The strike between the Writers Guild of America (WGA) and Hollywood studios (Alliance of Motion Picture & Television Producers) is in its eight week now, with no end in sight. Issues are more complicated than just the new media compensation rights that has been mostly highlighted by the press. It also includes jurisdictional rights over Reality TV and animation content (refer AMPTP's web-site).
The big questions is: will the strike accelerate transfer of commercial and creative value to the Internet, and if so, how permanent will be the shift?
Only time will tell about the permanency of the shift, which I think is bound to happen. VCs and new media studios are looking to make opportunistic moves during the strike period. According to LA Times, several writers are looking to launch Web ventures to directly reach viewers online, bypassing Hollywood. The strategy ranges from launching their own studio that creates content exclusively for the Internet, to creating a Guild-sanctioned collaborative studio, to leveraging open social networks like Facebook for new programming distribution.
Although some content created for the Web has seen early success (LonelyGirl15, KateModern, quarterlife, Prom Queen), I'd like to see more energy devoted towards original content that truly leverages new media's three distinguishing characteristics: interactivity, and its social and non-linear aspects. This requires tighter scripts and viewer involvement during unfolding of the story. Other new dimensions will emerge over time through experimentation. Compelling storytelling used for traditional content will always matter, and therefore needs to complement the above new skills required for creating original new media content.
KateModern's integration into Bebo generated ~30M total views for its 127 episodes. Michael Eisner's Prom Queen on MySpace had 15M total views across its 80 episodes. These numbers should have guaranteed net profit for both the shows, though as discussed earlier, we're not going to see economic success of hit shows on the TV reproduced for any original new media content anytime soon.
In the long-run, real success would be seen by original content created specifically for each screen - content that leverages uniqueness of user experience and his/her interaction style on each screen. Putting TV content on the Web, and Web content on the mobile phones will not be sustainable. For watching a movie, theaters will continue to provide the best experience, and cell phones the worst. I don't have all the answers on how screen-specific content may ultimately evolve, but it's safe to guess that video on cell phones would take advantage of its voice feature, mobility and constant proximity, while successful Web videos, as discussed above, would leverage interactivity, social and non-linear nature of the Web, that is unavailable on TV.
In the meantime, it'd be great if Bebo's new initiative, Sofia's Diary, a new series on Bebo.com in association with Sony Pictures TV International, can surpass KateModern's success.
December 24, 2007
December 12, 2007
Internet video on the TV
The debate on how to bring the vast & rich collection of Internet videos to your living room TV continues. Over the years, several companies have tried, and failed, to sell consumers the third box for their living room (in addition to the cable/satellite set top box and the DVD/music player). The value proposition has simply not been compelling enough (on most fronts: user experience, complexity, cost, etc.).
We thought Apple, the most likely company to succeed, will crack this nut through Apple TV, which was marketed as the 21st century DVD player. In other words, a replacement for one of your current two living room boxes, not an additional third box. Until Steve Jobs called Apple TV a "hobby" - a rather open admittance of defeat.
Can the video game console be the Trojan horse to bring Internet videos to the living room? Microsoft and Sony are definitely betting on it with their IP enabled game consoles.
Can the STB evolve to include the Internet TV functionality?
The intelligence can also move to the TV itself (e.g., new Sony Bravia IP enabled TVs).
The Wall Street Journal this week ran a comprehensive story on this topic. Interviewing several industry analysts and executives, they presented five reasons on why the convergence has failed and proposed solutions for each reason:
1) Too many boxes. Proposed solution: Blend boxes
2) Too complicated (for users to set up the functionality). Proposed solution: Keep it simple
3) Sticker shock. Proposed solution: Set video free (free, ad-supported model)
4) Limited selection (of currently available walled-garden video libraries). Proposed solution: Open up the boxes
5) Slow downloads. Proposed solution: Faster, smarter (thru new technologies)
I'd suggest reading the full WSJ article (subscription required).
We thought Apple, the most likely company to succeed, will crack this nut through Apple TV, which was marketed as the 21st century DVD player. In other words, a replacement for one of your current two living room boxes, not an additional third box. Until Steve Jobs called Apple TV a "hobby" - a rather open admittance of defeat.
Can the video game console be the Trojan horse to bring Internet videos to the living room? Microsoft and Sony are definitely betting on it with their IP enabled game consoles.
Can the STB evolve to include the Internet TV functionality?
The intelligence can also move to the TV itself (e.g., new Sony Bravia IP enabled TVs).
The Wall Street Journal this week ran a comprehensive story on this topic. Interviewing several industry analysts and executives, they presented five reasons on why the convergence has failed and proposed solutions for each reason:
1) Too many boxes. Proposed solution: Blend boxes
2) Too complicated (for users to set up the functionality). Proposed solution: Keep it simple
3) Sticker shock. Proposed solution: Set video free (free, ad-supported model)
4) Limited selection (of currently available walled-garden video libraries). Proposed solution: Open up the boxes
5) Slow downloads. Proposed solution: Faster, smarter (thru new technologies)
I'd suggest reading the full WSJ article (subscription required).
November 2, 2007
Open social networks - Google's OpenSocial API
This happened faster than I expected - a common set of APIs to build social applications across multiple websites (social networks). The goal is to tear down the walls which keep hubs of users & their activities locked within each social network.
Facebook's astronomical growth with its closed, proprietary platform played a key role in expediting a wide cooperation, led by Google, amongst players on the other side of the line. These players, in addition to doing the right thing, also want to quickly stunt the user growth on the Facebook island - as users deepen their time/effort investment on Facebook, their switching "cost" out of its platform increases. Facebook traffic has almost doubled in the past five months since it opened its platform on May 24th (from 27M monthly uniques to 51M).
Google has created a partner ecosystem to release OpenSocial APIs which can be used by developers to create applications that will work on any of the host social networking sites in the ecosystem. There are already 27 partners in the ecosystem (MySpace, Bebo, Hi5, Ning, LinkedIn, Plaxo, Salesforce.com, etc.). Marc Andreessen, Founder of Ning, has a good explanation of benefits to participating partners on his blog. APIs are built on Google's Gadget technology.
Google has historically gone solo in creating new standards. What changed this time around?
With Facebook's expected launch of its own advertising network that promises to effectively leverage user data for targeted advertising (e.g., thru News Feeds), it'll be interesting to see a showdown with OpenSocial, as advertising dollars continue to shift online, and brand advertisers play a bigger role in this shift.
Meanwhile, OpenSocial participants will be busy stabilizing the new standard and fixing its bugs. The first OpenSocial application was hacked within 45 minutes after its launch.
Facebook's astronomical growth with its closed, proprietary platform played a key role in expediting a wide cooperation, led by Google, amongst players on the other side of the line. These players, in addition to doing the right thing, also want to quickly stunt the user growth on the Facebook island - as users deepen their time/effort investment on Facebook, their switching "cost" out of its platform increases. Facebook traffic has almost doubled in the past five months since it opened its platform on May 24th (from 27M monthly uniques to 51M).
Google has created a partner ecosystem to release OpenSocial APIs which can be used by developers to create applications that will work on any of the host social networking sites in the ecosystem. There are already 27 partners in the ecosystem (MySpace, Bebo, Hi5, Ning, LinkedIn, Plaxo, Salesforce.com, etc.). Marc Andreessen, Founder of Ning, has a good explanation of benefits to participating partners on his blog. APIs are built on Google's Gadget technology.
Google has historically gone solo in creating new standards. What changed this time around?
- Orkut, Google's social networking product, never really took off like MySpace or Facebook. It's therefore a defensive move by Google in order to not allow one of these sites to become the default destination for users' social activity on the Web. By lining up partners that have a strong desire to participate in open standards that give them access to more applications and by providing users an easier way to mange their information across social networks, Google has created a very compelling value proposition that benefits everyone - participating social networks, the end user, applications developers, and, above all, Google.
- The promised holy grail with social networking is to leverage rich user data for high-CPM, targeted advertising. Google has a proven leadership in this game. But it needs access to that data. Even though questions still remain about ownership of user data on applications built using OpenSocial APIs and distributed on several social networks, common standards is a step in the right direction. It's a matter of time before data ownership, profit sharing, and related questions get answered.
- OpenSocial will streamline the ability to feed Google ads into applications/widgets. Googles, thru its AdSense program, has the biggest network of advertisers on the planet. No other company is therefore better positioned to leverage the vast amount of advertising inventory that is being created by an explosion in the number of widgets/gadgets/applications on the Web. It also gives developers and marketers of applications, especially small- and mid-size firms, one channel to reach multiple audiences.
With Facebook's expected launch of its own advertising network that promises to effectively leverage user data for targeted advertising (e.g., thru News Feeds), it'll be interesting to see a showdown with OpenSocial, as advertising dollars continue to shift online, and brand advertisers play a bigger role in this shift.
