Apple, Airlines Agree
To Offer iPod Connection
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
November 14, 2006 9:51 a.m.
Apple Computer Inc. struck deals with six airlines to integrate its iPod portable music and video players into in-flight entertainment systems.
Apple said Tuesday the airlines, which include Air France-KLM, Continental Airlines Inc., Delta Air Lines Inc., Emirates Airlines, and United Airlines, a unit of UAL Corp., will begin offering passengers seat connections that will power and charge iPods while allowing video content contained on the devices to be played on seat-back monitors. The connections will be available on planes by mid-2007, Apple said.
Apple's iPod has so far dominated the market for portable music and video players , but the popular device could face stiff competition in coming months from Microsoft Corp.'s Zune and other music players.
Strategic partnerships like Tuesday's airlines deal could help the Cupertino, Calif., company secure a place for the iPod with consumers. Apple also struck deals with auto makers over the summer, teaming up with Ford Motor Co., General Motors Corp. and Japanese Ford-affiliate Mazda Motors Corp. to offer iPod connectors in new models.
11.09.2006
Microsoft Entertainment Domination Plan
Forget the fact that Microsoft is being overshadowed by Google and that Google is looking like the 800lb gorilla beating down Microsoft. Microsoft has other plans they’ve been working on — plans that have been really coming together the past few weeks and that quite frankly, I’m sitting here in amazement.
Earlier this week, Microsoft’s Xbox 360 division announced partnerships with CBS, MTV Networks, Paramount Pictures, Turner Broadcasting, UFC and Warner Bros. Home Entertainment to “Digitally Deliver TV Shows and Movies to Gamers.” This is Microsoft’s first move into digital movie and TV show sales — and is also another move towards turning their Xbox gaming system into a full-fledged digital entertainment system (note: they want to become the center of your living room). These digital movie and TV show partnerships for their Xbox 360 unit, will likely turn into sales through their future digital media sales service Zune.com and playback on their upcoming handheld Zune device. Xbox 360 up until this announcement has only let users download select music videos and movie trailers. Last week, Microsoft sent a major update to Xbox 360 consoles that now allows users to now stream video from a PC or portable device (note: their handheld Zune device has wireless capabilities built-in) — previously, only users with Windows XP Media Center Edition installed could stream video to the Xbox 360.
Last week, Microsoft launched the website for their handheld digital music/video player Zune, which comes out next week (November 14) — Microsoft is taking on Apple’s iPod with their Zune device. And less than 2 weeks ago, Microsoft launched the latest version of their Windows Media Player (WMP), version 11, which takes over for Windows Media Connect and allows users to manage connections for sharing media (between PC, Xbox 360, Zune) within the new WMP player. One shocker is that Zune is not using Microsoft’s own “PlaysForSure” framework that other digital music etailers and manufacturers embraced (Napster, Musicmatch, Wal-Mart, URGE, MSN, FYE, etc) since Apple has not let etailers sell to iPod owners (due to Apple’s proprietary DRM, which DVD Jon recently cracked) and Apple has not let other manufacturers make devices that can work with iTunes-purchased media. Zune will be proprietary as well (like the iPod) and won’t be allowing etailers to get their media on it — Zune will not support PlaysForSure.
Since September, Apple has been selling movies online via iTunes, which iTunes at the time had 40-60 million copies of their software installed on user machines. Less than a week after launch, Apple announced $1mm in digital movie sales (125k purchases).
What does all of this mean? Microsoft has a serious strategy to dominate digital entertainment. Microsoft already has a very successful gaming console (Xbox 360) that allows users to play games, watch movies, buy movies, buy TV shows, stream video from their computer, stream music from their computer, and I’m sure buying music from URGE is in the gameplan — not to mention the social networking features that allow Xbox 360 users (and maybe Zune users, considering the wi-fi built-in?) to chat with each other in games, send messages to each other, add users to their friends list, etc.
The other device that has entered millions of homes over the years is the DVR. Microsoft has already been using DVR-related technology in their Windows XP Media Center Edition 2005 operating system (OS). In fact, if you own this OS, you can login to Microsoft’s online TV listing guide and setup their MSN Remote Record service, which then allows you to browse TV listings from any computer and click a button that will set a TV program to record to your home PC. I’d guess that in the future, there will be an accessory for my Xbox 360 that plugs into one of the Xbox 360 USB ports, hooking my cable TV into my Xbox 360, and allowing me to easily record TV shows to my Xbox 360 (note to self: short TIVO).
Apple may have millions of users using iTunes and millions of owners of iPods, but they lack a gaming console (which PriceWaterhouseCoopers predicts the gaming market will be $54.6 billion by 2009), they lack a DVR unit, and they won’t let manufacturers and etailers sell to their users. Currently, Apple’s strategy for getting into your living room is the anticipated iTV, which is rumored to be a set-top box for your TV and will allow you to stream movies, TV shows, and music from your iTunes software. Apple is also planning to sell basic games through iTunes, which iPod owners will be able to play. Could there be a gaming console (Nintendo WII? Sony Playstation 3?) purchase or partnership in the future for Apple? Could there be an Apple purchase of TiVo? (note to self: long TIVO)
This strategy by Microsoft is impressive and we’ll begin seeing how it all plays out over the next couple months of the holiday season — as buyers put up their money for an Apple iPod or a Microsoft Zune and/or Xbox 360.
Earlier this week, Microsoft’s Xbox 360 division announced partnerships with CBS, MTV Networks, Paramount Pictures, Turner Broadcasting, UFC and Warner Bros. Home Entertainment to “Digitally Deliver TV Shows and Movies to Gamers.” This is Microsoft’s first move into digital movie and TV show sales — and is also another move towards turning their Xbox gaming system into a full-fledged digital entertainment system (note: they want to become the center of your living room). These digital movie and TV show partnerships for their Xbox 360 unit, will likely turn into sales through their future digital media sales service Zune.com and playback on their upcoming handheld Zune device. Xbox 360 up until this announcement has only let users download select music videos and movie trailers. Last week, Microsoft sent a major update to Xbox 360 consoles that now allows users to now stream video from a PC or portable device (note: their handheld Zune device has wireless capabilities built-in) — previously, only users with Windows XP Media Center Edition installed could stream video to the Xbox 360.
Last week, Microsoft launched the website for their handheld digital music/video player Zune, which comes out next week (November 14) — Microsoft is taking on Apple’s iPod with their Zune device. And less than 2 weeks ago, Microsoft launched the latest version of their Windows Media Player (WMP), version 11, which takes over for Windows Media Connect and allows users to manage connections for sharing media (between PC, Xbox 360, Zune) within the new WMP player. One shocker is that Zune is not using Microsoft’s own “PlaysForSure” framework that other digital music etailers and manufacturers embraced (Napster, Musicmatch, Wal-Mart, URGE, MSN, FYE, etc) since Apple has not let etailers sell to iPod owners (due to Apple’s proprietary DRM, which DVD Jon recently cracked) and Apple has not let other manufacturers make devices that can work with iTunes-purchased media. Zune will be proprietary as well (like the iPod) and won’t be allowing etailers to get their media on it — Zune will not support PlaysForSure.
Since September, Apple has been selling movies online via iTunes, which iTunes at the time had 40-60 million copies of their software installed on user machines. Less than a week after launch, Apple announced $1mm in digital movie sales (125k purchases).
What does all of this mean? Microsoft has a serious strategy to dominate digital entertainment. Microsoft already has a very successful gaming console (Xbox 360) that allows users to play games, watch movies, buy movies, buy TV shows, stream video from their computer, stream music from their computer, and I’m sure buying music from URGE is in the gameplan — not to mention the social networking features that allow Xbox 360 users (and maybe Zune users, considering the wi-fi built-in?) to chat with each other in games, send messages to each other, add users to their friends list, etc.
The other device that has entered millions of homes over the years is the DVR. Microsoft has already been using DVR-related technology in their Windows XP Media Center Edition 2005 operating system (OS). In fact, if you own this OS, you can login to Microsoft’s online TV listing guide and setup their MSN Remote Record service, which then allows you to browse TV listings from any computer and click a button that will set a TV program to record to your home PC. I’d guess that in the future, there will be an accessory for my Xbox 360 that plugs into one of the Xbox 360 USB ports, hooking my cable TV into my Xbox 360, and allowing me to easily record TV shows to my Xbox 360 (note to self: short TIVO).
Apple may have millions of users using iTunes and millions of owners of iPods, but they lack a gaming console (which PriceWaterhouseCoopers predicts the gaming market will be $54.6 billion by 2009), they lack a DVR unit, and they won’t let manufacturers and etailers sell to their users. Currently, Apple’s strategy for getting into your living room is the anticipated iTV, which is rumored to be a set-top box for your TV and will allow you to stream movies, TV shows, and music from your iTunes software. Apple is also planning to sell basic games through iTunes, which iPod owners will be able to play. Could there be a gaming console (Nintendo WII? Sony Playstation 3?) purchase or partnership in the future for Apple? Could there be an Apple purchase of TiVo? (note to self: long TIVO)
This strategy by Microsoft is impressive and we’ll begin seeing how it all plays out over the next couple months of the holiday season — as buyers put up their money for an Apple iPod or a Microsoft Zune and/or Xbox 360.
Verizon, YouTube Deal
Verizon, YouTube Aim
To Bring Web Videos
To Cellphones, TV
By AMOL SHARMA and KEVIN J. DELANEY
November 7, 2006; Page A1
Verizon Communications Inc. is in advanced talks with YouTube Inc. to bring the popular Web site's videos to cellphones and television sets, in what would be a landmark link-up between telecom and Internet video.
An agreement would allow Verizon's customers to view some of the most avidly watched entertainment on the Internet. That could advance the long-expected convergence of video and cellphones. It could also, at least temporarily, give Verizon a marketing edge over its rivals in the wireless and cable industries, furthering the company's efforts to expand into Internet and entertainment services.
Under the terms being discussed, customers of Verizon Wireless -- Verizon's joint venture with Vodafone Group PLC -- would be able to view some YouTube videos on their cellphones through the carrier's premium V Cast service, people familiar with the matter said. Verizon Wireless, like other cellular providers, has been adding video and data services to offset declining revenue from its calling plans.
Verizon also would offer YouTube videos as an on-demand feature of a TV service it is launching throughout the nation. The company paved the way for the launch with a massive upgrade of its network that is expected to cost $18 billion through 2010.
A deal with YouTube, which could be finalized within weeks, would give Verizon the chance to showcase its new network, which runs on fiber-optic lines all the way to subscribers' homes and has more capacity than the networks of competing cable operators. It could also give Verizon the exclusive right to carry YouTube videos for a limited period of time, one person with knowledge of the discussions said. The talks, however, could still fall through.
