The death of the networks...and what is a channel anyway?

To start off, the evolution of the internet & television convergence is happening even faster than I, or most of us in the industry ever imagined. Combine the ability for anyone to be able to publish & broadcast via the internet, with the power of traditional television and anyone can now start a channel. But what is that?

The answer lies within the history (or lack thereof) of the internet itself. (If you are not interested in this, skip the next two paragraphs!) The internet experience for most of us is not that old. Maybe 10-15 years at best. Even if you go back to it's invention as a network of computers in the late 60's. The first node went live at UCLA on October 29, 1969 on what would be called the ARPANET, one of the "eve" networks of today's Internet. Following on from this, the British Post Office, Western Union International and Tymnet collaborated to create the first international packet switched network, referred to as the International Packet Switched Service (IPSS), in 1978. This network grew from Europe and the US to cover Canada, Hong Kong and Australia by 1981. The network gained a public face in the 1990s. On August 6th, 1991 CERN, which straddles the border between France and Switzerland publicized the new World Wide Web project, two years after Tim Berners-Lee had begun creating HTML, HTTP and the first few Web pages at CERN.

Contrary to some common usage, the Internet and the World Wide Web are not synonymous: the Internet is a collection of interconnected computer networks, linked by copper wires, fiber-optic cables, wireless connections, etc.; the Web is a collection of interconnected documents and other resources, linked by hyperlinks and URLs. The World Wide Web is accessible via the Internet, as are many other services including e-mail, file sharing, and access to countless amounts of data & services that are now common to us all.

So it all started as a way to get at information. From an evolutionary standpoint things are still young here. Web 2.0 is just now being mined and the benefits both financial & information-ally are allowing us to leave the crash of 1.0 behind us. 3.0 is already being discussed as a piece of Artificial Intelligence which may allow the connectivity of all of this connected information via the internet to be able to make decisions for us, prompted or not. Yes, your TV will know what it is you want to watch even before you do - and it will never be wrong - we are creatures of habit. Scary or not, it will happen.

So what does this have to do with the networks, the creation of channels and the old boob tube? Lots!

First off, the internet has evolved from a text based medium to one that delivers sound, images and now video. When it comes to watching video, 'TV', like the internet, will no longer be a linear experience. Video sites have taken off because we can now search and watch whatever we want (provided we can find what we want) whenever we want to watch it. From this point forward the concept of there never being anything to watch on TV will disappear. Search will also evolve to be something very different than it is now with new technologies that are able to tag video content automatically by scanning the content for the spoken word along with optical character recognition. Traditional broadcast platforms are scrambling to deliver a larger choice of PPV and VOD products in an attempt to compete or catch up. The bad news is, they never will and the survivors will have to figure this out soon and migrate their platforms over to web based initiatives in order to survive.

So, what is a channel? For this discussion lets define that as a destination with the predominance of video content. Basically any website has the ability to be able to serve video, and thus any web address has the ability to be a channel. I also believe that the phenomenon that started with YouTube and users posting professional, albeit stolen content is the tip of the iceberg and will actually become the norm. That's right, the networks that are trying so hard to stop this flow of stolen content are merely sticking their finger in the hole of the dam. If you take the evolution that I so painfully described above as any indication of what is about to happen, it is also painfully clear that channels or the networks as we know them may in fact disappear. As the web evolves, we will be served content that is relevant to us on channels that are branded by and for us. In other words we will NOT go to ABC to watch Lost, Lost will come to us or our home-page for us to watch. That does not say that Lost will not be branded as being brought to us from ABC as a distribution network or that there will be no commercials...but the rules we are used to will no longer apply.

We are already seeing this, as the networks start to legally license their content out to other destinations like iTunes or MSN for download or streaming. But as I said, this is the tip of the iceberg and the start of something big...the death of the Networks as destinations...as we currently know them...has begun.

For non-believers, a few relevant articles from this weeks news:

Coming Soon via Your TiVo: Internet Video on Television
http://www.nytimes.com/2006/11/14/technology/14tivo.html

With a Dish, Broadband Goes Rural
http://www.nytimes.com/2006/11/14/technology/14satellite.html

MSNBC.com Offers Video Podcasts of News Shows
On Nov. 14, MSNBC.com will begin offering video podcasts of two of NBC's top new shows. The site will begin offering podcasts of both NBC Nightly News along with Meet the Press at podcasts.msnbc.com. Each weekday starting at 10 p.m., Web users can access the full-length version of that day's Nightly News broadcast at podcasts.msnbc.com. In addition, each week's broadcast of Meet the Press will be downloadable starting on Sunday nights at 10 p.m.

