Some people might be embarrassed if their friends found an old copy of Mr. Big's "To be with you" or Paula Abdul's "Cold hearted (snake)" stashed away in their CD collection. But not EMI. They own those songs, and they want the world to know it.
The music giant is suing social-networking site Hi5, video advertising start-up VideoEgg, and 10 unnamed defendants for allegedly infringing on the copyrights of those and hundreds of other pop throwbacks.
The lawsuit alleges that Hi5 users have uploaded and disseminated hundreds of music videos the company owns rights to. VideoEgg is on the hook because it's a former partner of Hi5, and those allegedly infringing videos were uploaded to its servers. (On May 31, VideoEgg stopped hosting videos uploaded by the public and refocused efforts on its ad network, prompting rumors that the company was on its way out.) The lawsuit doesn't say much of anything about who the 10 John Does are.
The companies had attempted to work out some kind of deal for more than a year, a source told TechCrunch, but those efforts eventually failed.
A new study says that the number of people who watch online video will top 1 billion in the next five years.
As my boss, Jim Kerstetter, points out, it's unwise to put too much faith in predictions like this, but this isn't too much of a stretch.
The rapid rate at which broadband is being adopted around the world will lead the number of Web video viewers to quadruple by 2013, according to a report issued Tuesday by technology research group ABI Research.
The study also points out that Web video sites are increasingly finding more efficient ways to distribute their content.
"These include content distribution networks that cache content closer to the user," ABI Research wrote in a statement, "peer-to-peer networks which leverage users' PCs, and hybrid networks which combine these two approaches."
There's been a lot written recently about whether Google erred by acquiring YouTube, but it's this kind of growth potential for online video that still makes YouTube a good deal at $1.65 billion--provided Google can figure out the ad model.
The emergence of online video has begun enticing Silicon Valley entrepreneurs to Hollywood, and unlike an earlier migration during the dot-com era, the film industry is rolling out red carpets.
After spending three days at the Digital Hollywood conference, where I spoke with dozens of entertainment executives as well as tech CEOs, it's easy to spot what's going on: studio executives are more comfortable with online video and clip-playing gadgets than in the past. The entertainment sector also needs help figuring out how to make money from digital. On the other side, the geeks seem less dismissive of studio's copyright concerns and are much impressed with the film industry's glamor and riches.
"The new group descended so quickly on Los Angeles," said Philip Lelyveld, a former Disney executive who is now on his own as an entertainment-technology adviser, and has been a member of Hollywood's tech community for over a decade. "It's been in the last six or seven months where we suddenly saw a huge (spike) in activity. The reason for that is people are seeing startups built around content are suddenly becoming economically viable. The studios have also made their content more available. In some cases, they have made it clear that there are things that can be done with content that were still in dispute a few years ago."
Indeed, the film industry has begun galloping into the digital age.
News Corp. and NBC Universal launched Web video-portal Hulu in March. Earlier this month, the top movie studios agreed to allow Apple to offer flicks via iTunes the same day they're released on DVD. Two weeks ago, Warner Bros. Television announced it was bringing back the WB channel, the TV network shuttered 18 months ago, as an online-only play. According to one Warner Bros. executive, "the TV network of tomorrow won't be found on TV."
The new alliances, however, could still prove fragile. Tech entrepreneurs still complain that it takes too long to close licensing deals. The Studios continue to chafe when the whiz kids build services around their films or TV shows before they obtain rights--ala YouTube. And nobody can overlook the vastly different and often conflicting ways each side does business.
Lynda Keeler, a former Silicon Valley venture capitalist and chief of Sony Pictures Digital Group, said the techies are known for their willingness to work hard for options and equity--the possibility of a future payday. In Hollywood, she said, people want their money upfront. She remembers interviewing for a position with a venture fund after spending most of her career in entertainment. She asked the VC execs if they would like to speak to her lawyers.
"They said, 'Lawyers? We only use lawyers for term sheets," recalled Keeler, who now runs online retailer, Delight.com. "In the Hollywood culture, it's about the lawyers. It's an arm wrestle at a table. The (two industries) have a very different understanding of how to structure a deal."
