through their onsite advertising venues.8

“ The market [for both streaming audio and video advertising] is forecast to grow by 121%
in 2004 to $230 million dollars, and by another 56.5% in 2005 to $360 million dollars.“
—AccuStream iMedia Research

The Costs of Digital Media Distribution

These trends have led those in the music, video, news and entertainment business to see that the Internet
provides a viable business channel. The companies that implement a sensible business model that integrates
with their offline strategies are likely to increase revenues substantially. For instance, the online music
market alone is projected to account for $4.4 billion in revenues by 2008.9

“ expect to see the expansion of digital and online subscription services not only begin
to lift the music industry…, but also positively impact segments such as film, video games
and business information.“
—Wayne Jackson, Global Leader of PricewaterhouseCoopers’ Entertainment & Media Practice

As recently as two years ago, the costs of hardware and bandwidth required to support an online distribution
strategy were so high that they effectively eroded any profit margin. However, the costs have come down to
such an extent that they now account for only 1-5% of total achievable revenue. This improvement extends
to the distribution of larger media files, such as movies that tend to be 200-300 times larger than music files
and therefore 200-300 times more expensive to deliver. Now the associated hardware and bandwidth costs
are only 5-10% of the overall revenue.
However, while online distribution costs now appear reasonable, developing the right business model can
prove challenging. As companies develop an online business plan, they must experiment with various business
models and therefore incur a variety of additional costs associated with the creation, transformation, licensing,
and management of digital movies, videos, songs, and articles. At the same time, companies often need to
overprovision hardware and software to ensure they can serve peak traffic caused by promotions or new
releases. Addressing all these requirements can result in a significant investment in both time and infrastruc-
ture – an investment that may prove misplaced should the company’s digital media business model change.

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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

While these challenges may seem daunting, M&E companies cannot afford to ignore the online channel,
as it will likely prove to be the most effective way of reaching a new, younger audience that increasingly
turns to the Internet for media and entertainment. “More than any other age group, 18 to 34 year olds
consider the Internet to be one of the most important sources of entertainment available to them. They
use the Internet both as a primary source of entertainment and as a resource for entertainment news
and information…Beyond just visiting entertainment and music sites, 18 to 34 year-olds are more likely to
engage in downloading, sharing and burning music and videos online and are more avid consumers of
online video content than any other age group.”10

“ The Internet has surpassed television in overall time spent to become

the primary medium of choice among the young“
—-Harris Interactive

How to Succeed with Digital and Streaming Media

No company can successfully operate a digital distribution business if its infrastructure can not support
the unpredictable demands of its online audience. Unfortunately, many M&E companies get bogged down
in the details of maintaining an infrastructure to support their digital distribution strategy. It is neither
strategic nor cost-effective to procure and install hardware and software, manage a multitude of vendors,
and negotiate bandwidth and hosting contracts.
The goal is to identify a cost-effective means of delivering media assets over the Internet, one that
enables M&E companies to turn a profit. For instance, if a site offers $0.99 music downloads, the online
distribution costs per song would ideally not exceed 5% of the sale price. At the same time, M&E
companies need a solution that enables them to maintain the flexibility to experiment with business
models—one that requires a minimal investment in infrastructure hardware and software.\

Revenue-generating opportunities
• Ad insertion: Enables targeted advertisements to be inserted into on-demand or
live audio and video.
• Subscription: Provides content at pre-defined intervals in exchange for pre-payment.
• Pay-per-use or view: Allows one-time viewing or use of video or audio files for a fee.
• Syndication: Supports distribution of licensed content across multiple Web sites.
• Territorial rights: Limits geographical content distribution via licensing rights.
• Digital rights management: Protects and encourages payment for digital content.

A Practical Solution—Content Delivery Networks

Whether they're designed to drive advertising impressions, ad click-through rates, or requests for paid
content, online business models require an infrastructure that supports disparate end user geographies,
large file sizes, high traffic levels, spiky or inconsistent traffic patterns, and inherent Internet weaknesses.
As a result, many M&E companies are turning to the capacity and digital distribution capabilities provided
by content delivery networks (CDNs).