ESPN.com Announces Local Podcast Net 
To bring new content to ESPN.com and broaden the audience for local programming that airs on local ESPN radio stations, ESPN Monday announced the launch of a local podcasting network. For the first time, local ESPN radio shows that air on five ESPN owned-and-operated stations in markets such as Pittsburgh and New York will now be available for downloading at the ESPN.com PodCenter and via Apple’s iTunes Music Store.

InStyle.com Unveils Parties Channel 
Time Inc.'s In Style is boosting its celebrity coverage with its launch today of a Parties channel on its Web site, Instyle.com. The channel features daily updates of Hollywood parties and events with photos and video, which will be open to advertising sponsorships. Other features on the channel include photo galleries of partying celebrities, an events calendar, a party scene blog, and party and style news feeds from various sources.

Lycos Cinema Rolls Out Classic Shows 
Web portal Lycos, which is in the midst of an attempted reinvention as an online entertainment hub, has launched a new product that combines streaming video and chat. The new Lycos Cinema allows Web users to gather virtually to watch old TV and movies online and chat in real time using a proprietary technology.

VH1 to Launch Home Purchasing Club on VSPOT 
VH1 has announced plans to launch an original series for its broadband platform VSPOT while at the same time unveiling an initiative to distribute VSPOT content across the Web. On Nov. 27, the cable network's online video hub will begin streaming Home Purchasing Club, a short-form spoof of home shopping TV shows. The new eight-episode weekly series comes from a pair of writers/performers who have worked on several comedic TV series, such as Jimmy Kimmel Live and the Drew Carey Show.

Is YouTube a $1.65 billion flash in the pan?

Dare I say it? A $1.65 billion snafu? Ouch!

Don't get me wrong, I am a big fan (I own Google stock!), and have been tracking YouTube since their inception. The funny thing is that they were not the only players back then, but they were the only ones with a singular focus....and so they amassed market share. Now there are many players in the space, all of them focusing on User Generated Content (UGC). I have listed the URL's of the most prominent players at the end of this blog. It's a looooong list.

So what is the draw of User Generated Content in the first place and why did it take off? Like most things there is not one answer, but I narrow it down to this:

1. Sociology: We are social beings, and we want to share. Websites that make that easy, reap the benefits.

2. Democratization: The internet has democratized many things and video is no exception. Now that the general public has easy access to the tools that make creation of video possible, they want to share them.

3. Non-Linear Experience (VOD): Unlike TV, this is a non-linear, on-demand, streaming experience that technology could finally deliver and we were ready for. Now traditional TV is playing catch up, with technology that will enable that same experience. In the near future we will most likely watch very little programming at the scheduled time of 'release'.

3. Short Format: With little time these days, the short, 'snack-like' experience of UGC fills a need. It is in its early stages and will probably breed a whole new art form before all is said and done.

4. No Advertising: Not that this will last long, but entertainment without advertising appeals to us. Perhaps advertisers will get a clue and deliver content of value as a result.

But is all of this enough to keep sites like YouTube & UGC in the public eye? Long term, I don't think it is. Today it is a novelty, because for the first time since the invention of big media, the common man can publish his thoughts and point of view for free - for everyone to see. The power of that is huge, but the fact remains that the content that is most watched, even on sites like YouTube, has to be...well...you know...good...and most if it is not. In fact, most the videos on YouTube that are the most watched, are professionally produced or disguised as such like lonelygirl15 . Now under Google's corporate monicker, YouTube is playing nice and making significant strides to remove content that is not owned by them. Read this article as Viacom trial lawyers ask YouTube to take down copies of the Colbert Report. The irony is that it is no secret that the Colbert Report's ratings grew in popularity because of circulation on YouTube. http://www.pbs.org/mediashift/2006/10/open_letterstephen_colbert_don.html

But the big deal here is that the networks and other professional content producers are catching on. It won't be long before short format programming produced by professionals is able to be streamed and eclipses most UGC. I'm not saying that there are not some very talented filmmakers out there that will not rise to the top, but I am saying that the days where we are willing to wade through crappy video are numbered. Even AOL's has built a professional online video portal to compliment its UGC site: http://video.aol.com/

UGC will also not be able to compete with the amount of media dollars placed behind the promotion of professionally produced content. 1/3 of commercials on TV today are for shows on TV.

