TV revolutions

Here we go. The Bill is merging PCs and TVs. Again (remember webTV?). And according to his Davos-speech, it will take just about five years to revolutionize the tube.

Of course, Mr. Bill is right. “I’m stunned how people aren’t seeing that with TV, in five years from now, people will laugh at what we’ve had,” he told business leaders and politicians at the World Economic Forum. Yes. What we‘ve had. Let’s not forget. Microsoft is the leading supplier of IPTV backend software for the leading telcos of the world. So it’s very much likely, that in five years, with Windows Vista being slowly replaced by its successor, Microsofts TV foundation will finally deliver on its promises.

Currently, IPTV isn’t any different from any other broadcasted multichannel tv. Same content, same linear delivery. That’s going to change. Slowly. Because for building huge proprietary interactive applications, you’ll need a huge audience. For building small proprietary interactive applications for micro audiences, you’ll need a huge incentive.

That’s where the blur starts. Huge IPTV deployments currently means a quarter million subcribers. That’s a lot if you have to start from scratch. But essentially equals the online population of Memphis, TN. And if you want to revolutionize a mass medium reaching billions of people all over the world, fueled by a global content industry, revolutionizing Memphis will be an important first step out of several gazillions.

That’s why The Bill is making a switch. To quote Reuters: The rise of high-speed Internet and the popularity of video sites like Google Inc.’s YouTube has already led to a worldwide decline in the number hours spent by young people in front of a TV set. Uhm. Interesting math. But Douglas A. McIntyre is making another point here: Using YouTube is actually a poor example of what is likely to happen. Making money from teenagers lip syncing music or farting in the tub is not likely to supplant content like the Superbowl. Unless, of course, Mr. Gates has odd tastes.

Broadband TV à la YouTube and IPTV à la Gates aren’t twins, separated after birth. It’s two completely different business models. Merging them will happen as soon as Microsoft publishes its software under a GNU license.
Let’s get back to the revolution. “Certain things like elections or the Olympics really point out how TV is terrible. You have to wait for the guy to talk about the thing you care about or you miss the event and want to go back and see it,” explains the software tycoon. “Internet presentation of these things is vastly superior.”

Yes, tv is (sometimes) terrible. An commented on demand features of live events would definitely be a very nice thing to have. But let’s put it like that. TV content is software, too. PC software and tv software a.k.a. broadcasting content are both increasing return businesses. Both are businesses because of the underlying intellectual property rights. But the major difference is: Windows XP has a life cycle of half a decade, at least. Events like the Olympics are good for month and a half. So a real Microsoft TV would be the only available channel, broadcasting a single event for a couple of years in a row, with monthly updates, thank you.

OK, unfair. Microsoft is in the enabling business. With Office being the premier User Generated Content-production suite. “Because TV is moving into being delivered over the Internet — and some of the big phone companies are building up the infrastructure for that — you’re going to have that experience all together,” sez Bill. Nope (No, he doesn’t have to care, as he’s delivering some building blocks for this infrastructure). But just because SAP data and YouTube-vids are delivered via IP, you will not be able to tune into TheWallStreetJournal.tv.

29.1.2007 von hubert Kommentieren

Being Disruptive

Here we go. At Hubert Burda’s DLD, Nicholas Negroponte is holding up a working model of the 100 Dollar Laptop. My little one is still (sometimes) toying around with her Barbie Laptop (which is a purple piece of plastic litter, disguised as a real computer). It’s disruptive, too. Because it blinks and squeaks all the time. Negroponte’s Kddie-Laptop looks like a hard plastic clam shelled soap dish with pointy ears, crossbred with a silly wind up toy. But  if you want to talk disruptive, this thing surely will become so. This is a mean machine. In about a decade, we’re going to see the first real effects all over the world.

24.1.2007 von hubert Kommentieren

The Trojan Boxes

A box is a box is a box. But those console boxes are really mostly trojan horses. With one exception. Let’s start with this one. Nintendo’s Wii is just about playing (and puts the web on your tv; a fascinating retro concept straight from the mid nineties). I’m not a gamer. But the Wii with its funny controller redefined the meaning of jump and run gaming. No hidden agenda here.
With Microsoft and Sony, it’s a bit different. Sony’s Playstation 3 is by definition a trojan horse. It’s a fully fledged Linux home workstation (be afraid, Microsoft, be a teensy-weensy bit afraid), doesn’t contain any root kits (it’s a Linux) and is Sony’s spearhead to make Blue Ray the DVD of the future. A single PS3 contains more computing horsepower than all Apollo missions combined, sucks as much energy as a the fully enlightened Empire State Building, and doubles as a virtual lawn mower (at least, it looks like it should). For Sony, it’s make or break. If the PS3 doesn’t deliver, Sony will commit corporate seppuku and you can scrap up its remains on eBay.

