If Not Acquired, Limelight May Work With Other CDNs To Fight Akamai's 703 Patent

Why there is a lot of speculation on exactly what may happen to Limelight in terms of a potential acquisition, my bet is on AT&T or Level 3, there is also the possibility that Limelight may team up with other CDNs to fight Akamai's 703 patent if they are not acquired.

At the core of the 703 patent is the idea that Akamai has essentially patented all forms of delivering content on the web. Based on the ruling today, the court is basically saying that any content publisher that has a website with ANY embedded object (not just video) that is not delivered under the control of the content producer is infringing on the 703 patent. There was some very specific working about this in the ruling today and I will publish the exact wording shortly when I have the transcript.

Don't be surprised if Limelight rallies other CDNs to the patent fight under the belief that the 703 patent is too broad and is essentially patenting all content delivery on the Internet.

Limelight Will Appeal Ruling: Could Be Acquired Shortly

I expect Limelight Networks will appeal today's ruling and by so doing, will get a stay on the injunction ruling until the appeal can at least be heard. So for the mean time, it will be business as usual for Limelight and they won't be forced to shut down.

That being said, discussions are underway about Limelight being acquired by a larger player in the space who would then fight Akamai in court over the ruling. Limelight does not have a lot of resources to fight such a ruling nor an extensive patent portfolio so they are limited in what they can do.

While rumors have been circulating about Limelight being acquired by Microsoft, I am predicting it would be AT&T or Level 3. Talks are intensifying about the acquisition and I put the chance at over 50%.

Updated: Limelight has just announced they will appeal the ruling.

Akamai Awarded $45.5 Million In Patent Ruling Against Limelight Networks

A few hours ago, a ruling came down in the Akamai and Limelight Networks patent suit awarding Akamai $45.5 million dollars finding that Limelight Networks infringed on Akamai's patents. Akamai is also asking the court to issue a permanent injunction prohibiting Limelight from continuing to sell CDN their services.

While the damage claims are not that big of a deal in terms of the size of settlement Limelight would have to pay, the real question is what Limelight does next. There are a few potential things that could happen which are all going to be based on whether or not the court issues an injunction in Akamai's favor. If Akamai gets the injunction, Limelight options will be limited as they won't have a lot of time to stay an injunction.

Limelight might be able to find a work around on its network to avoid the infringing patent and could always potentially come to some kind of licensing terms with Akamai, but my guess is that they already have a work around on their network to avoid the infringement. They have known about the suit for a long time and hopefully, have prepared different plans to put into action once the ruling came out.

Microsoft Releases Windows Media Services 2008

Yesterday, Microsoft officially announced the launch of Windows Media Services 2008. While I expect we will see a lot more announcements and news around this and other products at next week's MIX event, here are just some of the highlights from Microsoft of the new Windows Media Services:

• Reliability: Improves on the 99.999% reliability of Windows Server 2003

• Native 64-bit OS Support: 2x the industry-leading scalability of WMS 9.0 thanks to native 64-bit operating system support

• Scalable Live Streaming: deliver large-scale live events to a global audience

• Fast Streaming: Fast Start and the newer Advanced Fast Start for WMS significantly reduce streaming buffering times to deliver near-television-like experiences when playing back content or switching between sources. For on-demand content, Advanced Fast Start also enables quick seeking within a WMS stream, allowing users to "seek" forward or backward instantly.

• New Cache/Proxy Server plug-in: this plug-in allows a Windows Media server in a branch office or other remote location to easily split a single broadcast stream from the home office into multiple streams for local end users, reducing WAN traffic.

There are a bunch of other features as well that simplify management, cut costs and enable monetization, which you can read about here.

In addition, many features of Windows Media Services that were previously available only on Windows Server Enterprise and Datacenter are now available on Windows Server Standard, and all Standard features are now also available on Windows Web Server 2008. This makes Windows Media Services 2008 available to a broader set of users at a lower cost. 

With the launch of Windows Server 2008, Windows Media Services 2008 is now available for the Windows Web Server 2008, which has a suggested retail price of $469.

List Of Online Video Conferences, Tradeshows and Events

In the past year or two, many new summits, conferences and events have sprung up to talk about online video or some specific facet of online video like video advertising, video search etc... and I am asked all the time by people for a list of shows.

With that in mind, here is a list of many events that have an online video focus to them of some kind. I did not list events like NAB, CES, IBC etc... as those shows are not focused on online video specifically and I didn't list shows that only talk to terrestrial video with no online component. Also, I did not list any event that has a website that has no info on it or an event that is over a year old and I only listed events in the U.S., Canada and Europe. Many of the links go to 2007 show websites as some have not yet announced 2008 dates.

This list is far from finished. Please add events you think are missing in the comments section and I will continue to keep the list updated.

