VON Fall 2007
By John Latta, WAVE
0716 12/12/07
Boston, MA
October 29 - November 1, 2007
VON has transformed from a conference focused on just voice to a range of conferences, some embedded into VON and some outside. This VON, for example, now supports within the same conference: vondex, UnifiedCommunications, digium/Asterisk World and Video on the Net. Here at the WAVE we are focused on Video on the Net.
From the Panel Discussions
Emerging Media Dynamics ran a workshop called New Video Summit. Following a trend seen at a number of conferences there was not a single presentation – just talk. The even went so far as no company had a video of its content. Panel moderators asked questions of the members. This structure results in limited content because the panel members do not have to prepare and the panels lack structure. This report will present highlights of what was said and provide background on key companies.
blip.tv
blip.tv is a video sharing service based on user generated content which is "episodic" or "shows," and not one time viral video. The business model is based on an "advertising marketplace" whose revenue is split 50/50 between content producers and blip.tv. The marketplace allows users to opt into specific advertising formats and advertising partners. Options include post-roll and player-adjacent advertisements. blip.tv provides free hosting, support for a variety of video formats, and distribution. The company also provides private label support for traditional media companies who want to integrate user-generated content into their existing platforms. Customers include Turner Broadcasting and Conde Nast.
It is easy to get started with blip.tv. UGC can come from a cell phone to a web cam and other low end platforms. The value of blip.tv is that the cost of content production is the responsibility of the producers. If the content goes well advertising can be sold and both parties gain
http://www.blip.tv/
Expo TV
ExpoTV is a video product review site based on consumer generated content. It is supported by advertising including those products being reviewed. The submitted content is reviewed by ExpoTV for appropriateness but not for the opinions expressed. The "videopinions" are one- to three-minute clips. These are also reviewed by users for usefulness, and comments can be made on each review. Top vote getters will get paid $0.01 every time their clip is played. Further, ExpoTV originally paid $25 for each review but this has decreased to $2 -$5, There are now 200,000 videos of which 99% are seen each month. The key to the value of ExpoTV content is search. That is, individuals are seeking the content and if they can find it the reviews are seen as valuable.
In terms of distribution, ExpoTV content is distributed on AOL Video, Google Video, and through a deal with About.com. The About.com deal also includes distribution of About-produced expert videos on ExpoTV. ExpoTV is also available as a video-on-demand channel through several cable TV providers.
http://www.expotv.com/
Metacafe
Metacafe is an Internet based video sharing community. Members can download a client which will download high quality videos in the background. The content spans from humor videos, Internet videos (memes) and viral ads as well as sports and news-related media. Videos are reviewed prior to posting. Users can also rate videos. There is a Producer Rewards program where users of this program are paid for their original content. If the video has a rating of 3.00 or higher Metacafe pays $5 for every 1,000 views an item gets, after the first 20,000 views. As of August 2007, the top 14 producers on Metacafe have earned over $10,000 each, with the top producer, KipKay, having earned over$72,000. Metacafe's Producer Rewards pays the producer on a pay-per-view basis, as opposed to revenue sharing.
http://www.metacafe.com/
Next New Networks – CEO Herb Scannell
Herb spoke of Next New Networks as doing “super distribution” over many outlets. This is a “micro television networks” company focused on niche communities. A typical show is 3-11 minutes of programming, on a weekly or daily basis, a website, and a feed that can be subscribed to in places like iTunes or My Yahoo. It began in January 2008 with $8 million in funding from Spark Capital. The company has started 9 micro-networks and plans to expand to 30:
The current shows include:
Indy Mogul: a network dedicated to DIY filmmakers and film lovers.
Channel Frederator is billed as the world’s original cartoon podcast, it serves the funniest cartoons sent in by viewers each week.
Fast Lane Daily is a car news network providing 5 minutes of fresh car news every day.
Pulp Secret is “the world’s first network dedicated to comic book news and culture”.
ThreadBanger is targeted at people who make their own clothes and accessories. Includes DIY tips and how-to guides.
Veracifier is an “Alternative channel” with “original ideas”, reporting and commentary on news of the day.