Microsoft’s XBox isn’t that big on hardware. It still could render Toy Story 1 in a single afternoon, alas: no real super computer here. Anyway, Microsoft’s idea of operating system fun has been building up a hodepodge of completely different pieces of software, which just share a crappy user interface. Just look at Windows mobile, which is a s bad as it gets (and look at the iPhone: it’s running OS-X, not some bonsai shaped look-a-like). Compared to the Winmob, the XBox is definitely top notch. And it’s a trojan, too. Yes, MS endorsed the HD DVD. But it’s just an add on. The real BIG THING is IPTV. After all, Microsoft is a major player in IPTV. And selling settop-boxes is usually as promising as selling ice cubes in Antarctica (after all, it’s phantastic promise is: you buy this box, and you’ll be able to watch tv. Duh. ) So here comes the XBox. And here it is in action.

16.1.2007 von hubert Ein Kommentar

Axel Ehssan Springer

OK, that’s a pretty German thing. Bernt von zur Mühlen asks in the media newsletter Medienbote: Where are the Web 2.0 Portal founders? Meaning: old media has had a tradition of reinventing itself from within. And gives some examples. Like Axel Springer (founder of the German multi billion Euro media empire Axel Springer Verlag). Or Helmut Markwort, reinventing for Burda the weekly news mag sector in Germany. Or Helmut Thoma, building up RTL from a softsex pirate station to Germanies leading tv network. His question: has old media now lost its knack? Instead of buildig up their future from scratch again, they buy their future.

Well, we talked about this one before. Real innovation (as in paradigm shifts) has never been the game for the incumbents. At least not in media. So he’s getting something wrong here. The founders are busily starting up their businesses. And the incumbents are busily picking the raisins. And everything’s just fine.

9.1.2007 von hubert Ein Kommentar

Bill sez: DRM s*cks

Well, of course he didn’t. But he meant it. Or how would you explain an advice like this, while meeting the politburo of the US blogosphere: People should just buy a CD and rip it. You are legal then. As Techcrunch’s Michael Arrington notes.

Now, what is this all about. DRM is a well loathed acronym of the digital entertainment world. Depending on your point of view, it either stands for Digital Rights Management. Meaning, as a publisher you can remotely control the access to digital data. Or Digital Restriction Management. Meaning, it’s a stupid/devious scheme to extend a business model of the 15th century (Johannes Gutenberg invents European movable type printing, thereby enabling mass media production) into the 21st century, which causes immense collateral damage.

To be honest, I understand both positions. Probably the most important digital media topic right now is the question of the content value chain. It’s a nice thing, that now everybody can get worldwide distribution. It would be even nicer, if this distribution could be monetized. In the current setup, producing user generated content means you become an active member of the attention economy. Attention economy always means, that all your efforts will pay out, if you get enough attention of a player with a more tradtional economic approach. It’s the American Idol model. Lots of people give their heart and soul, accept the possibility of public humiliation, to finally get an intern job at a global whatever conglomerate.

I theory, DRMing digital content would transform an infinitesimaly copyable digital file into ressource of virtual scarcity. Transforming it into a sellable good. Sounds good. Unfortunately, this just theory. In it’s current setup, DRMed content is cumbersome for consumers and adds layers of cost and complexity for copyright owners: choosing a DRM, licensing a DRM, paying for DRM - and paying for 1st level customer support, because the consumer does neither understand the tech nor the legal licensing stuff involved. And it can get worse. Just ask Sony BMG about its brilliant idea to infect consumer computers with black-hat-hacker-style root kits.

Of course, DRM is about Digital Restriction Management. Take a freely accessible set of data. Shrinkwrap it using DRM. And whoosh, you’ve restricted the total accessabiliy, and made those restrictions manageable, too. The concept is of course highly attractive. Let’s say, if you put some sensitive data on an intranet. In mass media, there a two different proponents. Traditional media companies, wanting to protect their traditional business model. And governements from überdemocratic countries like China and Iran. And that’s where the collateral damage starts. Because unfortunately, if you really want to shrinkwrap some media into a closed shop, you have to include pretty much all devices which potentially might be used to play such a file.

