Everyone in the Web 2.0 world hears news coming from companies like Youtube and Hulu on a seemingly daily basis.  However what most tech blogs fail to cover is the (for lack of a better term) unsexy part of the online media business.  These companies are uploading, managing and distributing millions of files on a global basis and are the invisible hand of online video.

Sparked by the ongoing explosion of audio, video, photos, and text being generated or converted in digital formats, the global market for digital asset management (DAM) solutions – software intended to capture, organize, store and distribute an organization’s digital content – is expected to pass the $1 billion mark in 2013.

I’ve had the chance to spend some time with a company that is one of these platforms, Vidshadow.  Vidshadow’s CTO, Atul Patel had this to say about the ’shadow’ of the digital media industry,

“There has always been an interesting gap between the consumer facing startups and the business services that sit behind them.  For instance, with airline search, Kayak and Orbitz utilize ITA Software for their data.  In a similar fashion, in digital media, the services companies focused on the backbone of the industry itself, such as digital asset management, encoding, content delivery, are apt to generate more revenue in the long-haul.  This is the same reason why most startups want to become ‘platforms’ — it gives them an edge to be more the backbone with more predictable revenues, than merely the dotcom consumer site trying to monetize with advertising.  In the digital space, this is what makes the likes of Ascent Media and Akamai far different than Veoh and Joost.”

According to ABI Research industry analyst Zippy Aima, there are a number of forces acting to drive this market to great heights, but DAM also has some significant challenges to overcome.

“Large quantities of digital media content require collaboration across all personnel and departments, from creation to delivery,” says Aima. “DAM systems’ ability to enable integration is driving demand.”

Until recently, the different operations concerned with rich media content were siloed and isolated. DAM solutions available today can integrate with existing third-party applications and systems, such as ERP and enterprise content management (ECM) applications.

Another factor motivating organizations to implement DAM is the bottom line: such solutions improve operational efficiency and demonstrate a clear ROI. Falling storage costs and ever-increasing bandwidth also mean that digital assets can be moved around with ease, and this capability too demands powerful management tools.

All that notwithstanding, there are still issues to be resolved. First among these is a lingering confusion about the very definition of digital asset management. “There is still a lack of clarity around defining the system,” cautions Aima. “DAM systems are often confused with ECMs. Currently, DAM is considered to be a subset of ECM.”