Meanwhile, OpenSocial participants will be busy stabilizing the new standard and fixing its bugs. The first OpenSocial application was hacked within 45 minutes after its launch.
October 25, 2007
How can a Platform succeed in the long-run?
The rage in Silicon Valley today is all about platforms - platforms which are vying to become industry standards in their respective categories. Apple is pushing iPhone (cell phone applications) and iPod/iTunes (discovery, purchase and consumption of music and video). Google, Yahoo, Microsoft and AOL want their products (online advertising, maps, widgets/gadgets, etc) to become platforms in their respective categories. Facebook is hoping its social networking site to essentially become a communications platform on the Internet.
Here are three key criterion any company has to meet in order to make its product (platform) an industry standard:
General Motor's failed experiment with its OnStar system to make it a standard platform in the automobile industry for a wireless system that can provide new communication capabilities to vehicles is an example where customers and industry players agreed with the value (criterion #1) but GM's competitors could not trust it on the third criterion.
Facebook has checked the boxes on all the three above criterion. Its ability to succeed on (3) is however still questionable because it's too early to judge how Facebook will balance the very fine line and the difficult task of profiting from its own innovations on its platform while letting 3rd parties have unfettered and equal footing access to the Facebook platform in the long run - the economic incentives for the two to happen simultaneously can clash very easily. Then, Facebook is operating in a space where it is competing with the ultimate industry platform, the Internet itself. No points for guessing the winner in that fight.
Similarly, Apple has failed thus far in playing win-win with content firms whose content it needs to sustain early success of its iPod/iTunes platform in the long run (3rd criterion).
MIT's Michael Cusumano, along with Annabelle Gawer, wrote The Elements of Platform Leadership in 2002, a book that I'd recommend folks to pick up given its relevance in the industry's current love affair with Facebook & Apple. The book provides lessons from Intel, Microsoft and Cisco - pioneers in their respective industries, which succeeded in establishing their platforms as industry standards.
Here are three key criterion any company has to meet in order to make its product (platform) an industry standard:
- Solve a problem for users and players in your industry.
- Allow 3rd parties to easily build on top of your platform in order to continue innovation and expansion of the value the platform creates.
- Fairly share the created economic value with 3rd parties which are developing products on top of the platform and thus enhancing platform's value to its users - the most difficult of the three criterion to execute successfully.
General Motor's failed experiment with its OnStar system to make it a standard platform in the automobile industry for a wireless system that can provide new communication capabilities to vehicles is an example where customers and industry players agreed with the value (criterion #1) but GM's competitors could not trust it on the third criterion.
Facebook has checked the boxes on all the three above criterion. Its ability to succeed on (3) is however still questionable because it's too early to judge how Facebook will balance the very fine line and the difficult task of profiting from its own innovations on its platform while letting 3rd parties have unfettered and equal footing access to the Facebook platform in the long run - the economic incentives for the two to happen simultaneously can clash very easily. Then, Facebook is operating in a space where it is competing with the ultimate industry platform, the Internet itself. No points for guessing the winner in that fight.
Similarly, Apple has failed thus far in playing win-win with content firms whose content it needs to sustain early success of its iPod/iTunes platform in the long run (3rd criterion).
MIT's Michael Cusumano, along with Annabelle Gawer, wrote The Elements of Platform Leadership in 2002, a book that I'd recommend folks to pick up given its relevance in the industry's current love affair with Facebook & Apple. The book provides lessons from Intel, Microsoft and Cisco - pioneers in their respective industries, which succeeded in establishing their platforms as industry standards.
October 10, 2007
The Facebook Economy
Facebook is clearly the new darling of Silicon Valley. It's the "new Google" (based on traffic growth); it's the "new Microsoft" (based on its Platform); and its estimated valuation is a staggering $15B for a company less than three years old.
Some quick Facebook stats from its site:
Then, there is this whole debate about sustainability of the Facebook platform itself. We know that the Web is the ultimate platform. It's open. It's not owned by a corporation or a government, and it provides a common standard for innovation to everyone around the world. The history of closed, proprietary platforms tells us that such innovations, while may be ground breaking at the time, succeed only during the temporary period taken by alternative/replicating innovations to be developed on the open Web. Anil Dash from Six Apart provides a detailed account of this theory on his blog. He eloquently argues:
As an example, Anil cites two proprietary innovative platforms launched in mid-90s by the Internet trailblazers of the time to create rich online experiences, both of which were ultimately taken over by similar/better innovations on the Web: Blackbird by Microsoft and Rainman by AOL.
Having worked at AOL, I can elaborate on Rainman, its proprietary platform that was used to create the walled garden Web experience provided within AOL's desktop client (remember those free AOL CDs you'd get in the mail). I was at AOL at the time when we sunset Rainman, and in my opinion it should have been done much earlier. Several old-timers within the organization kept insisting that AOL's desktop client built on the Rainman platform can stay as a differentiator for the company. It worked wonderfully during the early Internet years in mid-90s when standards for organizing information on the Web were either non-existent or awfully pre-mature at the best. However, by early 2000, innovation on the Web had made Rainman unnecessary and inefficient. AOL dragged its feet with Rainman until 2005. It finally had to adopt HTML (open Web standard) and re-write all of its content. AOL's content built on Rainman did not show up on Web search results - a significant and increasingly important source of traffic for the publishers by that time - a proof that innovations on the open Web platform (search engine spiders, in this case) force out proprietary closed platforms in the long run.
Some quick Facebook stats from its site:
- >48MM active users (20ok new registrations every day)
- 6th most traffiked site in the U.S.
- 54B pageviews per month
- Over half of its active users visit the site daily; average daily time spent is 20 min
- Over 5,000 applications added to its Platform within 5 months since launch (100 new per day)
- VCs have started funds specifically for Facebook application development: Bay Partners, a Silicon Valley based VC firm, has created AppFactory, a fast-track program for entrepreneurs developing applications for the Facebook Platform.
- fbFund: Facebook announced its own $10M fund (open to expanding it further if required) that will provide $25k - $250k grants to developers for building Facebook applications. Developers can apply through, of course, a Facebook application built for the purpose (after the initial application process thru e-mail did not work out).
- Buddy Media, a NY-based startup plans to make money by building a business around Acebucks, a virtual currency for the Facebook platform.
- In order to monetize Facebook applications, at least three dedicated ad network experiments have started, valuing each application user at $0.30 (in contrast, the company valuation of $15B translates to $375 per active Facebook user).
- Global wealth creation: Developers around the globe now have an opportunity to earn a living thru the Facebook platform. The Wall Street Journal reports about one Agarwalla brothers team in Kolkata, India, that has built Scrabulous, an online game that resembles the traditional Scrabble. Since its Facebook debut in July, Scrabulous has grown to about 950,000 players, 36% of which are daily active users, or people who have logged in every day over the last 30 days. In contrast, only 7% users for Facebook's top 50 tools and games are daily active users. The game is generating $18k per month in advertising revenue for the Agarwalla brothers, a very good amount from Indian standards given country's low cost of living.
- Multi-million dollar valuation for popular Facebook applications: Lee Lorenzen, a VC in Monterey, CA, who describes himself as “the first Facebook-only VC,” started a $25 million Facebook investment fund this summer and introduced a Web tool, Adanomics.com, that lets you track application growth, activity, and valuation. The tool applies a stock-market-style analysis, using variables like the number of users, frequency of use and advertising revenue, and assigns a monetary value to Facebook applications. Some popular applications like Where I’ve Been (lets users show which countries and states they have visited), Texas Hold ’Em Poker and What’s Your Stripper Name (suggests what you and your friends would call yourselves on stage) have been valued at around $2 million each.
Then, there is this whole debate about sustainability of the Facebook platform itself. We know that the Web is the ultimate platform. It's open. It's not owned by a corporation or a government, and it provides a common standard for innovation to everyone around the world. The history of closed, proprietary platforms tells us that such innovations, while may be ground breaking at the time, succeed only during the temporary period taken by alternative/replicating innovations to be developed on the open Web. Anil Dash from Six Apart provides a detailed account of this theory on his blog. He eloquently argues:
Think of the web, of the Internet itself, as water. Proprietary platforms based on the web are ice cubes. They can, for a time, suspend themselves above the web at large. But over time, they only ever melt into the water. And maybe they make it better when they do.
As an example, Anil cites two proprietary innovative platforms launched in mid-90s by the Internet trailblazers of the time to create rich online experiences, both of which were ultimately taken over by similar/better innovations on the Web: Blackbird by Microsoft and Rainman by AOL.