• AlwaysOn OnHollywood
• AlwaysOn OnMedia NYC
• Broadcast LIVE and Video Forum (Europe)
• ClickZ Online Video Advertising
• Digital Hollywood (Many Locations)
• Digital Media Summit
• Driving Digital Content (Europe)
• EconSM Conference
• Entertainment Technology Alliance (Europe)
• FT Digital Media & Broadcasting Conference (Europe)
• Future TV Show
• Future TV Show Europe (Europe)
• Government Video Technology Expo
• IP Media Expo
• IPTV World Forum (Europe)
• Media Content World Summit (Europe)
• mesh (Canada)
• Mobile TV & Video Summit
• Mobile TV World Summit (Europe)
• NewTeeVee Live
• nextMEDIA (Canada)
• OMMA Global Hollywood
• OMMA Video LA
• OMMA Video NY
• Online Publishers Association (Europe)
• Streaming Media East
• Streaming Media Europe
• Streaming Media West
• The Deal's Convergence 2.0
• The Engagement Debate
• TV of Tomorrow Show
• TV Over Net (Europe)
• Video Search Summit

If I forgot your event, it wasn't personal, just too many to keep track of, hence the need for a list. Please add it to the comments section.

Webinar: Online Video 2.0, Best Practices You Can Use Today

StreamingMedia.com is hosting a free live webinar today at 11amPST/2pm EST on the subject of "Setting the Bar for Online Video 2.0: Best Practices You Can Use Today". Sponsored by PermissionTV, join online video experts as they discuss the top trends in online video and review real-world examples of how companies are setting the bar for the next phase – Video 2.0. Whether a brand marketer, an advertising agency or a media company, this Webcast will arm you with the information you need to execute your own Video 2.0 strategy.

The webinar is free and you can sign up online.

CDN Panther Express Raises $15.75 Million In Series B Round

As expected, this morning Panther Express announced it had closed $15.75 million in series B funding lead by Index Ventures. Gold Hill Capital and existing investor Greylock Partners also participated. 

In the press release,Panther does not gives any real details on what they will use the money towards other than to say for "international expansion" and "further infrastructure investment". Currently Panther has 250 customers, 50 of which are based in Europe.

The big question I have is whether or not Panther Express will use any of this money to build out their network to support streaming, since right now they only support video delivery via progressive downloads.

Note: I have a briefing call with Panther Express later in the day and will update this post should I get any additional details.

Free Product Giveaway: Microsoft Expression Studio

Thanks to the generous folks over at Microsoft, they have provided me with nine copies of Expression Studio that I can give away on the blog. The Expression Studio bundle includes Expression Web, Expression Blend, Expression Media and Expression Design and retails for $599. Expression Studio also includes a license for Expression Encoder and anyone can currently download a 180 day trail of the encoder here.

Three have already been given away in a drawing last month and I'll be giving the last six away in the next two weeks. I would like to give them away to those who will really use them as part of their daily job. To qualify to win a copy you must leave one comment in this post with a suggestion for Microsoft on how they can improve any aspect of Expression, Silverlight or Windows Media. Have you seen a feature you'd like included? Is there something missing that you think should be in the next version? Leave a comment with a working e-mail address. I will pick three users a week from today using a random number picker website and ship them out to the winners at no cost. Anyone is welcome to enter, but only your first comment will be counted.

If any company is interested in getting exposure for their video related product on my blog and is willing to give away the product, contact me. I will post pictures of the product, link to the company website and potentially write a product review or link to other reviews on the web. It's great exposure for your product.

MSNBC Debate Webcast Constantly Buffering, Poor Audio

I've been trying to watch the Clinton and Obama debate live on MSNBC.com and for the 10 minutes since it started, I can't get more than 2-3 seconds of clear video without the screen freezing and delivering me a "buffering" message in the video window. The audio is very distorted as well with high-pitch feedback type noises. What a terrible experience. Anyone able to watch the stream without any problems?

Update: Within a few minutes of me making this post ten others have already left comments below experiencing the same problems. Not good, especially for those of us who have FiOS TV, which does not carry MSNBC.

Update 2: One of the folks who commented below gave a new link from another website where the video works. Now that's the power of the web.

Update 3: I put in calls to Limelight and Akamai's support numbers and both folks I spoke to in the network operations centers didn't think their company was delivering the stream. I won't know for sure until Wednesday where/who the problem is with.

Update 4: Limelight Networks has officially confirmed that they are not delivering the webcast.

Update 5: Akamai has officially stated to me that they were not involved in the webcast. I have a request into MSNBC, should hear back shortly.

P2P Session: Speakers and Content Suggestions Wanted

In May, I've got a panel at Streaming Media East entitled "P2Ps Role In Delivering Online Video" and I am looking for speakers and suggestions on the content. What core topic or facet should the session really drill down on? What are the most pressing issues with P2P and who would make for good speakers?

At our last show, we did a whole P2P session with just vendors, so this year around I am looking to have speakers from non-vendor companies. Customers, ISPs, legal experts etc.... is the angle I am thinking of but am open to ideas. I am also looking for a really good moderator that is not employed by a P2P vendor.

