SeeSaw Needs To Look At Spotify For Inspiration & Ideas

Maggie Brown of the Guardian asks a very pertinent questions about the business model of SeeSaw, the latest free video on demand service to come to the increasingly crowded UK market.

Seesaw will offer 3000 hours worth of programmes that will be streamed for free and is planning to offer a pay-per-programme feature from June 2010. It is still too early to say what the price per view will be but it is likely to be much less expensive than what Apple charges, on average £1.50.

Should Seesaw follow Spotify's path, one can expect it to gradually increase the amount of content on the service (an additional 2000 hours of premium programmes will be delivered soon), offer a HD version down the road, DRM-wrapped downloads as well as offline viewing.

We can even dream of having a mobile version of SeeSaw one day and even an unlimited, Spotify-like package. However, all this is unlikely to happen because of the costs involved due to the sheer size of the files.

Thinkbroadband says that a low quality video running for an hour would amount to roughly 200MB with the high quality version swallowing around 540MB, that's tens of times bigger than an audio file from Spotify.

Then there's the revenue generated by advertising which as Ms Brown highlighted, is painfully low compared to broadcast television, although the return on investment is likely to be higher because it can be targeted.

Furthermore, Spotify is partly owned by the labels themselves who invested in the free music on demand service at a very early stage, back in 2008 and purchased 17.6 percent of the company altogether. That's not the case for Seesaw who will not benefit from any concessions from the BBC or Channel4.

Seesaw is owned by Arqiva which purchased what remained of Project Kangaroo when it was unceremoniously dumped by its former owners after it failed to pass the Competitions Commission's test. (ed : Arqiva is also one of the five partners that currently handle Freeview).

All this means that Seesaw will be facing an upward hill in its journey towards profitability, one which will be almost entirely driven by the pay per view model.

The problem for Seesaw though is that it will burn money faster than Spotify even if Arqiva's size (2300 employees and £800 million worth of revenues per annum) means that it has at least one year to prove its value.