Having worked at AOL, I can elaborate on Rainman, its proprietary platform that was used to create the walled garden Web experience provided within AOL's desktop client (remember those free AOL CDs you'd get in the mail). I was at AOL at the time when we sunset Rainman, and in my opinion it should have been done much earlier. Several old-timers within the organization kept insisting that AOL's desktop client built on the Rainman platform can stay as a differentiator for the company. It worked wonderfully during the early Internet years in mid-90s when standards for organizing information on the Web were either non-existent or awfully pre-mature at the best. However, by early 2000, innovation on the Web had made Rainman unnecessary and inefficient. AOL dragged its feet with Rainman until 2005. It finally had to adopt HTML (open Web standard) and re-write all of its content. AOL's content built on Rainman did not show up on Web search results - a significant and increasingly important source of traffic for the publishers by that time - a proof that innovations on the open Web platform (search engine spiders, in this case) force out proprietary closed platforms in the long run.
September 25, 2007
India wins Twenty20 Cricket World Cup
India won the inaugural Twenty20 cricket world cup by defeating arch-rival Pakistan by five runs in a nail-biting finals in Johannesburg on Monday.
Nobody gave India any chance of even making it into the semi-finals, especially because their top four star players had sat out of the tournament to give chance to new, upcoming players. India also had almost zero experience in this shorter version of the game, having played only one Twenty20 international match coming into the tournament. With a new fearless captain and several rookies amongst its ranks, the Indian team improved with every game and defeated England and host South Africa in the Super 8 knock-out stage, and world-champion Australia in the semi-final.
Twenty20 World Cup was a huge success with sell-out crowds and superb organization. Pyrotechnics and American-style cheer-leaders were seen for the first time in this so-called gentleman's game. Tournament's success would be a great boost for this new format of cricket that will pull-in more cricket fans - games are fast paced, last only three hours, and can therefore fit into schedules of more fans. India, which almost single-handedly drives the global cricket economy, given its over 1 billion cricket-fanatic base across the globe (me included), will now surely play a huge role in popularizing the new format.
Team India was awarded more money ($2Mm) from its cricket Board (richest in the world) than the champion prize money ($500K) given by ICC, the official global cricket governing body that organized the tournament.
Talking about economics of cricket, last year, the cricket Board in India increased its revenue by 10x by selling TV rights to the Indian cricket games to Nimbus Communications for a staggering $612M. Nimbus is also the recipient of the largest private equity investment in the Indian media & entertainment sector. Cisco, 3i, and Oman International Fund (OIF) invested $125M in Nimbus earlier this year, mainly due to Nimbus' lucrative cricket rights.
Nobody gave India any chance of even making it into the semi-finals, especially because their top four star players had sat out of the tournament to give chance to new, upcoming players. India also had almost zero experience in this shorter version of the game, having played only one Twenty20 international match coming into the tournament. With a new fearless captain and several rookies amongst its ranks, the Indian team improved with every game and defeated England and host South Africa in the Super 8 knock-out stage, and world-champion Australia in the semi-final.
Twenty20 World Cup was a huge success with sell-out crowds and superb organization. Pyrotechnics and American-style cheer-leaders were seen for the first time in this so-called gentleman's game. Tournament's success would be a great boost for this new format of cricket that will pull-in more cricket fans - games are fast paced, last only three hours, and can therefore fit into schedules of more fans. India, which almost single-handedly drives the global cricket economy, given its over 1 billion cricket-fanatic base across the globe (me included), will now surely play a huge role in popularizing the new format.
Team India was awarded more money ($2Mm) from its cricket Board (richest in the world) than the champion prize money ($500K) given by ICC, the official global cricket governing body that organized the tournament.
Talking about economics of cricket, last year, the cricket Board in India increased its revenue by 10x by selling TV rights to the Indian cricket games to Nimbus Communications for a staggering $612M. Nimbus is also the recipient of the largest private equity investment in the Indian media & entertainment sector. Cisco, 3i, and Oman International Fund (OIF) invested $125M in Nimbus earlier this year, mainly due to Nimbus' lucrative cricket rights.
August 28, 2007
Facebook is learning fast
In one of my earlier posts, I had proposed that Facebook should use actual user engagement as a success metric for its applications as opposed to the metric that only captures total number of users who've added the application (and may not be using it at all). Facebook decided to do exactly this. Dave Morin from Facebook notified of their policy change on Facebook's Developers blog on Monday:
It's heartening to see Facebook is learning fast and making quick changes to ensure its evolving Platform continues to provide great experience for both its users and developers.
This week you'll see us shift our application directory metrics to a focus on user engagement. This will help inform users as they make decisions on which applications to add as well as shift developer focus to engagement rather than total users. More specifics will be available as we roll out these changes this coming week.Recently, Facebook made two other changes to its Platform in order to prevent questionable tactics used by application developers to promote their applications. Developers will not be allowed to show a different profile to a user's friends than the one the user sees himself. Developers will also be blocked from sending misleading notifications to users in order to promote viral spread of their applications.
It's heartening to see Facebook is learning fast and making quick changes to ensure its evolving Platform continues to provide great experience for both its users and developers.
August 8, 2007
Is Web Video a Threat to TV? - WSJ Discussion
The Wall Street Journal recently organized an online discussion between Steven Starr, co-founder and chairman of Revver, and I. The subject was: "Is Web Video a Threat to TV?"
Below is the link and the text:
http://online.wsj.com/article/SB118530221391976425.html
Text:
------------------
The Internet has made it possible for anyone with a video camera to become a filmmaker or YouTube star. But can independent creators make a living off Web video? And will this army of amateurs pose a threat to traditional broadcasters and studios?
Several video-sharing sites, including Revver and Metacafe, are trying to translate Web fame into dollars by sharing advertising revenue with contributors. Even YouTube has adopted a similar program. Traditional broadcasters, meanwhile, are taking steps to capture online viewers (and ad dollars). NBC, for example, is adding social networking features to its flagship site and will debut "Coastal Dreams," a Web-only soap opera, in October.
The Wall Street Journal Online invited Sab Kanaujia, vice president for digital product strategy at NBC Universal, to discuss the future of TV on the Web with Steven Starr, co-founder and chairman of Revver. Their exchange, carried out over email, is below.
Sab Kanaujia begins: Can independent creators make a living with Web video? I don't think they can in the short term. Current business models online are not attractive enough to make a living or leave your other day job. The CPMs [cost per one thousand ad impressions] paid by online distributors for independent content are not very high compared with those for professionally produced, long-form content, so it requires a lot of views to translate into a decent amount of money. Low CPMs also indicate the appetite of advertisers at this point for content from independent creators. There are of course some exceptions (LonelyGirl15, etc.) where we have seen good, engaging content that has driven a lot of traffic.
Steven Starr responds: Well, it all depends how you define independent creators. Old school independent creators, used to Hollywood economics, should stay home. But successful independent online creators are seeing CPM and [cost-per-click] returns that can exceed $10,000 per month. The promise of an online creator economy is right around the corner, one that supports an entirely new form of creativity quite distinct and separate from traditional TV creation. This is happening in the short-term, with Web video creators not controlled by the linear programming demands of traditional TV. The Web video toolkit is far more interactive; response videos, social networking, mashup technology and the like are changing the parameters of content creation. Web video as a nascent art form, one that promises significant and sustainable revenue as it develops, is close at hand.
Mr. Kanaujia: I agree with the promise of online platform for both content creators (non-linear, timeliness, etc.) and for users (interactivity, more features, etc). But I think business models are still evolving. In the short-term, I think the Web will continue to provide a great vehicle for independent creators to get discovered (zero barriers to entry). And when they do get discovered, many may want to join traditional media -- or not.
Here are two real-life examples: Rocketboom -- Amanda Congdon established herself online. She leveraged her online popularity to get an offer from ABC, which she accepted. Now, she's using that opportunity to marry the digital and traditional worlds by anchoring in addition to doing video blogs on ABC.com. I was recently at Om Malik's Pier Screenings in San Francisco, where one of the creators of LonelyGirl15 spoke. They have thus far not joined a traditional media company amid several such offers that their agency was able to secure for them. They want to maintain total creative control and flexibility with their shows. Also, their storytelling style requires quick turnaround and interactivity -- which does not yet fit the traditional TV platform, with its many other considerations (advance scheduling, advertisers, etc.). Though they've not seen a financial windfall by going alone, they're still sticking to their original plan. These examples provide different paths taken by two successful online independent creators.
Mr. Starr: Using the Web as a discovery platform for old media trolling for talent is 1999 all over again; why take these new media creators and force them into old media formats? If the future of TV on the Web is continuous streaming, everywhere-accessible and ubiquitous, isn't a far more exciting outcome the emergence of an entirely new art form?
In today's Hollywood, over 90% of [Writers Guild of America] and [Directors Guild of America] members are not even close to making a living at their chosen craft. In the high-stakes game of traditional TV, the prospect for an Amanda Congdon or LonelyGirl15 achieving the financial windfall you refer to are incredibly remote, at best. Yet online, where Rocketboom and LonelyGirl15 can take incredible risks with format and genre, can grow their own audience at a fraction of network costs, can enjoy free syndication, hosting, audience-building and ad services at their disposal, an absolute cornucopia of opportunity awaits.