So what is a 'YouTube' to do? I don't have an answer, but in order to be able to sell ad space which, we assume they will start doing given the Google relationship and the need to get a return on that $1.65BB, they will need to keep the eyeballs on their site. In order to do that, they will need to make sure the stuff on the site is good, and right now all they are doing is having to remove most of the good stuff.

What will happen here is anyone's guess, but it ain't going to stay like it is!

Take a look at two articles from this week from two of the largest, independent players in media and how they are making big strides into this territory.

Barry Diller & Co.
http://www.nytimes.com/2006/10/31/business/media/31jackson.html

Turner Broadcasting
http://www.hollywoodreporter.com/hr/content_display/news/e3iSvX2Mh9HIlLBrE13tEdDEg%3D%3D
What Comes After YouTube
http://www.businessweek.com/magazine/content/06_44/b4007052.htm

'Short List' of competitive sites to YouTube (UGC)
SelfMadeTV.com
Current TV
The Yahoo! Current Network
AddictingClips
IFILM
FireANT | Not TV
C H A N N E L B L A S T :: the future of internet television
GUBA - Usenet Search - Easy access to Usenet Pictures and Videos
Revver
Google Video
Yahoo! Video - Featured Videos
Channel101 - The Unavoidable Future of Entertainment
Official Google Video Blog
Welcome to Vimeo!
Myspace-Film
Break.com - Funny Pics, Hot Chicks, & Cool Flicks
GoFish - Watch videos, upload your own and share with friends
Metacafe: Funny Movies & Videos
Zango – You’re Good to Go. Unlimited Free Games, Free Videos and Free Downloads.
Veoh - The First Internet Television Peercasting Network
AOL UnCut Video
blip.tv (beta)
ClipShack
Dailymotion - Share Your Videos
Jumpcut [Make Amazing Movies Online]
Ourmedia Homepage | Ourmedia
Streamload - Free Online Storage - Share Videos and Photos - Online MP3 Storage and Access
vSocial - The Video Clip Sharing Community
motionbox
PodShow
Jumpcut [Make Amazing Movies Online]
eyespot
Grouper Video - Watch. Share. Create.

Will online video fall to the same fate as online music?

How much does online video have in common with online music...?

Other than the fact that both mediums consist of a personal, digital media file that can be shared or purchased...not much.

It's no secret that the music industry missed the boat with online commerce as it focused its efforts on copywriter infringement and peer to peer file-sharing with the likes of Napster - so does the same fate await online video?

There are two major differentiators when it comes to discussing these two mediums and their respective business models:

1. Music is listened to over and over. We listen to music over and over while we are usually doing something else. Music is short in format and keeps us company in the background unlike video that you need to focus on. Not that we don't like to buy movies and keep them to watch over again if we love them, but the difference is fundamental. That is why we care about ownership of one more than the other.

2. Music has always been purchased, never rented or listened to for free along with a sponsor message like video. Yes, yes, I know some of you still 'download' music for free, but that is not the point. Anyway, try that with a video file that is over 1 gig.

These two fundamental differences will essentially dictate the commerce model for video moving forward.

In other words, we will prefer to watch video content for free along with a sponsor message like we have been used to. Especially if we only plan on seeing the show once - so why own it? With video, we will also gravitate to rentals as we do now with DVD and VOD once the online technology for this improves. We will still buy movies and TV shows, but not like we do music.

So, what does this mean for the industry? For one thing, Apple better get their act together (I own the stock :-) and figure out a rental model soon - before Netflix or one of the other players improves their interface along with download & compression technologies. As for the studios and the Networks, although it took them a little bit of time to catch onto things, they are well on board with streaming their popular shows for free online - complete with sponsor messages. They will most likely keep the advertising/sponsorship model to themselves and NOT share that with the Netflix and Apples of the world. The Networks will most likely also sell their content and compete with Apple as they already do now in some form.

The good news for video is that the model is healthy and booming, especially for young, aspiring filmmakers who really own the new medium. There will also be entirely new art forms invented for the medium which will give birth to new stars and expressions we have yet to realize.

The music industry may even learn a thing or two...
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The truth is that I was scooped on this one by Shelly Palmer, but I started writing this a few weeks back - I swear! Hopefully my perspective adds a thing or two.

I recently met Shelly Palmer, the Chairman of the Advanced Media Committee for the Emmy's who had this and more to share on his blog at: http://advancedmediacommittee.typepad.com/emmyadvancedmedia/

Will consumers accept marketing on mobile devices...

...or will they be willing to pay for content, or want it at all?