Though many cellphones provide Internet access, it is difficult for cellphone users to watch video on the Web, in part because it typically isn't formatted for cellphone screens. But cellular operators such as Verizon Wireless have the technology to bring video, music and other entertainment options to those screens. And their millions of subscribers make them attractive to digital-entertainment companies like YouTube, which are looking to extend their reach beyond personal computers.
YouTube, which has agreed to be acquired by Internet giant Google Inc. for $1.65 billion, is expected to seek similar deals with other big cellular operators -- such as Sprint Nextel Corp. and Cingular Wireless, a joint venture of AT&T Inc. and BellSouth Corp. -- to get the widest possible distribution for its content.
A spokeswoman for YouTube declined to comment on whether the company is in discussions with telecommunications carriers.
YouTube rose to Internet stardom by offering a wide variety of videos submitted by its users. They range from home videos to clips recorded from TV, such as music videos and soccer highlights. Users watch videos more than 100 million times daily on the site.
It remains to be seen whether YouTube's online success can translate to TV sets and cellphones. For one thing, the quality of the many homemade videos it carries is generally lower than what viewers expect on their TV sets. And consumers have yet to take to video on cellphones in large numbers.
Chad Hurley, YouTube's chief executive and co-founder, told an advertising conference last week that he sees a huge market in mobile services. The company has already launched a service that allows cellphone users to upload videos from some handsets to the YouTube site, but the clips can be watched only on a PC. The proposed Verizon deal would give cellphone customers an easy way to access YouTube videos while on the move.
The talks between Verizon and YouTube come at a time when a wide range of media and advertising companies are racing to figure out how to cash in on the skyrocketing popularity of Internet entertainment. Comcast Corp., the nation's largest cable operator, also has had talks with YouTube but has opted instead to create its own video-sharing site that will have ties to its video-on-demand service on TV.
Verizon Wireless, like other cellular carriers, is marketing new data services such as ringtones, songs, games and videos as its revenues from voice services decline. YouTube videos could give Verizon's business a boost by encouraging more subscribers to sign up for its V Cast service, which costs an additional $15 a month.
Verizon already offers video clips from major media companies and networks such as MTV, ESPN, and ABC News, but a YouTube deal would be its first with a company whose videos appear only on the Internet. Among the many clips Verizon was offering yesterday was a short CBS News piece on President Bush's last-minute campaigning before today's midterm elections. Rivals Sprint and Cingular have even broader offerings, including live TV.
Under the terms being discussed, Verizon Wireless cellphone users would be able to access about 50 to 100 of the most popular videos on the YouTube Web site at any given time, people familiar with the matter said. Initially, Verizon cellphone users wouldn't be able to post material of their own to the V Cast service but, by the end of the year, they would probably be able to upload video shot with a Verizon camera phone, a person with knowledge of the plan says.
As part of the proposed deal, Verizon, starting next year, would allow users to view YouTube videos on demand through its new TV service. Users would likely be able to buy access to the top YouTube videos of the day for a small fee, with the revenue shared between the two companies.
Verizon is offering TV as part of its effort to compete with cable companies in selling consumers bundles of home phone, Internet and television services. At the end of the third quarter, Verizon said it had 522,000 customers for its fiber-based Internet service and 118,000 TV customers.
Up until now, Verizon's TV service hasn't varied significantly from digital cable service, offering roughly the same slate of the most popular channels as well as movies and video on demand. A deal with YouTube would give the phone giant an opportunity to distinguish itself from cable, especially with viewers in their teens and twenties who are YouTube's biggest fans.
Verizon rival Comcast has decided to go it alone with its own video Web site, ziddio.com, which became accessible to the public in a trial phase yesterday. Ziddio solicits videos from users which, if they are deemed good enough, will show up on Comcast's video-on-demand service or traditional cable networks. Today, for example, the site is promoting contests for videos about Jedi warriors and messy houses. The best videos will be available on demand when Ziddio is officially launched, probably before the end of the year. Comcast also hasn't ruled out the possibility of doing a deal with an Internet company like YouTube or Revver Inc.
The Verizon discussions with YouTube suggest there are some areas where it makes sense for the large telecom carriers and Internet companies to work together. Until now, the giant cellular providers sometimes have been reluctant to cooperate with companies like Google and Yahoo Inc. Providers such as Verizon, Cingular, and T-Mobile USA generally have opted to work with small start-ups like Medio Systems Inc. and JumpTap Inc. when integrating search features into their handsets, rather than work with the Internet powerhouses, who have demanded a larger share of revenue from mobile search-based advertising.
Landline phone companies, meanwhile, have chafed at the fact that they get no slice of the massive profits that Google and other Internet companies generate on the Internet, despite the fact that their lines provide the Internet connections customers need to use those services. Telecom industry observers have mused for several months about the possibility that AT&T and Verizon might begin charging Internet companies and online video providers a special fee to guarantee priority treatment of their traffic on the Internet, an arrangement opponents say would violate principles of "net neutrality."
The dynamic of the Verizon deal would be very different, however: The carrier would be harnessing YouTube's Internet brand to promote its own FiOS TV services, treating the Web site as a partner rather than a competitor. If any money changes hands in the deal, it is likely Verizon will be paying YouTube, a person familiar with the matter said.
Verizon was hesitant about doing a deal because of legal concerns surrounding YouTube's content. In some cases, users of the video-sharing site have uploaded copyrighted material without the permission of the music labels and media companies that own the rights. The company already faces a copyright-infringement suit filed in July in U.S. District Court by Los Angeles News Service owner Robert Tur over several videos he alleges appeared on the site without his permission. YouTube has said Mr. Tur's suit is "without merit."
YouTube says it removes copyrighted videos when requested by their owners, which it says protects it from liability. At least partly to help insulate itself from lawsuits, the Web site has signed content licensing agreements with some media and entertainment companies, including Vivendi SA's Universal Music Group, Warner Music Group Corp., Sony BMG and CBS Corp.
To Bring Web Videos
To Cellphones, TV
By AMOL SHARMA and KEVIN J. DELANEY
November 7, 2006; Page A1
Verizon Communications Inc. is in advanced talks with YouTube Inc. to bring the popular Web site's videos to cellphones and television sets, in what would be a landmark link-up between telecom and Internet video.
An agreement would allow Verizon's customers to view some of the most avidly watched entertainment on the Internet. That could advance the long-expected convergence of video and cellphones. It could also, at least temporarily, give Verizon a marketing edge over its rivals in the wireless and cable industries, furthering the company's efforts to expand into Internet and entertainment services.
Under the terms being discussed, customers of Verizon Wireless -- Verizon's joint venture with Vodafone Group PLC -- would be able to view some YouTube videos on their cellphones through the carrier's premium V Cast service, people familiar with the matter said. Verizon Wireless, like other cellular providers, has been adding video and data services to offset declining revenue from its calling plans.
Verizon also would offer YouTube videos as an on-demand feature of a TV service it is launching throughout the nation. The company paved the way for the launch with a massive upgrade of its network that is expected to cost $18 billion through 2010.
A deal with YouTube, which could be finalized within weeks, would give Verizon the chance to showcase its new network, which runs on fiber-optic lines all the way to subscribers' homes and has more capacity than the networks of competing cable operators. It could also give Verizon the exclusive right to carry YouTube videos for a limited period of time, one person with knowledge of the discussions said. The talks, however, could still fall through.
Though many cellphones provide Internet access, it is difficult for cellphone users to watch video on the Web, in part because it typically isn't formatted for cellphone screens. But cellular operators such as Verizon Wireless have the technology to bring video, music and other entertainment options to those screens. And their millions of subscribers make them attractive to digital-entertainment companies like YouTube, which are looking to extend their reach beyond personal computers.
YouTube, which has agreed to be acquired by Internet giant Google Inc. for $1.65 billion, is expected to seek similar deals with other big cellular operators -- such as Sprint Nextel Corp. and Cingular Wireless, a joint venture of AT&T Inc. and BellSouth Corp. -- to get the widest possible distribution for its content.
A spokeswoman for YouTube declined to comment on whether the company is in discussions with telecommunications carriers.
YouTube rose to Internet stardom by offering a wide variety of videos submitted by its users. They range from home videos to clips recorded from TV, such as music videos and soccer highlights. Users watch videos more than 100 million times daily on the site.
It remains to be seen whether YouTube's online success can translate to TV sets and cellphones. For one thing, the quality of the many homemade videos it carries is generally lower than what viewers expect on their TV sets. And consumers have yet to take to video on cellphones in large numbers.
Chad Hurley, YouTube's chief executive and co-founder, told an advertising conference last week that he sees a huge market in mobile services. The company has already launched a service that allows cellphone users to upload videos from some handsets to the YouTube site, but the clips can be watched only on a PC. The proposed Verizon deal would give cellphone customers an easy way to access YouTube videos while on the move.
The talks between Verizon and YouTube come at a time when a wide range of media and advertising companies are racing to figure out how to cash in on the skyrocketing popularity of Internet entertainment. Comcast Corp., the nation's largest cable operator, also has had talks with YouTube but has opted instead to create its own video-sharing site that will have ties to its video-on-demand service on TV.
Verizon Wireless, like other cellular carriers, is marketing new data services such as ringtones, songs, games and videos as its revenues from voice services decline. YouTube videos could give Verizon's business a boost by encouraging more subscribers to sign up for its V Cast service, which costs an additional $15 a month.
Verizon already offers video clips from major media companies and networks such as MTV, ESPN, and ABC News, but a YouTube deal would be its first with a company whose videos appear only on the Internet. Among the many clips Verizon was offering yesterday was a short CBS News piece on President Bush's last-minute campaigning before today's midterm elections. Rivals Sprint and Cingular have even broader offerings, including live TV.
Under the terms being discussed, Verizon Wireless cellphone users would be able to access about 50 to 100 of the most popular videos on the YouTube Web site at any given time, people familiar with the matter said. Initially, Verizon cellphone users wouldn't be able to post material of their own to the V Cast service but, by the end of the year, they would probably be able to upload video shot with a Verizon camera phone, a person with knowledge of the plan says.
As part of the proposed deal, Verizon, starting next year, would allow users to view YouTube videos on demand through its new TV service. Users would likely be able to buy access to the top YouTube videos of the day for a small fee, with the revenue shared between the two companies.
Verizon is offering TV as part of its effort to compete with cable companies in selling consumers bundles of home phone, Internet and television services. At the end of the third quarter, Verizon said it had 522,000 customers for its fiber-based Internet service and 118,000 TV customers.
Up until now, Verizon's TV service hasn't varied significantly from digital cable service, offering roughly the same slate of the most popular channels as well as movies and video on demand. A deal with YouTube would give the phone giant an opportunity to distinguish itself from cable, especially with viewers in their teens and twenties who are YouTube's biggest fans.
Verizon rival Comcast has decided to go it alone with its own video Web site, ziddio.com, which became accessible to the public in a trial phase yesterday. Ziddio solicits videos from users which, if they are deemed good enough, will show up on Comcast's video-on-demand service or traditional cable networks. Today, for example, the site is promoting contests for videos about Jedi warriors and messy houses. The best videos will be available on demand when Ziddio is officially launched, probably before the end of the year. Comcast also hasn't ruled out the possibility of doing a deal with an Internet company like YouTube or Revver Inc.