Please leave content suggestions and topics in the comments section and contact me if you want to speak or know of a good speaker/moderator. Anyone who is helpful in securing speakers will receive a free conference pass to the event.

CDN Survey Data: 52% Have No Commit Contracts, 63% Use One CDN Vendor

The StreamingMedia.com survey on CDN pricing and trends has now been filled out almost 1,000 times. I'll be keeping it open for another week or so and then we'll start to compile all the data and give away the free iPhone. Taking a look at some of the preliminary data that has been collected reveals some great data points which I will be showcasing all this week on the blog.

When it comes to the length of CDN contracts, customer commit levels and dual-vendor strategy, there has a been a lot of speculation in the market on what the trends are. Here is the data we collected from nearly 1,000 respondents, 25%+ of which are doing over 25TB of delivery per month.

• 60.8% of respondents said they had a 12 month contract with their CDN. Only 12.9% had a two year deal.

• 73.5% said that when they renegotiate their contract, they don't plan to change the length. Only 12.4% said they planed to sign a longer term contract.

• 52.3% of respondents said their CDN contract had no revenue or bandwidth commitment at all. 25.3% have a monthly commit, 6.7% a quarterly commit and 11.4% have a yearly commit.

• 63.3% of respondents said they used only one CDN vendor for the delivery of video and static content. 26.% use two CDNs and 10.3% use three or more.

You can download the pie chart data for the questions here:(Download CDN-Contract-Data.jpg)

Job Opening: Media Delivery Sales Execs, Pando Networks

Pando Networks is currently looking to fill an immediate need for a Media Delivery Sales Executive located in NYC or LA. With nearly every major media company considering peer assisted delivery for long form, high res content, this it’s a good opportunity for someone who’s not afraid to sell into a developing market environment with an emerging leader.

If you are interested, contact David at Pando Networks.

If you are looking for a new position, have taken a new job or are a company that has a job opening, let me know. In many cases I will highlight it here on the blog - free of charge.

DivX Finally Shuts Down Stage6 Portal

Today, DivX announced that it would be shutting down the Stage6 video portal effective this Thursday. DivX originally planned to spin off Stage6 as a separate company late last year but then announced in December that it was looking for strategic alternatives instead.

I'm never pleased to see any service or video portal have to close but this is the best thing DivX could be doing. Operating a portal was not their core business and the last thing we need right now as an industry, or as consumers, is more video portals. Stage6 never got any real traction in the industry, was not a service I heard others discussing and had very little in the way of usage by content owners.

From the get go the service was destined to fail as DivX was using the site to showcase their own technology. The problem being that if the only way you can try to showcase adoption of your technology by content owners is by running your own website, it won't work. The shut down notice on the Stage6 website says the service was started "with the mission of empowering content creators and viewers to discover a new kind of video experience." I'm not sure what that "new kind of video experience" was they are referencing but I think too many companies in the industry think that just because they encode video at high bitrates or large window sizes, they will be successful. You have to do more today than just deliver video that looks good, you have to have a business model behind it and their needs to be a demand for the service.

A high-quality, high-bitrate, large window sized video content offering does_not equal success by itself.

Microsoft Gives First Look At Silverlight 2 Functionality

Last Friday, Scott Guthrie from Microsoft gave out details on his blog about the next version of Silverlight. Scott says that Microsoft will soon release the first public beta of Silverlight 2, which will be a major update from the initial release of Silverlight nearly 7 months ago. Scott says he'll be doing a bunch of blog posts over the coming weeks talking about Silverlight 2 in more detail. Head over to his blog for the details.

Take A Survey On Encoding/Editing Systems: Win A PlayStation 3

StreamingMedia.com is conducting a survey on editing systems, encoding software and content workflow. Also of interest are streaming formats and delivery methods. The survey should take no more than two minutes to complete and all respondents will be entered into a drawing for a free PlayStation 3. The winner will be notified on March 15, 2008.

Adobe Gives Details On FMS 3 Benchmarks, Live Streaming and DRM

At StreamingMedia.com, we operate seven different e-mail based discussion lists based on various topics with over 5,000 members. Our lists are free to join and it's a great place to get answers to your questions from others in the community. One of our most active lists is the "advanced" list where more of the technical discussions take place.

Last week Adobe gave some public info on the benchmarks for the new Flash Media Server 3 and also
addressed the topic of live Flash and DRM. Here are some excerpts on the info they gave out.

Flash Media Server 3 Benchmarks

"The benchmarks for Flash Media Server will be out shortly. I can leak that the numbers will show a staggering difference from the version 2 of the product. We are seeing 200% on Windows 2003 (SP1; Standard) increase in both VOD and Live capacity given the same hardware. In Linux, the numbers are over 300%. The key factor for streaming servers is the threshold of how much CPU usage someone will run. Similar to how high you rev the engine to get your speed. We’re seeing a 1Gbps network card saturated with just 20% CPU on Linux. Given this is our lab, which we use as a baseline for testing.  RTMPE (the new real-time Encryption protocol) only adds an addition 10% to the CPU usage."