And yes, the business models are evolving, but it's happening quickly and well. At Revver, we're seeing a 4x and 7x jump in creator revenue just by adding pre-roll [ads] as an option to our Revver creators. It may be the wild west, but the opportunities are historic; there has never been a better time to be a creator, not in the history of media.
I've got a question for you, Sab: How does NBC Universal see its role as a supporter of this new art form?
Mr. Kanaujia: I'm not arguing that traditional media should either force new media creators into old media formats or restrict in any way the tremendous opportunities provided by digital platforms for content creation and distribution. I was just highlighting what is happening today as we evolve towards realizing the full potential of the new medium.
NBCU whole-heartedly supports the new art form. In fact, one of the primary goals of NBCU's Digital Media group is to explore how we can proactively embrace new digital platforms. We've created a Digital Studio that is extending NBCU's history of quality programming into the digital age by producing original programming and interactive experiences that engage consumers across a variety of topics and genres.
We're also exploring how we can creatively marry originally produced online content with our on-air shows. I think democratization of content creation and distribution provided by technology innovation on digital platforms and changing user behaviors would in the long run be a win-win for all stakeholders.
Mr. Starr: NBCU has been quite proactive in extending its brand online; the digital studio sounds promising. But I really don't envy what big media's facing. Consumers are their own programmers; control over the media experience has been ceded.
New media is social, all about connection and inclusion, and the challenge to monetize those connections is starting to be met. Andrew Keen's "The Cult of the Amateur" disputes the disruptive history-in-the-making prospect of all this, and blames new media for a "loss in quality." So maybe it started with cats swinging from chandeliers and frat boy video, but it's evolved in less than a year to budding auteurs like Goodnight Burbank6, Happy Slip7, Studio88 and LoadingReadyRun9, all building audiences, all operating at the forefront of new media. No doubt it's early days, but a year or so from now we may see world-class creativity emerge, and Mr. Keen's dismissal seems shortsighted at best.
The fact is, while new media creators keep bursting out of nowhere, old media has yet to figure out how to truly engage this unique audience. Repurposing TV and film content is not a long-term solution. Social media demands a different expertise. We're in a period akin to the transition from silent to talkies, and it's going to leave a lot of traditional creators and content suppliers behind.
Even more disruptive, social media rejects the cult of the velvet-roped celebrity, demanding far more fan-creator interaction than ever before. This drives the attention of a connection-expecting audience into the hands of the independent creator, not the entity that controls their channel, and empowers creators to control the advertiser relationship themselves. Again, a heady time to be making media, to be building an audience.
Mr. Kanaujia says: All these are examples of Web TV done right. In the long-run, I believe Web TV will co-exist with the traditional media. Forecasts claiming that the new media will swallow traditional TV are grossly overblown. Today, almost half of the total media consumption in the U.S. is on TV -- 47% of 68 hours/week/user (Source: Veronis-Suhler 2006). Rest is split between radio, recorded music, print, Internet, mobile, etc. Future trends also point to the dominance of TV (48% of users' media time in 2010).
For advertisers, the lean-back user experience allowing deep engagement with the long-form content on the TV is undoubtedly the best opportunity to develop brand awareness. Having said that, traditional media would still need to adapt to the growing reality of the new media. Over the past 80+ years, traditional media firms have successfully gone thru many transitions in the industry (from radio to broadcast TV to color TV), and have emerged stronger each time. No reason why they can't succeed the current transformation from traditional to what I call "integrated media," that combines digital platforms to traditional ones.
Talking about integrated media, I think ultimately Web TV will make its way into the living room as well (it has already started; e.g., YouTube/Apple TV, AOL's deal with Sony for their IP connected Bravia TVs). But for Web TV to succeed, it has to leverage the Internet not as a platform, but as a medium that is non-linear, social and interactive. Web content creators will not succeed if they develop their content by copying what has historically been done for the TV. They have to leverage the above three fundamental advantages provided by the Internet. Compelling, storytelling skills will always be critical -- no matter what the screen is (Web/mobile/TV). Advertisers will naturally follow if the execution is done right.
Mr. Starr concludes: I agree in almost every regard. Traditional TV absolutely will adjust and survive, just as there's still a market for books a century after movies were introduced, after TV, after the Web. But I think we're not far off from having most of the advertising dollars spent predominantly on the Web -- and around that corner we'll see most of the fortunes made from storytelling come from Web-based media. There will always be exceptions -- J.K. Rowling will make over a billion dollars from an old-fashioned book series -- but my point is that, in the storytelling and visual arts, the future is moving quickly towards Web-based media. It's just too efficient in gathering a motivated mob for the smart money to go elsewhere.
Serials produced in the creative diaspora already engage repeat audiences that, per episode, number in the millions. A new breed of storytellers are inventing new ways to narrate, new formats, new genres. At the same time, a new breed of audiences are finding new ways to interact, to participate, to engage with these storytellers. It's all happening outside of traditional media auspices, and that's what makes this new art form so unpredictable and so thrilling.
This disruption itself is what drove me to start Revver. I'm absolutely convinced online video is where the creative center of the next decade, and possibly the next quarter century, will reside.
---------------
Below is the link and the text:
http://online.wsj.com/article/SB118530221391976425.html
Text:
------------------
The Internet has made it possible for anyone with a video camera to become a filmmaker or YouTube star. But can independent creators make a living off Web video? And will this army of amateurs pose a threat to traditional broadcasters and studios?
Several video-sharing sites, including Revver and Metacafe, are trying to translate Web fame into dollars by sharing advertising revenue with contributors. Even YouTube has adopted a similar program. Traditional broadcasters, meanwhile, are taking steps to capture online viewers (and ad dollars). NBC, for example, is adding social networking features to its flagship site and will debut "Coastal Dreams," a Web-only soap opera, in October.
The Wall Street Journal Online invited Sab Kanaujia, vice president for digital product strategy at NBC Universal, to discuss the future of TV on the Web with Steven Starr, co-founder and chairman of Revver. Their exchange, carried out over email, is below.
* * *
Sab Kanaujia begins: Can independent creators make a living with Web video? I don't think they can in the short term. Current business models online are not attractive enough to make a living or leave your other day job. The CPMs [cost per one thousand ad impressions] paid by online distributors for independent content are not very high compared with those for professionally produced, long-form content, so it requires a lot of views to translate into a decent amount of money. Low CPMs also indicate the appetite of advertisers at this point for content from independent creators. There are of course some exceptions (LonelyGirl15, etc.) where we have seen good, engaging content that has driven a lot of traffic.
Steven Starr responds: Well, it all depends how you define independent creators. Old school independent creators, used to Hollywood economics, should stay home. But successful independent online creators are seeing CPM and [cost-per-click] returns that can exceed $10,000 per month. The promise of an online creator economy is right around the corner, one that supports an entirely new form of creativity quite distinct and separate from traditional TV creation. This is happening in the short-term, with Web video creators not controlled by the linear programming demands of traditional TV. The Web video toolkit is far more interactive; response videos, social networking, mashup technology and the like are changing the parameters of content creation. Web video as a nascent art form, one that promises significant and sustainable revenue as it develops, is close at hand.
Mr. Kanaujia: I agree with the promise of online platform for both content creators (non-linear, timeliness, etc.) and for users (interactivity, more features, etc). But I think business models are still evolving. In the short-term, I think the Web will continue to provide a great vehicle for independent creators to get discovered (zero barriers to entry). And when they do get discovered, many may want to join traditional media -- or not.
Here are two real-life examples: Rocketboom -- Amanda Congdon established herself online. She leveraged her online popularity to get an offer from ABC, which she accepted. Now, she's using that opportunity to marry the digital and traditional worlds by anchoring in addition to doing video blogs on ABC.com. I was recently at Om Malik's Pier Screenings in San Francisco, where one of the creators of LonelyGirl15 spoke. They have thus far not joined a traditional media company amid several such offers that their agency was able to secure for them. They want to maintain total creative control and flexibility with their shows. Also, their storytelling style requires quick turnaround and interactivity -- which does not yet fit the traditional TV platform, with its many other considerations (advance scheduling, advertisers, etc.). Though they've not seen a financial windfall by going alone, they're still sticking to their original plan. These examples provide different paths taken by two successful online independent creators.
Mr. Starr: Using the Web as a discovery platform for old media trolling for talent is 1999 all over again; why take these new media creators and force them into old media formats? If the future of TV on the Web is continuous streaming, everywhere-accessible and ubiquitous, isn't a far more exciting outcome the emergence of an entirely new art form?
In today's Hollywood, over 90% of [Writers Guild of America] and [Directors Guild of America] members are not even close to making a living at their chosen craft. In the high-stakes game of traditional TV, the prospect for an Amanda Congdon or LonelyGirl15 achieving the financial windfall you refer to are incredibly remote, at best. Yet online, where Rocketboom and LonelyGirl15 can take incredible risks with format and genre, can grow their own audience at a fraction of network costs, can enjoy free syndication, hosting, audience-building and ad services at their disposal, an absolute cornucopia of opportunity awaits.