The Verizon discussions with YouTube suggest there are some areas where it makes sense for the large telecom carriers and Internet companies to work together. Until now, the giant cellular providers sometimes have been reluctant to cooperate with companies like Google and Yahoo Inc. Providers such as Verizon, Cingular, and T-Mobile USA generally have opted to work with small start-ups like Medio Systems Inc. and JumpTap Inc. when integrating search features into their handsets, rather than work with the Internet powerhouses, who have demanded a larger share of revenue from mobile search-based advertising.
Landline phone companies, meanwhile, have chafed at the fact that they get no slice of the massive profits that Google and other Internet companies generate on the Internet, despite the fact that their lines provide the Internet connections customers need to use those services. Telecom industry observers have mused for several months about the possibility that AT&T and Verizon might begin charging Internet companies and online video providers a special fee to guarantee priority treatment of their traffic on the Internet, an arrangement opponents say would violate principles of "net neutrality."
The dynamic of the Verizon deal would be very different, however: The carrier would be harnessing YouTube's Internet brand to promote its own FiOS TV services, treating the Web site as a partner rather than a competitor. If any money changes hands in the deal, it is likely Verizon will be paying YouTube, a person familiar with the matter said.
Verizon was hesitant about doing a deal because of legal concerns surrounding YouTube's content. In some cases, users of the video-sharing site have uploaded copyrighted material without the permission of the music labels and media companies that own the rights. The company already faces a copyright-infringement suit filed in July in U.S. District Court by Los Angeles News Service owner Robert Tur over several videos he alleges appeared on the site without his permission. YouTube has said Mr. Tur's suit is "without merit."
YouTube says it removes copyrighted videos when requested by their owners, which it says protects it from liability. At least partly to help insulate itself from lawsuits, the Web site has signed content licensing agreements with some media and entertainment companies, including Vivendi SA's Universal Music Group, Warner Music Group Corp., Sony BMG and CBS Corp.
Microsoft, Universal Music Strike Licensing Deal for Zune Service
Microsoft, Universal Music Strike
Licensing Deal for Zune Service
Associated Press
November 9, 2006 10:35 a.m.
LOS ANGELES -- Microsoft Corp. and Universal Music Group say they have struck a licensing deal for the software company's new Zune portable music player and digital music store that calls for the recording company to get paid a cut of the sales of the device.
Executives at both companies declined to disclose the financial terms of the deal, which is expected to be officially announced early Thursday.
Redmond-based Microsoft is pursuing similar agreements with other major record labels, Chris Stephenson, general manager of global marketing for Microsoft Entertainment, said late Wednesday.
MOSSBERG REVIEWS THE ZUNE
Walt Mossberg says Zune, the upcoming MP3 player from Microsoft, has some attractive features but overall doesn't outshine Apple's iPod.
• Microsoft's Zune Challenges iPod
Zune, which is scheduled to be released Nov. 14, is Microsoft's attempt to compete with Apple Computer Inc.'s market-leading iPod player and iTunes music service. The device, which will sell for $249.99, lets people share songs, playlists or pictures over a wireless connection with nearby Zune users.
By paying record labels a portion of Zune player sales, Microsoft hopes to have more freedom to allow song-sharing or other promotions, Mr. Stephenson said. "There's certain marketing elements that we're looking at going forward, all based around the sharing and wireless scenarios," he said. He declined to provide specifics.
But in an interview late Wednesday, Universal Music Group Chairman and CEO Doug Morris said that the wireless song-sharing feature of the Zune player wasn't a major factor behind the company seeking a revenue sharing deal on the player.
"The only factor was that we feel that there's a great deal of music that's [stored] on these devices that was never legitimately obtained, and we wanted to get some sort of compensation for what we thought we're losing," Mr. Morris said. "I want our artists to be paid for the music that makes these devices popular."
While sales of digital tracks have increased in recent years amid lagging sales of CDs, record labels lament that much of the music that winds up on iPods and other digital players comes from either CDs fans already own or tracks culled from online file-sharing services. Apple does not give a cut of sales of iPods to music companies. It only pays labels for songs sold on its iTunes download store.
Earlier this year, Universal and other major recording companies settled a dispute with Sirius Satellite Radio Inc. over its Sirius S50 portable music player by reaching a deal that called for Sirius to pay the record companies a fee for every S50 it sells.
Universal sought a similar approach when Microsoft came calling the recording company to hash out a licensing deal for its Zune online music store. Absent a deal with Universal, Microsoft faced the prospect of unveiling Zune without content from the world's biggest recording company, home to artists such as U2, Eminem and Shania Twain.
Mr. Morris said the agreement with Microsoft marks a turning point in how the company will approach similar deals in the future. "I don't want any business built on our music without getting paid a part of the business," he said.
Mr. Morris declined to say what percentage of each Zune sold will be paid to Universal Music, but said "it's good." Under the terms of the deal, Universal will split the money it gets from Zune player sales with its artists. Mr. Morris declined to say how much artists will be paid.
Licensing Deal for Zune Service
Associated Press
November 9, 2006 10:35 a.m.
LOS ANGELES -- Microsoft Corp. and Universal Music Group say they have struck a licensing deal for the software company's new Zune portable music player and digital music store that calls for the recording company to get paid a cut of the sales of the device.
Executives at both companies declined to disclose the financial terms of the deal, which is expected to be officially announced early Thursday.
Redmond-based Microsoft is pursuing similar agreements with other major record labels, Chris Stephenson, general manager of global marketing for Microsoft Entertainment, said late Wednesday.
MOSSBERG REVIEWS THE ZUNE
Walt Mossberg says Zune, the upcoming MP3 player from Microsoft, has some attractive features but overall doesn't outshine Apple's iPod.
• Microsoft's Zune Challenges iPod
Zune, which is scheduled to be released Nov. 14, is Microsoft's attempt to compete with Apple Computer Inc.'s market-leading iPod player and iTunes music service. The device, which will sell for $249.99, lets people share songs, playlists or pictures over a wireless connection with nearby Zune users.
By paying record labels a portion of Zune player sales, Microsoft hopes to have more freedom to allow song-sharing or other promotions, Mr. Stephenson said. "There's certain marketing elements that we're looking at going forward, all based around the sharing and wireless scenarios," he said. He declined to provide specifics.
But in an interview late Wednesday, Universal Music Group Chairman and CEO Doug Morris said that the wireless song-sharing feature of the Zune player wasn't a major factor behind the company seeking a revenue sharing deal on the player.
"The only factor was that we feel that there's a great deal of music that's [stored] on these devices that was never legitimately obtained, and we wanted to get some sort of compensation for what we thought we're losing," Mr. Morris said. "I want our artists to be paid for the music that makes these devices popular."
While sales of digital tracks have increased in recent years amid lagging sales of CDs, record labels lament that much of the music that winds up on iPods and other digital players comes from either CDs fans already own or tracks culled from online file-sharing services. Apple does not give a cut of sales of iPods to music companies. It only pays labels for songs sold on its iTunes download store.
Earlier this year, Universal and other major recording companies settled a dispute with Sirius Satellite Radio Inc. over its Sirius S50 portable music player by reaching a deal that called for Sirius to pay the record companies a fee for every S50 it sells.
Universal sought a similar approach when Microsoft came calling the recording company to hash out a licensing deal for its Zune online music store. Absent a deal with Universal, Microsoft faced the prospect of unveiling Zune without content from the world's biggest recording company, home to artists such as U2, Eminem and Shania Twain.
Mr. Morris said the agreement with Microsoft marks a turning point in how the company will approach similar deals in the future. "I don't want any business built on our music without getting paid a part of the business," he said.
Mr. Morris declined to say what percentage of each Zune sold will be paid to Universal Music, but said "it's good." Under the terms of the deal, Universal will split the money it gets from Zune player sales with its artists. Mr. Morris declined to say how much artists will be paid.
10.11.2006
9.29.2006
Yahoo! and Terry Semel's long pause
While Google and small internet firms race ahead, Yahoo! seems to be standing still
“NOW let's just pause for a second.” It is the fourth pause for thought that Terry Semel, chairman and chief executive of Yahoo!, has requested in about ten minutes. He is trying to marshal various arguments to prove that his firm, the world's largest internet company by visitors to its website, has a coherent and winning strategy compared with Google, a phenomenally successful search engine. With only slightly bigger revenues, Google has three and a half times the market value of Yahoo!. Twice in three months Wall Street has dumped the shares of Yahoo! and widened the gap (see chart).
The first sell-off, in July, came after Mr Semel announced that Panama, an ambitious project to improve Yahoo!'s technology so that it can make more money on each of its users' searches, would be delayed until the end of this year. Yes, agrees Mr Semel, it was supposed to be released a quarter earlier, but this sort of market reaction was silly. Unlike Google, which has a habit of releasing sloppy brainstorms in test versions called “beta”, he says, Yahoo! wants to launch a fully functional product, and therefore had to be cautious—and since the financial benefits will come next year, why should the stockmarket get into such a tizzy?
The second sell-off happened last week, when Mr Semel warned investors at a conference hosted by Goldman Sachs that growth in online advertising was not quite what he had hoped. Quarterly earnings would be on the low side of his previous estimates. In particular, Mr Semel noted slower growth in demand from carmakers and banks—Yahoo!'s biggest customers—for graphical advertisements, the category in which it outsells all its rivals. “Let's pause for a second,” he says again. “We still expect to outgrow the segment in 2006. This is not about a tragedy or disaster; it's just pointing out something that we had seen.”
Part of the problem for Yahoo!, however, is that nobody else appears to be seeing a slowdown. This week the Interactive Advertising Bureau and PricewaterhouseCoopers, a consultancy, jointly released the latest industry numbers, which show that online advertising in America grew by 37% to $7.9 billion, a new record, in the first half of the year. Another firm that tracks online advertising, eMarketer, cut its forecasts, but that was in response to Mr Semel's statement. Jim Lanzone, the boss of Ask.com, the fourth-largest search engine after Google, Yahoo! and Microsoft's MSN, says that his firm is not seeing any similar easing of demand.
The deeper problem, says Henry Blodget, founder of Cherry Hill Research, a consultancy, is that Yahoo! is still suffering from a “colossal error” it made in the late 1990s. At that time, it already wanted to become a portal, or a gateway to content on the web, but thought that search would be at most a feature, not a business in its own right. This allowed Google to dominate the category. “By the time Yahoo! realised its mistake about three years ago it was too late,” says Mr Blodget. Google's share of search queries has been growing, and the enormous profits from this product allow Google to invest more than Yahoo! does.