Despite their differences, it's clear both sides see a profit in working together.
Paramount Pictures executive Derek Broes is helping build bridges between Hollywood and Silicon Valley.
(Credit: Greg Sandoval)Derek Broes is Paramount's senior vice president of worldwide business development and the person assigned to find new ways for the studio to profit from its content. Lelyweld says Broes is among the group driving Hollywood's technology welcome wagon. To launch Paramount's VooZoo service, which allows Facebook users to send famous scenes from the studio's film library to friends, Broes got help from FanRocket, a developer of social-networking and media sites.
"Fan Rocket was a natural," Broes said. "We are a motion picture company that doesn't have a lot of technical experience and we're not in a position to be bringing in engineers on staff and start building things. The folks at FanRocket and Danny Kastner, their CEO, immediately got what I was trying to accomplish. We took off from there. VooZoo is only a first step in a larger strategy"
Broes is a former manager at Microsoft and Brilliant Digital Entertainment, the company that made news for bundling its Altnet P2P application into Kazaa. So he knows something about approaching the studios with a disruptive technology. He said the past friction between Hollywood and Silicon Valley was due to a lack of understanding of each other's businesses.
"I include myself in this," Broes said. "Back then it was almost like, 'Hey, look, give me your content. Look at all these people I have. I'll put ads around it and it will be hugely popular.' Well, they don't understand that the studios have certain restrictions in their business and have previous windows occupied by previous agreements. It wasn't a lack of wanting to go out and make money in a new way. It was just limitations of a legacy business that are now beginning to change."
Broes also said that for any of the new online ad models to work, corporate America must embrace new technologies. During a panel session at Digital Hollywood, Broes singled out the face-mapping system developed by start-up Big Stage. The company uses photos of a person's face to create a digital avatar and then computers manipulate the image to change facial expressions.
Broes asked why the technology couldn't be used for ads. Instead of showing Facebook users a commercial with actors, why not replace an actor's face with a viewer's. "If I can actually star in my own commercials, I'm going to watch them, Broes said."This is where the advertising community has completely failed at adjusting and adapting and being creative."
As for whether the geeks and movie people can get along, there's no doubt, according to Keeler, the former Sony executive.
Although she did not attend, Keeler said she heard that the much-publicized party thrown last month in Los Angeles by TechCrunch was a huge hit. "It was a mash of tech guys and beautiful women," Keeler said. "It showed the two tribes can get together...the children that come from this union are going to have it all, the good looks of Hollywood and the smarts of the valley...but it's going to be a painful pregnancy."
(Read my related blog: Advice for techies who want to star in Hollywood)
Move Networks, a content delivery network for high-definition television online, has closed on a $46 million series C round of financing led by Benchmark Capital. Cisco Systems, Comcast Interactive Media, and Televisa, along with the company's previous investors, Steamboat Ventures and Hummer Winblad Venture Partners, also joined the round.
The American Fork, Utah-based company has raised more than $44 million in two previous rounds of funding since 2006. The company supplies video-delivery technology to publishers including ABC, Discovery, ESPN, and Fox. But it has a hefty list of rivals, including Akamai Technologies, Edgecast, and Limelight Networks.
Benchmark general partner Bill Gurley said that the investment was a nod to Move's growing presence in the business. "The best brands with the best content want full control of their experience and their advertising relationships. The Move platform is the only choice on the market that optimizes this strategic imperative," Gurley said in a statement.
The predicted thinning of the herd of video-sharing start-ups launched in the last few years hasn't--at least so far--gone according to naysayers' projections.
Last month, Revver, the video-sharing site famous for splitting advertising revenue with videographers, was sold for pennies on the dollar. The same month, Stage6, the YouTube competitor started by video-technology maker, DivX, abruptly closed.
Other less well-known companies have folded, but it certainly hasn't been the bloodbath that many expected. Two years ago, pundits and executives alike predicted that YouTube would grab the lion's share of the sector's money, audience, and talent. Indeed, some of those prophecies came true. YouTube has amassed an audience of 78 million unique U.S. users and dwarfs any other video destination on the Web, including those belonging to such entertainment conglomerates as Viacom and NBC.