And yes, the business models are evolving, but it's happening quickly and well. At Revver, we're seeing a 4x and 7x jump in creator revenue just by adding pre-roll [ads] as an option to our Revver creators. It may be the wild west, but the opportunities are historic; there has never been a better time to be a creator, not in the history of media.
I've got a question for you, Sab: How does NBC Universal see its role as a supporter of this new art form?
Mr. Kanaujia: I'm not arguing that traditional media should either force new media creators into old media formats or restrict in any way the tremendous opportunities provided by digital platforms for content creation and distribution. I was just highlighting what is happening today as we evolve towards realizing the full potential of the new medium.
NBCU whole-heartedly supports the new art form. In fact, one of the primary goals of NBCU's Digital Media group is to explore how we can proactively embrace new digital platforms. We've created a Digital Studio that is extending NBCU's history of quality programming into the digital age by producing original programming and interactive experiences that engage consumers across a variety of topics and genres.
We're also exploring how we can creatively marry originally produced online content with our on-air shows. I think democratization of content creation and distribution provided by technology innovation on digital platforms and changing user behaviors would in the long run be a win-win for all stakeholders.
Mr. Starr: NBCU has been quite proactive in extending its brand online; the digital studio sounds promising. But I really don't envy what big media's facing. Consumers are their own programmers; control over the media experience has been ceded.
New media is social, all about connection and inclusion, and the challenge to monetize those connections is starting to be met. Andrew Keen's "The Cult of the Amateur" disputes the disruptive history-in-the-making prospect of all this, and blames new media for a "loss in quality." So maybe it started with cats swinging from chandeliers and frat boy video, but it's evolved in less than a year to budding auteurs like Goodnight Burbank6, Happy Slip7, Studio88 and LoadingReadyRun9, all building audiences, all operating at the forefront of new media. No doubt it's early days, but a year or so from now we may see world-class creativity emerge, and Mr. Keen's dismissal seems shortsighted at best.
The fact is, while new media creators keep bursting out of nowhere, old media has yet to figure out how to truly engage this unique audience. Repurposing TV and film content is not a long-term solution. Social media demands a different expertise. We're in a period akin to the transition from silent to talkies, and it's going to leave a lot of traditional creators and content suppliers behind.
Even more disruptive, social media rejects the cult of the velvet-roped celebrity, demanding far more fan-creator interaction than ever before. This drives the attention of a connection-expecting audience into the hands of the independent creator, not the entity that controls their channel, and empowers creators to control the advertiser relationship themselves. Again, a heady time to be making media, to be building an audience.
Mr. Kanaujia says: All these are examples of Web TV done right. In the long-run, I believe Web TV will co-exist with the traditional media. Forecasts claiming that the new media will swallow traditional TV are grossly overblown. Today, almost half of the total media consumption in the U.S. is on TV -- 47% of 68 hours/week/user (Source: Veronis-Suhler 2006). Rest is split between radio, recorded music, print, Internet, mobile, etc. Future trends also point to the dominance of TV (48% of users' media time in 2010).
For advertisers, the lean-back user experience allowing deep engagement with the long-form content on the TV is undoubtedly the best opportunity to develop brand awareness. Having said that, traditional media would still need to adapt to the growing reality of the new media. Over the past 80+ years, traditional media firms have successfully gone thru many transitions in the industry (from radio to broadcast TV to color TV), and have emerged stronger each time. No reason why they can't succeed the current transformation from traditional to what I call "integrated media," that combines digital platforms to traditional ones.
Talking about integrated media, I think ultimately Web TV will make its way into the living room as well (it has already started; e.g., YouTube/Apple TV, AOL's deal with Sony for their IP connected Bravia TVs). But for Web TV to succeed, it has to leverage the Internet not as a platform, but as a medium that is non-linear, social and interactive. Web content creators will not succeed if they develop their content by copying what has historically been done for the TV. They have to leverage the above three fundamental advantages provided by the Internet. Compelling, storytelling skills will always be critical -- no matter what the screen is (Web/mobile/TV). Advertisers will naturally follow if the execution is done right.
Mr. Starr concludes: I agree in almost every regard. Traditional TV absolutely will adjust and survive, just as there's still a market for books a century after movies were introduced, after TV, after the Web. But I think we're not far off from having most of the advertising dollars spent predominantly on the Web -- and around that corner we'll see most of the fortunes made from storytelling come from Web-based media. There will always be exceptions -- J.K. Rowling will make over a billion dollars from an old-fashioned book series -- but my point is that, in the storytelling and visual arts, the future is moving quickly towards Web-based media. It's just too efficient in gathering a motivated mob for the smart money to go elsewhere.
Serials produced in the creative diaspora already engage repeat audiences that, per episode, number in the millions. A new breed of storytellers are inventing new ways to narrate, new formats, new genres. At the same time, a new breed of audiences are finding new ways to interact, to participate, to engage with these storytellers. It's all happening outside of traditional media auspices, and that's what makes this new art form so unpredictable and so thrilling.
This disruption itself is what drove me to start Revver. I'm absolutely convinced online video is where the creative center of the next decade, and possibly the next quarter century, will reside.
---------------
July 12, 2007
IIT Alumni Conference
This past weekend I spoke at a panel (Topic: Opportunities in Convergence) at the IIT Global Alumni Conference in Santa Clara, CA. Over 3,500 attendees from around the world participated in the event that featured keynotes from the U.S. Senator Hillary Clinton, GE CEO Jeff Immelt and Vodafone CEO Arun Sarin. The Indian Institute of Technology (IIT) system includes seven engineering and technology schools of higher education in India. IITs are arguably one of the world's most elite university systems with less than 2% acceptance rate (full disclosure - I'm an alum).
Founded in 1950s, IITs have since graduated a total of around 100,000 engineers. Many have gone on to assume leadership roles in various walks of life (science, engineering, research, academic, business, etc.). The influence of IIT graduates in the U.S. is almost as great as it is in India - 25,000 of IIT's 100,000 graduates live in the U.S. According to Jeff Immelt, GE employs around 1,500 graduates from IIT - 35 of its top 600 employees are IIT grads.
The Mercury News reports:
"(Indians)...have a disproportionate influence in Silicon Valley. Of an estimated 7,300 U.S. tech startups founded by immigrants, 26 percent have Indian founders, CEOs, presidents or head researchers, according to a recent report by Duke University."
By some estimates, a big proportion of these entrepreneurial Indians are IIT grads.
Time magazine's coverage of the conference is here.
Founded in 1950s, IITs have since graduated a total of around 100,000 engineers. Many have gone on to assume leadership roles in various walks of life (science, engineering, research, academic, business, etc.). The influence of IIT graduates in the U.S. is almost as great as it is in India - 25,000 of IIT's 100,000 graduates live in the U.S. According to Jeff Immelt, GE employs around 1,500 graduates from IIT - 35 of its top 600 employees are IIT grads.
The Mercury News reports:
"(Indians)...have a disproportionate influence in Silicon Valley. Of an estimated 7,300 U.S. tech startups founded by immigrants, 26 percent have Indian founders, CEOs, presidents or head researchers, according to a recent report by Duke University."
By some estimates, a big proportion of these entrepreneurial Indians are IIT grads.
Time magazine's coverage of the conference is here.
July 4, 2007
Facebook Application Fatigue?
Is this already happening? Fatigue after the initial euphoria over Facebook applications.
Last I checked, there were a total of 1,729 applications on the Facebook Platform. Majority of them, over 95% of the total, had less than 100k users. Only 24 applications had over 1M users (~8.5M for the most popular app). This highly lop-sided usage, though logical to some extent, still needs an explanation.
Given that Facebook's ~30M users are very active (50% visit the site every day), it may appear that adoption rate is stagnating within six weeks after Facebook's f8 Platform launch on May 24th. I'd argue, at the risk of being blamed for premature judgement, that many developers are throwing in crappy applications without giving too much thought into what would work on Facebook. "If you build it, they'll use it" does not apply. Fundamentally, such applications in a community use the real connections users have to help them share information more efficiently. Applications not designed to leverage the power of those real connections (Facebook calls it social graph) will not be widely adopted. And if adopted, those minority users won't use them frequently over time, or remove them altogether at some point. I've seen number of users on some applications actually go down with time, as users clear the clutter of applications they had added. With credit to Facebook, removing an application is as easy as adding one.
It'd be interesting to see some usage metric - e.g, number of invites sent/received thru an Invite application - in addition to the metric currently used to determine an application's popularity (number of users who added it to their profile).