Mr Semel counters that Google's gains in search have not come at the expense of Yahoo!, which has been a steady number two. MSN has been the primary loser. Panama will help. And there are differences between Yahoo! and Google which favour his company. For advertisers, the difference is supposed to be that Yahoo! is more of an all-round online media company, selling the full gamut of advertising, from pay-per-click text snippets on search pages to interactive banners, whereas Google sells almost exclusively pay-per-click advertisements. As such, Yahoo! benefits from its huge leads in web-mail and finance and general news, where Google is a tiny, niche competitor.
For consumers, the difference is supposed to be that Yahoo! is about human beings, whereas Google is about soulless machines and algorithms. So Yahoo! has bought several young firms such as Flickr, a photo-sharing site, and Del.icio.us, a bookmark-sharing site, which both allow users to “tag” the pictures and web pages they encounter, and pass them on to each other. There is Yahoo! Answers, where users can ask real questions and other users respond. Yahoo! started the service nine months ago, and it now has more than 50m users in 20 countries. Yahoo! has fared less well with its social-networking site, Yahoo! 360, and is now negotiating to buy Facebook, a networking site used by many American college students.
But none of these is a solid answer to Yahoo!'s woes. The “tagging” that Flickr and Del.icio.us offer is still far from the mainstream, and are mostly used by hard-core technology geeks. Yahoo! Answers is growing, but arguably full of rubbish. “What is the sexiest food?” is a typical recent question. Answers range from “bacon, mmmmm” to “a pickle” and “anything with a beautiful woman sitting across from it.”
And Yahoo!'s efforts to buy Facebook may illustrate the older firm's shortcomings as much as its market power. Yahoo! was originally interested in MySpace, the biggest social network, but lost it to News Corporation, a media conglomerate. It also wanted to buy AOL, a web portal owned by Time Warner, another media company, but Google swooped in. Yahoo! again lost to Google when the latter won a deal to supply the advertising on MySpace, and then to Microsoft when it struck a deal to deliver advertising on Facebook. Now Yahoo! looks rather desperate, and will have to pay an enormous price for Facebook, a fast-growing company which many big firms have considered buying.
“Days go by and deals go away,” says an outside adviser to Yahoo! who has sat in on executive meetings. The firm has a “relatively constipated process of reviewing anything,” he says. It is slow and cumbersome and “not an entrepreneurial culture” because Mr Semel is a “low-risk, non-confrontational guy”, says this adviser. He recalls a meeting at which an engineer asked: how long do we take from idea to execution? Several people scrawled on the whiteboard and agreed on an answer of eight months.
None of this means that Yahoo! is in dire trouble. If it turns out to be true that online advertising is growing more slowly as a whole, Google and all other internet firms will feel it sooner or later. Christopher Sherman, executive editor of SearchEngineWatch, an online newsletter, says he doesn't think that Yahoo! has lost its way. But “we're past the days of radical innovation where somebody is really going to blow past a competitor.” Yahoo! will have to content itself with a position as the internet's number two, at best.
“NOW let's just pause for a second.” It is the fourth pause for thought that Terry Semel, chairman and chief executive of Yahoo!, has requested in about ten minutes. He is trying to marshal various arguments to prove that his firm, the world's largest internet company by visitors to its website, has a coherent and winning strategy compared with Google, a phenomenally successful search engine. With only slightly bigger revenues, Google has three and a half times the market value of Yahoo!. Twice in three months Wall Street has dumped the shares of Yahoo! and widened the gap (see chart).
The first sell-off, in July, came after Mr Semel announced that Panama, an ambitious project to improve Yahoo!'s technology so that it can make more money on each of its users' searches, would be delayed until the end of this year. Yes, agrees Mr Semel, it was supposed to be released a quarter earlier, but this sort of market reaction was silly. Unlike Google, which has a habit of releasing sloppy brainstorms in test versions called “beta”, he says, Yahoo! wants to launch a fully functional product, and therefore had to be cautious—and since the financial benefits will come next year, why should the stockmarket get into such a tizzy?
The second sell-off happened last week, when Mr Semel warned investors at a conference hosted by Goldman Sachs that growth in online advertising was not quite what he had hoped. Quarterly earnings would be on the low side of his previous estimates. In particular, Mr Semel noted slower growth in demand from carmakers and banks—Yahoo!'s biggest customers—for graphical advertisements, the category in which it outsells all its rivals. “Let's pause for a second,” he says again. “We still expect to outgrow the segment in 2006. This is not about a tragedy or disaster; it's just pointing out something that we had seen.”
Part of the problem for Yahoo!, however, is that nobody else appears to be seeing a slowdown. This week the Interactive Advertising Bureau and PricewaterhouseCoopers, a consultancy, jointly released the latest industry numbers, which show that online advertising in America grew by 37% to $7.9 billion, a new record, in the first half of the year. Another firm that tracks online advertising, eMarketer, cut its forecasts, but that was in response to Mr Semel's statement. Jim Lanzone, the boss of Ask.com, the fourth-largest search engine after Google, Yahoo! and Microsoft's MSN, says that his firm is not seeing any similar easing of demand.
The deeper problem, says Henry Blodget, founder of Cherry Hill Research, a consultancy, is that Yahoo! is still suffering from a “colossal error” it made in the late 1990s. At that time, it already wanted to become a portal, or a gateway to content on the web, but thought that search would be at most a feature, not a business in its own right. This allowed Google to dominate the category. “By the time Yahoo! realised its mistake about three years ago it was too late,” says Mr Blodget. Google's share of search queries has been growing, and the enormous profits from this product allow Google to invest more than Yahoo! does.
Mr Semel counters that Google's gains in search have not come at the expense of Yahoo!, which has been a steady number two. MSN has been the primary loser. Panama will help. And there are differences between Yahoo! and Google which favour his company. For advertisers, the difference is supposed to be that Yahoo! is more of an all-round online media company, selling the full gamut of advertising, from pay-per-click text snippets on search pages to interactive banners, whereas Google sells almost exclusively pay-per-click advertisements. As such, Yahoo! benefits from its huge leads in web-mail and finance and general news, where Google is a tiny, niche competitor.
For consumers, the difference is supposed to be that Yahoo! is about human beings, whereas Google is about soulless machines and algorithms. So Yahoo! has bought several young firms such as Flickr, a photo-sharing site, and Del.icio.us, a bookmark-sharing site, which both allow users to “tag” the pictures and web pages they encounter, and pass them on to each other. There is Yahoo! Answers, where users can ask real questions and other users respond. Yahoo! started the service nine months ago, and it now has more than 50m users in 20 countries. Yahoo! has fared less well with its social-networking site, Yahoo! 360, and is now negotiating to buy Facebook, a networking site used by many American college students.
But none of these is a solid answer to Yahoo!'s woes. The “tagging” that Flickr and Del.icio.us offer is still far from the mainstream, and are mostly used by hard-core technology geeks. Yahoo! Answers is growing, but arguably full of rubbish. “What is the sexiest food?” is a typical recent question. Answers range from “bacon, mmmmm” to “a pickle” and “anything with a beautiful woman sitting across from it.”
And Yahoo!'s efforts to buy Facebook may illustrate the older firm's shortcomings as much as its market power. Yahoo! was originally interested in MySpace, the biggest social network, but lost it to News Corporation, a media conglomerate. It also wanted to buy AOL, a web portal owned by Time Warner, another media company, but Google swooped in. Yahoo! again lost to Google when the latter won a deal to supply the advertising on MySpace, and then to Microsoft when it struck a deal to deliver advertising on Facebook. Now Yahoo! looks rather desperate, and will have to pay an enormous price for Facebook, a fast-growing company which many big firms have considered buying.
“Days go by and deals go away,” says an outside adviser to Yahoo! who has sat in on executive meetings. The firm has a “relatively constipated process of reviewing anything,” he says. It is slow and cumbersome and “not an entrepreneurial culture” because Mr Semel is a “low-risk, non-confrontational guy”, says this adviser. He recalls a meeting at which an engineer asked: how long do we take from idea to execution? Several people scrawled on the whiteboard and agreed on an answer of eight months.
None of this means that Yahoo! is in dire trouble. If it turns out to be true that online advertising is growing more slowly as a whole, Google and all other internet firms will feel it sooner or later. Christopher Sherman, executive editor of SearchEngineWatch, an online newsletter, says he doesn't think that Yahoo! has lost its way. But “we're past the days of radical innovation where somebody is really going to blow past a competitor.” Yahoo! will have to content itself with a position as the internet's number two, at best.
Living a Second Life
Living a Second Life
A Californian firm has built a virtual online world like no other. Its population is growing and its economy is thriving. Now politicians and advertisers are visiting
PETER YELLOWLEES, a professor of psychiatry at the University of California, Davis, has been teaching about schizophrenia for 20 years, but says that he was never really able to explain to his students just how their patients suffer. So he went online, downloaded some free software and entered Second Life. This is a “metaverse” (ie, metaphysical universe), a three-dimensional world whose users, or “residents”, can create and be anything they want. Mr Yellowlees created hallucinations. A resident might walk through a virtual hospital ward, and a picture on the wall would suddenly flash the word “shitface”. The floor might fall away, leaving the person to walk on stepping stones above the clouds. An in-world television set would change from showing an actual speech by Bob Hawke, Australia's former prime minister, into Mr Hawke shouting, “Go and kill yourself, you wretch!” A reflection in a mirror might have bleeding eyes and die.
When Mr Yellowlees invited, as part of a trial, Second Life's public into the ward, 73% of the visitors said afterwards that it “improved [their] understanding of schizophrenia.” Mr Yellowlees then went further. For about $300 a month, he leases an island in Second Life, where he has built a clinic that looks exactly like the real one in Sacramento where many of his students practise. He gives his students “avatars”, or online personas, so they can attend his lectures inside Second Life and then experience hallucinations. “It's so powerful that some get quite upset,” says Mr Yellowlees.
Second Life, as Mr Yellowlees illustrates, is not a game. Admittedly, some residents—there were 747,263 as of late September, and the number is growing by about 20% every month—are there just for fun. They fly over islands, meander through castles and gawk at dragons. But increasing numbers use Second Life for things that are quite serious. They form support groups for cancer survivors. They rehearse responses to earthquakes and terrorist attacks. They build Buddhist retreats and meditate.
Many use it as an enhanced communications medium. Mark Warner, a former governor of Virginia who is considered a possible Democratic candidate for president in 2008, recently became the first politician to give an interview in Second Life. His avatar (also named Mark Warner) flew into a virtual town hall and sat down with Hamlet Au, a full-time reporter in Second Life. “This is my first virtual appearance,” Mr Warner joked, “I'm feeling a little disembodied.” They then proceeded to discuss Iraq and other issues as they would in real life, with 62 other avatars attending (some of them levitating), until Mr Warner disappeared in a cloud of pixels.
