Web TV / IPTV / DTV

Sat down this evening to have a good play with Phreadz, a video based social network (think Twitter with Video) now that its ourt of alfalfa mode and into closed beetroot mode. I've looked at Seesmic and Qik before, which are in the same space, but - in my opinion - Phreadz is easier to use than Seesmic, and more flexible than Qik as it takes mobile media in and also a whole lot of other input. It takes media from a huge range of sources - live webcams, most media file types (audio, photo, video) , Youtube, Seesmic and Qik of course, Blip.tv, and Slideshare. It also takes mobile input via a Phreadz email address, but I didn't have time to test that.

I gave it a fairly non-trivial use case - taking input from a camcorder via a laptop (a standard mobile mediahead config) and allowing it to be used as:

- webcam,
- live camcorder
- stored media file playout device

In addition I tried it out with a Slideshare presentation.

You can see the camcorder as videocamera taking a video of the Phreadz screen in the embedded file below:



Net net it performed very well - I had no problems getting it to take the camcorder - it just saw it and started to record from it. Ditto an uploaded Youtube video, a saved piece of my video, and real time feed from the camcorder-as-webcam and camcorder-as-TV camera. Ditto Slideshare.

The dynamics of using it as a social network were also fairly simple and intuitive - replying to comments, following friends, navigating the menus etc. Its very quick as well.

Next steps - I'm going to give it 3 more things to deal with:

- a composite media file that I pre-mix
- a mobile video upload
- an audio / slideshare composite media

As I noted the first time I looked at Seesmic, I'm not convinced about VideoTwittering - but this platform can do so many other things. Its quite interesting - after an evening playing, there are quite a number of other things I can imagine doing with it. As with Twitter, the unified comms nature and extreme simplicity lend themselves to high adaptability

There are two stories about the Rocketboom / Sony deal in the feedreader tonight. One is this from TechCrunch:

Rocketboom, the daily video blog, is turning over its distribution and ad sales to Sony Pictures Television in return for a seven-figure guarantee plus a share of revenues. Rocketboom will be distributed on Sony’s Crackle video site, as well as across other Sony platforms such as the PS3, PSP, and Bravia I-Link TVs.

Rocketboom founder Andrew Baron says he went with Sony because of Sony’s distribution strengths and the deal allows him to maintain control of the business. (Whereas selling the business to another media buyer, such as WallStrip did to CBS a year ago for $5 million, would have required him to give up his baby). The deal is structured as a distribution and advertising deal, and sounds like it could lead to a closer relationship or outright sale if things go well. But if they don’t, Rocketboom would regain complete control of distribution and ad sales after the contract expires.

And then there is the Valleywag story:

...it's the tale of Andrew Baron's Rocketboom, an online-video startup held up, inexplicably, as an example of the potential of the medium. Sony's seven-figure deal to distribute Rocketboom is seen by some as evidence that the industry is growing up. But what it really tells us is that having access to a credit line backed by Daddy is as sure a recipe for success online as it was in the old Hollywood. The exciting plot twist: Baron's father was not always happy about the arrangement. We've only learned how daddy-dependent Rocketboom was because Fred Baron loaned his son's company a total of $810,300.40, and then took it to court in order to force repayment last year. If you think it's strange for a father to go after his own son's company in court, then you don't know the elder Baron.

Apparently, Amanda Congdon (ex RB anchor) is suing to get her mitts on the former but intervened to mitigate the latter...it gets better and better! I can imagine a new Web TV startup using this as a plot for a Webcom.....

Brought to you in the interests of balanced reporting (and a love of salacious stuff.....) . Don't you love the New Olde Media

I recall a few years ago, we were doing a piece of work on re-engineering the "VoD" market (nowadays it would be called VoD 2.0 I guess). Anyway, it quickly became clear that having everybody buy a PVR was economically nuts, compared to centralizing it as a VoD type service.

The reason this was not done was commercial risk - any organisation that was recording the service for its customers was liable for legal action, never mind the opprobrium that the Ad industry would heap on them.

So I read today in the NYT that the law has been overturned, you now can run a PVR webservice.

The United States Court of Appeals for the Second Circuit in New York said Monday that the so-called network DVR, which records programs on a faraway computer rather than on the device itself, does not violate copyright law.

The ruling, a turning point in a two-year legal battle, represented a major victory for Cablevision, which wants to offer network DVR services through its existing set-top boxes. It also dealt a significant blow to the media companies that had sued to stop the technology, which include Turner Broadcasting and the major TV networks.

Expect appeals all the way to the floor of the Oval office though, it will clearly be a time for lobbyists to earn their lunch money.