VOD Cars is billed as the “#1 Broadband Car Network”. Features clips of driving, racing, showing, drifting, posing and more from viewers. One for rev-heads.
http://nextnewnetworks.com/index.html
DigitalSmiths
DigitalSmiths has two technologies: an ad platform, VideoSense, which does automated matching of advertising for online video and video search technology. With its ad technology viewers and ads are matched based on audio recognition, video recognition, and behavioral data. The value of this is that it is claimed to better match video with advertising with the audience. The search technology also uses the same level of automated recognition of video content to support search. The company completed a $6m round in June 2007.
http://www.digitalsmiths.com/
Across the panels it was stressed that video on the Internet is in its very early stages. It does not have the scale of cable. Advertisers are very conservative and they have slowly embraced this new medium. One of the shortfalls is the lack of quantitative measurements of the audience.
A VC on a panel stated that no one has made money in this space, with the possible exception of the Youtube sale to Google.
The major technical issue to be addressed is video search. It was conceded that Google is spending considerable on this. The company which has successful video search technology will do much to realize its potential on the Internet.
Market Dynamics in Internet Video
If there is so much excitement on Internet video why is the show floor empty of video companies? In the Video on the Net portion of the exhibition space has about 8 booths. The problem is that conferences focus on business to business selling, in large part, but a counter example is CES. Here at VON the show floor is focused on suppliers to the service providers selling products and services. But there are still some interesting market dynamics in Internet video as the WAVE found out.
VON Industry Perspective
Before the Jeff Pulver industry perspective, Tom Evslin, former, Chairman and CEO of ITXC Corp. The company grew from startup in 1997 to the leading provider of wholesale VoIP and one of largest carriers of international voice minutes of any kind by 2004 when it was acquired.,
Tom described his early predictions on how VoIP would launch and evolve. He called this a 3 stage rocket.
The first stage was fueled by arbitrage opportunity. Driven by the artificially high international call rates IP made possible the elimination of these rated. This stage happened.
The second stage would be fueled by technology. Value of IP technology would be significant over the legacy of the PSTN. This stage also happened.
The third stage would be the driven by new applications which would create new phone services and capabilities. This did not happen.
There are a number of issues around this. First, I underestimated the power of the phone companies to use legislation to slow innovation. I predicted the future to telephony would not be the same and the executives in the phone companies stated it would. They proved me wrong. I was naïve.
Technology did not cause movement away from legacy of the PSTN. In reality the future of communications are best reflected in cell phones. These devices communicate with text, messages, pictures and video.
But there is a new rocket ship which is happening as if the PSTN never existed. It is based on social networking.
Here are further comments from his blog.
"There is no third stage of VoIP as an incremental improvement on POTS (Plain Old Telephone Service). Instead there is a whole new way to communicate. POTS won’t be improved; it’ll just be replaced. The rearguard action fought by traditional phone companies will eventually result in their over-priced and underperforming voice services being replaced and abandoned since they aren’t being improved (unless those companies can control the Internet – that’s a big unless).
In the new communication world – which is already forming inside social networks – live voice and voice mail are just two on a continuum of choices people have for communicating with each other. Video’s a choice; so is text and email and still pictures. Communication can be live and real-time; it can be slightly async like texting; or seriously async like email. The modes of communication mix freely. Two or more people using different devices communicate at the highest common denominator rather than the lowest.
And there are no more phone numbers, just names and handles (made up names). There’s no more great directory in the sky; there’s the union of the directories of the social networks we use and our personal directories. We’ll know who’s “calling” us as surely as we know whom we’re calling (callerID today tells you where a call is made from, not who is making it)...It’s been an interesting ten years. And it’s only the beginning."
Jeff Pulver then gave his Industry Perspective. In a nutshell it followed closely the framework given by Tom above. Jeff stated his life has changed since he created his page on Face Book. This has allowed him to create circles of friends, communicate both asynchronously and synchronously and open up new means of interaction with others. He showed an example of a video he created while waiting for a ferry to Long Island. During the presentation he posted a note on his Face Book page and then noted how 15 comments came in. The other social site given by Jeff was twitter.com. It was stated that 22% of Canada is on Face Book and 19% or Norway. Jeff went so far as to stated if corporations do not effectively use social media by 2008 and 2009 “they will be out of it.” A major point was made that Face Book is opening up is social network with an API so others can add applications. Jeff described that Face Book could become the operating system for social communications.
Video on the Net Conference
Video on the Internet is classified in four ways in both name and the ratio of viewers/creators.
Viral video
Small ratio other than major “hits” which are very few
Friends & Family
10s to 100s based on size of viewing group
Web Shows
1000s and higher based on the popularity of the show.
This is the critical measure which helps support a case for advertising.
Opportunistic video
Can be in the millions. These are unique news worthy images or celebrity shots. Like viral videos these seldom happen.