Last I checked, there were a total of 1,729 applications on the Facebook Platform. Majority of them, over 95% of the total, had less than 100k users. Only 24 applications had over 1M users (~8.5M for the most popular app). This highly lop-sided usage, though logical to some extent, still needs an explanation.
Given that Facebook's ~30M users are very active (50% visit the site every day), it may appear that adoption rate is stagnating within six weeks after Facebook's f8 Platform launch on May 24th. I'd argue, at the risk of being blamed for premature judgement, that many developers are throwing in crappy applications without giving too much thought into what would work on Facebook. "If you build it, they'll use it" does not apply. Fundamentally, such applications in a community use the real connections users have to help them share information more efficiently. Applications not designed to leverage the power of those real connections (Facebook calls it social graph) will not be widely adopted. And if adopted, those minority users won't use them frequently over time, or remove them altogether at some point. I've seen number of users on some applications actually go down with time, as users clear the clutter of applications they had added. With credit to Facebook, removing an application is as easy as adding one.
It'd be interesting to see some usage metric - e.g, number of invites sent/received thru an Invite application - in addition to the metric currently used to determine an application's popularity (number of users who added it to their profile).
June 26, 2007
My first U.S. Presidential Election Fund-Raiser
This past Sunday, my wife and I attended a fund-raising dinner in Manhattan for Hillary Clinton's 2008 presidential campaign. It was organized by Indian-Americans for Hillary - a group that supports her 2008 campaign. No, we did not pay $1,000 for an hamburger dinner. Neither are we very active followers of the U.S. presidential politics. We attended for the experience (our first), and our invitation was free (from a very close friend, whose employer was the main host).
The event, apparently the biggest of its kind, raised ~$2m for the former first lady. Given a rather early start for the 2008 campaign, it'd be hardly surprising if all the previous fund raising records get broken this time. Mrs. Clinton’s ties with the increasingly wealthy 2.3M-strong Indian-American community in the U.S. could therefore prove very helpful.
According to the US Census Bureau, Indian-Americans are the richest ethnic group in the country - their median annual income is $61k compared to the national median of $41k. More than 300,000 Indians work in the Silicon Valley, where their average annual income is $200k. This, combined with the increasing importance of India on the global economic scene, indicates that alienating Indian-Americans could be an expensive prospect in the US politics, as Barack Obama, Mrs. Clinton's main Democratic presidential rival, realized recently.
The event, apparently the biggest of its kind, raised ~$2m for the former first lady. Given a rather early start for the 2008 campaign, it'd be hardly surprising if all the previous fund raising records get broken this time. Mrs. Clinton’s ties with the increasingly wealthy 2.3M-strong Indian-American community in the U.S. could therefore prove very helpful.
According to the US Census Bureau, Indian-Americans are the richest ethnic group in the country - their median annual income is $61k compared to the national median of $41k. More than 300,000 Indians work in the Silicon Valley, where their average annual income is $200k. This, combined with the increasing importance of India on the global economic scene, indicates that alienating Indian-Americans could be an expensive prospect in the US politics, as Barack Obama, Mrs. Clinton's main Democratic presidential rival, realized recently.
June 21, 2007
The Media Revolution - 2050
This is an interesting video on the future of the media industry. Too radical in my opinion, as most such predictions usually are. End of radio, TV, advertisement, books, abolition of copyright in 2020 after Lawrence Lessig, the author of Free Culture, takes over as the U.S. Secretary of Justice, etc.
Some are however on the mark. E.g., the concept of prosumer (producer + consumer) has already become mainstream, and is only going to gain further momentum.
Some are however on the mark. E.g., the concept of prosumer (producer + consumer) has already become mainstream, and is only going to gain further momentum.
June 15, 2007
Activity on my blog
It has been the longest break in my brief blogging history. My readers (though a tiny base) are pretty vocal in complaining that I need to be more active. Most are folks from my professional/personal network. Trust me, it's not lack of commitment, but rather lack of time due to a crazy travel and work schedule lately.
Going forward, I'll be writing shorter posts when I'm pressed for time in order to keep the blog active.
Going forward, I'll be writing shorter posts when I'm pressed for time in order to keep the blog active.
May 24, 2007
TiECon 2007 Conference
Last weekend I spoke at a panel at the TiECon conference in Santa Clara, CA. The topic was Web 2.0 - Redefining How We Live and Socialize Online and Offline. The Indus Entrepreneurs (TiE) is one of the most successful networks of entrepreneurs globally. Started in 1992 in Silicon Valley by a group of successful entrepreneurs, corporate executives, and senior professionals with roots in the Indus region (South Asia), the organization has grown to over 12,000 members in 45 chapters across 10 countries. Its mission is to foster entrepreneurship globally through mentoring, networking, and education. I've been involved with TiE for over 10 years now.
TiECon, the annual event of TiE's founding chapter in Silicon Valley, has evolved to become TiE's most important networking event for technologists, investors and entrepreneurs from around the world. About 4,000 people attended this year's event. Keynote speakers included Nobuyuki Idei, Chief Corp. Advisor & Ex-CEO, Sony Corp; Meg Whitman, President & CEO, eBay; Marc Benioff, Chairman & CEO, Salesforce.com; Vinod Khosla, venture capitalist (Khosla Ventures) and founding ex-CEO of Sun Microsystems; Tim O’Reilly, Web 2.0 thinker; among several others.
Talking to Nobuyuki Idei during the conference, he feels that Japan's aging and closed society critically needs an organization like TiE to spur openness and entrepreneurship in the country.
The theme for TiECon 2007 was "The New Face of Entrepreneurship." Fittingly, one of the attractions on the floor was Anshul Sharma, the 13-year old founder and CEO of Elementeo, a Silicon Valley gaming startup that aims to introduce fun and excitement into kids' education through games (instead of boring textbooks). Here is the video of Anshul confidently touting his new fantasy role playing board game to learn chemistry:
TiECon, the annual event of TiE's founding chapter in Silicon Valley, has evolved to become TiE's most important networking event for technologists, investors and entrepreneurs from around the world. About 4,000 people attended this year's event. Keynote speakers included Nobuyuki Idei, Chief Corp. Advisor & Ex-CEO, Sony Corp; Meg Whitman, President & CEO, eBay; Marc Benioff, Chairman & CEO, Salesforce.com; Vinod Khosla, venture capitalist (Khosla Ventures) and founding ex-CEO of Sun Microsystems; Tim O’Reilly, Web 2.0 thinker; among several others.
Talking to Nobuyuki Idei during the conference, he feels that Japan's aging and closed society critically needs an organization like TiE to spur openness and entrepreneurship in the country.
The theme for TiECon 2007 was "The New Face of Entrepreneurship." Fittingly, one of the attractions on the floor was Anshul Sharma, the 13-year old founder and CEO of Elementeo, a Silicon Valley gaming startup that aims to introduce fun and excitement into kids' education through games (instead of boring textbooks). Here is the video of Anshul confidently touting his new fantasy role playing board game to learn chemistry:
April 22, 2007
Barriers to entry for successful online video creation
While technology innovations and the Internet has clearly democratized the process for creating and distributing video content, one major barrier to entry at the most fundamental level still exists for individuals who want to succeed. That is the skill-set required for compelling story-telling and engaging your audience. This becomes even more important for the long-form content.
With the explosion in the popularity of online video and emergence of firms (Brightcove, Metacafe, Revver, etc) that provide an opportunity to make money to any user who can create content, we're clearly in a new era where one does not need big media firms to launch his/her career. I'm sure most of us welcome this democratization process. Even the price barrier has gone down significantly - these days you can produce professional looking videos using sub-$1k digital cameras. However, just because you can easily create and distribute content, it does not necessarily translate into the ability to make a living out of it. Metacafe pays producers a CPM of $5. Your video therefore needs millions of views for you to make sufficient money to earn a living. Last I checked, the most viewed video on MetaCafe (Matrix - For Real) had earned $26,680 for its producer over two years and five months. All other videos in that list had earned under $8,000. Most other online firms won't disclose the average income for content owners who're utilizing their distribution platforms.
The main reason, in my opinion, is that these short video clips can provide a "snack value" to the audience, but not the "entree" that is required to engage them long enough to command higher CPMs from advertisers. The types of Lonely Girl 15 are few and far between, which by the way was a series of short clips as opposed to long episodic content. The other reason is that the online business models, though constantly evolving, are still not attractive enough for content creators.
Compelling story-telling to engage your audience over a long duration is an art - a very difficult one. Traditional media firms know it well enough to pay big bucks to producers who have mastered this art. And these producers, some of whom even after openly criticizing the concentrated power of big media, will not abandon them to exclusively produce for and distribute on the Internet until the online economics improve significantly to provide comparable earnings, which is unlikely in the near future.
Until then, we may find more and more talented independent online producers switching to traditional firms, especially if they can get an opportunity to bridge the gap between old and new media. Amanda Congdon's move from Rocketboom, a popular online video blog, to ABC News last Fall may be the most famous example of such a switch, but it might become a norm rather than staying as an exception, with the Internet providing the platform for getting discovered.
