Apple Drops DRM From iTunes Music, But What We Need Are DRM Free Videos

Today, Apple announced at Macworld that by the end of the first quarter, all songs in their catalog will be DRM free. While that's nice, but not really that big of a deal, the real question is when DRM free videos will be made available?

Lets face it, most folks who buy music from iTunes only want to play it on an iPod anyway and are not moving the content around to many other devices. Music is not what's driving the growth of the Internet, new applications, or bandwidth consumption. It's all about video. If Apple really wants to push the market forward and help video consumption explode, it needs to convince content owners that offering DRM free videos would help jumpstart the industry. New business models would be created overnight and consumers would be happy, which means they would buy and consume more content. We'd see an amazing amount of growth in just a year's time.

For all we know, Apple is already doing this and trying to convince content owners of the need for DRM free videos. But until the day consumers can buy content once and move it to any device they want, the market for purchasing video content won't see the kind of growth that many of us in the industry have been waiting for.

Announcing The Passing Of Longtime Industry Executive Ezra Davidson

I wanted to pass along the sad news that Ezra Davidson, former co-founder of SyncCast and a previous writer for StreamingMedia.com passed away over the New Year's holiday. Sadly, he was killed by a family member who the LA Times is reporting is being charged with his death.

Ezra was a long time veteran of the online video industry and co-founded SyncCast in 1998 which he departed in 2007 when it was sold to Technicolor. While I never got to know Ezra on a personal level, through our business relationship he was a friendly guy who was always excited to talk about the online video industry. Every time I saw him at a Streaming Media show he was always laughing and had a smile on his face.

Some of his friends have put up a memorial website with more details on Ezra's background and photos of Ezra with some of his colleagues.

Updated: The family welcomes all those who knew Ezra if they want to attend the service.

10:30 AM, Saturday January 10, 2009, Memory Chapel, Forrest Lawn, 21300 Via Verde Drive, Covina, CA 91724

Streaming Media Industry Sourcebook Coming in February: Sign Up For Free

For those interested in the business, technology and content of online video, our annual Streaming Media Sourcebook will publish in February. It’s our biggest issue of the year, and it includes comprehensive year-in-review articles looking at the most notable developments in 2008, as well as a look forward at what’s likely to come in 2009. It also includes case studies and a slew of how-to and buyer’s guide features, including the following:

• Choosing a Camcorder
• Selecting the Right Nonlinear Video Editor
• The 2009 Video Encoder Shoot-Out
• Picking a Content Delivery Provider
• How to Add Closed Captions to Online Video
• How to Generate Automatic Speech Transcripts in Flash Video
• Making Sense of the H.264 Licensing Labyrinth
• The Live Mobile Video Landscape
• and many more.

Also featured are a roster of case studies from each of the major verticals: entertainment, education, enterprise, government, and advertising. You can subscribe to the magazine for free, and if you’re interested in advertising, contact Joel Unickow.

Level 3 To Cut 450 Jobs, CDN Group Still Growing: Should Do $45-50 Million

Level 3 announced today that it would be laying off 450 employees in North America or about 8% of their total workforce. While that's not good news for the company as a whole, the company has confirmed that the CDN group is not being affected and none of the cuts are coming from the content delivery markets group.

While I expect a lot of the 115 open jobs listed on Level 3's website to disappear, Level 3 is currently looking to fill various positions in the CDN group. In particular, they have three sales engineer positions they are looking to hire for right away in SF/San Jose, LA/Tustin and NY. If interested, contact Brian Gero at Level 3.

As we put the final touches on our Frost & Sullivan report entitled World Video Content Delivery Networks Market, which breaks out CDN video revenue and market share, Level 3 will do between $45-50 million in total CDN revenue this year. While most of that revenue comes from small object delivery video downloads and not video streaming, Level 3 is showing some good progress with their streaming offering. $50 million in revenue for 2008 won't make any impact on Level 3's total company revenue, but it would rank them at number four in the industry based on total CDN revenue behind Akamai, Limelight and CDNetworks.

That being said, Level 3's content delivery group can easily be affected if the rest of Level 3's businesses can't increase revenue, cut costs and reduce their debt. The job cuts today is intended to help reduce their costs but it is to be seen if that will be enough even in the short-term.