Marketers are obviously hoping that we will be willing to accept some form of advertising on our phones. In the United States, the very thought of getting advertising on our handsets is appaling to us. But what if the content was not advertising per se, but sponsored content that we subscribed to? What if a portion of our long distance or roaming calls were free and paid for by a sponsor?

For the most part, mobile content is new to us in the Unites States. Only a very small percentage of the handsets can even play video streams, but that is changing fast. In Asia, watching video content is commonplace. Technology aside, large cultural differences make it difficult to compare the success Asia has seen with mobile content in the United States. For one thing, in Asia, people's cell phones are often the ONLY device they have to communicate with. Unlike Europe or the U.S., most users do not have a computer and rely solely on their phones for everything.

In these countries, subscribing to content is commonplace and a large revenue source for the providers who face continuing competitive pressure on the price of regular voice and data services.

So where is it going...? It is clear that while the U.S. may be behind, the world is watching to see if our proposed ad model will work. Logic sais it will as we accept sponsored programming in other forms of media. But not so fast, phones are different. For one thing, our time is very limited with this device and even if it allows us to get content for free, do we have enough idle time to watch that commercial or sponsored message too? My guess is not. Which leads me to believe the rest of the word has it right on this device and we are barking up the wrong tree.

It does not mean that sponsors cannot participate. Carrier services are a commodity. This is clear by constant price wars and ill-backed claims of better networks. Proprietary content may be the only thing to separate one carrier from another in the future.

ESPN actually had it right despite their mobile phone failure. If I am a sports nut, I might just gravitate to one carrier over another for the best sports content. The mistake ESPN made was trying to actually get into the phone business rather than having their content exclusively integrated with one carrier.

Brands need to find ways to form relationships with consumers in inventive ways on these devices. Providers need to work with brands and content creators to secure proprietary content for their networks or face being placed in the same commoditized marketplace they are in now. Both need to bring us content of value, or we won't be willing to pay for it.

Online video surpasses TV with 18-24 demographic...

I've just come from a two day session at OMMA (Online Media, Marketing & Advertising Conference) in New York. It was astounding at how much of the focus was on online video. There was great discussion on metrics & measurement, standards, viral marketing & behavioral targeting, but the focus was clearly video.

Driven by the success of User Generated sites like YouTube, Revver, Yahoo, Google Video, AOL UnCut Video, Jumpcut, Grouper, Eyespot, Wallop, Clipshack...the list is becoming endless. Most content is amateur content, some of it is pro-am. All of it is drawing millions of eyeballs.

As a result,more marketers are using video in place of simple banner ads and Google is making a big push toward the technology from both a video display and media buying standpoint. Adoption is growing and the shift of content viewer-ship has just tipped over to the internet with the 18-24 demographic watching more video content online than on TV. The 18-34 demographic is not far behind.

The statistics are showing that online video is more engaging, memorable & measurable, giving marketers a better bang for their buck. Those on the cutting edge are getting in early in order to seat themselves before the internet convergence completes itself within the next 3- 5 years.

The focus for brands is on bringing value to their customers. Videos that bring value and are viewed as authentic are the most requested, watched, and are ultimately the ones being passed around. Viewers are watching the videos all the way through and they have the highest recall...Repurposed television spots running within a banner are bombing in comparison.

Watch two guys from the midwest as they film their discovery of what happens to a bottle of Diet Coke when you drop in a few Mentos. Irreverent & funny. The combined videos have been viewed 6 million times & counting. The combined media value of this to both brands was in the millions and they got it all for free.

http://one.revver.com/browse/Most+Watched#_show_video_27335

As a brand, there is NO WAY that you can afford to not be a part of this right now. Those that are participating are reaping huge rewards by creating their own valuable content that consumers are asking for. But brands beware, this is now a two way dialogue, and you are no longer in control. So, be honest, laugh at yourself, act with humility and you may win renewed respect.

Is owning media the wrong model?

It's no surprise that retail entertainment outlets have been in trouble for a long time. I have not bought a CD myself in over 4 years. So, what do HMV, Virgin, Tower & Blockbuster have in common with iTunes? You still buy stuff.

Why own anything? It's not like we are buying a car that we could recoup our cost on in a few years. The hurdle we have to get over here is purely psychological. Think about it. If I said that you could play any song in the world whenever you wanted via a simple subscription, would you do it? Of course it depends on how much that subscription is. Rhapsody does that now for $9.99 a month with access to over 2 million songs. For music lovers, meaning those of us who buy some music once a month, this will save you money provided the song you want is hosted. It is just a matter of time before the major labels work through the growing pains, along with the digital rights technology enabling us to take our music with us on mobile devices like iPods & cell phones.