One the thing that has changed in the time since we did the work is that PVR penetration has moved from c 5% to c 25% of US homes, maybe that made the incumbent's arguments harder to justify. This should drive it far higher - 50%+ over 3 years we would estimate roughly.

An interesting thing to watch is what will companies do about Ad skipping - the whole interactive, online advertising industry has come up from near-zero since when we looked at this the last time, so there are quite a lot of interesting potential opportunities......which will be needed, because as ell as recording shows, PVR's are still used as Ad-Avoidance devices.

Interesting piece by 1938 Media's Loren Feldman essentially signalling he is thinking of logging off from Technology videoblogging as the sector is starting to bore him. Feldman has stirred things up just a tad in the year or so he has been tweaking various tech beards. He was an early adopter of video as his blogging medium and this differentiated him in his entrance into tech sector blogging - a delicious irony of its own, really..

The "so what" here is more that this is one of the signals of the zenith of the "Hype Cycle" 2.0. When smart media rats start leaving ships, its time to pay attention, as after the zenith of the hype cycle comes the slide into the slough of despond as people realise that the early predictions are not going to be fulfilled. (See hype cycle below).



The internet is no stranger to that cycle, and while Loren is right when he says that Twitter or any one Web 2.0 or 3.0 or whatever product won't change the world, I think he is wrong when he says the Web / Net won't change the world. The 'Net is a fundamental comms revolution, and those have in the past changed the world fairly radically.

This is alluded to in one of the comments on the piece:

Yeah, time to use the tech to talk about something *else*. Like race, politics, culture as you say. Keep dissing the tech and pricking the pricks’ balloons but use the tech to go further otherwise you are like Scoble interviewing your iPhone and not the person.

In other words, the current generation of "2.0" technology is becoming settled - reliable, predictable etc - and, well, boring. That layer of bedrock is done, and people are using it for the next layer. As another commentator notes:

The media game is a vast territory open for the taking, and now that you’ve honed your skills and proven your mettle with tech and the “zero commenting” crowd, think about how this can be just another arrow in your quiver, bro.

To paraphrase Churchill, this is not the end, or even the beginning of the end, but its the end of the beginning. In a nutshell, transaction costs of communication have gone down 2 orders of magnitude in c 10 years, and that shock is only starting to be felt. The broadband media industry proper is just starting ( "Web 2.0" is just one of its early evolutions ), and that as a game dwarfs the changes in the print and music media markets seen to date.

YouTube users are the losers in the carve up between YouTube (Google) and Viacom. The NYT is one of many reporting the issue, but this says it well:

the judge’s order, which was made public late Wednesday, renewed concerns among privacy advocates that Internet companies like Google are collecting unprecedented amounts of private information that could be misused or could unexpectedly fall into the hands of third parties....

....Google’s lawyers asked their counterparts at Viacom to agree to allow Google to remove information from the data that could potentially be used to identify individuals.

The legal judgement is a red herring - this is the fundamental issue: there is no good reason for Google to collect the amount of user data it does, or retain it for as long as it does, in order to serve a YouTube video. By doing so it puts its own users at risk (not just from legal challenges but from all sorts of rogue behaviour), and thus if it is not yet Evil, it is far from being a Good Thing.

For a variety of reasons* I was unable to attend 2gether08, but I have been able to be a Virtual Participant so far via a number of channels:

Firstly, the Mogulus Web TV feed - even when I can't watch it as I'm on other tasks, I can listen in. A switchable TV/ Radio service

Secondly, the Summize service taking feed from Twitter picking up the hashtag #2gether08

Thirdly. my personal backchannel - via Twitter, email, Skype - there are friends of mine there and we are batting comments back and forth.

What has been quite interesting is the experience of being able to not just consume the streamed media, but to comment and chat online to some of the people there in real time by using Twitter etc - it's been like passing a comment to the person sitting next to you.

This afternoon and tomorrow morning I have leaving ceremonies at my kids' school to attend, somehow I think that will be a major challenge to listen to 2gether08 live - not because of the technology, mind you - more the expectations in the situation. But of course, the media has persistence so I can time shift it.



* Work etc

From the Times comes more ammunition for the view that we have held for some time, ie that making money from YouTube won't be easy, and the ROI is hard especially given (i) what Google paid and (ii) that there was no ability to claw it back with performance based earnouts:

Google has said that it is still unsure how to make money from YouTube, the enormously popular video-sharing website it owns, but hopes to be able to do so soon.