Which translates into: for protecting a nice old business model we put everything in place to jumpstart a dystopian surveillance society, modeled after Orwell’s 1984 and the East-German Stasi.

But I think, it really stands for Does it Really Matter. Correct me if I’m wrong. But even in a totally shrinkwrapped media world, you will have to leave some space for consumer produced media. Uncle Umpty will have to be able to make his dreadful birthday movies and post them somewhere in the digital realm. The next Robbie Williams will have to put some first moves and shakes onto a web site of his choice. And let’s not forget consumers. Yes, DRMed music downloads are picking up and the iPod saved the Apple. But the digital format of choice is still yer good olde MP3, no strings attached. When the Bill says: People should just buy a CD and rip it, he’s just stating the obvious. Guess where all the music is coming from, filling all those iPods. And the gazillion other MP3 devices out there in the wild, wild consumer world.

But let’s come back to the digital value chain. Is DRM evil? Nope. But it can be used for mighty evil things. So better be careful of the collateral damage. In its current implementation, DRM ist mostly stupid. Interoperability is a word consumers should not have to learn to hate (as it per se does not exist). DRM can be a nice thing in a confined setup. But it’s not a silver bullet. As a value chain of one chain link is a pretty feeble excuse for not being able to adapt to the brave new world of networked entertainment.

16.12.2006 von hubert 5 Kommentare

Pipe classic, Pipe lite

Yes, I like the virtual pipe (thanks, Bertram, for the pointing me to Andy Kessler). But, uhm, what exactly is a virtual pipe? As opposed to a real pipe, virtual pipes try to emulate a lock-in situation. To understand what he’s talking about, we have to remind ourselves that Andy is a) American and b) a VC. His real media pipe looks like a typical cable walled garden to me. Here’s the media, there’s the pipe, that’s your home. In the US, it’s a billion Dollar market. Break up this lock in situation, and you’ll be offering what VCs are looking for.

A virtual pipe is just trying to emulate this lock-in situation. His prime example is convincing. The business model of console games is about a technologywise totally closed shop, built upon the razor model. The more boxes you sell (in the beginning even at a loss), the bigger your reach. And if everything goes well, you make a killing from the software licenses. BTW, brought into perfection by Microsoft. Not with Xbox, but yer olde Windows. As they outsourced the risk of shipping hardware, just keeping the increasing returns business of peddling software.
As it happens, it’s one of the oldest business ecosystems, in regards of media and technology. Edison and Berliner sold their hardware (OK, I doubt the grammophone was ever a loss leader). And started successful software subsidiaries, whose leftovers are now known as the music industry majors.

Apple’s iTunes takes this model topsy-turvy. The software a.k.a. music is the bait (a loss leader? I doubt that. Maybe micro business). The hardware is the game, and usability, design, and branding the driving forces. The virtual lock-in into the iPodsphere by DRM is actually pretty much non-existent. You won’t see too many poeple filling up their umpteen Gig hard drives with music bought in the iTunes store (S. Jobs could afford that. But could you?). And even then: you still have your desktop application which allows you to unlock the DRMed file. It’s a minor hurdle. But if you bought into the Applespace because of superior usabilty and convenience, this might be the virtual virtual lock in.

Let’s take another step back. Media is a software business. Traditionally, the content is tied to a physical thingy. The model behind is milking a scarce ressource. Spectrum (if you’re a broadcaster), right of way (if you do cable), advertising (hold on - now it’s getting mushy).

Because for some strange reason, capital puts the telco, media, and, entertainment eggs into a single basket. Which only makes sense, if you never worked with a telco AND a media company. Telcos think infrastructure, decadelong depreciations. TV is about yesterdays ratings. And even if there’s sometimes a symbiosis going on, they are as much related to each other as a lactobazillus to my family. Can’t live without both of them, but that doesn’t make me the grand uncle of little acidophilus.

Of course, sometimes the strategic interests of telco and/or hardware companies led them to gobbling up some media properties (what’s content, compared to cash flow?). And, with the notable exception of Time Warner, you won’t see too many fully integrated telco-media-companies. Usually, the telcos wield the stick (Vodafones EBIT dwarfes the combined revenues of the whole music industry). John Malone used to play hardball with his media “partners”, or, remember the Japanes-led invasion of Hollywood? Ted Turner might have been the only media player, who successfully quenched his telco partners for the monies he needed.
In this concert, media plays the second fiddle. And content is as much king as the Green Giant the duke of Broccoli.
Yer olde media equation looks like this:

- raise lots of capital
- hook up with a large entity which controls a scarce ressource (governement, if it’s spectrum or just a license you need, a telco, if it’s cable bandwith, a game console company, if … and so on)
- aggregate/produce and distribute content
- make some money by either selling eyeballs or selling the goods (discs, cable subscriptions, paper …)

With networked media and entertainment, this equation starts to change. The gridlock onto scarce ressources is weakening. Anybody gets global distribution by pressing an upload button. Which might make life kinda complicated for traditional media outfits. But, on the other hand: obviusoly, this new environment seems to serve new media companies Google pretty well.