Aberdeen analyst Kent Allen theorizes that "with so many consumers now having 4-5 years
of online experience, today’s buyer is smarter, faster and more demanding than ever."

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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

As M&E companies evaluate the various CDN providers, they should ensure the solution can:
• Guarantee a quality storefront or homepage experience. A rich and engaging experience
supported by an always available and highly-performing Web site is critical to keeping visitors on
the site, where they can purchase goods or click on advertisements. According to Jupiter Research,
site performance dramatically impacts the ability to capture online sales—a 50% degradation in
site performance can lead to a 25% reduction in paid conversions. The site must provide good
performance for all visitors, regardless of their location. It must scale to handle high traffic load
during peak seasons and events, and it must be available 24x7, no matter what the network
conditions on the Internet. Equally important, companies must protect their sites from threats such
as hacker attacks, viruses, worms, and intrusions without provisioning cost-prohibitive technology
that cripples site performance.
• Provide services that help secure content and generate revenues, e.g., DRM and secure
streaming. To safely deliver subscriptions, pay-per-view files, and exclusive online content, M&E
companies need security technologies that prevent theft of intellectual property and protect against
media rights violations. These technologies should also enable businesses to charge users for the
right to access the content.
• Offer a cost-effective and flexible alternative to infrastructure buildout. Rather than building
out and managing infrastructure, M&E companies’ efforts and resources are best spent developing
content and promotions and events that drive traffic to the site. At the same time, these companies
need an infrastructure that offers the flexibility to support a wide range of digital media business
models. M&E companies should seek out a CDN that enables them to extend their existing infrastruc-
ture, limit capital expenditures and oversight, and instantly accommodate changes in business strategy.

Akamai’s Solution—Delivering Digital Media Success

Akamai’s digital media solution helps address these challenges, enabling M&E companies to extend their
online architecture to the Internet, and meet the growing needs of consumers in a cost-effective manner.
Specifically, Akamai’s solution offloads centralized Web infrastructure and ensures that all digital media is
served without fail from Akamai’s network of 15,000 servers. This solution, developed based on experience
with leading media and entertainment companies worldwide, supports the ability to respond rapidly to
shifts in market conditions and consumer demands.
By extending their Web site to the Akamai network, M&E companies can deliver all content types—HTML,
images, dynamic content, software and document downloads, secure content, personalized content, and
streaming media—close to requesting end users, while leveraging the network’s ability to absorb peak
traffic. Online applications are distributed over this global network to help ensure that critical storefront
processes are never interrupted. And the network inherently masks customers’ Web sites from external
attacks that can lead to frustrated users, a damaged brand image, and loss of critical assets and revenue.
The result for each Web site is higher availability, superior performance and protection, and greatly
enhanced scalability.

The ROI of Akamai’s Solutions

• 92% increase in advertising impressions (news site)
• 100% uptime for season opener while other sites failed (sports news site)
• 91 million page views on September 11, 2001 (news portal)
• 300% increase in video stream duration (broadcast site)
• $1.2 million saved in infrastructure buildout (news site)

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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

Section 2

Why M&E Companies Choose Akamai

Akamai enables the successful online media distribution initiatives of leading companies such as Apple
iTunes, CinemaNow, Internet Broadcast Systems, MSNBC, MTV, The Seattle Times, Warner Music, and
Yahoo!. In fact, Akamai has delivered some of the largest Internet-based media events in history, including
all Major League Baseball games on MLB.TV, uninterrupted coverage of the September 11th tragedy by
major online news sites and portals, and New Line Cinemas' The Lord of the Rings movie trailer, which
prompted 6.6 million downloads in one week.

“ There is tremendous interest in baseball and the content of baseball, and we are looking
forward to the start of another exciting season. Our relationship with Akamai supports
our efforts to provide baseball fans all over the world with a consistent high-quality online
experience at all times. MLB.TV features over 250 live games per month. Akamai’s proven
network is ideal for handling this extensive amount of content.“
—Joe Choti, Senior Vice President of MLB Advanced Media

The following case studies are just four examples of the many Akamai M&E customers that have realized
success via the Akamai network and digital media solution.