But look around. Plenty of one-time YouTube competitors are still chugging along.
CNET News.com interviewed CEOs from a half dozen start-ups that made names for themselves during the online-video craze of 2006. They say that while profits are scarce and plenty of companies may yet crash, the keys to their survival have been keeping costs down, dumping "me too" business models, and motivating themselves with the knowledge that eventually, a large chunk of the $70 billion TV advertising market is headed to the Web.
"The one consistent thing we have in common is that we're all racing to figure out the business model," said Erick Hachenburg, CEO of video-sharing site Metacafe. "Nobody has found out how to make money yet. There's no doubt that it will be found. Video is such a central part of storytelling and entertainment and the Internet...we know there's a lot more to do."
You don't have to look very hard to find proof of television's migration to the Web. Internet video is booming.
According to ComScore, more than three-quarters of the total U.S. Internet audience (75.7 percent) watched at least one online video in January. The major TV networks and entertainment conglomerates are all posting their content online. The most recent example came earlier this month with the launch of NBC's and News Corp.'s video portal, Hulu.
The public proved the experts wrong. Turns out people enjoy watching video on computer screens after all. But where's the profit in this?
Google, which paid $1.65 billion for YouTube in October 2006, doesn't reveal earnings figures for the video-sharing site. Most of the CEOs interviewed, however, said they believe that with the site's huge bandwidth costs and ongoing struggle to find an advertising model, YouTube at best ekes out a small profit.
If the Web's biggest and most successful video player barely makes money, how is anybody else supposed to?
More to video than YouTube
Only a handful of companies can still be considered legitimate head-to-head YouTube competitors.
YouTube is the undisputed king of video sharing, the practice of allowing the public to post videos online. Nonetheless, companies such as Metacafe and DailyMotion continue to vie for audiences, albeit mostly overseas.
Metacafe, the largest independent Web site, saw only 6.8 million users in the United States in January but recorded 23 million more from outside this country. Despite attracting more than $40 million in venture capital, there haven't been any spending sprees at Metacafe. Hackenburg said CEOs have learned to stretch dollars.
The kind of public financing that flowed freely during the bubble era isn't as readily available today.
During the dot-com halcyon days, hundreds of companies filed for initial public offerings as investors threw money at tech plays. An IPO equipped companies with the cash to gobble up competitors. But in 2006, everybody in video understood the capital markets would be less generous.
"Without the kind of currency from an IPO, we knew you wouldn't see a classic consolidation," Hachenburg said. "Everybody knew they had to be smart with their funding."
Other video companies have tried to take a larger hand in producing videos themselves. Grouper (now known as Crackle), bought by Sony in August 2006 for $65 million, has launched Crackle Studios, a sort of video production incubator. Break.com bankrolls promising videographers and also partners with production companies to produce higher-quality content than amateur-made clips.
Where the money may be
But while all the glamour to this point has been in video sharing, selling software services and video know-how to companies that want video on their sites may be where the money is.
Brightcove has become the frontrunner among the so-called white-label companies. The 130-employee company boasts such customers at CBS, The Wall Street Journal, 20th Century Fox, Time magazine, and Sony BMG Music Entertainment, just to name a few.
"The first thing we launched was our software platform," said Jeremy Allaire, Brightcove's CEO. "That was right at the same time that consumer sites were taking off. We experimented with a consumer site, but literally within six months, we moved exclusively to the business we're in now. We saw the huge demand from other media companies and we believed those other investments could not amount to a meaningful scale."
Brightcove has already received more than $80 million in venture funding. Allaire wouldn't comment on whether his company is profitable, but said it won't need any more venture funding.
Greg Kostello, CEO of vMix, followed a similar track in the spring of 2006. The San Diego-based start-up undertook a labor-intensive effort to repackage its in-house technology--originally built to service its user-generated content--into enterprise software. Among vMix's customers is the Tribune Co., parent company of The Los Angeles Times. "I looked out at the 200 other videos sites out there and realized that it was really going to be hard to compete," Kostello said. "We made a quiet transition, and it was the right thing for us."
