Thursday, October 26, 2006

YouTube Future – Napsterization or Brave New World?

It was as clear as the writing on the wall. Almost as the ink was drying on the signatures on the Google/YouTube deal, content companies across the world were sharpening their knives in anticipation while dialing their lawyers with the other hand!

NetResults, a company representing the rights of Formula 1, Australian Open Tennis and others, is the latest to identify over 1000 videos which it demands be removed from YouTube (with another 10,000 to follow). This follows the Japan Society for Rights of Authors, Composers and Publishers (Jasrac) forced YouTube to remove some 30,000 videos from its archives.

This is despite YouTube moving to limit the length of the videos to 10 minutes earlier in 2006.

Youtube has already looked at deals with CBS and the labels – BMG & Universal – whereby the owners of content get copyright protection as well as automated software to trap copyright violations.

There are 2 likely outcomes of this. The first is that content owners get all huffy and demand that their content be removed. This is the initial response of most content owners or their representatives – as in the case of NetResults. This needs to get classified in the “really-bad-move-which-shows-we-haven’t-learn’t-anything-from -Napster-and-the-music-industry” section of our idea bank. There is a character in Mahabharat (the great Indian epic) who cannot easily be killed in battle because every drop of blood that falls on the ground creates another incarnation. In the same way, you can expect a hundred underground file sharing and video sharing sites to pop up, increasingly hosted in remote countries, where the legal process is slow at best and copyright is a grey area. To be followed by annual releases by industry analysts on the billions of dollars of lost revenue.

The second possible outcome is that content users will stop trying to fight the dying of light and recognize that content sharing on the web is here to stay as sure as night follows the day. They will then focus on how to exploit this rather than how to stop it. A starting point is the sharing of advertising revenue. Rather than demand that the content be removed, they should negotiate for a much higher percentage of advertising generated by the content.

Of course we’ll get both kinds of responses and some in the middle. But its telling that the music companies who have suffered in the Napster saga have been quick to get to the ad-sharing model.

There is an issue of right and wrong here, which I’ve sidestepped so far. In our current framework of thinking copyright theft is wrong. And I believe this. However, in any society, the majority defines the “acceptable” behaviour and it’s the deviant who is seen as a criminal. Laws follow majority thinking. So in due course, I expect that the legal framework on content protection will shift subtly but surely to reflect the views of the majority, whatever it might be at the time. Remember there was a time when “witchcraft” was wrong and punishable by death. And carrying fire-arms without license was once perfectly legal in many societies but is a criminal offence today. Hosting pirated content was deemed a crime recently, irrespective of whether the content was put there by somebody else or by the hosting entity.

It will be interesting to see if the YouTube story follows the lose-lose model of the Napster saga or creates a brave new world of content monetization.

Saturday, October 21, 2006


About 7 internet years and 1 bubble ago, I had an idea - why not create a completely user centric browsing experience. A really correctly named "". The idea would be to use web services to create little windows which you could build without knowing any HTML, but just by using drag and drop tools. So you could say - in this box on top, I want a link to my bank. Here I want to link to all my utilities - phone, gas, water etc. Here's a link to my council tax, local library and gym, and on the other side, a window for all my favourite blogs. Right at the bottom, a link to my yahoo, and other personalized pages, my news papers... you get the idea.

I knew at the time, that a good idea like this lasts about 6 months (which is about 5 internet years, or 3 internet years and 1 bubble - bubbles initially speed up and then dilate internet time).

So its wasn't a surprise when I discovered pageflakes in the sign off line from a friend who works at Benchmark. Although largely US Centric and not absolutely user focused as was in my mind, the site pretty much delivers the experience I had thought about and no doubt, they'll add the rest. The key difference is that this is all server centric - which means any data you share will reside at their end.

It would be nice to have a local version as well, but of course, that means you're tied to a device. Can't win them all! But here's to pageflakes - long may the idea thrive.

Thursday, October 19, 2006

Print Publishing's Growing Pains.

I continue to believe that the line between print and broadcast will start to blur and then vanish. As we speak, the print publishing industry is reeling. Strategy and reorganizations abound. In LA the Tribune company has faced open revolt as they try to cope with the downswing by reducing editorial staff. Many others, from Dow Jones to the Guardian - household brands all, have announced strategic rethinks.

As is common with most media businesses, newspapers have traditionally under invested in the technology changes changing their world. This is true both for internally facing tech - which drives the business and external - i.e. the web and other consumer facing technologically evolving channels. As the FT reports, the Business Week Magazine, which has been running from 1929, has only had a part time editor for the web version till last year.

The numbers tell their own story - the online advertising has risen by 60% year on year, while print advertising is, of course, flat. The print version has under 1 million circulation now. Even accounting for (say) 5 people per copy, it still reaches less people than the online edition which has 7 million unique users and 50 million page views. The fact that online advertising is still only 13 % of the total, is probably brought about by lack of support there as well.

And still the real numbers aren't getting discussed - the number of registered users, the number of actual clicks on advertising, the hundreds of stratifications possible on the user and usage data which can be fed to gleeful advertisers. Of course nobody in publishing is talking about video numbers, though the FT, and most other magazines are dabbling with podcasts, and videos. This is a mistake. This will grow and the smarter publications will become "pan-media" companies. You only need to look at the BBC to see how it can be done.