Recent Level 3 Posts:

- Level 3 Opens Broadcast Encoding Centers: Ecosystem Offering Now In Play

- Q&A With Jim Crowe, CEO of Level 3 About Their CDN Business

Hard Times Are Good For The Online Video Industry: Don't Give Into The Scare

No one will argue that just about every business vertical and our country are experiencing hard times. But for the online video industry, the challenging times are good for business and as a whole, good for the industry overall. To me, it looks as if too many folks are writing for headlines and want to predict doom and gloom just so they can play on emotions and do things like create lists of ways that companies in our space can "survive" the hard times. How many more posts do we have to read where someone gives advice saying things like "watch your expenses" or "renegotiate vendor contracts"? If any company in any industry does not already know to watch their expenses and isn't constantly working to renegotiate vendor contracts, in good or bad times, then they don't deserve to survive. Let them go under.

Part of the reason why we see so many of these is lists is that quite frankly, there are way too many companies that have to do with the Internet, being run by a bunch of young kids with no business experience at all. What other industries besides the Internet space do you see lists like this being made? The airline and automotive industries as a whole have been taking for years. We don't see the Airlines and those who cover the space talking about how airlines should "watch their fuel costs" or "make sure they don't have empty planes". A lot of what we are reading about in the online video space is due to the fact that many running these companies just don't have a lot of business experience. I don't fault them for that, you have to get your start somewhere, but those who have money in these companies should be overseeing them very closely all the time, not just when times are bad. And how many companies have a CEO or executive management team who might have very strategic visions or be very smart people, yet have no leadership skills or business experience. Many of the companies in the Internet space as a whole are founded by very smart technology people, not business people.

It seems that many writers want readers to give into the scare of these articles talking about how bad things are, and how much worse they are going to get, without looking at the real reason companies are having problems. Most of the companies I see laying off employees, don't have any business model to begin with. So at some point, in good economic times or bad, they are going to layoff employees anyway. That is not the case for all companies, but it is for many of them. And what about the positive impact this will have on the industry as a whole? Do we really need a hundred user generated video sites out there? Chopping many of them out of the market will help better define who the leaders are, what business models work and will assist those with real business models to grow faster and help them stand out from the sea of confusion. Many companies who have a legitimate shot at making it tell me their main marketing problem is how they make themselves stand out from all the noise that comes from having way too many companies, with no real business, in the market.

That being said, I'm not suggesting that anyone losing their job is a good thing or easy to deal with. And some cuts are coming to companies who I do think have a real business model in the future. But layoffs are a part of any business. The thing I don't like hearing is how so many executives of these companies are only just now talking about keeping an eye on costs because of the economy. Any real business person will tell you that you keep a closer eye on costs when things are good, when you tend to waste money, so that when things are bad, you are already prepared and don't have to take drastic actions. More money is wasted in good economic times with things like lavish dinners, expensive hotel rooms and company branded swag, than in times when the economy is bad.

I think it is also crucial for all facets of the online video industry to keep things in perspective and set expectations properly. For instance, at the beginning of this year it was all about how online video advertising was talking all this money from broadcast and print advertising. The death of every medium except the Internet was being predicted and as a result, people expected more than what was possible. The most aggressive prediction I saw was for online video advertising to be a billion and a half dollars in 2008. Now, at the end of this year, it looks like it will be more along the lines of $500 million. While there is nothing wrong with that number, even if it was a billion and a half dollars this year, that's less than 3% of the entire TV advertising market, that the industry is predicting such immediate death for. Lets be positive and excited about the growth we have coming, but also be realistic.

We have to keep in mind that even though this industry has been around for more than ten years now, every facet of the online video industry is still very small. The markets for online video advertising and content delivery for video are both under half a billion dollars this year. The market size for video transcoding, video publishing platforms and niche video networks are all under a few hundred million each. I think it is very easy for people in the industry to forget that while many have been working in this industry for years, our industry as a whole is still very small when compared to just about every other vertical market. We still have a lot of growth to do, a lot of innovation to bring to the market and many applications that need to be developed on top of the basic underlying technology that has been created.

Things will get worse for companies with no real business model, product offering or clear and defined message of who they are and what they offer. That's just business. But after the shakeout, our industry will still be here, business is still growing and the industry will be stronger as a result of it. We are only just getting started.