MTVi’s Online Properties Reach Profitability with Akamai

MTV Networks generates revenues by serving ads and selling branded merchandise across its
Web properties. As a high-visibility company known for being on the cutting edge, MTV Networks
frequently hosts online events and cannot afford to have any of its sites crash. To meet its needs
for a cost-effective, long-term infrastructure plan that could accommodate unpredictable growth,
MTV Networks implemented Akamai’s EdgeSuite® service in June 2002 across more than a dozen of
its most highly trafficked Web sites, including mtv.com, nick.com, vh1.com, sonicnet.com, and
tvland.com.
Results:
• No additional online technology spending required for past two years to accommodate growth
• Staff can now focus on strategic business initiatives

“ We couldn’t be more pleased with our experience using Akamai’s services. Not
only has MTV Networks been able to save money, but our businesses are reaching
profitability— this is due in large part to no longer having to sink money into an
infrastructure that doesn’t meet our needs. Instead, we can use the Akamai
EdgePlatform to extend and control our infrastructure to deliver the innovative
content we’ve become known for.“
—Nick Rockwell, Manager, Interactive Technology and Software Development,
MTV Networks

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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

Seattle Times Boosts Viewership and Revenues with Akamai Services

seattletimes.com extends the reach of The Seattle Times newspaper, one of the top 15 newspapers
in the country. As a source for 24/7 online information and news updates for an average of over
1.1 million unique visitors per month (as of September 2004), the site offers a compelling advertising
venue to a variety of businesses. To meet audience and advertiser expectations for “delivery without
failure”, the Seattle Times’ IT department knew it needed an incredibly robust Web infrastructure
to meet the huge demands and unexpected traffic spikes that often accompany large news events.
It chose Akamai to deliver the seattletimes.com Web site with increased performance, reliability,
and scalability.
Results:
• Supported more than double the number of unique viewers that typically access the site
• 92% increase in ad impressions led to higher revenues

“ This migration [to Akamai EdgeSuite] allowed The Seattle Times to get out
of the ISP business and substantially cut bandwidth and engineering costs.“
—Kyle Getz, Systems Support Manager, New Media, The Seattle Times Company

MSNBC Offers Huge Opportunities for Advertisers

MSNBC has created a premier online and interactive news destination, MSNBC.com, which delivers
the best of NBC News, MSNBC Cable, CNBC, and NBC Sports. Its sophisticated audience consumes
streaming video, and engages in polls and live votes, chats, and message boards. The site offers
customized sponsorships, including streamed concerts, and rich media advertisement opportunities,
allowing advertisers to reach an audience of over 20 million per month (as of June 2004).
Results:
• Continuous site operation ensured uninterrupted advertisements
• Flawless handling of unprecedented 91 million page views following September 11th tragedy

“ [if MSNBC had opted to build out its site infrastructure] We would have had to
have ten times the capacity sitting idle for 364 days of the year, which is ridiculous.
Akamai is a very elegant solution when compared to throwing money at hardware
that you’d have to leave 90% turned off most of the time. Using Akamai EdgeSuite
means that MSNBC.com is there for every one of our viewers, every minute of
every day. Akamai is critical to our viewers, which translates ultimately to the
success of our business as the leading online news source.“
—Steve White, Chief Technology Officer, MSNBC

FOX Sports Networks Keeps Site Visitors and Advertisers Satisfied

The FOX Sports sites cater to millions of enthusiasts seeking information on sporting events and
news, many of whom are driven to the site from “push-to-Web” promotions on the FOX Sports
television station. While FOX Sports markets directly to registered site visitors, its well-trafficked
site provides an attractive audience for advertisers.
Ensuring 100% uptime and performance for FOX’s event-driven online business is critical, since a
flawless online experience results in registered users and increased marketing opportunities. Akamai’s
EdgeSuite service allows FOX Sports to dramatically simplify its planning for sporting events, without
worrying about under- or over-spending, slow-loading pages, or the site being unavailable to users.
With the EdgeSuite service, FOX Sports can maintain a more uniform Internet infrastructure and retain
total control of its content.