By emphasising creativity and communication, Second Life is different from other synthetic online worlds. Most “massively multi-player online role-playing games”, or MMORPGs (pronounced “morpegs”), offer players pre-fabricated or themed fantasy worlds. The biggest by far is “World of Warcraft”, by Blizzard Entertainment, a firm in California, which has more than 7m subscribers. These worlds are the modern, interactive, equivalents of Nordic myths and Tolkien fantasies, says Edward Castronova, a professor at Indiana University and the author of “Synthetic Worlds: The Business and Culture of Online Games”. They allow players to escape into their imaginations, and to take part by, say, joining with others to slay a monster.
Making, not slaying
Second Life, by contrast, was designed from inception for a much deeper level of participation. “Since I was a kid, I was into using computers to simulate reality,” says Philip Rosedale, the founder of Linden Lab, the San Francisco firm that launched Second Life commercially three years ago. So he set out to construct something that would allow people to “extend reality” by building a virtual version of it, a “second life” not unlike that envisioned by Neal Stephenson in “Snow Crash”, a science-fiction novel published in 1992.
Unlike other virtual worlds, which may allow players to combine artefacts found within them, Second Life provides its residents with the equivalent of atoms—small elements of virtual matter called “primitives”—so that they can build things from scratch. Cory Ondrejka, Linden Lab's product-development boss, gives the example of a piano. Using atomistic construction, a resident of Second Life might build one out of primitives, with all the colours and textures that he would like. He might add sound to the primitives representing the keys, so the piano could actually be played in Second Life. “Of course, since these are primitives, the piano could also fly or follow the resident around like a pet,” says Mr Ondrejka.
Because everything about Second Life is intended to make it an engine of creativity, Linden Lab early on decided that residents should own the intellectual property inherent in their creations. Second Life now allows creators to determine whether the stuff they conceive may be copied, modified or transferred. Thanks to these property rights, residents actively trade their creations. Of about 10m objects created, about 230,000 are bought and sold every month in the in-world currency, Linden dollars, which is exchangeable for hard currency. Linden Lab estimates that the total value (in “real” dollars) this year will be about $60m. Second Life already has about 7,000 profitable “businesses”, where avatars supplement or make their living from their in-world creativity. The top ten in-world entrepreneurs are making average profits of just over $200,000 a year.
By emphasising creativity and communication, Second Life is different from other synthetic online worldsSecond Life's total devotion to what is fashionably called “user-generated content” now places it, unlike other MMORPGs, at the centre of a trend called Web 2.0. This term usually refers to free online services delivered through a web browser—for example, social networks in which users blog and share photos. Second Life is not delivered through a web browser but through its own software, which users need to install on their computers. In other respects, however, it is now often held up as the best example of Web 2.0. “It celebrates individuality,” says Jaron Lanier, who pioneered the concept of “virtual reality” in the 1980s and is now “science adviser” at Linden Lab. And it connects people, he says, because “the act of creation is the act of being social.”
The Web 2.0 crowd also extols Second Life for its highly original business model. Most Web 2.0 firms try to build audiences around user-generated content in order to sell advertising to them. This assumes the availability of unlimited advertising dollars, a notion that is increasingly ridiculed.
Linden Lab does not sell advertising; instead it is a virtual property company. It makes money when residents lease property—an island, say—by charging an average of $20 per virtual “acre” per month. Only about 25,000 residents, or about 3% or the population, lease property, but that already amounts to 53,800 acres, which, in real life, would be bigger than Boston. This works out to monthly revenues of $1m, not counting the commissions that it takes on currency exchanges between Linden dollars and hard cash. As a private company, Linden Lab does not disclose its exact revenues, although Mr Rosedale says the firm is “close to profitability”.
A common reaction to such numbers is astonishment that anybody should pay anything at all for something that exists only in a metaphysical sense. But “there's actually no economic puzzle in this; all kinds of things derive their economic value only from the realm of the virtual,” says Indiana University's Mr Castronova. The American dollar, for instance, is virtual (aside from the value of the paper used for the bills) in that it requires consumers to have faith in its worth. In the context of online games, virtual economies much bigger than Second Life's have existed for years. Many people in poor countries, called “gold farmers”, play games such as “World of Warcraft” professionally to score weapons, points or lives to sell to lazier players in rich countries. But Second Life is unique in that residents conceive what they sell. As such, says Mr Lanier, it is “probably the only example of a self-sustained economy” on the internet.
For all these reasons—its ability to change the real lives of its residents, its innovations in technology and in its business model—Second Life has become a darling of Silicon Valley. It promises to be “disruptive”, says Mitch Kapor, the inventor of the Lotus spreadsheet that played a big role in the personal-computer revolution of the 1980s and 1990s. He is now chairman of Linden Lab. To him, Second Life is comparable to both the PC and the internet itself, which started as something “quirky” for geeks, and then entered and transformed mainstream society. “Spending part of your day in a virtual world will become commonplace” and “profoundly normal,” says Mr Kapor. Ultimately, he thinks, Second Life will “displace both desktop computing” and other two-dimensional “user interfaces”. As “a hothouse of innovation and experiment,” he says, Second Life may even “accelerate the social evolution of humanity.”
Back to this reality
It is bold and early to make such predictions. After all, Second Life is still a relatively small virtual world—only about 9,000 residents are usually logged in at any one time, for example. About two-thirds create content from scratch, but mostly they customise things that they find or browse passively. And a lot of the wares on offer are banal. Whereas a few residents choose very innovative bodies for their avatars, most have shapes, male and female, that hew to the default templates and look, predictably, like cosmetically enhanced porn stars. Among the artefacts, there is some genuine art but quite a bit of junk.
Endless possibilities: Donna Meyer, a grandmother from New York, and her avatarIs Second Life a nirvana where unknown talent can prove its creative mettle and make it in the real world? “You can create your own island and people come to it,” said Bill Joy, a co-founder of Sun Microsystems and now a prominent venture capitalist. But “I don't see any correlation between that and what it's going to take to be a designer and have a skill set to succeed in the world.”
Mr Castronova also cautions against overestimating the depth and breadth of Second Life's economy. Yes, people do create clothes and games and spacecraft in Second Life and then sell them. But most of the big money comes from the virtual equivalent of land speculation, as people lease islands, erect pretty buildings and then rent them to others at a premium. Tongue in cheek, Mr Castronova compares Second Life's in-world boom to America's house-price bubble. In artistic terms, there is not always much difference between building an in-world house and designing a personal web page.
There are also stirrings of discontent among some of the “older” (if one can use that term in a three-year-old metaverse) and more purist residents of Second Life about what they see as a menacing trend toward commercialism. One avatar, for example, has created “MetaAdverse”, a network of advertising billboards inside Second Life to which property developers can feed images of their creations. More controversially, Second Life is also attracting the attention of corporations and advertisers from the real world hoping to attract the metaverse's residents. Publishers now organise book launches and readings in Second Life. The BBC has rented an island, where it holds music festivals and parties. Sun Microsystems is preparing to hold in-world press conferences, featuring avatars of its top executives. Wells Fargo, an American bank, has built a branded “Stagecoach” island, where avatars can pull Linden dollars out of a virtual cash machine and learn about personal finance. Starwood, a hotel and resort chain, is unveiling one of its new hotels in the virtual world.
Toyota is the first carmaker to enter Second Life. It has been giving away free virtual vehicles of its Scion brand and, in October, will start selling all three Scion models. The price will be modest, says Adrian Si, the marketing manager at Toyota behind the project. Toyota really hopes that an “aftermarket” develops as avatars customise their cars and sell them on, thus spreading the brand “virally”. Toyota will be able to observe how avatars use the cars and might, conceivably, even get ideas for engineering modifications in the real world, he says.
Those Scion cars have “great driving performance for in-world physics,” says Reuben Steiger, the boss of Millions of Us, a company he founded this year to bring companies like Toyota into Second Life for marketing and brand-building. “How it corners and makes sounds when it changes gears is great.” So Toyota, which is a client of his, along with Sun Microsystems and even Mr Warner, shows that Second Life is “perfect for creating experiences around a brand,” says Mr Steiger. “We don't think that conventional advertising will be very prevalent,” he says, because it would “be badly received culturally”. Advertising in Second Life is not about “trapping people” but about captivating and stimulating them. A good campaign in Second Life costs about $200,000 dollars, he reckons, of which only a tiny part is property leases and most goes to paying the talented designers to create great virtual stuff.
Virtual strip mall?
Inevitably, this sort of thing turns some residents off. Will Second Life, that realm of individualism and pure creativity and spontaneity, get plastered over by the same mega-brands and mass culture that have, arguably, made the physical world such a homogenous place? In real life, many avatars argue, big business tends to push out small artisans. If the same happens in Second Life, the metaverse will lose its raison d'être.
Mr Rosedale, Linden Lab's founder, empathises with the concern, but thinks it is misplaced. “That is a fear which comes from the real world that is not likely to be borne out in Second Life,” he says. His arguments are all economic. In the physical world land is scarce, so big brands can buy up much of it; in Second Life, Linden Lab simply allocates more computer-processing power and makes even more islands available. The world is infinitely expandable, in other words. If one patch did become homogenous and drab, avatars would simply fly off to the next.
Another economic difference, says Mr Rosedale, is the lack of economies of scale in Second Life. In real life, a shoemaker, say, can reduce the average cost of making a pair by producing huge amounts, and the average cost of marketing by buying advertising in bulk. In Second Life, however, scale means nothing. There is no manufacturing cost to minimise. Gimmicks, such as giving away free shoes, are useless because nobody actually needs shoes at all. Nike, say, has no inherent competitive advantage over a hobbyist who likes to design shoes (or feet, paws, wings or claws) for fun. Thus, says Mr Rosedale, whereas the physical world has relatively few things that are sold in huge numbers, Second Life has huge numbers of things that are sold in relatively small quantities. In the statistical jargon, Second Life's economy trades in “the long tail” of things.
This is why, for the time being, Mr Rosedale prefers to rule Second Life with Adam Smith's “invisible hand” only. To him that means treating every resident the same, whether it happens to be Toyota or “an 80-year-old woman from India.” Both will pay the same price for their acres; what they do with it is up to them. If it ever became necessary, he adds, Linden Lab could “become a regulator and break up monopolies”, but this does not seem likely to come about.
How, then, is one to make sense of Second Life? For those new to it, it appears to be too mind-boggling to have much relevance to real life. For those who spend time inside, however, Second Life ironically tends to resemble the real world even as its obvious differences become clear. Mr Kapor, Linden Lab's chairman, is the first to agree. “People bring all their karma” into the world, he says. Alongside benevolence, there is harassment. If Second Life were ever to become truly mainstream, there is no guarantee that residents would not pollute it with racism and hatred. Perhaps crime too: residents had to reset their passwords after a recent hacking attempt.