Tuesday, October 10, 2006

Google, Youtube and the Napster Effect

So it's happened. Given the success of the MySpace exit, Youtube was always going to attract its fair share of suitors. It's just a shame that 2 of the most promising plays in the Web 2.0 era, have cashed in. It's the equivalent of Google, Yahoo, Ebay and Amazon selling out 5 years ago to the Microsofts, Viacoms and WalMarts.

No prizes for guessing who the winners are here - the founders of Youtube - Hurley & Chen - who, having seen it happen to their earlier employer - Paypal, have now walked successfully down that road themselves.

Google is a winner too, sort of. As one of the quoted analysts mention, this essentially adds a whole lot to their inventory. They still need to integrate the search technology, work out better indexing and delivery but its all good from there.

Big Media are happy too - they have much greater leverage with a listed and wealthier entity than with a start up with no revenues or business model. They can exert a much greater influence on their content, and the pirated versions therein.

The only losers in this deal may be the punters. The 50 million people who come to the site to see the latest gaffes from George Bush or the Peter Crouch wonder-goal, or just sample the range content from weird to wonderful, and from inane to inspired. For them, the crack down on "illegal content" may take a chunk out of the Youtube allure.

If the Napster story taught us anything though, it's that preventing 50 million people from doing something they really want to online, is like trying to prevent ageing. If indeed there is a crackdown on the pirated content on Youtube, it will create a whole generation of YouTube clones. Which will be a whole lot harder to track and take down, but equally, harder to find - you'll have to be in the know as a consumer, as to which site is the flavour of the month for your favourite content. They will appear occasionally on Wired Magazine and on geeky message boards and other places where digital culture builds its crossroads.

Friday, October 06, 2006

Is the Tide Turning?

Is the tide turning for the Music industry? They've coralled the pirates, threatened consumers and grimly held on to their turf, withstanding the furious digital onslaught. But will they actually beat the unstoppable force that is the consumer?

Victor Keegan writes in the Guardian " The recording industry's imposition of its own contract law - which can last forever - on top of the laws of copyright can, as the British Library has pointed out, override "fair use" provisions and even end copies for the disabled. The government should resist industry pressures to nail down costly long-term restrictions when the digital revolution is making content cheap and accessible." (read the article here)

Once consumers really start voicing their feelings will the unweildy economics of the Internet drive a wedge through the current models and margins of the recording industry?

Wednesday, October 04, 2006

What Ikea Could Learn from Amazon

There are some basic flaws (annoyances for consumers) with the Ikea superstore model as it works currently (or doesn’t in some cases).

First, you can select all the right bits and pieces, make diligent notes, but then in the self service area (where you go to pick up all the components of your cupboard or table or shelves… ) you may well find, as we did, that the colour you chose is out of stock, or perhaps the model itself. This is despite being told upstairs that things were in stock. One explanation here is that the last piece may have been sold and collected between your seeing it and collecting. As this gap may be an hour or more for a lot of people, this is quite likely.

The second challenge is the sheer physical work involved – K and I struggled and at times I was picking and trolley-ing boxes which were marked as “2 people required for safe handling”. I saw lots of people struggling with the weight of the material and anybody not used to lifting say 20-25kg weights and being able to handle the unwieldiness of boxes 6 feet long, must not try this alone!

A final issue is that often people make mistakes or Ikea themselves do. My friend Carmen was stuck at checkout because they insisted she had only picked up 3 legs of the table she chose and they refused to facilitate her paying and then providing the 4th leg. Our cousin Kiki came home to find his chest of drawers had a drawer less. On calling Ikea he was told that they would need to watch the CCTV footage to assess the veracity of his claim.

All of this can be avoided if Ikea takes a leaf or two from Amazon. The Ikea experience is similar to Amazon in that the buying decision is segregated from the fulfillment. Of course in Ikea the payment comes right at the end. Here’s how it could work a la Amazon.

Ikea should have “electronic” payment stations situated across the store itself. Customers could get hand held equipment (these can be rented for a price) which allow the creation of a “shopping basket”. By linking this to the inventory position in the store, customers can first, get a near-live update of the stock position and can make substitution decision while in the store itself. When customers are ready to complete their purchase they could do so on their handheld or at payment booths scattered across the store.

Fulfilment should be done by professionals, using RFID and other automation technologies, so that when an order is placed, the Ikea trained people can pick, stack and have it ready for collection at the gate. This avoids customers having to wrestle with both the weight and shape of packed desks and bookcases. The use of effective technology is a key issue for ensuring that across the entire store the stock position is accurately mentioned to the last unit.

You can even imagine “warnings” given to shoppers who have chosen an item which is down to (say) it’s last 5 pieces – so they would know that they needed to have a back up.

Finally, by the method above, the number of errors will come down, simply because of better trained people and better use of technology. Replenishment also will be faster as you wouldn’t have shoppers meandering through the store trying to push a 100 kilo trolley around other shoppers.

The phrase “Click & Mortar” used to be a popular phrase a few years ago, essentially to imply that virtual retailers needed to adapt parts of their physical brethren. It is perhaps as relevant for real world retailers to pick up the odd leaf or two from their online colleagues.