Call For Speakers Now Open For Streaming Media East 09

The call for speakers for the Streaming Media East show, taking place May 12-13th 2009, at the Hilton Hotel in NYC, is now open. The deadline to submit is December 1st and all speaking requests must be submitted via the online form at: www.streamingmedia.com/east/speakerinfo.asp

I cannot stress enough how important it is to get your submission in on time. Last year, we had over 800 speaking submissions and 110 actual speaking spots. If you are interested in possibly moderating or organizing a session of your own, please contact me immediately.

Streaming Media West Conference Videos Available Soon

Thanks to all of those who helped make the Streaming Media West conference a success once again. Hard to believe but last week's show was the 10th year that the industry has been getting together in CA to talk about online video. Most of the presentations from the sessions are now archived and can be downloaded here. All of the sessions are currently being edited and encoded and we will start posting them online in a few days at www.streamingmedia.com/videos

I have a lot to blog about from the show and am quite behind on my posts, but will be picking it back up this week. If you attended the show and have any follow up questions, please contact me at any time.

Online Video News Roundup From Streaming Media West

This morning, the Streaming Media West show kicked off with a keynote by Werner Vogels, CTO of Amazon, who highlighted some of the data around the usage of Amazon Web Services. Jordan Hoffner, Director of Content Partnerships for YouTube then presented on some of the challenges associated with making money from online video. I'll get the slides from Werner's presentation online as soon as I get them and you can download Jordan's slides from his presentation here.

A lot of news has crossed the wire this morning, with more to come:

• Adap.tv Closes $13 Million in Series B Round of Funding

• IVT Debuts PrimeTime, the Enterprise Video Portal with Search and Social Networking Capabilities

• Octoshape and Highwinds Unleash P2P Solution for Live Streaming

• Qumu Breaks Down Video Barriers with Launch of Capture Studio

• RipCode Announces Latest Version of its Flagship Offering

• Akamai Accelerates Metacafe Leading to Significant Impact on Page Views and Video Consumption

• Kontiki Announces Delivery Management System, Version 5.4

• Gomez Adds Streaming Media Monitoring Service to the ExperienceFirst Platform

• Mirror Image Internet Launches an Easy To Use Media Management Platform for Monetizing Video Content

• DigiMeld Launches Online Video Portal for Independent Content Providers Using Its Grid-Streaming Platform

• DigiMeld Launches New Grid Streaming Technology for High-Quality Internet Video

• Abacast Inc. Announces the Acquisition of Tukati, Inc., Becoming the First Content Distribution Network to Offer Hybrid Peer-Assisted Distribution for Both Live and On Demand Streaming Media

• Ipera Leverages Revolutionary Video Enhancement Technology for Enterprise Video Server Market

• AP Taps ThePlatform For Broadband Video

• Visible Measures’ Viral Reach Database Surpasses 100 Million Unique Videos from More Than 150 Video Sharing Sites

I'll get more news up as I get it. Don't forget, if you are in the area, there are various parties and networking events taking place this week.

Vendors: I appreciate The Thought, But Please Stop Sending Frisbees And Polo Shirts

I don't want to sound ungrateful and I do appreciate vendors thinking of me, but I'd prefer to see vendors save their money and not send me logo encrusted frisbees, beach balls, mugs, calendars, polo shirts and the like. This swag costs vendors a lot of money to get made and in most cases, it's also arriving to me via FedEx which is costing you another twenty or thirty dollars for delivery.

What I always recommend to any vendor who wants to get in front of the media and leave them with something that keeps their brand in mind is to use flash drives. They are cheap to buy and you can drop them in an envelope and mail them out for less than a dollar. And even better, pre-load it with all of your marketing materials, product sheets, press releases and any other company related content and it's even more valuable. I'll actually use it and will look at the contents on the drive.

I'd feel bad if I were to throw out all the shirts I get, being some of them are very nice and some even come custom with my name already on them. But at 185 pounds, anything sized XL looks like a dress on me. So the shirts end up going in one of those clothing donation bins.

Again, I appreciate the thought, but I think the money could be spent more wisely.

Niche Video Networks: Can Content Owners Make Money?