Flash Player Adoption

"We all know that Flash Player is ubiquitous across both the consumer and enterprise markets. This is the core runtime required to render a video, and connect via RTMP or encrypted RTMPE protocol to FMS. We just published the December 2007 census and Flash Player 9 now enjoys a 97% penetration in mature markets."

Flash Live Quality

"Live video in Flash can be done in 3 ways."
1) Using the Flash player’s live capture feature (SPARK/Nellymoser Codecs); (webcam quality)
2) Using Flash Media Encoder (On2/MP3 Codecs); (good quality at higher bitrates)
3) Using 3rd party partners such as ViewCast, Kulabyte, Digital Rapids and many of the ones that support Ben’s initiatives.   You can see a list of them on the Adobe website.

"Adobe will also be releasing an update to the Flash Media Encoder to support H.264 live streaming in a couple months. This should put aside many of the “quality” concerns you may have. H.264 is higher quality video at much less bitrate."

Addressing Digital Rights Management (DRM) With Flash

"You will be hearing a lot more about this from Adobe over the next few months, but from a streaming point of view, DRM is built on top of 2 key requirements; Encryption of content and Access Control. When you break it down, to protect content from mis-use, you need to protect the bits as they leave the server and before you get the bits, you need to protect the access (i.e. creating a policy)."

"Streaming to Flash resolves both of these requirements WITHOUT a DRM server and WITHOUT any disruption in the playback to download a key. To set the stage, RTMPE and RTMPS (SSL version) encrypts the video bits in real time as they leave the server, and render on the player. There is no client cache (as there would be with a HTTP delivery) so you don’t need to worry about people stealing the bits after they have arrived. There is also a very advanced set of APIs that let you build out your own policy rules for accessing the content. Out of the box, you can protect access to the server using SWF Verification or Domain white listing or even restrict by version of the player. You can build time-out tokens, or anything else you need to protect the delivery channel, and the playback. Because your user is always connected to the server, you have full control over policies for content access."

Experience Does Matter

"Flash / Flex are just one part of the experience process. It’s not just the adoption of the run time that makes Flash Player / AIR the best choice to deliver these experiences. Often times we all focus so much on the adoption rate of Flash player. There is a reason why the proliferation of Flash is so ubiquitous, and there is a reason why Adobe is seeing the fastest adoption of new players then ever before in its history. The reason is from planning to playback – from the person shooting video, or designing the video player experience to the person consuming the video."

"By understanding the workflow of the creative designers and developers and ensuring that their workflow are made as easy as possible using the tools they use every day (Photoshop/Illustrator/Premiere/AfterEffects/Soundbooth….) When you make life easy for people making content, more content will be produced on the platform – it’s really that simple. All the other pieces are in place to ensure content protection, quality and reach so all that effort can be monetized and protected."

Sounds like we will be hearing a lot more news from Adobe about these topics very soon.

JumpTV Selling Their CDN: Shows It's Too Expensive To Operate Your Own Network

Last week, JumpTV announced that it was looking to sell its content delivery network and would be "refining its strategic focus toward high-value sports and Hispanic broadcast content." This is a great example of where trying to own and operate your own network specifically for the delivery of video does not makes sense. In the release, JumpTV said "The content delivery network is currently a significant cost center for the company, and the Company believes its sale will enable it to lower its ongoing operating costs."

When asked by investors who their biggest competitors are in the market, some CDNs choose to say "companies who do it themselves". That may be the case when it comes to the static caching of images and HTML, but for video, nearly no content owner builds out their own CDN. Yes, Google and MySpace deliver the majority of their video content themselves, and AOL does a lot, but how many companies are truly like those three? Certainly not JumpTV.

Delivering video to a mass scale, like JumpTV was doing for over 5,500 live events in the last quarter alone, takes a lot of money, a lot of effort and more resources than most realize. Yes, it is not rocket science anymore, but it is very capital and man-power intensive. For all the investors that think any company with some money can enter the market and easily give the top CDN players a run for their money, it's not that easy. And when any content delivery network says that "customers doing it themselves" is the bigger competition they face, ask them for what service they are talking about. It's not for video.

Think about some of the biggest users of video on the web today; MLB, NBA, CNN, MSNBC, FOX, ABC, CBS etc... none of them are building out their own CDNs for video delivery. The CDNs have no major threat from content owners building out their own distribution networks for video delivery.

Akamai, Limelight and The Writers Strike: What It Really Means

Limelight put out earnings this week and once again, many analysts are unfairly comparing Limelight and Akamai numbers and data. Why is it that so many analysts and reporters are willing to make very specific statements about CDN providers, but do so using general terms? Sounds confusing just saying it but I'll prove my point in a second.