And so we’re coming back to last posts final question: Is content now really king? Looking out of the window leads to the following idea. Olde media used to pay for content. Google’s positions itself more like an intelligent remote control (at least you do not have to pay for integration, like in the yellow pages). To Google, all content is created equal and just piece of data store in the indices of Google’s server farms. (The YouTube-deal might chance this comfortable postion; suddenyl, it’s all about licensing and copyrights.)

Does this mean, content will be demoted fiscally from lackey to lactobacillus? OK, this might be the logical path from the intern-executed media production style of the early 21st century. But, fair enough. More likely, that’s what happens if you look out of the window and outside everything’s greyish, wet and fall.

Mostly, the de-piping of media means:
- As abundance replaces scarcity as a driving factor, media’s distributional power is reduced to the power of being a brand. Which, in an environment of abundance, ain’t that bad a position.
- Network neutrality assumed, the media’s gatekeeper position won’t be taken over by the telcos. Or, at least, you’ll have a choice which gated (or open) commuinty you’re going to visit today.
- Meta-media like plain search engines, dedicated search engines plus hosting (ASPs like YouTube, Flickr), social networks et al drives the audience to the content. Old media mostly picks up what’s already on their screens.

But what’s the effect on content? The medium is the package. Which, by it’s commercial needs and restrictions, defines the content. TV shows are produced around commercial breaks. A pop album is defined by the capacity of vinyl records and CDs. Which, after this little excuriosn, leads us back again to last next stop: the content value chain ….

11.11.2006 von hubert Ein Kommentar

Is Google run by morons?

Mark Cuban did put it on the map. Only a moron would buy YouTube. Well, here comes Mr. Google, allegedly offering some 1.6 Billion USD. Whoo-hoo, here we go. Is Google run by morons? Probably not. But they have to cater to analysts (which might be even worse).

I still think: as a business, YouTube is worth a nickel and a dime.
As a buying-growth-scenario, the deal might save Google’s mega valuation for a couple of months. Just look at the latest comScore stats.

TRAFFIC DATA
__________________________________________________________
Select Online Video Sites (Note: Not an official ranking)
Total Unique Visitors (000)
August 2006
Total U.S. - Home/Work/University Locations
Source: comScore Media Metrix

Total Unique Visitors (000)
Select Sites Aug-06
———————-

Google Video + YT would guarantee the number 1 spot for at least 6 months. But obviously the people aggregators like MySpace, Yahoo and the like beat Google’s dried up services approach.

Which probably means, they shouldn’t buy YT, but Facebook. But Google buying traffic to save a valuable property? That would be a scary thought. Well anyway. On a mid term perspective, it could always be argumented that it will help solidify Google’s entry as the video ad engine of choice.

7.10.2006 von hubert Ein Kommentar

Old Media as a Commodity

Is Old Media dead? Nope. It just smells a bit funny (to misquote Frank Zappa). But let’s start from the beginning. Media as a business is a mere pipsqueak in the troublesome world of high finance. Exxon Mobile as a single company has probably a large turnover than all media companies combined. And my fav example has always been the music industry, ogling the mobile business - when in fact Vodafone has a larger annual EBITDA than the whole music industrie’s cumulated revenues.

But media as a business has always been really attractive, too. Not just because of the Swarovski-glitz that comes with it (nice for us involved). And the potential of coming from rags to riches (and vice versa). Media mostly lacks direct financial power. But has the incredible leverage of making matters matter. Just ask Silvio Berlusconi. Or any given (former) Russian Oligarch. Or the people at Gazprom. Or, maybe, General Electric.

Sure, Old Media has been a quite good business, too. Maybe a bit volatile (yesterday’s hit is today’s fad). With some superstars milking their companies for the last cent (most investment bankers can relate to that). But if everything runs smoothly, the return was constantly pretty good. And if you’re in production, too, a real hit would mean a serious income peak (at least in movies, publishing or the music).