In most cases UGC lies in the all but the 3rd which can be both. The focus of most of the discussion at VON is how to monetize Web Shows.
Individuals seeking to learn how to create quality content cited that most learned on-line from others. There are many good resources on how to become a producer. It was stated that Apple’s iMovie is good enough for quality content. There is also an increasing transition to HD, in part, because it has become so easy to collect and post process.
The Face Book Platform is a major opportunity. It was also claimed that both MySpace and Google will open their platform APIs, in part, as a result of Face Books action.
The site mashable.com provides 10 examples of outstanding Face Book applications using the Face Book Platform.
http://mashable.com/2007/05/02/10-awesome-things-built-on-the-facebook-api/
The Facebook API has been available to developers since the summer and there are more than 100 applications now featured in the Facebook Developers Product Directory. Here is a list of the top ten they selected.Facebook Toolbar for Firefox – This application extends the Facebook experience to the browser. You receive automatic notifications of friend requests, new messages, and can check what your friends are up to in the “Facebook Friends Sidebar” feature. The toolbar also comes with the “share” link which allows you to quickly import and share any web site with your Facebook friends.
rendezbook – Serving as an anonymous “MeetMe @HotOrNot” type service, rendezbook lets you identify Facebook friends as someone you a) would like a stronger friendship with b) would like to date or c) would like to have a “random fling” with. Your preferences are anonymous, until of course the person you desire indicates the same feeling. The homepage claims more than 1,700 users so far, with a surprising 200+ matches already.
CampusRank – This site allows you to nominate people in the type of categories you might expect to find in a yearbook – Best Smile, Campus Clown, and even “Metrosexiest.”
Friend Analyzer – This tool shows you which of your friends are most similar to you in a variety of categories. You can also see what the most popular items are in your network. It appears that I have rather feminine taste in music:
College-Roomies – This service lets you search other students looking for a roommate at your school. In addition to being able to check out the Facebook profiles of other students in search of housing, there is a cool split screen feature where you can see housing preferences (for example, cleanliness, smoking habits, etc.) that prospective roommates that they have filled out on the College-Roomies site:
Your True Self– This site is built around the premise that “your friends say a lot about you.” It analyzes your friends’ political views, favorite movies, music, television shows, and books to guess at things that you might like. For example, 5 of my friends like Family Guy, so Your True Self indicates that I might like it:
The Friend Match – This service randomly pairs up two of your friends and allows you to rate on a 5 star scale how good of a dating match you think they make. If someone has matched you with someone else, you can see it under “My Matches.”
FbCal.com – The Facebook Birthday Calendar Generator creates an iCalendar (.ics) file with your friends and their birthdays that can be imported into iCal, Sunbird, and Google Calendar. For Outlook users, there is the Facebook Birthday Exporter.
Facebook to Twitter – Facebook and Twitter in the same application? How have these guys not received millions in VC funding already!? In reality “FT” will save you maybe 37 seconds per year, as you need to point to the fbtwit.com site each time you want to automatically post your Facebook status to Twitter.
Votetronics – This simple voting application allows you to setup a poll that only your Facebook friends can participate in. It seems like this would be an easy and logical feature for Facebook to add to the main service, as polls and surveys are always popular on social networking sites.
There is too much focus on YouTube. Currently there are 10 – 20 other good video posting sites.
Six points in Internet video were cited multiple times in the various panels:
Monitization.
There were countless discussions on how to make money and no clear answers. Advertising is assumed, yet, no one could cite a success. blink.tv implied it was doing well but would give no information. The monetization issue is important to professional content and web shows as discussed above but it seems not to be a barrier to the flood of content in the other three categories above.
Getting audio right
Poor video is tolerable but poor audio is the death of content no matter how well done. Do not use the microphone with the camera – have a separate microphone for the speaker and environment.
Video Search
The firm that gets right this will win big. The assumption is widely made that Video search will open up advertising in a manner similar to Google with the web. Everyone concedes that this is an area for Google to win big time or its to lose. It is investing heavily in search.
Distribution
Many are working this issue and but it seems far from solved.
Investment saturation
From a VC perspective, at least the one at the conference, the time for new investments in Internet video content producers has passed. It was that a site with 5m hits for a show could generate an investment and this has now risen to 50m or more. Others cited that consolidation will begin next year and the players begin to consolidate.
Traditional Content Producers are Missing this opportunity
Most cited are the televisions producers and networks. Old video media has a hard time understanding the market dynamics, quality needs, necessity for low cost production and the user expectations. But it was said that many video companies are seeing the necessity to try the medium out. They cite the disastrous efforts of the music industry to control its fate in a new technology environment and it lost. In fact, the VCs would rather invest in those outside of traditional video than those with a history of involvement in old video.