A new report on the tech habits of women shows that the female of the species is edging out the male in the areas of DVR use and ownership of portable game devices.
The study, done independently by Solutions Research Group, and released Thursday, was undertaken to explore the "digital lifestyles" of American women. Data was collected from more than 2,000 respondents between October 2006 and February 2008.
What the final tally shows is that women are as comfortable with popular consumer technology as men (not really a surprise), and that they're making significant inroads into the gaming lifestyle, which has long been dominated by men.
Women who own DVRs spend more than half of their TV viewing time watching time-shifted content.
(Credit: TiVo)For example, SGR characterizes women who own DVRs as much "more enthusiastic" about them than men. That's because women spend 56 percent of their TV-watching time viewing time-shifted content on their DVR. Men spend 42 percent of their time using their DVRs. The discrepancy between the two has much to do with the type of shows men and women watch, according to Kaan Yigit, SGR's director of syndicated studies.
"Men are more likely to watch sports, which has more impact live, obviously," he said. Women are more likely to watch half-hour comedies and 1-hour dramas, he said. Because of those same content preferences, women are also more likely to stream television shows from network TV Web sites.
In the gaming realm, men continue to lead in playing video game consoles--half of all men had played a console game in the previous month, whereas 38 percent of women had--but women are demonstrating a taste for portable game devices. Fourteen percent of women who describe themselves as "gamers" own a PSP (PlayStation Portable), compared to 11 percent of men who are gamers.
"It's a marginal difference, but in every other category, men or boys are slightly or substantially higher, as in the case of Xbox 360 ownership," Yigit said. "We find in general that girls and young women are more likely to skew to (owning) portable units, like the Game Boy Advance for the convenience and portability."
Jeff Pulver, the Vonage founder, wants to make viewing online video much more like traditional TV.
Now, to change channels online you have to jump between the Web sites of the different broadcasters and networks. But PrimeTimeRewind.Tv, a company Pulver co-founded, enables visitors to watch shows from such outlets as NBC, ABC, and TNT and on one site. The site launched this week.
Pulver is able to do this by accessing the embed codes that each of the networks provides for their video. No more keying in numerous URLs, filling out multiple registrations or downloading different clients.
The TV guide is replaced by a cube-shaped menu that users can flip around to see what shows are available for each network.
The networks won't mind Pulver aggregating their shows because he's using their video player and ads, he said in his blog. He's just syndicating their content, and ultimately the content producers will get more traffic. Pulver said PrimeTimeRewind.TV is not "stealing traffic."
TiVo Desktop Plus 2.6 software lets you view Web videos on your TV--but they need to be downloaded to a PC first.
(Credit: Slashgear)TiVo has added the ability to view downloadable Web videos on the company's DVRs, making good on its announcement at January's Consumer Electronics Show. The update will allow Web videos such as video podcasts to be downloaded with the same Season Pass functionality used by TiVo viewers to record their favorite TV shows. But don't expect to just punch in a URL or an RSS feed into the TiVo remote. Videos must first be downloaded to your PC's hard drive, after which they'll be transferred to your TiVo via your home network. That's a departure from Amazon Unbox videos, the Rhapsody subscription music service, and TiVo's forthcoming YouTube service, all of which are accessible online straight through TiVo's onscreen interface without the need to have a PC running elsewhere in the home. (By contrast, the Apple TV can pull down PC-free video podcasts, so long as they're indexed on the iTunes Store.)
The Web video functionality requires TiVo's Desktop Plus 2.6 software, available for download today ($25 for new users, or a free upgrade for users of the existing software). For now, it's a Windows-only solution, though TiVo says that the company is continuing "to work with Roxio on delivering equivalent functionality on the Mac platform." With any luck, perhaps the new Desktop Plus software will also swat those TiVoToGo bugs that have been afflicting some TiVo users for the past several months.
This is not the first attempt to challenge YouTube's gatekeeper position for viral video by establishing an alternative portal for sticky commercials closer to the original brand context. Microsoft and NBCU have launched Firebrand, an online and mobile platform to feature the "coolest" TV commercials. And NBCU's USA Network also plans to launch a site for new and classic TV spots next year. However, the branded portal spree may be a fad: Bud TV, Budweiser's proprietary user-generated entertainment channel, started off with high hopes that quickly diminished.
