Archive for October, 2007

Most of you who watch this space are probably already aware of the segment on MoneyTV which featured USVO, and this author.

Most of what was presented there had been presented here, or in other sources previously.

What was new, and certainly a unique circumstance for your humble servant, was being asked to do so live on camera. While MoneyTV isn’t produced straight to broadcast, it doesn’t do post production. What you see is what was said, so every ‘uh’ or ‘hmm’ goes out. I felt fortunate to get all the main points delivered, and I certainly hope the remarkable aspects of the show are in the news that was supplied. Expect updates in this quarter.

MoneyTV is a great example of several of the points that we make about content. Its value is in being circulated. The product is eleven years old, and the consistent delivery of news about companies and finance have created a solid company produced by a team familiar with one another and what the audience expects. They do a great job of taking care of the guests too.

The issue of security of content continues. There hasn’t been a day that I couldn’t post a pointer for you to go look at an article, a lawsuit, or some related revelation to the subject. There could be a hyperlink for every word in this paragraph without sending you to something redundant. It is that prevalent an issue.

The latest estimate is that the US economy loses $58 billion a year to various forms of copyright infringement. Understandable for the nation that has made thinking things up the source of its wealth growth. Extraction of natural materials and converting them to objects remains a significant part of the world economy, but the growth due to these activities is always based upon perceived limits to the desired material or object. While objects are what comes out of Silicon Valley, the ‘ion breadbasket’ of the information economy, most of them are about how to bring infinite information to you. The internet is built out of the products of Cisco, but why we value them, and thus Cisco, has more to do with the fact that these products connect us to each other, and make a level of exchange of ideas more facile and rapid.

As an example, look what happened Friday in the stock market. While a raw material (oil ) saw its highest price point in history, stocks of companies that profit by this lost ground in their share prices. In fact in the general sell that took place, every stock in the S&P 100 save one, was a loser. That remarkable company? Google. Google is fundamentally not a content company, but a channel for content. Isn’t it remarkable that a channel is resilient while oil services or energy related to oil isn’t? Google isn’t even the biggest channel. Just the one with the most potential.
On the information and content front, Google is currently a lightning rod for a number of reasons. First-It is essentially a new information channel selling viewers to advertisers. It has a huge audience because we need to find the bits that we want, out of an immense universe of possibilities. Second – It offers a more informed form of advertising. Because it knows what you are asking for, it can put an ad up that (in theory anyhow) addresses your stated interest. Third- It is a growing and distributed channel. Unlike every other way- newspapers, broadcasting, cable etc. – that an advertiser can reach you, Google is able to attract eyeballs for an infinite number of ‘programs’, very little of it that it creates or has any cost of providing. Even its element that most resembles television- YouTube- has no original programming.

Google has seized the first real estate in the advertising land of tomorrow, and it is the belief in the promise of tomorrow that drives its valuation, along with its tremendous profitability, actual cash flow etc. It isn’t the world’s largest channel, but equity buyers are pretty sure it will be.

Which is why it is the subject of Viacom’s billion dollar lawsuit. There are a lot of significant and complicated issues for society to sort out in this kind of action. Just what responsibility does a Google have regarding its pointing you to content (the search business) or being a bulletin board for others (the YouTube business)? Is linking to a site make a company responsible for whether or not someone can then do something illegal in their locality through that site? These issues are because technology will always lead the law.

Let me say that I don’t think we’ll ever see a judge weigh in on any of those issues. The Viacom lawsuit is to press Google to implement a level of content security that satisfies the comfort level of Viacom shareholders and leadership. Witness the weekend speech by Viacom’s Phillippe Dauman. As reported in PCWorld “Viacom’s Philippe Dauman said at the Web 2.0 Summit here that instead of a proprietary system to block content that may infringe on copyright, there needs to be an industry standard for that type of effort.” The Viacom call, for which the lawsuit is a lever, is for something bigger, broader and that has a standard. Much taller hurdles.

How does Dauman know that Google’s proposal falls short of his call? The obvious answer is that Google did the usual PR blitz (although Google also used its ‘official’ blog). It has shareholders to keep happy too, and no one likes their asset being sued for a billion bucks. Not so obvious is that the management of both companies are talking to each other, at least through their technical mavens who are the front line proxies who have to design and build a solution to not just the content protection problem, but also the foundation of what will amount to the ‘settlement’ that will end the lawsuit.

Almost a month has passed since the last post. My apologies. It isn’t that nothing is happening in the space, or with USVO, it just isn’t stuff that a publicly traded company gets to state publicly.

But there is plenty to point you at and comment upon.

For instance the MPAA sued downloading websites. This marks another landmark on the road that the music industry went down, and I do mean down. At least the MPAA went with attacking companies, as opposed to college kids and young mothers. The loser of the RIAA case pledged to appeal. Nearly a decade into this strategy and the first significant case using the lawsuit approach has a decision. Can the music business afford this strategy?

In other news, NBC President Jeff Zucker made a speech last week calling for a ‘massive campaign to fight piracy of copyrighted works” as reported here. Interesting comments and analysis are supplied by Saul Hansell of the NY Times at that link.

On the same day another leader of a media powerhouse weighs in on the current 800 pound gorilla of emerging media. These comments by Peter Chernin, President of News Corp. sound a bit like the pot calling the kettle black. News Corp.’s MySpace is the number two video sharing site after Google’s YouTube. Naturally the way Mr. Chernin says it, he is just pointing out how much better his team is doing that those youngsters under the Google umbrella.

To get a better idea of just how much disconnect there is between the YouTube you see and the YouTube as the company presents itself, check out this fine post by Jeff Atwood, who blogs under the title “Coding Horror”

Just to compare, I did a search on MySpace for “Copyright Rules” and got over 3600 results, all for member postings. The last question on their FAQ panel does lead to this page- a much less extensive discussion than the YouTube statement of hypocrisy detailed by Atwood. Take note that the MySpace FAQ on copyright is answer #51 in category 10 of their FAQ. I am sure that is not an indication of priority for the MySpace team.

There are a couple of business notes. First our partner Lighting Media hit a landmark in their DVD business this summer. Congratulations to them.

Equally interesting is the news from a competitor that they have raised an additional $5 million. This comes after a round of $8 million last summer. This gives a good indication of what the burn rate is for being in the watermarking space. This competitor has narrowly focused its efforts in pay TV of the IPTV variety- a channel that is itself, like watermarking, just getting going.

While the industry is moving slowly in the watermarking direction, there are obviously investors ready to bet that watermarking is going to be a winning part of the media distribution business.
We like that.