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VON Fall 2006 Boston, MA This is the 10th year of Fall VON. There are some 10 VON events around the world each year. This is the Jeff Pulver spotlight on media transitions on the Internet. Fall VON is being held in the new Boston Convention and Exhibition Center. This is a first class venue. There will be 10,000 in attendance. What Jeff does very well is to capture technology transitions and this is his showcase. With this event, he has a sub conference on Video on the Net. This is very early in the market development and one can see the struggles to form a market here at the conference. Jeff’s Views
AOL View of Video Ted Leonsis, Vice Chairman, AOL, showed how video is transforming the Internet and AOL seeks to be at the center of this change. He spoke of the changes being brought by Community and Social Networking. Video chat is just one element of this. An example given is the transformation of the search engine. Another example was given where instead of a search on Madonna which provides text, only this would include images and links to video and songs. The next generation media and entertainment business will be based on:
AOL’s video efforts include:
TMZ has become a breaking new source around Hollywood stories. Sessions is a performer free style music studio which can be used to promote artists and products. In an interesting twist Ted ended with seven Web 2.0 virtues, which he stated are similar to virtues that one would use between family and friends.
These virtues can be the source of individual happiness. The core sources of this happiness include:
With that, he stated that AOL is in the happiness business. Convergence and the Consumer Christopher Rice, VP Workplace Technology, Goldman, Sachs & Co. spoke of their primary market research. They recently completed a Broadband Consumer Survey which netted many useful insights. Some overall comments placed the Goldman Sachs views into perspective:
Goldman Sachs did a survey of 600 households in Spring 2006 on the broadband consumer. Key takeaways include:
Other results include:
Christopher left a parting thought that there is a need for a “universal convergence” which is need for a “continuum of experience.” That is, as providers, it is important to consider the home, the family and its environment. This includes: work, public, environment of the home, entertainment and the IT infrastructure in the home. Video Gold Rush is On Here at VON there is a separate side conference Video on the Net. Complete with a television like studio with on air taping. Unfortunately it is also like a television program with talking heads sitting on stools responding to interviewers and some audience questions. This leads to unstructured discussion and the lack of preparation by most participants. The result is that threads surface rather than factual presentations which use more traditional PP based talks. Irrespective of this, there is an underlying theme – video is the next big wave of opportunity on the Internet. It all seems like the clock has been reset to the late 1990’s. Video and the Next Wave of Internet Opportunity There is an eerie feeling in the air.
The result is a lack of clarity but an abundance of excitement. There is an open field of opportunity not seen since the browser days. This in part, explains the excitement shown by AOL earlier in its presentation on AOL Video. Further, with 100m Internet users in the US there is an assessment that “hits,” in whatever form, can happen quickly. Thus, this is not seen as a slow ramp opportunity space. Examples Andrew Baron, Creator and Co-Producer of RocketBoom discussed his creation. He began by describing a counter view of media – do not protect content and seek the largest audience possible. RocketBoom is a 3 minute news source each day which ranks highly in the new video space. Use a Wiki type content linked to the site and stories and build a community around the blog. Financially, the only cost is a small staff. Revenues have yet to begin but Andrew has many ideas including selling T-shirts, which some sites have shown to be a large business. Start-up Network Foundation Technologies claims an affordable means of video distribution. NFT uses a binary-tree (non-Bit Torrent) approach to video distribution. This means that every node in the network has a single parent and no more than two children. The advantage is that it limits the bandwidth per connection. The binary trees dynamically re-form as nodes appear and disappear. The system is capable of scaling to 10,000s and more. Net Neutrality and the Next Telecom Act Few technology issues spark the passion that Net Neutrality has. Scott Cleland, Chairman, NetCompetition.org gave a blunt, no punches pulled argument that Net Neutrality is a bogus issue. While Susan Crawford, Cardozo Law School, argued that it is the potential for harm which is important. It appears that any chances for a rewrite of the Telecom Act are dead in 2006. Killed by both the rush to get reelected and the Net Neutrality issue, it seems that more rationality is required. Underlying the core of the Net Neutrality issue is the potential to harm the entrepreneurial spirit of the Internet. On multiple times it was stated that if there were high barriers to entry to gain access to the Internet, Google and Yahoo would not have been created. There is fear that, the potential for harm from tiered pricing on Internet access, would have a significant negative effect on the creative process of forming new businesses. It is certainly less than ironic that video on the net is at the center of the current entrepreneurial wave. Video needs bandwidth, no one knows where it will evolve and the last barrier which many want to erect is a toll booth which stops the success of new companies such as YouTube from starting up and being successful. WAVE Comments At VON, after 10 years of promotion at VON conferences, VoIP is old news. TDM is dead. Many are using VoIP and do not even know it. The cable companies use VoIP and this supports the rapid rise in the consumer markets. Even the CEO of Covad said that only in the last year has the regulatory uncertainty gone away that the market could be well defined. At VON, VoIP almost sounded like a mature market. Yet, some implied that measurements of voice quality actually indicate that the VoIP quality was on the decline. These are all signs the VoIP has reached a market plateau where consolidation will take place as the market matures. But there was another conference within a conference – Video on the Net – this is where the action was. VON was gushing with excitement over video. The problem was that the discussions were non-specific. Consistent with the video culture, PP presentations were an anthemia, and in their place was the talk show format Ted Leonsis, Vice Chairman, AOL, captured the potential of video with his assessment that it is the individual who will be driving this business and not the source of the content. It is easy to look at this and blow away happiness as marketing puffery. We believe not. The WAVE has long spoken of the need for technology to reduce the burdens of life. Another perspective is to increase “happiness” and both are very hard to quantify and then accomplish. But, what Ted has stated is that the focus on the individual and family is an important corporate objective. Certainly the role of IM, video messaging, e-mail are all consistent with this but AOL is now pulling it together into a higher plain. The explosion of community and social networking is another indication that important changes are in place. Put in another way the concept of “experience” is but one small component in achieving happiness. Jeff Pulver cautioned that when disruptive technologies impact established markets, especially those with monopoly players, the ramifications can be significant and long lasting. As the CEO of Covad stated, it took 10 years after the Telecommunications Act of 1996 for this to settle out. With video on the net, the impacts are felt most directly, at a minimum, by cable/telcos, movie studios, broadcasters and independent producers. This will create significant pressures in Washington to protect markets and frustrate entrants. It was stated over and over that participation in the political process is essential to impact the debate which will ensue. Again one might conclude that this is more puffery, but Goldman Sachs is observing, not selling. What is striking is that both AOL, as a provider, and Goldman Sachs, as a mirror of the buyers, are reflecting on the same market observations. The winners in the market are not going to be about one technology, one experience, one family member, or one web site but how to view the overall all contribution to the living unit. It is the end result as seen by that unit which is what counts. As such, this is a profound and major shift in thinking. Perhaps the most significant indicator of value and opportunity in very recent days is the purchase of YouTube by Google for a nearly obscene amount of money. The percieved value of the marketplace for emerging entrepreneurs hasn’t diminished. It is very much alive and well. Two (relatively new) startups in the Internet world have outperformed the majors in an extraordinary manner where “happiness” seems to be the apparent marketable objective. |
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