With the explosion in the popularity of online video and emergence of firms (Brightcove, Metacafe, Revver, etc) that provide an opportunity to make money to any user who can create content, we're clearly in a new era where one does not need big media firms to launch his/her career. I'm sure most of us welcome this democratization process. Even the price barrier has gone down significantly - these days you can produce professional looking videos using sub-$1k digital cameras. However, just because you can easily create and distribute content, it does not necessarily translate into the ability to make a living out of it. Metacafe pays producers a CPM of $5. Your video therefore needs millions of views for you to make sufficient money to earn a living. Last I checked, the most viewed video on MetaCafe (Matrix - For Real) had earned $26,680 for its producer over two years and five months. All other videos in that list had earned under $8,000. Most other online firms won't disclose the average income for content owners who're utilizing their distribution platforms.
The main reason, in my opinion, is that these short video clips can provide a "snack value" to the audience, but not the "entree" that is required to engage them long enough to command higher CPMs from advertisers. The types of Lonely Girl 15 are few and far between, which by the way was a series of short clips as opposed to long episodic content. The other reason is that the online business models, though constantly evolving, are still not attractive enough for content creators.
Compelling story-telling to engage your audience over a long duration is an art - a very difficult one. Traditional media firms know it well enough to pay big bucks to producers who have mastered this art. And these producers, some of whom even after openly criticizing the concentrated power of big media, will not abandon them to exclusively produce for and distribute on the Internet until the online economics improve significantly to provide comparable earnings, which is unlikely in the near future.
Until then, we may find more and more talented independent online producers switching to traditional firms, especially if they can get an opportunity to bridge the gap between old and new media. Amanda Congdon's move from Rocketboom, a popular online video blog, to ABC News last Fall may be the most famous example of such a switch, but it might become a norm rather than staying as an exception, with the Internet providing the platform for getting discovered.
March 18, 2007
Emerging India
Coverage of India in the U.S. press today has become a commonplace. Almost every major U.S. periodical has run a cover story on India - many have done so multiple times. Twelve years back when I first arrived in this country, the Internet was the main source for Indian news, and at times the only source. In fact, I'd pick up the newspaper and pray for no story on India because it invariably involved road/train accidents with avoidable fatalities, embarrassing Parliament skirmishes amongst its multiple political parties, natural calamities claiming casualties so high that it'd make Katrina a side news, etc. In other words, news on India was mostly negative with rare focus on its economy, which at the time was just coming out of its decades-old, socialism-style government controls.
Today, it's all about India's red hot economy. At 9% annual growth rate, it is one of the fastest expanding in the world. With over 1.1 billion people, including a 300M strong middle class, India is the unavoidable growth engine for major multi-national firms which are witnessing mature markets for their goods and services in most developed countries. More importantly, unlike aging demographics in the developed world, India has an incredibly young population. Over 95% of it is below the age of 65, and almost 40% are younger than 15 years of age. India's unusually favorable demography, apart from making it the largest consumer market in the world after China, also results in a very positive "dependency ratio," with proportionately more workers in their peak productive years providing for children and retirees.
China and India, the two future global economic giants, are often compared for their economic progress and its chosen paths. While China took the manufacturing route to became the world's manufacturing hub, India focussed on the services sector and utilized its English speaking army of engineers and college graduates to become the outsourcing capital of the world. It's really astounding to witness both these societies go through such a major socio-economic transformation in a single generation, with millions of people migrating from the hinterland to urban areas in an effort to move out of subsistence farming that limits any significant improvement in one's standard of living. Equivalent transformation in the western societies spanned over several generations, thus providing them ample time to absorb its pace and adopt with far more ease. For example, rapid transformation in China and India is causing serious strains in the family institution as parents and children adjust to each other's starkly different growth environments.
For India, the service sector, which is far less labor-intensive compared to manufacturing, will not be sufficient to push its vast rural population into more productive economic activities. By some measures, India's outsourcing and IT industry employs less than 2MM workers. The majority of the population has been untouched by India's high-tech industry driven growth. Economists are hanging their hats on the filter-down approach. The theory assumes that the government will first fill its tax coffers from economic surge and then invest the collected capital into education and health care for the poor in order to widen the base of beneficiaries. This approach is typically too slow, especially as the impatient lower strata in India watches the rich in the country getting richer at an alarming rate (India crossed Japan as Asia's biggest home for billionaires on the Forbes's latest list of global billionaires), and the government is known to be notoriously corrupt.
Atanu Dev & Vinod Khosla have an interesting Marshall Plan to expedite the desired inclusive-growth in India. Their plan proposes focusing investment on 6,000 Rural Infrastructure and Services Commons (RISC) to expedite development of India's 700MM farmers living in 600,000 villages. The argument goes that 6,000 concentrated zones will provide economies of scale and scope instead of focusing on 600,000 villages.
Coming back to India's urban centers, where many are migrating to from villages in search of better livelihood, there is an urgent need for better roads, bridges, sanitation, mass transport system, power generation & distribution, water supply, and almost every other infrastructure support a modern society requires. India's archaic and aging infrastructure was not built with much planning to begin with, and it's now bursting at its seams trying to cope with the country's sudden, explosive growth. My two visits to India over the past three years convinced me that infrastructure improvement should be India's single biggest immediate focus area. Trouble with India, BusinessWeek's recent cover story, provides a good analysis on India's infrastructure pains.
I can't end a post on India's economic future without discussing the status of its digital media landscape. A recent global study by comScore ranks India home to the world's fastest growing Internet audience (age 15+). Last year, India's Internet audience over 15 yrs of age grew by 33% to 21MM uniques, compared to 2% for the U.S (153MM) and 20% for China (87MM). Online media market in India is expected to grow at 29% annual compounded rate over the next five years. In terms of online usage (avg. monthly online hours per unique visitor), India does not rank in the Top 10, mainly because of its low broadband penetration rate. Indian government declared 2007 as the "Year of Broadband" and plans to increase its BB base from 2MM subs at the end of 2006 to 9MM subs by the end of 2007. In general, the size of the market in absolute terms (dollars and number of users) is relatively small, but all the future trends makes this market unavoidable.
While the above numbers project a bright future for India's online media sector, its wireless market is exploding. In June 2006, India joined China, Russia, Japan and the U.S. as the only countries with over 100MM wireless subscribers. India is adding ~5MM new wireless subs every month, faster than any other country, and is expected to have ~280MM subs by 2010.
Indian market is highly price sensitive because discretionary income is much lower compared to that in the developed world. The starting point for the wireless market in India is also very different - main growth lies in India's rural areas that has no existing telecommunication service. Global firms entering India's fast growing online and wireless markets will therefore need to innovate as proven success formulas from their previous experience may not work in India.
Another important difference to note is that the Indian digital media market is not growing at the expense of its traditional media market - the shift we're seeing in the west. Instead, the overall pie is becoming bigger. According to a recent New York Times story (In India, the Golden Age of Television is Now), the TV advertising in India grew by 21% per year on average from 1995 to 2005, when it reached $1.6B. While it's much smaller than the ~$67B U.S. market, Indian TV advertising is expected to continue its double digit annual growth for the foreseeable future, whereas it's flat to declining in the U.S.
To conclude, India presents a very bright and exciting prospect for the future of the global economy. To realize its full potential, the Indian government still needs to do a lot of hard work and make some tough decisions. Among which, it needs to continue its economic liberalization program, double-up its focus on infrastructure, bring down corruption, and prioritize investment to improve living standards in the rural sector. It's high time that the world's largest democracy also plays a proportionate role on the global economic front.
Today, it's all about India's red hot economy. At 9% annual growth rate, it is one of the fastest expanding in the world. With over 1.1 billion people, including a 300M strong middle class, India is the unavoidable growth engine for major multi-national firms which are witnessing mature markets for their goods and services in most developed countries. More importantly, unlike aging demographics in the developed world, India has an incredibly young population. Over 95% of it is below the age of 65, and almost 40% are younger than 15 years of age. India's unusually favorable demography, apart from making it the largest consumer market in the world after China, also results in a very positive "dependency ratio," with proportionately more workers in their peak productive years providing for children and retirees.
China and India, the two future global economic giants, are often compared for their economic progress and its chosen paths. While China took the manufacturing route to became the world's manufacturing hub, India focussed on the services sector and utilized its English speaking army of engineers and college graduates to become the outsourcing capital of the world. It's really astounding to witness both these societies go through such a major socio-economic transformation in a single generation, with millions of people migrating from the hinterland to urban areas in an effort to move out of subsistence farming that limits any significant improvement in one's standard of living. Equivalent transformation in the western societies spanned over several generations, thus providing them ample time to absorb its pace and adopt with far more ease. For example, rapid transformation in China and India is causing serious strains in the family institution as parents and children adjust to each other's starkly different growth environments.