HoneyShed will face some daunting challenges, too. Having made it through the filter of the crowds, commercials with viral potential usually pop first on YouTube, and then float through the blogosphere. Only if HoneyShed manages to assert itself as a trusted destination for specialized branded entertainment, will it stand a chance to compete for a little piece of the large pie that the video portals own. To do so, it needs to build a critical mass of returning viewers. However, it is at least questionable--see Bud TV--whether there is more than just sporadic demand for brand-specific programming. I mean, one Sprite spot may be hilarious, but would you really want to have a regular feed of Sprite videos? For branded entertainment, you can reverse an old music biz proverb: it's the song and not the singer. Eyeballs are attracted by content, not brands. HoneyShed, therefore, must be either extremely good at curating content from myriad brands, or the brands themselves must be serious about becoming content companies.
The content shown on the site so far suggests the opposite. Sure, HoneyShed tries hard to tap into all the right trends: radical transparency (that is, blatant consumerism), social media features (social networking, embed/share capabilities), or conversational marketing (such as live chat facilities). But David Armano is right when he says that it still "feels like traditional advertising served up over the Internet."
If you want to talk about real innovation in online advertising, maybe life-casting is worth a look. Fast Company blogged about this awhile ago, and it's still a compelling idea: ads and product placements in live life-streams on networks like Justin.tv: "A Victoria's Secret shopping experience could be embedded onto the Web page where the video and chat are housed, with customers being enticed to click as each new outfit or item appears in the live video. The shopping experience would contain search functionality so that a customer could look up whichever item the current model is wearing and talking about."
For pessimists, this might mark the end of civilization (as we knew it), for web 2.0 acolytes it is an inevitable consequence of our new social media lifestyles: when social networking sites turn friends into business contacts and vice versa, when life-casts and mini-feeds exhibit each and every one of our acts and sentiments in real time, life itself might as well be utilized as the most powerful advertising format. To say that the boundaries between life and work, culture and commerce, private and public relations are becoming blurrier doesn't go far enough. They are not just becoming blurrier--these boundaries are in fact expanding as the new marketplaces for online interactions and transactions.
The online video sector appears stumped by the question of how to advertise to viewers without alienating them. Some say ads that run prior to the start of a video are the answer. Others, such as YouTube, are experimenting with ads that briefly appear at the bottom of a video while it plays.
Unilever, the maker of Axe men's personal-care products, isn't waiting around for popular video sites to figure it out. They are taking to the Web with attempts at cutting-edge humor and storytelling to create spots that are entertaining enough to attract their own viewers. The latest example is an ad called "The Axe Vice Naughty to Nice Program."
The idea of creating a commercial that will appeal to swarms of Internet users, or go viral, isn't new. But what makes this Axe ad different is that Unilever created a mini movie. The company was obviously willing to spend money and take time to tell a funny story. Unilever, which did not respond to interview requests, also seems prepared to offend some viewers.
The commercial is a new take on the ages-old pitch about a product making a user irresistible to members of the opposite sex.
The story is about how Axe products turn women into man-hungry maniacs. The story moves from the silly to the comical by following the women from courtrooms to prison life.
The commercial even pokes fun at Unilever's public relations department. The man who plays a company spokesman, as he tries to spin the story about the hazards posed to women by Axe products, uses the opportunity to repeat the names of the body spray and deodorant.
The ads are targeted for the Maxim crowd. There isn't any nudity or revealing clothing in the commercial, but there are sexual references that aren't typically found in mainstream ads. Some of the jokes push the boundaries of good taste and certainly won't appeal to everyone.
Nonetheless, the commercial should serve as an example to corporate America that it needn't piggyback on viral videos.
Advertisers don't have to lock us into watching prerolls or intrude on our viewing experience by sliding in ads at the bottom of our computer screens. What the Axe ads prove is that if companies put some time in, do a little thinking, they can create commercials that are actually worth watching.
