On Demand Media

Video on the internet: a lay of the land

The internet video space is getting crowded and anyone who hasn't been watching the space for some time can get confused easily. I plan to write a few posts about this in the coming weeks, but first I need the lay of the land. Here is an attempt.

First, distinguish three things:

• Internet Protocol (IP): This is just a technical method for delivering content - a type of pipe, but not the pipes themselves. It is what powers the internet, but it also powers other many other things.
• The internet: This is the one global network we all use, what a broadband connection lets you hook up to. It is powered by IP, and its key feature is that two device connected to it can talk to each other (e.g. your PC and a server somewhere). The web (below) relies on the internet, but so do many other things: email, Skype, instant messaging, game consoles, Vonage phones, etc.
• The web: This is the sum of all the web pages out there, plus the arrangements (technical and social) that let any page link to any other, and anyone follow any link and access any page. All of this is enabled by the internet, but the two are not the same thing – the internet is much older.

And then distinguish two more things:

• Computers - i.e. PCs and laptops, with keyboard, mice etc
• Televisions - i.e. the living-room appliance, or a set-top-box next to it

With this you get this table:

	Computers	Televisions
Internet Protocol (IP)	1.	2. IPTV AT&T U-verse, BT Vision
The Internet	3. Internet Video Joost, iTunes	4. Internet TV Apple TV, Xbox, Playstation, Vuze
The Web	5. Web video Youtube, almost every website	6.

 

Points of note:

• The two blank boxes (boxes 1 and 6) are left that way because not much is happening there

• IPTV (box 2): this doesn't use the internet. It uses IP over private networks. The end product is very much like cable TV – it is designed to compete with it
• Internet video (box 3): So far this has been a mixed bag. iTunes has done better, but this is at least partly because of the iPod (not covered in this grid)
• Internet TV (box 4): This is the future of TV, but the space is nascent and will take years to mature. It is risky territory, but the opportunities are enormous.
• Web video (box 5): The big thing since 2006. It is strong because it has the eyeballs: everybody has access to the web, and that is all you need to watch video here (i.e. no additional kit or software is required).

The terminology is all over the place, and the one I've used above is just an attempt at putting words to things and is by no way universal.

I will talk more about this grid in later posts.

Phorm

I am intrigued by Phorm. From today's FT:

The technology will give internet service providers, such as BT, a cut from online advertising. Advertising money has previously gone to website owners and advertising services companies such as Google. Content owners are expected to get about 75 per cent of the ad revenues with Phorm and internet companies sharing the remainder.

Analysts at Charles Stanley estimate that if the Phorm technology takes off, it could generate $1.5bn in 2012. This compares with $16.6bn of revenues reported by Google for 2007. The big question, however, is whether consumers will be happy to be monitored in this way. Phorm has sparked controversy among internet bloggers and privacy activists who have branded the technology "spyware".

Could this be a game changer? Privacy questions aside, if this works it could be the arrival of that much-talked-about "two-sided business model" that telcos dream of. ISPs could get money from the media world in a "positive" way, without threatening to block anyone. You could have radically new business models, like really free broadband (and not as part of a bundle). The mind boggles.

As to the privacy issues, I haven't looked into this in any depth, but in principle I don't see why it should be any  more controversial than ad networks and behavioural targeting, provided that safeguards like anonymity are enforced.

And yet the stock keeps getting punished. Go figure.

Update (28/05): As my original post states, I don't claim to have looked into this product in any depth. I am not qualified to take a view on the legal issues; for all I know, these may indeed be insurmountable obstacles (as some comments below suggest). All I know is what I've read in the press.  I do not own Phorm stock, nor am I recommending it: my observation that it has been falling is not meant to suggest that it is undervalued, but rather that, presumably, investors have looked into this properly and come to a negative conclusion -- which suggests I am missing something.

My observation was only about the business model, at a high level: if (and that's a big if) there is a way for ISPs' to monetize what they know about subscribers through better ad targeting, this might open intersting possibilities for strategic innovation.

The "if" depends not just on legal issues but also on whether users can be persuaded to accept this (presumably they would have to be offered something in return?), whether anonymity can be guaranteed, how much information is passed on to advertisers, who does the ad serving, etc. Presumably much of this would in turn depend on the company's reputation for integrity, how the technology is implemented, what data is retained, etc - none of which I have looked at. Whether Phorm has succeeding in addressing these issues - or whether they can be addressed at all - is something I don't claim to know.

 

Back

After a long hiatus, I am back. I have been insanely busy, and still am. But the show must go on. There is plenty of riveting stuff coming this way soon. Stay tuned.

Web video beyond the video

Alan Schulman has written a brilliant post over at Online Video Insider. The key paragraphs:

In this new world of “engagement” metrics, time spent “discovering” through features like the narratives of online video actually equates to more time spent, higher CPMs for publishers and richer information delivered to “viewsers” (the combination of “viewer” and “user”).  And those are metrics that translate to better results for brand marketers.