Yes, there is no question that Limelight did not show revenue growth from quarter to quarter and its yearly revenue guidance of ($136M) is a lot less than the pre IPO revenue guidance they gave ($179.2) for 2008. Investors want to see revenue growth quarter to quarter, but to me, who has no vested interest in either Limelight or Akamai's stock, the number of net new customers by Limelight each quarter continues to grow very well. Continued, long term, steady growth of customers is a good benchmark. Yes, being profitable is important, I get that, but this is not a dash to the finish line. This market is only just getting started and for Limelight, they are in this for the long term. And even without revenue growth quarter to quarter, the next closest competitor to Limelight in terms of CDN revenue for the U.S. has less than 25% of Limelight's revenue, so its not like anyone is bumping them from the number two spot.

I find it interesting that no one is saying Akamai only had 19 net new customer for the quarter and Limelight had 170? Why is no one comparing that and saying look how good Limelight is doing over Akamai? Because it is not a fair comparison. But that does not stop analysts and others from comparing Limelight's 15% decrease in the monthly average customer revenue, versus 20% increase by Akamai. That's suppose to be a fair comparison? What percentage of Akamai's revenue came from CDN services last quarter? How many new CDN customers did Akamai sign up? We don't know as Akamai won't break out those numbers. But did anyone stop to think that Akamai's CDN business could of been flat for the quarter as well but all of the other higher grossing products they have made up for it?

Limelight lives or dies by two things. It's CDN product, specifically for video delivery and the media and entertainment customers, which is its core vertical. Akamai offers multiple products not related to video and targets other verticals like enterprise and government. So when reporting numbers, we know exactly what product or service customers are buying. With Akamai, we don't.

Now some will say that Akamai stated on their call that a) the writers strike did not affect their business and b) they saw significant seasonal strength in media and entertainment. I agree with both of those statements, BUT, they are general statements. Did the writers strike affect Akamai. Absolutely. Doesn't Akamai have just as many if not more major broadcasters on their network than Limelight? While it did affect them, Akamai answered the question correctly when they said that it did not affect their business. Since Akamai is diversified in their product line, the writers strike had little impact on their revenue overall. But is that then fair to compare that to Limelight since they don't offer those other products? No.

And as for Akamai's statement that they, "saw significant seasonal strength in media and entertainment..." I don't doubt that. But for what product? Why does everyone assume that just because it is a media and entertainment customer that means they are doing video? Media and entertainment customers need other services Akamai offers as well. Why doesn't anyone question the general statements many companies put out and ask for the data behind it?

And before anyone writes in and says I am taking sides or am defending Limelight, I'm not. Yes, Limelight is a sponsor of the blog but Akamai has also nicely been a sponsor of the blog on multiple occasions. If the roles were reversed, I would still be making the point. It does not matter who the company is to me, it's the principle of how data is reported and conveyed to the industry and the market.

I probably saw over two dozen articles yesterday alone about Limelight's earnings. One said, "...it’s at least as likely that customers are pulling away from Limelight because of the costly patent lawsuits brought by Akamai and Level 3..." Really? That's a very specific statement, yet made in a general term with no details. Likely based on what? Customers you spoke to? Something Limelight said? Something you can point to? None of the above. If anything, Limelight's continued growth of net new customers each quarter says the opposite.

No, I don't own any shares of Akamai or Limelight. I have never bought, sold or traded their stock ever. And I know some investors are going to say that I am not a financial analyst so what do I know. That may be. But don't you think that is exactly what is needed in today's market? People who don't have any vested interest in public companies questioning what they say and asking for details on the products that make up the numbers? Anyone can look at a spreadsheet and P&L and all of that. But all of those numbers come from the products and every time I listen to a earnings call, nearly all of the questions are about ARPU and lots of financial data. That data comes from the products and services being sold. Why not ask more about them so you can see how the numbers evolved into what they are?

I'm sure some will say, why the hell do I care about this so much? Why am I always ranting about apples to apples comparison when I have no vested interest in the stock of any of these companies? The answer is simple. I want this industry to grow. I have been in this market for almost 15 years and I want to see it grow for another 15. In order to do this education, data, metrics and examples are the_best way that is going to happen. Maybe I am a fool for wanting companies and Wall Street to be more straight forward with info, ask the right questions and provide real data. I know when it comes down to it it's all about politics and the companies decide what data they put out in the market and what "perception" they want the industry to have.

My relative Sam Rayburn, former Speaker of the House said it best with the quote of "you can never remove politics from politics". That's what this industry feels like to me sometimes, politics.

AP Article: How Internet Video Is Clogging the Pipes

I can't figure out why we still have to read an article every few months talking about how online video is clogging the Internet. Last week the AP published an article titled "How Internet Video Is Clogging the Pipes". It's basis for the argument is that ISPs like Comcast and Time Warner Cable are shaping traffic due to file sharing. Ok, but what does that have to do with online video? Sharing files that may or may not contain video content is not "online video". Sharing a file via a download from one user to another does not involve the playback of any video online, it's played back locally from the users computer.

