Last Class (#12) Winter 2008

Thanks for a great quarter! The final class was jam packed with great pitches. Some of the best were:

• Ozan’s witty DIGI-THINK presentation of futuristic direct brain interfaces may indeed happen. Check out www.emotiv.com
• Andrew’s innovative futuretabloid.com Rumor exchange
• Laureen and Jennifer presented JUMPERINN.com home stay exchange and social network complete with layouts and mock-ups.
• Kahraman’s code-safe security device (written)
• We also heard about several content distribution models including Any and Raquel who want satellite TV wherever they go and Evghenia who wants unlimited content for a flat monthly subscription.

I summed up the course through a 50,000 foot view of some of the largest companies in the media and entertainment industry in the US ( Media Mega Corps ).

We can see how they are formulating interactive strategies through reorganizations and acquisitions. We can also see how the companies are vertically and horizontally integrated. For example GE, which has the largest market cap of all the media giants, owns Universal Studios and NBC, both a large film studio a TV Network and individual TV Stations. NBC is also a partner in HULU with NewsCorp and a $100 million Equity Partner, Providence. Comcast is partners with Sony on its stake in the the largest movie library from MGM, which is also partly owned by Providence. Content companies know they must be in all mediums: Film, TV, Publishing, Internet. They must seek the synergies and minimize piracy and cannibalization of their traditional businesses. They are often at odds within themselves.

Ah the tangled webs we weave. My friend Philippa Burgess from Creative Convergence (www.creativecvg.com) points out how the entire entertainment business has transformed over the past 10 years and all the silos have been broken down. TV Actors and properties cross into features and vica versa. Properties also cross over into games and publishing. CATV has become a rival to the broadcast networks for original series. All players are attempting to understand the impact of the Internet as the WGA strike so aptly pointed out.

It has been great having everyone in class and we look forward to staying in touch! Sphere: Related Content

Class 11, 19 March 2008

Thanks for the presentations this week. They included:

• Online Vault with tiers of service
• Online Newspaper publishing and UI platform,
• Out-of-Home Digital Video Ad Network
• iPhone Personal Productivity Tools
• An online web application for video editing
• A presentation about how online advertising works.

Relevant to out-of-home advertising, I was surprised to discover in my online research wanderings, that Google filed a Patent Application (705014000; 705001000) for “Allocating advertising space in a network of displays”. Here is the abstract:
“Advertisers may upload advertisement messages to a server specifying information such as budget, price per impression, preferred billboards and/or other constraints. One or more keywords or other descriptors are specified for each advertisement message. The system then generates an advertising campaign specifying where the advertisement message is to be output and send the messages to the specified displays. The output may consist of various forms including video, audio, printed incentive, interactive data transfers and/or combinations of these.”

Turns out that Google has a similar patents covering advertising in almost any situation.

The 20 March, LA Times had an article (http://www.latimes.com/entertainment/news/music/la-fi-apple20mar20,1,4485461.story) discussing how Apple is considering moving to a subscription music service for the iPhone. I personally think this is inevitably how it will go. I believe bundled subscriptions, especially via mobile carriers will become a dominant model for music distribution. Nokia is already doing it as well as carriers in other parts of the world.

One of our book reports covered THE FUTURE OF MUSIC by Gerd Leonhard. The book also argues that this “music as a utility” users subscribe to is inevitable.

Also noted this past week is Time Warner’s AOL acquisition of bebo.com the third largest social network with 40 million users for $850 million in cash. No doubt AOL is looking to leverage its 80 million AIM/ICQ users in new ways. Sphere: Related Content

News Bytes: Classes #9 and #10

3 March 08: The Chicago Tribune’s Jon Van reported that the FCC Auction for the analog TV spectrum could yield $20 billion, way more than anticipated. The 214 bidders included Verizon, AT&T and Google. No doubt that these airwaves formerly used for free over-the-air television will be recycled for wireless broadband Internet access that will compete with WiMax, EVDO and even Qualcomm’s Media Flow for wireless streaming video. Widely available wireless broadband will expand the market for mobile devices and mobile content services.

Dateline 15 March 08, Wall Street Journal superstar tech Journalist Walter Mossberg took a look at HULU with a balanced critique. He liked the UI and feature set and pointed out that the selection of videos was, of course, limited to NBC-UNI and Newscorp Content. Essentially Hulu clones YouTubes most popular features: fast search, embedding, emailing, fullscreen viewing. The networks finally get that the Internet is simply an extension of every other form of TV distribution and will rapidly equal or even dominate consumption. The networks are grasping that consumers have a limited tolerance for advertising. The reduced ad load in HULU’s delivered programming reflects this. I still believe that in the long run HULU will NOT become the mass destination its architects desire. The Internet is too fungible, and endless choice via endless search will dominate.

www.aimeestreet.com got a big PR boost from the Spitzer scandal when it was instantly discovered that his service provider, Ashley Alexandra Dupre, aka Kristen, had two tracks on the site. The site prices tracks based on popularity and her two offerings quickly rose to the max of 98 cents.