Other companies in the Internet video space cited included.
JibJab
JibJab is a website originally based on Flash cartoons. It is run by Gregg and Evan Spiridellis, who call themselves "the JibJab Brothers". JibJab was started in 1999. The site became well know with the "This Land" video.
http://www.jibjab.com/
Videoegg
VideoEgg began in 2005 by three Yale University students. It is a publishing service that allows users to capture video content from virtually any device and format and publish it to the web. The company began to sell advertisements through the new Eggnetwork in September 2006.
http://www.videoegg.com/
Heavy
Heavy.com is a consumer video company focused on 18-34 year old males. Heavy combines its nal programming with UGC to create an environment where individuals can control and even participate in the video experience. Some of Heavy's content includes "Superficial Friends," "Kung Fu Jimmy Chow," "The Massive Mating Game," "The Burly Sports Show," and"Behind the Music that Sucks." Its programming is available on Verizon V-Cast, Verizon FiOS, Comcast VOD, TiVo, Sony PSP, Apple iPod and Joost. Advertisers on the broadband network include Coors, Nissan, Panasonic, Diesel, Axe, Sony and Nike.
http://www.heavy.com/
Internet Trends in Contex
Jonathan Miller, former AOL CEO, began his talk by asking
the question:
Over the last 10 years what company has achieved 100m users and $1B in revenue on the Internet?
In response, the answer is none. Google registered its name over 10 years ago and thus there are no companies to achieve this level.
The point of this question is that it is very difficult, in spite of the excitement about the Internet, to achieve scale and revenue. It is important to examine the major technologies which have emerged from the Internet, in time order, that have accomplished this.
e-mail
IM
eCommerce
search
social networking
video
Given the current status of Face Book and MySpace these are likely to achieve this level of scale in the next year, if not less. It is Jonathan’s contention that video will be the next market to achieve this level. It may have happened sooner if it was not for the YouTube acquisition by Google.
As we consider this list there are important observations.
Those companies that establish key functionalities in these new areas are in a position to secure positions which last. eCommerce includes Amazon and eBay. Search is obviously Google.
Notice that these distinctions are largely based on two functionalities:
Communications
Content
What social networking and video accomplish are hybrid forms of these functionalities. (The Jeff Pulver comments in the prior report, on Face Book and his personal experience, is consistent with this.)
Increasingly it is becoming important that the winners provide more than functionality but also a platform. This is the case for YouTube and FaceBook. Google has long had a platform approach to its Internet offerings.
As disappointing as it is positive, old line companies, that is, those which drove the prior disruptions were unable to succeed in the next wave. A good example of this is Yahoo.
The key factor in the success of next generation of success is that specialists win. One of the best examples is Google’s search success over Yahoo’s prior position in this space.
Why then is video important?
Video is about consumption by consumers.
Video changes how consumers spend time. It changes how time is spent by going from off line to on line.
Given this the potential is huge.
Correspondingly, these shifts will drive the whole ecosystem of the Internet and video. This include the bandwidth providers, the media, the content producers and others.
There is a major unknown in this shift – the role of the pipes. That is, all the players whichp rovide the transport for the video. There are two camps.
Married camp which says the pipe companies will play a major role in shaping the market of video.
Divorce camp which implies that the pipe companies remain pipe companies. Production and delivery are independent.
It is here where net neutrality plays a role. Further it is an open issue if the pipe companies can play a significant role in enabling the video transition from on line to off line.
The next conclusion is that everyone will be in the multimedia business. Enterprises will have to have a multimedia presence and this will directly impact their businesses. If we note the list of disruptions above, this same trend happened when all businesses had to have e-mail, support eCommerce and have a web presence.
We are already seeing patterns of change which is responsible for the rush of adoption of video. But we are only at the beginning.
But we have not reached the transition in video.
This BIG event will happen when monetization takes root. There is no video equivalent to Google’s AdSense.
Thus, there will be a marketplace war ahead.
Today, video monetization is in the hands of the existing Web 1.0 companies and other video players. This includes the traditional video content providers such as the television networks and movie companies.
The result is that on-line video is a “line extension.” We see derivative 30 second spots. The same advertising models are being applied to the new media.
A key reason the video market transition has not happened is that video search is good but NOT great.
For this reason, YouTube will stay dominant for some period of time. The reason is simple: there is nothing better. There is no video search which impacts consumption.