Now that’s no excuse to make users work to find the video play button.  What it does suggest is that, as we continue to integrate linear video into the static user experience, do we need to acknowledge that there are, in fact, different user mindsets for different types of content — and which do we put first? 

It's not surprising that such an insight had to come from the advertising world, where media is understood wholistically and not just as a way of delivering content. Editorial people can't help thinking in terms of content and how to get it in front of audiences; and technical people think like dilligent engineers, always expediting the process by which people get to content (the 'navigation' or 'discovery' process). But what counts is the overall experience, the entire flow of screens and moving images you go through in a session in front of your PC ot TV set: that is the new content, and it is through it that the relationships between publishers and audiences are built.

Raymond Williams was the first to notice this, when back in 1974 he introduced the concept of flow in the TV experience. The schedule came to be seen as a cultural form, and schedulers (or programmers) were recognised as supreme creators. What people do with television is not watch programmes: they watch television first, and programmes second. They do this in the context of everyday life - fighting boredom by day, relaxing by night - and this dictates what kinds of content are appropriate. Failing to see this is like trying to understand town planning in terms of construction materials: not wholly irrelevant, but hardly a satisfying perspective.

What is happening now in the web is yet another step in the same direction. The more that web video is based on short-form content, the more relevant this is. As we begin to consider the experience as a whole, the focus has to be not just on the flow, but also on the wider context in which it fits: the ergonomics, moods, time of day, etc. Everything counts: how you were sent that email with that link, what you were doing when you got it, where you were, how much time you had.

It is because of this that attempts to replicate the web video experience with new appliances or within a walled garden are tricky businesses, no matter how good or abundant the content, or how good the navigation. The practice is just not the same, and it is the practice that people want, not the content.

This is not to say that new practices can't be invented with the same content as web video. But getting that right will take time, many false starts, open standards, and a new medium with a plurality of publishers. Creating a new practice is an uncontrollable social process. In the meantime, the safest bet is to opt for only gradual changes, and replicate the web video experience in new devices. As Steve Jobs said recently, what people want on a mobile phone is the web, not a mobile web.

links for 2007-06-08

• What Apple TV Costs to Make
  "If the costs were much higher, 'we'd be looking at a device that Apple was subsidizing,' perhaps in hopes of making up the difference with video content deals"
• New software can identify you from your online habits - tech - 16 May 2007 - New Scientist Tech
  I think this will be a big issue in the next few years
• Press Gazette Blogs - Fleet Street 2.0 » Expert Eye: The new vids on the block
  Ian Reeves reviews British newspapers' online video efforts
• BuzzMachine » Blog Archive » After the page
  "Every online site I know puts undue effort into its home page, even though in some news sites as few as 20 percent of users ever end up there."
• CNN.com to Abandon Pay-per-Video
• YouTube founders bet on user-generated content over big media « The Utube Blog
  “We have never been about full-length programming. We have never been about high quality. We don’t really see ourselves building the largest audience by moving in that direction.”

The limits of disaggregation

Via Jeff Jarvis I read Jason Fry's recent WSJ column on news disaggregation. A key passage:

In moving online, newspapers have become collections of individual articles, each of which often stands on its own. Once, readers encountered articles by reading the paper a page at a time. Now, such readers are being supplanted by voracious online consumers who get their news in any number of unpredictable ways.

This is unquestionably true, but it is not the whole truth. Yes, newspapers have become collections of individual articles, but they are not just that: they are also portals and subject indices where editors make respected judgements about what should be more or less important on any given day - judgements that audiences seek as much as they do the articles themselves. Agregation has value. This has always been so, with and without the web.

What the web has changed is that now there is an entire new marketplace of alternative takes on what should be important: that is what blogs, Digg, Newsvine, Google News and Jeff's own Daylife offer. Two types of content, articles (what I have earlier called 'linear content') and selections ('aggregate content') have just become uncoupled, and now it is possible to make a business with just one of the two.

Update 06/08: Scott Karp on link journalism: "There is a HUGE opportunity for news brands to redefine what they do for such 'media frenzy' stories — to focus on helping news consumers find the BEST coverage of the story."

Still, even in this scenario editors' original judgements are fundamental. A story would not get to Google News' front page if weren't featured prominently by newspapers, and a blogger would not link to it (or email it, or Digg it) if she or someone else hadn't first found it in a curated portal or some automatic derivative. Editors' judgements are less final than they used to be, but they are still important; they are no longer authoritarian but are at best authoritative voices in a wider conversation ('seeders of clouds' as Tom Grocer once said), and this calls more than ever for good editorial skills.

   

Update : See also Nicholas Carr on a similar theme, and a followup by Scott Karp (20/05/07)

Good enough TV

Jeff Jarvis went to the NAB and is in shock: "The convention center was packed — blimp hangar after blimp hangar and the lots inbetween and meeting rooms all around — with salaries and equipment devoted just to filling a little screen a few minutes a day."

Anyone who has read Clayton Christensen's book on disruption should be getting a sense of deja vu. An old, high-margin industry where everything is high-quality and expensive; a new emerging, low-cost industry with everything to prove and nothing to lose; the old guys refusing to see the new kids as a serious threat; and a magical, fatal point in time where the kids become just good enough and take over.