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Results:
• Expected increase in converting visitors to registered users ultimately translates into greater revenue
• Near-term reduction and future avoidance in infrastructure and related management costs that
would otherwise be required to support continued business growth
• Supported nearly four times as many site visitors as in previous years for the 2003 NFL season
opener, and served nearly 6 million page views during the game
• Experienced 100% uptime, while nearly every other competing sports Web site experienced
performance issues during the 2003 NFL opening weekend
• Saved approximately $150,000 in scaling costs during the NFL opening weekend
• Increased traffic has also led to increased advertising and fantasy-league revenues

For more details on these and other Akamai customer successes, please see
http://www.akamai.com/en/html/customer/case_studies.html.

Section 3

Benefits of Using Akamai’s Solution

Many successful organizations have realized the benefits of outsourcing a variety of non-core capabilities
to experts. By extending their existing Web infrastructure via Akamai’s global network, M&E companies
can focus on strategies, such as devising successful business models, instead of expending resources on
building and worrying about infrastructure. At the same time, taking advantage of the Akamai network
enables these companies to reduce bandwidth, Web, and application server capital expenditures and
maintenance costs, which contributes to a simplified Web infrastructure and enhanced profit margins.

The range of capabilities afforded by the Akamai network and digital media solution allow M&E companies
the freedom and flexibility to implement any online business model without investing large amounts of
capital. With Akamai, M&E companies never have to worry about being victims of their own success—the
capabilities and capacity of the Akamai network ensure that even when traffic surges due to developing
news and promotional events, Akamai delivers a high-performing user experience that drives online
conversions and advertising impressions.

As broadband access and online media consumption grows, companies must maintain a nimble core
infrastructure that allows them to adapt rapidly to change and be prepared to take advantage of promising
revenue-generating opportunities. Akamai provides the necessary worldwide network with advanced
features to help ensure high performance, secure digital assets, and an always available Web site to help
M&E companies reduce costs, enhance the consumer experience, and increase revenues.

Advantages of leveraging an on demand, online channel

• Multiple channels result in less dependence on any single channel and support
multi-channel advertising deals
• The online channel is an important part of integrated marketing efforts and an
important consumer touchpoint
• New channels enable new business models and incremental revenue streams 11

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AKAMAI ® WHITE PAPER Best Practices In Digital Media Delivery

About Akamai
Akamai® is the global leader in distributed computing solutions and services, making the Internet
predictable, scalable, and secure for conducting profitable e-business. The Akamai on demand platform
enables customers to easily extend their Web operations—with full control—anywhere, anytime,
without the cost of building out infrastructure. Headquartered in Cambridge, Massachusetts, Akamai
serves hundreds of today’s most successful enterprises and government agencies around the globe.
Akamai is The Business Internet. For more information, visit www.akamai.com.

References
1.Nielsen/NetRatings, U.S. Broadband Connections Reach Critical Mass, August 18, 2004
2.Federal Communications Commission, New Figures Show Broadband Deployment Accelerating in the U.S.,
September 9, 2004
3.Nielsen/NetRatings, U.S. Broadband Connections Reach Critical Mass, August 18, 2004
4.Forrester Research, Broadband Produces Smart Shoppers, February 20, 2003
5.USA Today, College students sued over music downloads, March 23, 2004
6.Jupiter [Alberto—need the name of this Jupiter report]
7.Forrester Research, Commentary: For downloads, things are looking up, February 4, 2004
8.AccuStream iMedia Services, Streaming Advertising and Subscription: A Complete Market Analysis 2003-2005
9.PricewaterhouseCoopers, A New Era for Content: Protection, Potential, and Profit in the Digital World, 2003
10. Comscore, Marketers Take Note: The Elusive 18-34 Year-Old is Habitually Online, March 29, 2004
11. Yankee Group, Digital Media Shakes Up Traditional Cable Programmer Market Dynamics, August 14, 2004

© 2004 Akamai Technologies, Inc. All Rights Reserved. Reproduction in whole or in part in any form or medium without express written permission is prohibited.
Akamai and the Akamai wave logo are federally registered marks. EdgeSuite is a registered trademark. EdgeComputing, EdgeControl and SureRoute are Akamai
service marks. Other trademarks contained herein are the property of their respective owners. Akamai believes that the information in this publication is accurate
as of its publication date; such information is subject to change without notice.

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Akamai Technologies, Inc.

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