For India, the service sector, which is far less labor-intensive compared to manufacturing, will not be sufficient to push its vast rural population into more productive economic activities. By some measures, India's outsourcing and IT industry employs less than 2MM workers. The majority of the population has been untouched by India's high-tech industry driven growth. Economists are hanging their hats on the filter-down approach. The theory assumes that the government will first fill its tax coffers from economic surge and then invest the collected capital into education and health care for the poor in order to widen the base of beneficiaries. This approach is typically too slow, especially as the impatient lower strata in India watches the rich in the country getting richer at an alarming rate (India crossed Japan as Asia's biggest home for billionaires on the Forbes's latest list of global billionaires), and the government is known to be notoriously corrupt.
Atanu Dev & Vinod Khosla have an interesting Marshall Plan to expedite the desired inclusive-growth in India. Their plan proposes focusing investment on 6,000 Rural Infrastructure and Services Commons (RISC) to expedite development of India's 700MM farmers living in 600,000 villages. The argument goes that 6,000 concentrated zones will provide economies of scale and scope instead of focusing on 600,000 villages.
Coming back to India's urban centers, where many are migrating to from villages in search of better livelihood, there is an urgent need for better roads, bridges, sanitation, mass transport system, power generation & distribution, water supply, and almost every other infrastructure support a modern society requires. India's archaic and aging infrastructure was not built with much planning to begin with, and it's now bursting at its seams trying to cope with the country's sudden, explosive growth. My two visits to India over the past three years convinced me that infrastructure improvement should be India's single biggest immediate focus area. Trouble with India, BusinessWeek's recent cover story, provides a good analysis on India's infrastructure pains.
I can't end a post on India's economic future without discussing the status of its digital media landscape. A recent global study by comScore ranks India home to the world's fastest growing Internet audience (age 15+). Last year, India's Internet audience over 15 yrs of age grew by 33% to 21MM uniques, compared to 2% for the U.S (153MM) and 20% for China (87MM). Online media market in India is expected to grow at 29% annual compounded rate over the next five years. In terms of online usage (avg. monthly online hours per unique visitor), India does not rank in the Top 10, mainly because of its low broadband penetration rate. Indian government declared 2007 as the "Year of Broadband" and plans to increase its BB base from 2MM subs at the end of 2006 to 9MM subs by the end of 2007. In general, the size of the market in absolute terms (dollars and number of users) is relatively small, but all the future trends makes this market unavoidable.
While the above numbers project a bright future for India's online media sector, its wireless market is exploding. In June 2006, India joined China, Russia, Japan and the U.S. as the only countries with over 100MM wireless subscribers. India is adding ~5MM new wireless subs every month, faster than any other country, and is expected to have ~280MM subs by 2010.
Indian market is highly price sensitive because discretionary income is much lower compared to that in the developed world. The starting point for the wireless market in India is also very different - main growth lies in India's rural areas that has no existing telecommunication service. Global firms entering India's fast growing online and wireless markets will therefore need to innovate as proven success formulas from their previous experience may not work in India.
Another important difference to note is that the Indian digital media market is not growing at the expense of its traditional media market - the shift we're seeing in the west. Instead, the overall pie is becoming bigger. According to a recent New York Times story (In India, the Golden Age of Television is Now), the TV advertising in India grew by 21% per year on average from 1995 to 2005, when it reached $1.6B. While it's much smaller than the ~$67B U.S. market, Indian TV advertising is expected to continue its double digit annual growth for the foreseeable future, whereas it's flat to declining in the U.S.
To conclude, India presents a very bright and exciting prospect for the future of the global economy. To realize its full potential, the Indian government still needs to do a lot of hard work and make some tough decisions. Among which, it needs to continue its economic liberalization program, double-up its focus on infrastructure, bring down corruption, and prioritize investment to improve living standards in the rural sector. It's high time that the world's largest democracy also plays a proportionate role on the global economic front.
January 28, 2007
Fame, fortune or passion?
What motivates users to volunteer their time and effort to create content for companies which profit handsomely from it?
I'd put the reasons in three buckets: fame, fortune or passion (or any combination of the three). Fortune primarily motivates full-timers and small/big firms creating content for promotion/marketing. Fame and passion, I think, motivates most other users, e.g., those making home videos, suggesting stories on Digg.com, contributing articles on Wikipedia, etc. As the novelty of the practice ebbs, users' contribution may also slow down, especially from those driven by fame .
CNET is now experimenting with a system that will reward its bloggers based on the number of clicks their posts get. I welcome the move. I strongly believe that everyone in the ecosystem should be compensated. I'd be eagerly watching how many bloggers, especially seasoned traditional journalists like Mary Jo Foley, a veteran tech journalist who covered Microsoft, join such ecosystems. PodTech recently interviewed Mary Jo on her switch from a full-time job at Microsoft Watch to a freelancer participating in CNET's new initiative.
Sites like Digg.com, which rely solely on its users' participation, should be rewarding its "diggers," at least the most active ones who spend hours every day to surface up popular and interesting stories, for free, while Digg's valuation has soared to $200m by some measures.
I don't agree with the argument that a reward system would be counter-productive, and will adversely affect the quality of user participation by creating wrong incentives for them. I believe checks and balances can be put in place to maintain quality (e.g., thru the algorithm).
Jason Calacanis, while re-launching AOL's Netscape.com along the Digg model, created a stir last summer when he suggested paying $1k/mo to its most active users. Calacanis withdrew the offer - maybe the idea was still too alien at the time - but CNET's experiment above suggests that change is on its way.
And now, YouTube, the biggest success story for a firm that derived almost its entire $1.65B value from its users' efforts, has announced that it'll start sharing revenue with its users. Chad Hurley made the announcement at the World Economic Forum in Davos on Friday.
I'd put the reasons in three buckets: fame, fortune or passion (or any combination of the three). Fortune primarily motivates full-timers and small/big firms creating content for promotion/marketing. Fame and passion, I think, motivates most other users, e.g., those making home videos, suggesting stories on Digg.com, contributing articles on Wikipedia, etc. As the novelty of the practice ebbs, users' contribution may also slow down, especially from those driven by fame .
CNET is now experimenting with a system that will reward its bloggers based on the number of clicks their posts get. I welcome the move. I strongly believe that everyone in the ecosystem should be compensated. I'd be eagerly watching how many bloggers, especially seasoned traditional journalists like Mary Jo Foley, a veteran tech journalist who covered Microsoft, join such ecosystems. PodTech recently interviewed Mary Jo on her switch from a full-time job at Microsoft Watch to a freelancer participating in CNET's new initiative.
Sites like Digg.com, which rely solely on its users' participation, should be rewarding its "diggers," at least the most active ones who spend hours every day to surface up popular and interesting stories, for free, while Digg's valuation has soared to $200m by some measures.
I don't agree with the argument that a reward system would be counter-productive, and will adversely affect the quality of user participation by creating wrong incentives for them. I believe checks and balances can be put in place to maintain quality (e.g., thru the algorithm).
Jason Calacanis, while re-launching AOL's Netscape.com along the Digg model, created a stir last summer when he suggested paying $1k/mo to its most active users. Calacanis withdrew the offer - maybe the idea was still too alien at the time - but CNET's experiment above suggests that change is on its way.
And now, YouTube, the biggest success story for a firm that derived almost its entire $1.65B value from its users' efforts, has announced that it'll start sharing revenue with its users. Chad Hurley made the announcement at the World Economic Forum in Davos on Friday.
January 21, 2007
Jeremy Piven & Smokin' Aces
I'm a big fan of Jeremy Piven. Saw my first live SNL at the NBC studios yesterday. Jeremy, as the host, was brilliant. Musical guest AFI also performed couple of my favorite numbers.
Smokin' Aces, Piven's latest movie and probably his biggest till date, is releasing in a week. Seems to be a clever new twist to an old story, done Tarantino-style with some big name cast. Writer/Director Joe Carnahan is my new hero. He's posted the original movie script he submitted to Universal on his blog.
..."The script I submitted to Universal, which really represents the version they greenlit. Lot of changes in the final film, including the ending (although we did shoot the scripted ending, it goes to that wonderful orphanage known as the DVD deleted scenes section, to be claimed by its loving parent later) and other misc twists and turns."
Movie trailer below:
Smokin' Aces, Piven's latest movie and probably his biggest till date, is releasing in a week. Seems to be a clever new twist to an old story, done Tarantino-style with some big name cast. Writer/Director Joe Carnahan is my new hero. He's posted the original movie script he submitted to Universal on his blog.
..."The script I submitted to Universal, which really represents the version they greenlit. Lot of changes in the final film, including the ending (although we did shoot the scripted ending, it goes to that wonderful orphanage known as the DVD deleted scenes section, to be claimed by its loving parent later) and other misc twists and turns."
Movie trailer below:
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