We always talk about disruption in media in the context of content and distribution--how low-budget content may one day account for more viewership than the high-end professional hits. But there's also another disription going on in the infrastructure side. Will the Thomsons and Tandbergs of this world be eaten by Apple and Adobe?

links for 2007-04-23

• Justin Timberlake - Culture - Hollywood - Idea Lab - New York Times
  Duncan Watts' must-read piece on marketing and the web
• Threat for Big Media: Guerrilla Video Sites - WSJ.com
  WSJ on link-only video plays. IMHO a key trend and controversy
• NewTeeVee » Could Veoh’s Porn Problem Haunt YouTube?
  NewTeeVee on YouTube and the DMCA
• Ofcom CEO Ed Richards talks to Ofcomwatch - Interview Transcript
  Ed Richards on the UK's Public Service Publisher
• Google snubs Net Neutrality debate | The Register
  Net neutrality: "an answer to problems we don't have, using a philosophy we don't share"
• Pearls Before Breakfast - washingtonpost.com
  The Washington Post's revealing experiment on content and context

Cummulative advantage and 'the good stuff'

In a must-read piece at the NYT Magazine, Duncan Watts argues against the received wisdom about the on-demand world. According to this view, the future is just about millions of consumers with millions of preferences, millions of content offerings, and opportunities for those who can connect the two and give consumers 'what they want'.

This is a view I (and others) have attacked many times before. People often don't know what they want until someone tells them what they might want. To an extent, word-of-mouth is taking over this 'discovery' role from broadcast media; but that doesn't mean that people's preferences are formed in isolation, that broadcast media won't play a role in this, or that the process of discovery is simply one of matching consumers profiles with product attributes (it is that, but only up to a point). Persuasion, 'hits' and marketing are here to stay, and even without big media the process by which content becomes popular is not just a matter of merit. The very concept of quality ('the good stuff') becomes suspect.

In Watts' words:

Conventional marketing wisdom holds that predicting success in cultural markets is mostly a matter of anticipating the preferences of the millions of individual people who participate in them [...]

The common-sense view, however, makes a big assumption: that when people make decisions about what they like, they do so independently of one another. But people almost never make decisions independently — in part because (i) the world abounds with so many choices that we have little hope of ever finding what we want on our own; in part because (ii) we are never really sure what we want anyway; and in part because (iii) what we often want is not so much to experience the “best” of everything as it is to experience the same things as other people and thereby also experience the benefits of sharing.

The numbers are mine, and I've introduced them to highlight how these three factors -- too much choice, the tendency to follow the crowd, and the need for shared experiences -- each question the orthodoxy independently.

To substantiate his claims, Watts did an experiment: he took several groups of people and asked them to choose songs to download, allowing people to see what others in the same group had downloaded. The result was that (i) within each group, those songs that were more downloaded at the beginning quickly became hits, dwarfing the rest; and (ii) one group's top hits had little to do with the next's.

Watts also set up an 'independent' group whose members were not allowed to see what others had downloaded. The most popular songs from this group (which you could call the 'quality' content) did prove to be popular on average accross the other groups, but this did not mean that they would be hits: "Overall, a song in the Top 5 in terms of quality had only a 50 percent chance of finishing in the Top 5 of success."

To this I would add a few things:

First, people's initial encounters with content are mediated by lists of stuff (or what I have elsewhere called aggregates): The lists of songs that people had to choose from in Watts' experiment, or iTunes' front page (on which read this excellent WSJ piece). These lists have authors and are usually annotated (the download counts in Watts' experiment), and this has an effect on their consumers.

Second, lists articulate communities: when I look at a list I know I am joining a 'consumption community' (not my term; read an earlier post on this, and also this) of others who are also looking at it, one in which the list's author (when there is one) plays a leadership role. When we speak about media being democratised, we should focus less on how anyone can publish content (although that is important) and more on the fact that anyone can publish a list. If that list is regularly updated and builds a loyal following, you have a tribe - or brand, or movement.

Finally, this has important implications for news. There, more than in any other genre, the three needs that Watts identifies (too much stuff; not knowing what to care for; and needing to know what others know) are crucial. The old civic values of news providers need to be reinterpreted in this context: offering a bit of guidance, providing an antidote to frivolity, and articulating shared concerns are key missions - and they are as relevant as ever.

links for 2007-04-12

• paidContent.org: The Economics of Content - Ofcom CEO: UK Needs Public Funded Online Media ‘To Protect Against Imports’
• MySpace Restrictions Upset Some Users - New York Times
  The widget economy
• The results: Apple TV vs. cable TV - Lost Remote TV Blog
• The Communications Market: Broadband | Ofcom
  Half (50%) of all UK adults lived in households with a broadband internet connection in Q4 2006. Around half (51%) of adults with broadband at home had accessed online video clips, with 26% saying they did this weekly
• Music's New Gatekeeper - WSJ.com
  A must-read