Video is the paramount example of connecting the long tail of content with the long tail of consumers. This has not happened yet.
For this to take place the industry needs recommendation engines.
These will cause a fundamental change. When these engines work there will be on-demand video. There will be no need for video discovery.
We cannot predict when the monetization will happen.
This is the BIG issue which will make video the next transition on the Internet.
Advertising must be non-intrusive. It will take a new form.
It is essential that there evolve a standardized monetization ecosystem in much the same way that it is today.
When the shift happens it will change every aspect of video and create new businesses.
This will extend the long tail by providing many new forms of video and content.
There will be many new video producers.
In this new environment, hits will become more powerful than ever.
Superdistribution will play a critical role.
But traditional video products will be in deep trouble.
Highly produced TV/Movies will have a hard time.
We are already seeing this trend were “B” products are having difficulty. The reason is that the video business, including movies, rely on packaging of “A” and “B” products as part of the distribution strategy. This is becoming less attractive when consumers do not want “B” products. This will directly impact the economics of movie and TV broadcasters.
The stimulant for change can come in many ways, most of which we cannot predict. Something as simple as a discontinuous event, such as the forthcoming writers strike can cause the change. When the public gets alienated they could well abandon in mass from on line to off line.
Mobile devices can play a major role in this transition.
It has been estimated that by 2010 60% of the video consumption will be on mobile devices.
The 2010 to 2012 time frame will mark a major change in consumption patterns.
A key reason is that today’s youth do not care about the size of the screen for viewing.
It should be noted that the Safari browser on the iPhone can be a source of disruption. The quality and experience is a BIG win. There is the potential that browsers on mobile devices could be revolutionary in impact.
Role of Internet in News
Both the Washington Post Newsweek/Interactive and AP gave talks about how each has used video to shape their roles as news sources with video. These were excellent follow-up talks in the context of the stage set by Jonathan on the role which video can play in all businesses.
Caroline Little, CEO and Publisher of Washingtonpost.Newsweak Interactive described how they are seeking to become a video powerhouse in the age of YouTube.
This publication began by producing short form documentary videos. An number won awards. Examples shown in the presentation included: Crisis in Darfur and Being a Black Man.
Yet, these well produced videos were not consistent with the impact that YouTube was having. Washingtonpost.Newsweak Interactive made a shift by using their print reporters to capture video. They had to convince and train these reporters to video while on assignment. This effort has been so successful that many reporters are now coming asking to do videos while on assignments.
An example cited was a campaign stop which showed the power of an individual to confront a candidate on the issue of health care. Increasingly reporters became video journalists.
Another compelling piece was a video of one of the great musicians in the US playing his Stradivarius violin in of the busiest Metro stops in Washington DC. He just played in a T-shirt against a wall with an open case on the floor. In spite of the fact that his music was stellar in such an unusual surrounding he was unnoticed as 1070 individuals passed him. Only one person recognized him and that was incorrectly. The response to the piece when posted online was quite surprising.
The success factors cited were:
The need for a back office staff to take these videos, do post production and put them on the web site.
The need to train the reporters by providing clear instructions, be clear on the work flow and production timelines and provide feedback on each assignment.
In this latter category coaching included as assessment of how well the video communicated the
message of the story and which shots were the most effective.
It was recognized that in spite of the success of these efforts they did not stem the loss in advertising
revenue to the Washington Post due to the Internet. Yet, the newspaper sees that it has no choice but to become a multimedia company.
Jessica Hawk, Director of Online Video, Associated Press described how AP is becoming a video news source for its affiliated news outlets.
In 2006 it began to build its network of disseminating video to affiliates, which began with 12 and now is over
1,000.
AP uses MSN to distribute the videos and handle the advertising.
These video are of news stories which newspapers can put on their web site to attract viewers and increase the advertising potential of sites. At the conference videos were shown of the recent fires in Southern California.
The AP now accepts videos from its members and some is redistributed over the AP network.
In 2008, with the buildout of the network, two major efforts are planned: the acceptance of UGC and
syndication. User content is seen as a way to decrease the collection cost and syndication is a way that
affiliates can redistribute its content to other affiliates. This very similar to how one newspaper can
create written stories which are run by other newspapers.
Another effort is the Next Generation Player and an improved ad experience. Consistent with many other comments users hate pre-roll ads and AP is seeking another means for ad placement.
These two examples of the use of video are illustrative of how video on the net changes the core business of news reporting. As Jonathan Miller stated – it has only begun.
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