Eric Schmidt, the search giant's chief executive, said it "seemed obvious" that Google should be able to generate "significant amounts of money" from YouTube, on which hundreds of millions of videos are watched every day, but that as yet it hadn't figured out how to go about it

Unlike much of the rest of Google's operations (and unlike many other Web 2.0 companies), YouTube has to ship a lot of bandwidth, and that costs real money. A Google search costs pennies, but a Youtube video serve probably costs not much shy of dollars (if not more), and there are 130 million odd per month. Adsense rates of recovery just won't cover that sort of cost per user, they are going to have to get CPM levels from a YouTube play.

Google has very deep pockets, so its not a financial problem, but every month that YouTube succeeds in growing increases the drain on the Googlepockets.

Ah, the penalties of FreeConomics - it eventually bites the *rse of the hand that feeds

Update - interesting take here by Mark Cuban on how services such as Hulu hitch a free ride on YouTube.

There is an article on TechCrunch today asking if YouTube is building market dominance or building a business. The essential argument comes from 2 conflicting datasets:

(i) YouTube is apparently 37% of all video watched, says Comscore
(ii) Youtube, with c $200m revenues, is only 15% of e-Marketers estimated $1.35bn Web TV ad market

In other words they are apparently only getting 40% the revenue per TV unit output than their legion of tiny competitors. How can this be, TechCrunch asks.

This gap could mean one of two things. Either YouTube is unable to make money from a large portion of its user-generated video inventory (advertisers want to stick to the home page and the safety of their own channels). Or YouTube just hasn’t turned on the money-gushing hose yet.

Actually, they are doing both - by building market dominance they are building a business.

Leaving aside the dubiousness of any forecast in this market (I'd happily divide e-Marketers numbers by 25%, after all they will in 6 months or so anyway ), or any assertions that YouTube is less sharp at extracting Ad revenue than competitors, I can't see why this is so surprising. Any model ever built of network economics shows that (i) if you can first achieve market dominance, you rule and (ii) Free is a great business model to achieve dominance, especially if it can be subsidised by very deep pockets - and with the exception of Microsoft, there is no one on the planet in the space who Google cannot outspend to subsidise this. No one VC backed outfit can come close.

Thus YouTube is highly probably using good old Freeconomics, funded by Google (see our paper here for a detailed look at FreeConomics) to give away more than the rest of the competition and go for market dominance. Once they get to Google levels of dominance I'm sure they will find that monetisation follows, strangely enough.

Opponents may cry foul, after all this is not that different to how Microsoft beat Netscape (but they haven't cried foul yet), ie by cross subsidy, but its realbusiness so unless a regulatory hand enters its unlikely to stop.

Whether its a good investment of $1.65bn by Google - ie whether its profitable to dominate the sector - is another matter entirely, the jury is still out there (literally with the lawsuit games ), but at Google's size its not a very expensive option to play.

Now that eBay has admitted they were a tad optimistic on Skype valuation, its clear Google feels it too can talk a bit about YouTube: From Nic Brisbourne:

I’ve been hearing rumours to this effect for a while now, but yesterday Eric Schmidt confirmed that YouTube isn’t exactly throwing off oodles of cash. Reported here on News.com and here on Sillicon Alley Insider.

I wish this were not the case for two reasons.

Firstly, everyone with an interest in the startup ecosystem wants to see more top-dollar transactions like the Google acquisition of YouTube and that will only happen if a decent proportion of the ones that have happened to date are deemed successes. Following ebay’s Skype writedown it has become even more critical that Google finds a way to make YouTube work

(At this rate we predict AOL will be in the confessional by Xmas 2009)

At the time we wondered if Google had considered the "DiY" business case rather than a highly priced acquisition - here was our deeply analytical approach which we did a bit later:

Broadstuff Biz Case (expurgated version*)

Cost of Service build - $1m
Cost of Operation before breakeven - $100m
Cost of "persuading" critical mass of YouTube UGC videos onto new service = $5 / video x 50 million clips = $ 250m (added to their content)

And if breakeven took longer than $100m, that's still a lot of headroom before picking up the tab for YouTube.

Bargain

Now we know that the deal was "strategic", but once done it has to make sense economically too (thats the rub with those strategic deals) and if they are turkeys, no amount of extra runway will help. Especially if the initial acquisition price is way, way too high - it changes from a Turkey on the runway to an Albatross round the neck.

In this specific case, Google is far too large to be on a wing and a prayer if YouTube can't fly, as Nic says the issue more that it has an impact on the valuation of the whole "Web TV" market development. And that issue now is how to find a way to make money in a world where there is so much video inventory looking for advertising that average CPM's will possibly fall to less than the fully loaded cost of transmitting the video in the first place.

This is brilliant!



Tip of wing to Media Influencer for pointer to it. Wait for the Q&A.....