Yet, after saying that file sharing is the problem, the article then says that "Internet use keeps climbing, with video being the big driver in recent years. Google Inc.'s YouTube, which started up in 2005, already accounts for about 10 percent of Internet traffic." First, is there anyone out there besides the company who produced that report that believes that YouTube accounts for 10% of all traffic passed on the Internet? And second, how can you compare file sharing to YouTube? They are two different types of traffic. File sharing is usually very large files and most times at very high quality. YouTube is short form content at very low quality.

My point is that we keep having to read articles every few months about how online video is supposedly breaking, clogging, or filling the pipes to the point that the Internet is going to come to a halt. There is no data anywhere to back this up. Yes, video traffic has grown and continues to each year, but it has been doing that for the past 10+ years. Online video is not clogging the Internet and I have yet to see anyone with any real data to back up the theory that online video is going to fill up all of the capacity the Internet has to offer.

More VC Money Coming To CDNs and P2P Networks

With over 30 CDN and P2P providers in the market today (www.cdnlist.com), you'd think the VC money would stop flowing to content distribution networks, but it's not. Over the first half of this I expect we'll see at least three more companies who are expected to announce funding. Looking at my list of 30+ providers, there is almost no company left on the list that hasn't raised money. I can't remember a time in the CDN market, even dating back to 1999, when nearly every company in the CDN industry all raised capital within nearly 12 months of each other.

We've seen Limelight Networks go public and EdgeCast, CacheLogic, CDNetworks, Grid Networks, BitTorrent, ChinaCache, Move Networks, Itivia, Rawflow and Rinera Networks all raise money within about the past 12 months. I expect the next round of funding announcements this year to come from Panther Express, Pando Networks and BitGravity and if that happens, nearly every company on the list will have raised money or is a publicly traded company.

This worries me. While it is great for the industry right now, over time, the market can't sustain 30+ providers. I fear that 18-24 months from now we're going to see quite a consolidation in the CDN market and only about half the providers will be left standing. The CDN market keeps going in the same cycle every couple of years. In 1998 there were about half a dozen CDNs. In 2001 that number surged to a few dozen. Then in 2004 we were back down to about six providers, and three years later, back up to a few dozen. It's a roller coaster ride for the CDN market and I really hope that the CDN and P2P providers are taking note of why companies failed in the past, where they went wrong and are aware of how not to repeat the same mistakes made in the market in years past.

SM East Conference: Advance Program Live, Speakers Wanted

The advance program for the Streaming Media East conference and exhibition taking place May 19-21st in NYC is now available for download.

We'll have over 100 speakers and 30 sessions, many of which will be interactive with live demos, presentations and how-to sessions. Many shows put six or seven speakers on a session or fill the agenda with vendor sales pitches. At Streaming Media East, nearly 75% of our speakers are customers who are buying and deploying these services and products today.

Here is the list of all the session names and full descriptions of each session can be found in the PDF:

• How Old Media Is Embracing Online Video and New Media
• Reinventing The Ad Model Through Discovery And Targeting
• Using Adobe Media Server To Deliver Live And On-Demand Video
• Mergers and Acquisitions: Wall Street's View
• Monetizing And Aggregating Niche Video Content
• Live Broadcasting Over Mobile And Wi-Fi Networks
• The H.264 Convergence
• Comparing and Using Online Video Codecs
• Online Video: Should Content Creators Get a Cut?
• Effective Advertising Models For Short-form Video Marketing
• Codec Comparison: VP6, H.264, And Windows Media
• CDN Pricing: The Going Rate For Video Delivery
• Lifecasting: The New Broadcasting Platform
• Planning, Building, and Launching a Successful Podcast
• P2Ps Role In Delivering Online Video
• New Advertising Platforms and Networks
• Creating And Promoting Amateur And Viral Videos
• Best Practices in Enterprise Streaming for Communications and Learning
• Ad Networks Vs. Branded Video Sites
• Deploying On-Demand and Live Media Experiences with Microsoft Silverlight
• Entertainment Devices: How TiVo, Xbox, and iPhone's Are Changing Content Consumption
• Adobe Media Player: Creating, Delivering, and Monetizing Branded Video
• User-Generated Video in Education
• Delivering Media For Microsoft Silverlight With Windows Server 2008
• Tools And Best Practices For The Enterprise Streaming Media Department
• Beyond The Classroom: Reaching A Global And Mobile Audience With Elearning
• Independent Content: Creating New Revenue Streams
• Planning & Executing Successful Webcasts
• Evaluating and Choosing The Right Methods Of Video Delivery

Nearly 65% of the speakers have already been confirmed and will begin going on the website next week. While the call for speakers closed last month, over the coming weeks I will be posting some open speaking spots I have for some very specific sessions. Your best way to stay up to date is to sign up to the blog in your RSS reader so you don't miss out on potential speaking opportunities.

Yahoo! Buys Maven Networks: Revenue Multiple Too High

As I'm sure you've read by now, Yahoo! announced earlier in the week it had acquired Maven Networks for approximately $160 million. While I see some of the synergy of the deal, I think Yahoo! paid too much. Based on the price tag, Yahoo! paid about 11x the sales revenue that Maven had in 2007. It's a good deal for Maven shareholders, but for Yahoo!, that's a high evaluation in my eyes in today's market.