On the ad front as reported in the NYT 14 March 08, PepsiCo opted to go the event, experiential marketing route for its Tava brand. Aside from the soup of synthetic compounds that go into these “natural” beverages, including “vitamins”, I admire the www.tava.com website as an exercise in branded media. Top level navigation of Events, Music, and Art reveal the strateg of pairing the beverage experience with emerging artistic experiences. Combine with strategic sampling in the offices of influencers at MTV, Google and others, Tribal DDB ( a unit of Omnicom) seeks to mirror the bottom up success of the likes of Red Bull. Free music downloads sweeten the tea.

Any contributed a link RE Intel’s WiMax chipset:
http://www.pcworld.com/article/id,143577-c,tabletpcs/article.html# The article supports the imminent coming of ubiquitous, cheap wireless broadband.
And Facebook’s new privacy options:
http://www.pcworld.com/article/id,143579-c,webservices/article.html

Joyce pointed out this WSJ article discussing the challenge imposed by exponential increases in Internet traffic.
http://www.nytimes.com/2008/03/13/technology/13net.html?ex=1363233600&en=37c92cf02bd0601f&ei=5124&partner=permalink&exprod=permalink
Massive amounts of P2P, video and music uploading and downloading is going to strain the system. Improvements in compression, and expansion in bandwidth will probably keep apace. Some ISPs and their customers who may not have adequate infrastructure may suffer. I see a tiered structure imminent whereby bandwidth limits are imposed with tariffs to begin balancing usage.

Flora sent a link to a Reporter summary of Disney CEO Robert Iger discussing its billion dollar online revenue outlook at Digital Hollywood. 4 million movie and 50 million TV episode downloads on iTunes are impressive stats. He claimed this was incremental revenue an no cannibalization of DVD sales, although I doubt that. Sphere: Related Content

Class#8 One-Wilshire, CRG West

The trip to One Wilshire provided excellent and unique insight into how the Internet works and how a major access point operates. Thanks to Mr. Sam Proudy for his excellent briefing and tour.

One 664,000 square-foot One Wilshire building was the first building to scrape the downtown LA Skyline in 1966. It became an alternative for the closed AT&T network shortly thereafter.

By touring Wilshire One we got to see first hand what a major global Internet Exchange (IX) looks like and get a sense of how it operates. We also got some rare insights into the operation of a major carrier hotel and data center.

The heart of CRG West’s One Wilshire is the Meet-Me room and its Any2 Exchange. This is the essence of the Internet. The Internet is, and was originally designed to be a network of networks. A priori, to achieve this, the networks must exchange data freely or “Peer”. Carrier neutral peering is what makes the Internet work. Seeing the Meet-Me room is a rare glimpse of Peering. Just beneath the visible, vast runs of copper and fiber interconnects, lay the switches and invisible software that manage an average of over 17 Gbps of traffic interconnecting about 120 users. This makes One Wilshire one of the busiest places on the global net.

Some of the interesting facts we learned on the tour:

• The limiting factors in data center operations are power and cooling. The data center is designed for about 150 Watts/Sq Ft. Paradoxically, smaller “blades” simply create much more density and more difficult cooling requirements. Therefore we saw some cages with a lot empty space since the max number of servers can fit in many fewer racks. This is also why Google and Microsoft are building super sized data centers where power is cheap.
• I was surprised to learn about the enormous price differences in power from 2 cents in Oregon where hydroelectric power is cheap, to 9 cents in LA to 13 cents in San Jose.
• Wilshire One sucks up a whopping 25 Megawatts per month. The City of Santa Monica uses about 15.
• Redundancy including failover power and cooling backup is essential. The blackout in Florida on Wednesday is a case in point. The 4 submarine trans-pacific fiber cables that were interrupted a couple of weeks highlighted some of the vulnerabilities and why CRG has separate facilities that back each other up.
• The US is one of the few places where major carriers from around the world can “peer” without government interference. That makes the One Wilshire Any2 Exchange extremely important in the global grid.
• CDNs or Content Delivery Networks such as Akamai and Limelight play an important role in optimizing data distribution.

Sphere: Related Content