As any given business, the Old Media is based on scarcity: if you’re a broadcaster, spectrum is finite. If you want to produce movies, you need access to lots of capital, some rare talent and finite distribution. If you’re into books, you better own the printing press and know your distribution channels.

All those ventures did share some things: production and distribution are expensive. Sustainable stability of sales is a matter of expensive branding. And, with the notable exception of film, where you need an army or two to get a movie done, the creative part will be handled by just a handful of people.

And that’s why online media makes most old media companies a little queasy. In a peer to peer system, distribution cost is, well, distributed. There’s no real scarcity of spectrum or shelf space. And the technical expertise needed to setup a blog is worth a cup of Frappuchino per month. OK. Making money is still the hard part. And probably will be for the next foreseable future (AdSense just isn’t enough).

But the effect on media companies, after dabbling a bit in the New Economy bubble, has been quite soberng. Media outfits increasingly are abandoning the pretense of being “growth” companies—like Silicon Valley tech titans—and instead opting to return cash to shareholders, like boring but profitable electric utilities or food companies, writes Robert Marich for Kagan Research.

Meaning: the party’s not over yet. But don’t look for anymore bottles of Bollinger. If you want some sparkle, get used to Prosecco and Pellegrino. Of course, Old Media still means good business. But the old mainstays are eroding. Despite loosing market share, the US broadcast networks still sell their ad inventory for a premium (compared to cable networks). Because their still the only way to reach out to the masses. But those masses reached are shrinking. Local newspapers are still the opinion leaders in their communities. But webbased publishing and user generated are is already making inroads.

Sure, it’s a glacial process. But opinion making is changing from one to many communications to a more distributed process (where one to many still will be a major force, but not the only one).

It’s a process of commodization. But what’s in it for a media company? One reaction cold be: embracing the new media world order. News Corp buys MySpace, German powerhouse Hubert Burda Media picks lots of brains and everybody tries to extend their brands into the digital world. But a completely different thing seems to be going on with Bertelsmann. As, at first glance, the singlemost interesting activity of the company hadn’t been related to media at all.

Entry into ‘Public Service’ Sector in Great Britain is not the stuff you get some headlines out. Essentially, in July 2005 the Bertelsmann subsidiary Arvato took over 500 employees of the County of East Riding (a project, which seems to be running just fine). Is this the future of Old Media? Let’s not forget. Old media is quite good at competitively running large systems for subscriber management and other back end processes, sometimes involving millions of customers and subscribers. And running a town isn’t that new an idea for a media company. In Florida, Disney isn’t just the service provider for a municipality, but wholly owns Celebration. But then, real estate development is a completely different track (so don’t expect TimeWarner to take over New York City any time soon).

23.8.2006 von hubert Ein Kommentar

Pricing Digital Movies

Why are downloads as expensive as physical as the same content burned on a silver disc? Anne Thompson of The Hollywood Reporter has a really interesting piece here. And CinemaTech has got the discussion.

The basic question: with downloads you get instant gratification, but otherwise less. Lower video quality, no bonus material, annoying DRM, no physical goods, no artwork and covers and booklets. OK, convenience has it’s price tag attached. But of course digital downloads and physical goods are not on the same level. It’s pure content versus content plus a thing. Something you can touch, collect, show off, present to somebody.

What got some people steaming, was Ben Feingold’s (Sony’s president of worldwide home entertainment) remark on pricing: Currently there is basic parity in the electronic or physical landscape. That’s what makes sense at this particular time.

Comments like price parity is NUTS are of course on track. From a consumer’s perspective, price parity looks greedy and pointless.

But Anne Thompson’s makes an important point: The reality is that the studios are so invested in such brick-and-mortar video retailers as Wal-Mart and Best Buy and Target that they can’t afford to alienate them. The big box retailers represent about 60% of the studios’ $24.5 billion in annual DVD revenue. At the recent quarterly meeting at Wal-Mart headquarters in Bentonville, Ark., where the studios bid for positioning in their stores, Wal-Mart made clear to the assembled studio home video reps, according to sources, that it does not view digital downloading favorably. And the prospect of Wal-Mart ordering fewer copies of just a title or two sends a chill into studio hearts.

The Grinch lives in Bentonville, Ark.

Via CinemaTech

19.7.2006 von hubert Kommentieren

FACEXPACES

How Youtube is shaping the post web 2.0 Internet. Totally convincingly explained in UserFriendly’s Cartoon of Today.

Via Basic Thinking

6.7.2006 von hubert Kommentieren