Clearly, Yahoo! bought Maven for their technology platform and IP, but at some point, you have to also look at the buy vs. build numbers. Acquiring Maven gives Yahoo! a platform today, as opposed to them having to build one themselves, but at what cost? Considering the state of the rest of Yahoo! business, selling a software video platform is very different than the way Yahoo! has sold everything else for years. And not really knowing what Yahoo! strategy is as a whole moving forward casts doubt on what will truly become of a Maven/Yahoo! integration.

While it sounds like the product will still be branded under the Maven name, Yahoo! should re-brand this immediately and bring it under the Yahoo! brand. With the sate of flux that Yahoo! is in as a company, I think it needs to do everything it can to put forth one clear brand, strategy and core set of products. I think over time the Maven platform could be a good core product for Yahoo!, but only time will tell how successful the integration will be and whether or not Yahoo! sticks to the set of current products offerings they have in the market today. In my eyes, it's hard to for Yahoo! to say to the market that it is dedicated to any product platform, while at the same time laying off 1,000 employees. How much will Yahoo! truly support the Maven platform with additional dev work and new products features and functionality?

Apple iPhone's To Support Flash Video Very Shortly

Some folks who work closely with the iPhone product line are telling me that iPhones will support Flash video playback very shortly. While I know there has been a lot of speculation about Flash video on the iPhone not being possible due to battery constraints and other technical rumors, the only real thing stopping it from working is an agreement between Apple and Adobe.

While I don't personally have an iPhone, getting Flash video adoption on the handset will go a long way in helping to make video a lot more portable for handsets. Yes, many phones already do video, but iPhone users amongst all others are always very adamant about showing what the phone can do and the moment it does Flash video, you'll see a lot of iPhone users showcasing that to anyone who wants to watch.

UPDATE: I am already getting a lot of questions about what "very shortly" means and it's a valid question. The answer is I don't know for sure, but based upon who told me the info to begin with, I took it to mean this quarter.

One Year And Nearly 400 Posts Later

It's been one year to the day since I started this blog and put up my first post. Nearly 400 posts later it's amazing how many topics the industry is talking about, what the hot topics are today and how much of what we were taking about a year ago, or eight years ago, is once again coming full-circle.

My thanks to the loyal readers and subscribers of the blog and all the sponsors who enable me to be able to sit down and write something nearly everyday. Support from sponsors has been overwhelming and I hope that in their eyes I am providing some good thought-provoking content via the blog for discussion.

My thanks to some of the newest blog sponsors: EdgeCast, Skytide, Microsoft, Internap, Adobe and to my long running sponsors of Limelight Networks, Tremor Media, Ignite Technologies, Ortiva Wireless and many of the other companies who have sponsored the blog.

Next month, I'll be doing some re-design of the blog layout to make things a bit easier to read, less clutter, and will be moving over to standard ad sizes.

Thanks again for everyone's support and as always, if you have ideas for the blog, if there are topics you want me to write more about, I am always open to feedback, good or bad.

62% Of CDN Customers Surveyed Say Pricing Flat Year Over Year

I've been taking a look at some of the preliminary data that we have been collecting from our CDN survey and we've already got some great data points. While I expect a few thousand respondents over the course of a month, after a few days we already have over five hundred customers who have filled it out.

As Akamai's Q4 earnings from last night showed, much of the "pricing war" talk in the industry by analysts is overblown. Yes, there is some competition, especially when it comes to the largest customers, but for the most part, the "price war" is not as bad as analysts make it out to be and this data point below seems to reinforce that idea.

One of the questions in the survey is: How would you assess the pricing of your current CDN contract(s) versus your last CDN contract?

62% of those who have been surveyed stated their pricing was flat year over year. That point by itself is not enough as you really need to know what kind of volume those who fill out the survey are doing, but we're collecting that data as well and nearly half of those surveyed are doing over 50TB of transfer a month, so it's good sized customers.

The point is that not every customer is getting rock-bottom pricing and not every customer knows what price they should be asking for. If they did, we'd be seeing lower prices in the market more than we are, but in many cases, customers who already think they are getting a good price aren't trying to get the CDNs to lower pricing even more, unless the customer is willing to commit to more traffic, more revenue, or more services.

Take A 2-Minute CDN Survey: Win A Free iPhone!

CDN CacheLogic Rebrands, Changes Company Name To Velocix

This evening, UK based content delivery network CacheLogic re-launched their company website and changed their name to Velocix. Some may be familiar with the Velocix name already as it was previously used by the company as part of their product offering branding. This comes hot on the heels of the company closing $25 million last month.

Breaking News: Court Throws Out Two Patents In Akamai/Limelight Patent Case

While I don't have all the details yet, within the past hour, the court has issued a preliminary ruling throwing out two of the three patents named in the Akamai suit. I'm being told that only the 703 patent will be going to court. I'll post more details as I get them. I expect we'll see an announcement tonight.