These things may be a criticism of human nature, but it cannot be blamed on Second Life. Henry Jenkins, a professor of media studies at the Massachusetts Institute of Technology, thinks that Second Life deserves credit as “a world of hypotheticals and thought experiments.” From new approaches to corporate branding to education, Second Life is a petri dish for innovations that may help people in real life. Already, therapists are using Second Life to help autistic children, because it is a safe environment to practice giving signals to others and interpreting the ones coming back. Other organisations are using Second Life for long-distance learning. Overall, says Jaron Lanier, the veteran of virtual-reality experiments, Second Life “unquestionably has the potential to improve life outside.”
A Californian firm has built a virtual online world like no other. Its population is growing and its economy is thriving. Now politicians and advertisers are visiting
PETER YELLOWLEES, a professor of psychiatry at the University of California, Davis, has been teaching about schizophrenia for 20 years, but says that he was never really able to explain to his students just how their patients suffer. So he went online, downloaded some free software and entered Second Life. This is a “metaverse” (ie, metaphysical universe), a three-dimensional world whose users, or “residents”, can create and be anything they want. Mr Yellowlees created hallucinations. A resident might walk through a virtual hospital ward, and a picture on the wall would suddenly flash the word “shitface”. The floor might fall away, leaving the person to walk on stepping stones above the clouds. An in-world television set would change from showing an actual speech by Bob Hawke, Australia's former prime minister, into Mr Hawke shouting, “Go and kill yourself, you wretch!” A reflection in a mirror might have bleeding eyes and die.
When Mr Yellowlees invited, as part of a trial, Second Life's public into the ward, 73% of the visitors said afterwards that it “improved [their] understanding of schizophrenia.” Mr Yellowlees then went further. For about $300 a month, he leases an island in Second Life, where he has built a clinic that looks exactly like the real one in Sacramento where many of his students practise. He gives his students “avatars”, or online personas, so they can attend his lectures inside Second Life and then experience hallucinations. “It's so powerful that some get quite upset,” says Mr Yellowlees.
Second Life, as Mr Yellowlees illustrates, is not a game. Admittedly, some residents—there were 747,263 as of late September, and the number is growing by about 20% every month—are there just for fun. They fly over islands, meander through castles and gawk at dragons. But increasing numbers use Second Life for things that are quite serious. They form support groups for cancer survivors. They rehearse responses to earthquakes and terrorist attacks. They build Buddhist retreats and meditate.
Many use it as an enhanced communications medium. Mark Warner, a former governor of Virginia who is considered a possible Democratic candidate for president in 2008, recently became the first politician to give an interview in Second Life. His avatar (also named Mark Warner) flew into a virtual town hall and sat down with Hamlet Au, a full-time reporter in Second Life. “This is my first virtual appearance,” Mr Warner joked, “I'm feeling a little disembodied.” They then proceeded to discuss Iraq and other issues as they would in real life, with 62 other avatars attending (some of them levitating), until Mr Warner disappeared in a cloud of pixels.
By emphasising creativity and communication, Second Life is different from other synthetic online worlds. Most “massively multi-player online role-playing games”, or MMORPGs (pronounced “morpegs”), offer players pre-fabricated or themed fantasy worlds. The biggest by far is “World of Warcraft”, by Blizzard Entertainment, a firm in California, which has more than 7m subscribers. These worlds are the modern, interactive, equivalents of Nordic myths and Tolkien fantasies, says Edward Castronova, a professor at Indiana University and the author of “Synthetic Worlds: The Business and Culture of Online Games”. They allow players to escape into their imaginations, and to take part by, say, joining with others to slay a monster.
Making, not slaying
Second Life, by contrast, was designed from inception for a much deeper level of participation. “Since I was a kid, I was into using computers to simulate reality,” says Philip Rosedale, the founder of Linden Lab, the San Francisco firm that launched Second Life commercially three years ago. So he set out to construct something that would allow people to “extend reality” by building a virtual version of it, a “second life” not unlike that envisioned by Neal Stephenson in “Snow Crash”, a science-fiction novel published in 1992.
Unlike other virtual worlds, which may allow players to combine artefacts found within them, Second Life provides its residents with the equivalent of atoms—small elements of virtual matter called “primitives”—so that they can build things from scratch. Cory Ondrejka, Linden Lab's product-development boss, gives the example of a piano. Using atomistic construction, a resident of Second Life might build one out of primitives, with all the colours and textures that he would like. He might add sound to the primitives representing the keys, so the piano could actually be played in Second Life. “Of course, since these are primitives, the piano could also fly or follow the resident around like a pet,” says Mr Ondrejka.
Because everything about Second Life is intended to make it an engine of creativity, Linden Lab early on decided that residents should own the intellectual property inherent in their creations. Second Life now allows creators to determine whether the stuff they conceive may be copied, modified or transferred. Thanks to these property rights, residents actively trade their creations. Of about 10m objects created, about 230,000 are bought and sold every month in the in-world currency, Linden dollars, which is exchangeable for hard currency. Linden Lab estimates that the total value (in “real” dollars) this year will be about $60m. Second Life already has about 7,000 profitable “businesses”, where avatars supplement or make their living from their in-world creativity. The top ten in-world entrepreneurs are making average profits of just over $200,000 a year.
By emphasising creativity and communication, Second Life is different from other synthetic online worldsSecond Life's total devotion to what is fashionably called “user-generated content” now places it, unlike other MMORPGs, at the centre of a trend called Web 2.0. This term usually refers to free online services delivered through a web browser—for example, social networks in which users blog and share photos. Second Life is not delivered through a web browser but through its own software, which users need to install on their computers. In other respects, however, it is now often held up as the best example of Web 2.0. “It celebrates individuality,” says Jaron Lanier, who pioneered the concept of “virtual reality” in the 1980s and is now “science adviser” at Linden Lab. And it connects people, he says, because “the act of creation is the act of being social.”
The Web 2.0 crowd also extols Second Life for its highly original business model. Most Web 2.0 firms try to build audiences around user-generated content in order to sell advertising to them. This assumes the availability of unlimited advertising dollars, a notion that is increasingly ridiculed.
Linden Lab does not sell advertising; instead it is a virtual property company. It makes money when residents lease property—an island, say—by charging an average of $20 per virtual “acre” per month. Only about 25,000 residents, or about 3% or the population, lease property, but that already amounts to 53,800 acres, which, in real life, would be bigger than Boston. This works out to monthly revenues of $1m, not counting the commissions that it takes on currency exchanges between Linden dollars and hard cash. As a private company, Linden Lab does not disclose its exact revenues, although Mr Rosedale says the firm is “close to profitability”.
A common reaction to such numbers is astonishment that anybody should pay anything at all for something that exists only in a metaphysical sense. But “there's actually no economic puzzle in this; all kinds of things derive their economic value only from the realm of the virtual,” says Indiana University's Mr Castronova. The American dollar, for instance, is virtual (aside from the value of the paper used for the bills) in that it requires consumers to have faith in its worth. In the context of online games, virtual economies much bigger than Second Life's have existed for years. Many people in poor countries, called “gold farmers”, play games such as “World of Warcraft” professionally to score weapons, points or lives to sell to lazier players in rich countries. But Second Life is unique in that residents conceive what they sell. As such, says Mr Lanier, it is “probably the only example of a self-sustained economy” on the internet.
For all these reasons—its ability to change the real lives of its residents, its innovations in technology and in its business model—Second Life has become a darling of Silicon Valley. It promises to be “disruptive”, says Mitch Kapor, the inventor of the Lotus spreadsheet that played a big role in the personal-computer revolution of the 1980s and 1990s. He is now chairman of Linden Lab. To him, Second Life is comparable to both the PC and the internet itself, which started as something “quirky” for geeks, and then entered and transformed mainstream society. “Spending part of your day in a virtual world will become commonplace” and “profoundly normal,” says Mr Kapor. Ultimately, he thinks, Second Life will “displace both desktop computing” and other two-dimensional “user interfaces”. As “a hothouse of innovation and experiment,” he says, Second Life may even “accelerate the social evolution of humanity.”
Back to this reality
It is bold and early to make such predictions. After all, Second Life is still a relatively small virtual world—only about 9,000 residents are usually logged in at any one time, for example. About two-thirds create content from scratch, but mostly they customise things that they find or browse passively. And a lot of the wares on offer are banal. Whereas a few residents choose very innovative bodies for their avatars, most have shapes, male and female, that hew to the default templates and look, predictably, like cosmetically enhanced porn stars. Among the artefacts, there is some genuine art but quite a bit of junk.
Endless possibilities: Donna Meyer, a grandmother from New York, and her avatarIs Second Life a nirvana where unknown talent can prove its creative mettle and make it in the real world? “You can create your own island and people come to it,” said Bill Joy, a co-founder of Sun Microsystems and now a prominent venture capitalist. But “I don't see any correlation between that and what it's going to take to be a designer and have a skill set to succeed in the world.”
Mr Castronova also cautions against overestimating the depth and breadth of Second Life's economy. Yes, people do create clothes and games and spacecraft in Second Life and then sell them. But most of the big money comes from the virtual equivalent of land speculation, as people lease islands, erect pretty buildings and then rent them to others at a premium. Tongue in cheek, Mr Castronova compares Second Life's in-world boom to America's house-price bubble. In artistic terms, there is not always much difference between building an in-world house and designing a personal web page.
There are also stirrings of discontent among some of the “older” (if one can use that term in a three-year-old metaverse) and more purist residents of Second Life about what they see as a menacing trend toward commercialism. One avatar, for example, has created “MetaAdverse”, a network of advertising billboards inside Second Life to which property developers can feed images of their creations. More controversially, Second Life is also attracting the attention of corporations and advertisers from the real world hoping to attract the metaverse's residents. Publishers now organise book launches and readings in Second Life. The BBC has rented an island, where it holds music festivals and parties. Sun Microsystems is preparing to hold in-world press conferences, featuring avatars of its top executives. Wells Fargo, an American bank, has built a branded “Stagecoach” island, where avatars can pull Linden dollars out of a virtual cash machine and learn about personal finance. Starwood, a hotel and resort chain, is unveiling one of its new hotels in the virtual world.
Toyota is the first carmaker to enter Second Life. It has been giving away free virtual vehicles of its Scion brand and, in October, will start selling all three Scion models. The price will be modest, says Adrian Si, the marketing manager at Toyota behind the project. Toyota really hopes that an “aftermarket” develops as avatars customise their cars and sell them on, thus spreading the brand “virally”. Toyota will be able to observe how avatars use the cars and might, conceivably, even get ideas for engineering modifications in the real world, he says.
Those Scion cars have “great driving performance for in-world physics,” says Reuben Steiger, the boss of Millions of Us, a company he founded this year to bring companies like Toyota into Second Life for marketing and brand-building. “How it corners and makes sounds when it changes gears is great.” So Toyota, which is a client of his, along with Sun Microsystems and even Mr Warner, shows that Second Life is “perfect for creating experiences around a brand,” says Mr Steiger. “We don't think that conventional advertising will be very prevalent,” he says, because it would “be badly received culturally”. Advertising in Second Life is not about “trapping people” but about captivating and stimulating them. A good campaign in Second Life costs about $200,000 dollars, he reckons, of which only a tiny part is property leases and most goes to paying the talented designers to create great virtual stuff.