I was thinking about all this as I was starting to write about the move to make full movies available for purchase online via download. Aside from the headache of waiting for a file that size to download, the headache of playing some formats on any device will prove challenging for most of us. And then why would I want to buy one movie online for $19.99 anyway, when I can get an unlimited amount of movies from Netflix for the same amount every month? Netflix has it right for the most part, now if they can only figure out a way to not have to ship all those pesky DVD's. Imagine if Netflix had Video on Demand technology to stream movies right to your laptop or TV. Now we're talking! Subscription combined with VOD.

If you can stream something, you do away with the whole rights management issue unless you want to take something with you on a portable device that is not connected to the internet. But it will only be a matter of time before all portable devices are connected via WiFi or WiMax anyway. Imagine never having to store your media? To be able to play it wherever or whenever you want, with or without a Slingbox? How about never having to physically loan something out to a friend, to never get it back?

From the consumer standpoint, engagement should rise as the affordability comes down, while the hard costs of manufacturing, shipping and the realities of retail come down on the corporate side. Unfortunately this will kill the current digital rights management business, as all media will only reside on the servers of those that own it - not necessarily a bad thing.

So, what's my point? My point is, buying anything is the wrong model moving forward. It makes no sense financially for either the consumer or the manufacturer.

If only Netflix was into Music too......if only you could get it online......if only......

Check out these sites if you don't know of them already for some interesting twists on the current model:

http://www.rhapsody.com/
http://www.pandora.com/
http://www.urge.com

Branded Entertainment Update...

...and the BIG news is of course seeing a major brand take matters into their own hands as Anheuser-Busch moves into the content creation business. They are not simply contracting it out through one of their agencies or other strategic partners, but are actually launching a full service, in-house film & TV production company.

They will focus on producing humorous shorts and sitcom-type programs to be broadcast over the internet and to cellphones that could branch into full-length films.

While they have dabbled in content before -- particularly in sports TV, where its Bud Productions division recently produced National Football League preseason games for the St. Louis Rams -- this initiative is the brewer's most ambitious by far. They have the money, with funds being drawn from their $1.56 billion marketing budget.
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Paris Hilton launched the video single from her debut album on a special YouTube channel. In a twist, News Corp paid to advertise a new TV series next to the video of Hilton cavorting in the surf, producing revenue shared between her label, Warner Brothers, and YouTube. Within days, Hilton's song had been watched a million times and her album is climbing the charts.
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Walt Disney Company's new cellular offering, Disney Mobile, is designed to rein in your kids' cell phone use and abuse. But you might not know about the many other parent-friendly features it offers. After all, you can only communicate so much in 30 seconds.
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Southern Comfort has produced eight short films that tell the personal stories of musicians living in New Orleans, the city of its origin. The project will benefit theSouthern Comfort Music Fund.
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OfficeMax, trying to stand out in the pivotal back-to-school selling season, is shunning traditional TV advertising in favor of a branded-entertainment project called "Schooled" that plays a "Punk'd"-style prank on a class of eighth graders. They will be Partnering With Google & Disney for the Upcoming Back-to-School Special.
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Wall Mart have given the green light to a new quasi-social online network for teens designed to let them "express themselves." It's called "School My Way," but it's nothing like MySpace, which is clearly hopes to imitate. All content is screened, parents are alerted once their kids join, and users, called "hubsters," are forbidden from e-mailing each another. Wal-Mart wants teens to create MySpace-like profiles that let them post pages about themselves and their favorite Wal-Mart clothes, as well as personal videos.
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Food Brands Lure Kids With Games & Web Sites
Kids find online games like Pop-Tart Slalom and Chips Ahoy Soccer Shootout fun. The traffic to game sites is huge. The Kaiser Family Foundation, a food-industry watchdog, singles out such games that make kids the subject of marketing efforts to sell food. Marketers hope that by playing their so-called "advergames," kids will remember their brands the next time they feel like having a snack.
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For NBC, YouTube & Nobody's Watching, it was a win-win all round.
To the established media industry, YouTube has proved itself as a place to test new ideas. In July, the pilot episode of new US sitcom Nobody's Watching was offered online. The show, which had failed to find a national US broadcaster, has now been resurrected by NBC.
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...and so, apologies for those of you expecting a story on Victoria's Secret, maybe next time...