Limelight put out a press release a few hours after this post. You can read it here.

Level 3 Winning Video CDN Business, But Not On Price

In October of last year, Level 3 announced that it would offer their content delivery services for video for the same price that it was charging for transit. Many in the industry incorrectly saw this as Level 3 saying they were undercutting other CDNs in the market and entering the industry as the low-cost leader, which is not the case.

If I remember correctly, Level 3 has over 2,000 customers for its IP transit services. It's only natural for them to roll out a pricing plan that they can use to target current customers buying other products like transit. But instead of many seeing it for just that, too many in the industry took it as a sign that Level 3 started a "price war" amongst the CDNs. For all those who have written about Level 3's pricing and a price war, why is it that none of them that I have seen have ever mentioned any real numbers of what Level 3 charges? Where is the data behind this Level 3 "price war" that so many talk about? How come no one will give an example of what Level 3 is actually charging? And if you aren't a Level 3 customer for IP transit services, their new pricing model gives you no indication of what they charge for CDN services without transit. Too many people want to make this more complicated than it is and want to talk to the "perception" of a Level 3 price war instead of finding out what they are actually charging for content delivery.

I've seen a bunch of Level 3 quotes and RFP responses and Level 3 is not undercutting the other CDNs in the industry just to win business. They are not the most expensive in the industry, nor are they the cheapest. From what I have seen, on large volume deals (over 50TB), Level 3 is a few cents more per GB delivered on average. But of the deals I hear Level 3 winning, like the one they announced yesterday with the Democratic National Convention, Level 3 is winning business where it involves more than just content delivery. In many cases it involves back-haul, transit, VYVX services, co-location and other products. Level 3's approach to the market is that they will gladly take on the customers who need high-volume delivery and commoditized CDN but they are really targeting the more complex business that involves more than just the CDN product. It's the same marketing angle and approach to the market that Internap is using and Level 3 and Internap are more similar in their services offered than Level 3 is to Limelight or Akamai.

I expect we will see more announcements about customer wins by Level 3 like the one from yesterday that involve multiple products and services outside of CDN. Is that to say that companies like Level 3 and Internap are eating into the market share of Limelight, Akamai and others? In most cases no, as they are all going after a core group of different customers with different needs. There is no CDN on the market today that is a perfect fit for every customers needs. Yes, all the CDNs are competing on some of the very commoditized business, but most of them are now distinguishing themselves by going after different sized customers, in different verticals, with different solutions. They have all become a lot more focused in knowing who they should target and who they shouldn't. A few years back, CDNs tried to be everything to every customer. Today, the majority of them are very good as knowing what business not to go after.

I'll be putting out more CDN pricing data over the next 30 days as we are collecting CDN data from customers via this survey. We've already had a few hundred CDN customers fill it out and I expect a few thousand over the next couple weeks.

Take A 2-Minute CDN Survey: Win A Free iPhone!

StreamingMedia.com is conducting primary research in the area of content delivery network pricing and trends. This survey should take no more than two minutes to complete and all respondents will be entered into a drawing for a free Apple iPhone.

Highlights of the survey results will be available for free to anyone who completes the survey. The survey will include information on the cost of video delivery services, format and bitrate trends, P2P adoption and other content delivery specifics.

Content Owners See Their Video Traffic Growing 2-4x Over Last Year

I talk to a lot of content owners large and small and no matter what subject we are discussing, I always ask them for their predictions on their traffic growth for 2008. While many of them share their numbers with me but don't allow me to make them public, the vast majority of content owners are telling me that they expect to deliver 2-4x more bits this year when compared with 2007. For most of them, that does not take into account the fact that this year, many content owners are bumping up their encoding bitrates from 300Kbps to 500-750Kbps. Taking that into consideration, with increased bitrates they could see their traffic growing from 4-8x over last year.

In most cases, nearly 100% of this content is being delivered via content delivery networks, so it's the CDNs who really make out from this growth. But the real question is while the number of bits goes up, does the price per GB delivered come down to the point of where the volume really does not make up for the reduced price? From what I can tell, even if a content owner increases their traffic by 4x over last year, the typical price break they are going to receive is somewhere around 35%. On a 200TB a month commit, a customer who is paying say $0.20 per GB delivered now, is going to be paying on average around $0.13 per GB delivered for 1000TB a month. Now that's not what ever content owner is paying, some pay more, some less, but if we use that as an average, CDNs should still see higher overall revenue based on increased volume.

Now for larger deals, that may not be the case. For a content owner who does 500TB a month today and grows to 2000TB a month this year, I expect they will see close to a 50% reduction in price based on the additional volume. So for some of the really large customers, increased bits delivered may not equate to more revenue for CDNs. For larger customers it may cancel it out. Bottom line, content owners are expecting to deliver a lot more bits this year and don't see the recession cutting back on their growth or spending.