I get a lot of calls and e-mails from content owners of all sizes. Aside from the major broadcasters, many of those who contact me are smaller content owners producing their own online content and are trying to figure out their distribution, syndication and advertising strategy. In the past 12-18 months, niche video networks or micro video networks as some call them, such as For Your Imagination and Next New Networks have ramped up their offerings for small content producers trying to gain their business. At the same time, video platforms like Babelgum and Brightcove are also competing for these same content owners and the differences between a network and a platform continue to confuse people.

These types of aggregators and networks offer content creators a promising new vehicle for syndicating and monetizing content that would be hard to do on their own, but many of those content owners keep asking what exactly the niche video networks offer and how the business relationship works? Much more info is needed on how these services actually operate and whether they might be good partners for content owners looking for an effective channel for distribution and monetization. As an industry, we talk about the value the networks provide, but from a very high-level with few details. As a result, content owners don't know where to start and I get the same frequently asked questions all the time.

To try and shed some light on this for content owners, I asked Revision3, Next New Networks and For Your Imagination amongst other, on how they explain their business model to content owners and how they set customers expectation properly on licensing, syndication and ad revenue.

The first question I am always asked is are these networks looking to license content, or are they primarily interested in acquiring and owning content? From those I spoke with, the consensus was that most networks look for a non-exclusive licensing type agreement that is based upon an advertising rev share, which is what most of the video sharing networks offer today. Some destination type sites may ask for an exclusive license for a fee upfront with no rev share, but those are less common. Another model might be the opportunity for a content owner to produce exclusive new content for a destination type site which works as a work for hire type of relationship.

Of course, content owners also want to know how is ad revenue generated and shared with content owners? Generally, rev share is some kind of a split of net revenues, maybe as much as 50/50 for on network and some three way split if it is on a publisher network. Net revenue is calculated by taking gross revenue minus any network costs for your content and the ad campaign, such as operations, management and hosting. Those costs usually amount to about 25% of the gross, with the remaining balance split with the content creator. While it sounds easy enough, the problem is that there is no "average" split of net revenues. The only true way for a content owner to know how much their split would be is to get an actual quote from the network.

Another question often asked is what demographics are networks interested in reaching? Only 18 - 30 yr. old males, or a wider audience? Each network has a different focus and target vertical, but for the most part, the wider and more generic the network the more broad the demographic reach is. The niche networks can get more specific and as a result should be able to offer better rev share models, but it may end up content owners get less revenue because the traffic is smaller. Targeted should mean better CPMs, but that's not always the case and it's nearly impossible to get the networks to tell you their CPM average across a certain type of content or niche vertical.

With all the talk in the industry of the costs to deliver video online, many content owners also ask if the networks pay for the bandwidth of delivering content from the website, or does the content owner foot the bill? If you are using a platform, like Brigthcove, the content owner foots the bill. If you are using a network, it can go both ways. For Your Imagination says that when they embed a video with blip.tv, Viddler or Revver player for example, those companies cover the delivery costs of the video in return for the right to sell ads on the videos and to share the revenue with For Your Imagination. For Your Imagination says this is super important because even though a show may not make a lot of money, at least they are no video delivery fees which for some shows can be expensive, easily over $1000 a month.

As for the question of what's the duration of and standard provisions offered in a typical contract? All of those I spoke with said their is no "typical" contract as so many variables are taken into account. That being the case, I have yet to see any niche video network publish a list of all the factors that are taken into account that determine their contract terms with a content owner. I understand if you don't want to publish your rates, but wouldn't it be nice if content owners had some idea of what factors affect the revenue share numbers?

A lot more work is needed by the nice video networks and video platform providers to make their pricing and business terms easier to understand for content owners. If it was made easier to understand, content owners wouldn't be so confused and the market would grow faster. We'd see more adoption and more usage of online video and we'd have a better chance of content owners not having to struggle to figure out what the pricing is, how it works and what their cost would be. And it's just not the networks that have this problem, the platform providers as worse. Last week I was trying to help a content owner review pricing from both Brightcove and thePlatform and trying to decipher what the terms are that they use is confusing even for me. On one hand, many of these video platform providers say you pay one price to use the platform, but then charge you for "software platform fees", bandwidth, the number of media clips you have, storage, use of APIs and the number of "user accounts" you have. Come on guys, this needs to get easier.