Dad With Teeth

Thin is In

It has been a busy few days as manufacturers and media giants posture for public approval over their digital media distribution solutions. Thursday Brightcove announced their strategy for decentralized distribution of internet video, yesterday Yahoo rolled out the beta of their one-stop-shopping podcast site and today Apple announces their video iPod. Apple says their iPod is “capable of playing videos, evolving the portable music player of choice into a multimedia platform for everything from TV shows to music videos.” (Seattle Times) Kinda’ like buying a hand-held TiVo for $399.

Handheld video devices are not new. With the color screen on the iPod you could guess it was only a matter of time before this feature would be integrated into the music player that occupies a whopping 80% market share. What is significant is the deal they have cut with ABC to distribute Prime Time programming via iTunes at $1.99 a download. Now you can watch “Lost” on the bus, or replay that steamy scene from “Desperate Housewives” over and over and over. And these are not episodes from two years ago. Customers will be able to download an episode the day after it airs.

It will be particularly interesting to see what the amount ABC actually receives from each $1.99 download. I can not believe Apple’s distribution costs are very significant because the videos are only a 320x240 canvas. With the economy of scale in distribution and the small file size of a postage stamp video you have to believe the cost per download is somewhere in the neighborhood of a dime. That leaves 95% of the pie for rights, royalties, encoding, and profit. Not bad once it scales up.

What I did not see in any of today’s announcement is if distribution is limited to the US or if it will be world wide. It would seem difficult if not impossible to control customers to US residents. And I have seen nothing in the announcement that indicated plans to offer files with larger screen sizes. 320x240 may look fine on your iPod, but don’t try watching it full screen on your computer unless you also enjoy watching 7Eleven surveillance video.

For me Apple’s announcement presents more questions than answers. Does ABC think Apple has solved the digital rights management issue? Or is ABC more interested in getting the brand out there and unauthorized sharing is not an issue (at least right now.) Who will be the next big content creator to jump on Apple’s bandwagon? How high will utilization be among iPod owners of the new feature? What will be the critical mass of content needed to really generate significant sales? As I said, more questions than answers.

But you can guess Apple will be leveraging their ubiquity in the market. I can’t wait to see the ad campaign they roll out over Christmas. I am guessing it will have an austere bright background with high contrast red and green actors squinting at a teeny-tiny screen, all to the sound of “White Christmas”.

posted by Drew Keller @ Wednesday, October 12, 2005 0 comments

Yahoo's Foray into Podcasting

I read with interest the news that Yahoo is entering into the podcasting fray. I must admit I respond with a fairly large dose of skepticism to these roll-outs of tools from mega corporations trying to capitalize on a grass roots phenomena. But I am a big fan of the idea of decentralized distribution of media. And it would be naive to assume the major media and technology corporations would stand by and watch yet another slice of their ever shrinking pie go away without a fight. Especially after both the recording and radio industries were caught flat-footed when ptp file distribution cut into their profits. The podcasting tool from Yahoo is not that revolutionary. It is sort of a searchable one-stop-shopping site for downloadable content. I must admit it is easy to use, and for wider adoption that is a definite plus. And as a user of 4 different mp3/wma players (none of them an iPod, thank you very much) I like that they have chosen to make their technology compatible with devices that extend past Apple's dominant market share.

Yahoo's news coincided with a Wall Street Journal article outlining how the media giants (Clear Channel, ABC, NBC) are jumping in with both feet. Some might ask, with only 15% of American households owning a portable music player, what is the big deal? I believe the audio file is only the start of the uses for push technology. The real money will be made with video. Certainly the business model will be less about portable video players (although there will no doubt be a market for that. Just ask my kids as they watch Spongebob in the back seat of my van on their handheld Nintendo DS.) But the ability to push video media to a targeted audience will have significant impact on how we watch television. Downloading the broad appeal shows and the low budget independent media may be free. But for most of the content I am wagering that for a monthly fee you will subscribe to a service the way you currently subscribe to Time, Vanity Fair or Guns n' Ammo. Whether watching on a home entertainment system, a laptop, a game console, a portable video player or your smartphone, the media will be there when you want it. It will be interesting over the next few years to see this unfold.

posted by Drew Keller @ Tuesday, October 11, 2005 0 comments