Virtual strip mall?
Inevitably, this sort of thing turns some residents off. Will Second Life, that realm of individualism and pure creativity and spontaneity, get plastered over by the same mega-brands and mass culture that have, arguably, made the physical world such a homogenous place? In real life, many avatars argue, big business tends to push out small artisans. If the same happens in Second Life, the metaverse will lose its raison d'être.
Mr Rosedale, Linden Lab's founder, empathises with the concern, but thinks it is misplaced. “That is a fear which comes from the real world that is not likely to be borne out in Second Life,” he says. His arguments are all economic. In the physical world land is scarce, so big brands can buy up much of it; in Second Life, Linden Lab simply allocates more computer-processing power and makes even more islands available. The world is infinitely expandable, in other words. If one patch did become homogenous and drab, avatars would simply fly off to the next.
Another economic difference, says Mr Rosedale, is the lack of economies of scale in Second Life. In real life, a shoemaker, say, can reduce the average cost of making a pair by producing huge amounts, and the average cost of marketing by buying advertising in bulk. In Second Life, however, scale means nothing. There is no manufacturing cost to minimise. Gimmicks, such as giving away free shoes, are useless because nobody actually needs shoes at all. Nike, say, has no inherent competitive advantage over a hobbyist who likes to design shoes (or feet, paws, wings or claws) for fun. Thus, says Mr Rosedale, whereas the physical world has relatively few things that are sold in huge numbers, Second Life has huge numbers of things that are sold in relatively small quantities. In the statistical jargon, Second Life's economy trades in “the long tail” of things.
This is why, for the time being, Mr Rosedale prefers to rule Second Life with Adam Smith's “invisible hand” only. To him that means treating every resident the same, whether it happens to be Toyota or “an 80-year-old woman from India.” Both will pay the same price for their acres; what they do with it is up to them. If it ever became necessary, he adds, Linden Lab could “become a regulator and break up monopolies”, but this does not seem likely to come about.
How, then, is one to make sense of Second Life? For those new to it, it appears to be too mind-boggling to have much relevance to real life. For those who spend time inside, however, Second Life ironically tends to resemble the real world even as its obvious differences become clear. Mr Kapor, Linden Lab's chairman, is the first to agree. “People bring all their karma” into the world, he says. Alongside benevolence, there is harassment. If Second Life were ever to become truly mainstream, there is no guarantee that residents would not pollute it with racism and hatred. Perhaps crime too: residents had to reset their passwords after a recent hacking attempt.
These things may be a criticism of human nature, but it cannot be blamed on Second Life. Henry Jenkins, a professor of media studies at the Massachusetts Institute of Technology, thinks that Second Life deserves credit as “a world of hypotheticals and thought experiments.” From new approaches to corporate branding to education, Second Life is a petri dish for innovations that may help people in real life. Already, therapists are using Second Life to help autistic children, because it is a safe environment to practice giving signals to others and interpreting the ones coming back. Other organisations are using Second Life for long-distance learning. Overall, says Jaron Lanier, the veteran of virtual-reality experiments, Second Life “unquestionably has the potential to improve life outside.”
6.29.2006
Video goes viral
Video on the net is nothing new. But with the arrival of YouTube and other video sharing sites, it's suddenly become a phenomenon. Video is finally easy to upload, easy to find, easy to share. So far it's free, and anyone can view it - regardless of operating system or web browsers. And it comes in quick-loading, bite-sized chunks.
Thursday, June 29 - 2006So what are these videos? Uploaded by users, the variety is infinite: from music videos, travel, sports, comedy, film clips, cult TV titles, science experiments and cute animals to random people sitting in front of a webcam giving their opinion on random topics. Adult content is usually banned, to keep sites off web-nanny blacklists. The brilliance of YouTube and its associates - Revver, MetaCafe, Yahoo Video and Google Video to name just a few - is that they allow people to embed their videos on other sites. A blogger, for example, can cut and paste a couple of lines of code and display their favourite music videos from YouTube on their blog. It greatly maximises the exposure for the videos and of course the video sharing sites. Popular videos go viral, with tens or hundreds of thousands of users viewing them, commenting on them, and re-linking to them.
Stunning figuresThe figures are spectacular. YouTube currently has a 63% market share, with 12.5 million visitors a month watching more than seventy million videos a day. There are around forty million different videos on YouTube, with sixty thousand new videos uploaded every day. It has become one of the Top 50 most visited websites. USA Today described it as the "beginning of the age of personal media". What inspired YouTube's founders was the difficulty of putting digital video on the web. With the explosion in camcorders and video-enabled digital cameras, people have millions of hours of footage but no easy to way to share it. It's too big to email. It's too difficult (and often too expensive) to put it on a personal website. Video sharing sites do all the work and bear all the cost.
The money modelBut this bandwidth is expensive. It's estimated that bandwidth costs YouTube US$1 million per month. But the investment - YouTube has raised US$11 million in venture capital - is money more than well-spent. YouTube estimates that it could already earn US$10 million a month by putting ads at the start of every video. So far, it hasn't, because it doesn't want to alienate viewers. Instead it's looking for new and creative ways to get advertisers on board. One of these is US TV network NBC, which has just signed a cross-promotional agreement with YouTube. This is despite a rockier early relationship, when NBC ordered YouTube to remove unlicensed copyright clips of Saturday Night Live. But NBC realised that the illegal video had actually created unprecedented hype for SNL. So it's now agreed to run TV and online ads for YouTube, in return for YouTube running legal promotional clips of NBC's autumn line-up.
A niche opportunityFor advertisers, the beauty of video sharing sites is being able to target highly niche audiences. All videos are tagged with different keywords, from the general "music" "sport" "comedy" to specifics such as "Britney" "golf" "kittens". Nearly a third of YouTube's visitors are aged 18-24, a key youth market that is getting harder for marketers to reach. YouTube's founders claim they don't want to replace TV or Hollywood, but act as a complementary service. But the boundaries are blurred. Videos on YouTube have a 10-minute length limit, but many users have split up entire TV programmes and feature films into numbered segments. Thousands of music videos are recorded off the TV and put up on YouTube, making it like a personalised MTV jukebox. It's also a showcase for users to promote themselves. Out-of-work actors and wannabes are known to have used YouTube to plug their talents. Some have picked up work. Other YouTube users have become cult names and been signed professionally. TUNG, a tongue-cleaning product manufacturer, are sponsoring one rising YouTube star because of his "huge obsession with licking things".
Lessons to be learntThere's a lot to learn from YouTube. The first lesson is that internet users are desperate for compelling, quirky and entertaining multimedia content. And they are happy to get it in small bites. They may not want to pay for it, but they'll probably put up with a short TVC or banner ad for the privilege of watching. The second is universality. Anyone, anywhere, on any system - even mobile devices - can watch YouTube's videos. There are no proprietary formats, no plug-ins to download, you don't need a particular browser or the latest version of Windows. This is going to be a harsh lesson for video sites that try to force users to specific (usually Windows-only) formats. Accessibility is the only way. The third - as NBC has learnt, but the RIAA still shuts its eyes to - is not to fear and resist the New Media Revolution, but to embrace it. The internet is here to stay and here to grow. It's impossible to try and control the machinations of millions of hungry bright minds. If people want to see a video, they'll find a way to rip it, copy it, encode it. Forget proprietary formats, forget copyright protection - the hackers and crackers will always be ten steps ahead.
Thursday, June 29 - 2006So what are these videos? Uploaded by users, the variety is infinite: from music videos, travel, sports, comedy, film clips, cult TV titles, science experiments and cute animals to random people sitting in front of a webcam giving their opinion on random topics. Adult content is usually banned, to keep sites off web-nanny blacklists. The brilliance of YouTube and its associates - Revver, MetaCafe, Yahoo Video and Google Video to name just a few - is that they allow people to embed their videos on other sites. A blogger, for example, can cut and paste a couple of lines of code and display their favourite music videos from YouTube on their blog. It greatly maximises the exposure for the videos and of course the video sharing sites. Popular videos go viral, with tens or hundreds of thousands of users viewing them, commenting on them, and re-linking to them.
Stunning figuresThe figures are spectacular. YouTube currently has a 63% market share, with 12.5 million visitors a month watching more than seventy million videos a day. There are around forty million different videos on YouTube, with sixty thousand new videos uploaded every day. It has become one of the Top 50 most visited websites. USA Today described it as the "beginning of the age of personal media". What inspired YouTube's founders was the difficulty of putting digital video on the web. With the explosion in camcorders and video-enabled digital cameras, people have millions of hours of footage but no easy to way to share it. It's too big to email. It's too difficult (and often too expensive) to put it on a personal website. Video sharing sites do all the work and bear all the cost.
The money modelBut this bandwidth is expensive. It's estimated that bandwidth costs YouTube US$1 million per month. But the investment - YouTube has raised US$11 million in venture capital - is money more than well-spent. YouTube estimates that it could already earn US$10 million a month by putting ads at the start of every video. So far, it hasn't, because it doesn't want to alienate viewers. Instead it's looking for new and creative ways to get advertisers on board. One of these is US TV network NBC, which has just signed a cross-promotional agreement with YouTube. This is despite a rockier early relationship, when NBC ordered YouTube to remove unlicensed copyright clips of Saturday Night Live. But NBC realised that the illegal video had actually created unprecedented hype for SNL. So it's now agreed to run TV and online ads for YouTube, in return for YouTube running legal promotional clips of NBC's autumn line-up.
A niche opportunityFor advertisers, the beauty of video sharing sites is being able to target highly niche audiences. All videos are tagged with different keywords, from the general "music" "sport" "comedy" to specifics such as "Britney" "golf" "kittens". Nearly a third of YouTube's visitors are aged 18-24, a key youth market that is getting harder for marketers to reach. YouTube's founders claim they don't want to replace TV or Hollywood, but act as a complementary service. But the boundaries are blurred. Videos on YouTube have a 10-minute length limit, but many users have split up entire TV programmes and feature films into numbered segments. Thousands of music videos are recorded off the TV and put up on YouTube, making it like a personalised MTV jukebox. It's also a showcase for users to promote themselves. Out-of-work actors and wannabes are known to have used YouTube to plug their talents. Some have picked up work. Other YouTube users have become cult names and been signed professionally. TUNG, a tongue-cleaning product manufacturer, are sponsoring one rising YouTube star because of his "huge obsession with licking things".
Lessons to be learntThere's a lot to learn from YouTube. The first lesson is that internet users are desperate for compelling, quirky and entertaining multimedia content. And they are happy to get it in small bites. They may not want to pay for it, but they'll probably put up with a short TVC or banner ad for the privilege of watching. The second is universality. Anyone, anywhere, on any system - even mobile devices - can watch YouTube's videos. There are no proprietary formats, no plug-ins to download, you don't need a particular browser or the latest version of Windows. This is going to be a harsh lesson for video sites that try to force users to specific (usually Windows-only) formats. Accessibility is the only way. The third - as NBC has learnt, but the RIAA still shuts its eyes to - is not to fear and resist the New Media Revolution, but to embrace it. The internet is here to stay and here to grow. It's impossible to try and control the machinations of millions of hungry bright minds. If people want to see a video, they'll find a way to rip it, copy it, encode it. Forget proprietary formats, forget copyright protection - the hackers and crackers will always be ten steps ahead.
6.27.2006
NBC on YouTube
NBC adverts on video-sharing site US broadcaster NBC has agreed a deal to promote its autumn schedule on video-sharing website Youtube.
NBC said the move, in which promos will air on a dedicated NBC channel on Youtube, would help reach people who might watch little TV in the summer.
The broadcaster has previously had to ask Youtube to remove unauthorised footage of its shows posted by users.
Meanwhile Warner Bros has begun selling films and TV on Guba.com. It already has a similar deal with Bittorrent.
Youtube allows professionals and amateurs to share video footage.
The NBC deal could see clips from new and old shows, behind-the-scenes footage, and other items exclusive to the internet airing on Youtube.
"The distinction between television and video is becoming murkier and murkier," said John Miller, chief marketing officer of NBC Universal Television Group.
"Rather than putting our heads in the sand and saying this doesn't exist, we're trying to jump in and embrace it."
Warner Bros' deal with Guba allows users to buy or rent films and TV shows, with new movies being made available on the same day that DVDs are released in stores.
New films will sell for $19.99 (£11), older ones for $9.99 (£5.50), while rental starting at $1.99 (£1.10) will allow unlimited viewing within a 24-hour period.
The studio is also planning to sell about 200 of its films and programmes on Bittorrent.com.
NBC said the move, in which promos will air on a dedicated NBC channel on Youtube, would help reach people who might watch little TV in the summer.
The broadcaster has previously had to ask Youtube to remove unauthorised footage of its shows posted by users.
Meanwhile Warner Bros has begun selling films and TV on Guba.com. It already has a similar deal with Bittorrent.
Youtube allows professionals and amateurs to share video footage.
The NBC deal could see clips from new and old shows, behind-the-scenes footage, and other items exclusive to the internet airing on Youtube.
"The distinction between television and video is becoming murkier and murkier," said John Miller, chief marketing officer of NBC Universal Television Group.
"Rather than putting our heads in the sand and saying this doesn't exist, we're trying to jump in and embrace it."
Warner Bros' deal with Guba allows users to buy or rent films and TV shows, with new movies being made available on the same day that DVDs are released in stores.
New films will sell for $19.99 (£11), older ones for $9.99 (£5.50), while rental starting at $1.99 (£1.10) will allow unlimited viewing within a 24-hour period.
The studio is also planning to sell about 200 of its films and programmes on Bittorrent.com.
Guba.com: For the first time, an online video site not affiliated with Hollywood can sell movies, TV shows
Guba.com: For the first time, an online video site not affiliated with Hollywood can sell movies, TV shows
By John BoudreauMercury News
Continuing Hollywood's dance with Bay Area tech companies, Warner Bros. announced Monday a partnership with online video site Guba.com to distribute new and vintage movies and TV shows.
The deal is the result of a yearlong courtship started by Guba's co-founder, 33-year-old Tom McInerney, who expects other studio agreements in coming months. People will be able to rent or buy video downloads on Guba, marking the first time a Web site not affiliated with a Hollywood company can offer both movies and TV shows, from new film releases such as ``Syriana'' and ``Harry Potter and the Goblet of Fire,'' to TV shows, such as ``Babylon 5'' and ``The Flintstones.''
The San Francisco company hopes to grow its catalog of titles every month. Television episodes will be sold starting at $1.79 per episode. Movie rental prices start at $1.99 and films released on the same date they are on DVD will sell for $19.99. Older films will be sold for $9.99.
After initially hesitating, Hollywood has rushed into the digital era and is gaining momentum. Analysts speculate Steve Jobs is working to line up a deal to add movies to Apple Computer's successful and trend-setting online iTunes music and video store.
Meanwhile, Movielink, an online service co-owned by five Hollywood studios, began offering download sales of some first-run and older movies in April. Sony and Lions Gate also sell films on CinemaNow, jointly owned by Microsoft, Lions Gate, Cisco Systems and Blockbuster. In May, Warner Bros. announced it had agreed to use file-sharing company BitTorrent in San Francisco to legally distribute films and shows online, though the rollout isn't expected until late summer, a BitTorrent spokeswoman said. And NBC will announce today it will use the video-sharing site YouTube to promote its fall television lineup.
A few giants
Ultimately, giants like Apple, Yahoo and Google, which have enormous audiences, will dominate online video, said Phil Leigh, president of research firm Inside Digital Media. They could use their size to drive for better deals, such as maybe a price of just $10 a movie, he added.
Warner Bros. began to take Guba seriously after it agreed to scrub its site of pirated Hollywood videos, said Jim Wuthrich, senior vice president of Warner Bros. Home Entertainment.
``They worked on cleaning up the illegitimate product in the network,'' he said. ``So it made sense for us to go forward with the deal.''
Said Tim Bajarin, president of research company Creative Strategies: ``If you do not have the ability to prove to Hollywood that you can handle their content securely and guarantee it cannot be pirated, you don't even get in the door.
Entertainment online, though, is very much in its nascent stage.
``I don't know how big this business will be on an industry basis, or for Guba specifically,'' Wuthrich said. ``We are in the experimental state. We are trying different models and different partners. I really don't know where we will be six months from now.''
Studios generally insist video rentals expire 24 hours after they are first viewed. They also will be reluctant to offer movies online before the traditional four-month theater run because that would disrupt longstanding relationships with cinema owners, Bajarin said.
Restricted DVDs
Under the Guba-Warner Bros. agreement, people will be able to make a copy of a video onto a DVD, but, because of industry licensing agreements, it can only be played on the computer from which it was burned. Wuthrich said he hopes consumers will be able to watch the copied DVDs with a DVD player within a year or so.
For McInerney, the Warner Bros. deal is a big payoff, professionally and personally.
About a year ago, McInerney decided the only way his relatively unknown, 8-year-old company could garner the business of studios was to immerse himself in Hollywood's culture. He rented a Beverly Hills penthouse and bought a Porsche 911 to cruise Hollywood Boulevard. To do business in Hollywood, it helps to hit the clubs and social scene. And so he did.
McInerney, an engineer who once worked for Apple and Sony, hopes the deal will increase the visibility of Guba, which had 900,000 visitors in May, according to Nielsen Media Research. (YouTube, the popular video-sharing site, had more than 20 million visitors last month.)
With a license agreement to distribute Hollywood videos, he said, Guba has a stronger business model than its competitors.
``Nobody is going to pay to see a kid falling off his skateboard or a dog riding a bicycle,'' McInerney said.
By John BoudreauMercury News
Continuing Hollywood's dance with Bay Area tech companies, Warner Bros. announced Monday a partnership with online video site Guba.com to distribute new and vintage movies and TV shows.
The deal is the result of a yearlong courtship started by Guba's co-founder, 33-year-old Tom McInerney, who expects other studio agreements in coming months. People will be able to rent or buy video downloads on Guba, marking the first time a Web site not affiliated with a Hollywood company can offer both movies and TV shows, from new film releases such as ``Syriana'' and ``Harry Potter and the Goblet of Fire,'' to TV shows, such as ``Babylon 5'' and ``The Flintstones.''
The San Francisco company hopes to grow its catalog of titles every month. Television episodes will be sold starting at $1.79 per episode. Movie rental prices start at $1.99 and films released on the same date they are on DVD will sell for $19.99. Older films will be sold for $9.99.
After initially hesitating, Hollywood has rushed into the digital era and is gaining momentum. Analysts speculate Steve Jobs is working to line up a deal to add movies to Apple Computer's successful and trend-setting online iTunes music and video store.
Meanwhile, Movielink, an online service co-owned by five Hollywood studios, began offering download sales of some first-run and older movies in April. Sony and Lions Gate also sell films on CinemaNow, jointly owned by Microsoft, Lions Gate, Cisco Systems and Blockbuster. In May, Warner Bros. announced it had agreed to use file-sharing company BitTorrent in San Francisco to legally distribute films and shows online, though the rollout isn't expected until late summer, a BitTorrent spokeswoman said. And NBC will announce today it will use the video-sharing site YouTube to promote its fall television lineup.
A few giants
Ultimately, giants like Apple, Yahoo and Google, which have enormous audiences, will dominate online video, said Phil Leigh, president of research firm Inside Digital Media. They could use their size to drive for better deals, such as maybe a price of just $10 a movie, he added.
Warner Bros. began to take Guba seriously after it agreed to scrub its site of pirated Hollywood videos, said Jim Wuthrich, senior vice president of Warner Bros. Home Entertainment.
``They worked on cleaning up the illegitimate product in the network,'' he said. ``So it made sense for us to go forward with the deal.''
Said Tim Bajarin, president of research company Creative Strategies: ``If you do not have the ability to prove to Hollywood that you can handle their content securely and guarantee it cannot be pirated, you don't even get in the door.
Entertainment online, though, is very much in its nascent stage.
``I don't know how big this business will be on an industry basis, or for Guba specifically,'' Wuthrich said. ``We are in the experimental state. We are trying different models and different partners. I really don't know where we will be six months from now.''
Studios generally insist video rentals expire 24 hours after they are first viewed. They also will be reluctant to offer movies online before the traditional four-month theater run because that would disrupt longstanding relationships with cinema owners, Bajarin said.
Restricted DVDs
Under the Guba-Warner Bros. agreement, people will be able to make a copy of a video onto a DVD, but, because of industry licensing agreements, it can only be played on the computer from which it was burned. Wuthrich said he hopes consumers will be able to watch the copied DVDs with a DVD player within a year or so.
For McInerney, the Warner Bros. deal is a big payoff, professionally and personally.
About a year ago, McInerney decided the only way his relatively unknown, 8-year-old company could garner the business of studios was to immerse himself in Hollywood's culture. He rented a Beverly Hills penthouse and bought a Porsche 911 to cruise Hollywood Boulevard. To do business in Hollywood, it helps to hit the clubs and social scene. And so he did.
McInerney, an engineer who once worked for Apple and Sony, hopes the deal will increase the visibility of Guba, which had 900,000 visitors in May, according to Nielsen Media Research. (YouTube, the popular video-sharing site, had more than 20 million visitors last month.)
With a license agreement to distribute Hollywood videos, he said, Guba has a stronger business model than its competitors.
``Nobody is going to pay to see a kid falling off his skateboard or a dog riding a bicycle,'' McInerney said.
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