Faster To Edinburgh with On Demand

hulu

“Jens, if you drove to Edinburgh today, would it make a difference how quickly you could open the door of your car?” I was asked this question by a colleague the other day. Given that Edinburgh is over 500 miles from London, my answer was: “No”. “So why are most established companies focusing on the equivalent of making car doors open faster?”

It took me a few days to really understand what my colleague tried to tell me.

Management and owners in established industries have a certain way to extrapolate the past into the future. The way in which products were improved in the past is the way in which products will improve in the future. But at some point, you reach a situation where improvements at the same point make no further difference to the users. And it is usually at that point that new developments will change the way in which the industry works.

Television is now at such a point in its development.

For years, TV was improved in two ways:

  1. The quality of picture and sounds was improved. First there was black and white picture and no sound. The there was B/W with sound. Then there was color TV. Then image and sound qualities improved. Now, you have Dolby Surround sound and high definition TV.
  2. More and more channels provided an increasing number of programs to watch. People can choose from amongst 100s channels these days, up from 1 when TV started.

So, ask yourself this question: would you really care if the quality of the picture and sounds doubled beyond HDTV or if the number of channels doubled? For me, the answer is a clear no. It is fine as it is. I don’t need better picture. I can’t deal with even more channels.

But what I really care about is something that TV just can give me: on demand. When I watch TV, I have to watch what other people decide I should watch at a time when they decide I should watch it. On demand means I can watch whatever I want exactly when I want to watch it. 6 billion video clips are watched on the Internet in the US every month. Of these, over 100 million are high quality TV programs, according to the Inquisitr.

There are many things that on demand will change. Essentially what it does is to make the existence of intermediaries (the TV channels) and almost everything they do obsolete. Costs to view a program will fall, as the intermediaries are cut out and producers can distribute content directly via the Internet. TV programs will get reviewed and rated the way in which computer games are rated today, because we will start to consume them like computer games. All of this is reasonably obvious to many people.

And yet, the TV industry is doing the equivalent of trying to make the opening of car doors faster. They are betting on high definition TV and probably even crisper sound. I am pretty convinced that won’t get any of us to Edinburgh faster.

Update:

And this is why Hulu and services like it will win.

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YouTube Revenue

youtube-logoGoogle has been trying to make YouTube work financially for some time. They couldn’t. Yesterday evening, I have a discussion with a friend about how to more effectively utilize the space on a website to drive people to what is truly valuable on a site. On the way back home, it struck me that YouTube is phenomenally ineffective at utilizing the space that they have. This morning, I took a quick screen shot of YouTube. I have covered all the areas with orange squares that I consider to be a waste of space on YouTube. Have a look:

I quickly measured the size of these areas. In my opinion, 66% of the space on a YouTube page is wasted. Think about it, they only use 34% of what they have effectively. They also operate a fixed width of the screen (not shown) which means I have these white bands on my monitor. Why they do that is beyond me. Even more wasted space.

The second thought that then struck me was that the following. Because YouTube is only using 34% of the space available, their entire monetization strategy is concentrated on squeezing stuff somewhere into these 34%. Guess what: that doesn’t work very well. The reason why it doesn’t work is because that interrupts the functionality of the site. You start to think along the lines of television advertising: pre-rolls, post-roles, interruptions, pop-ups, all this stuff that users don’t want.

Let’s have a look at Goggle Search for comparison. One of the things that Google Search is so good at is using space effectively. I would actually argue that over 80% of the space on the site is used effectively. Have a look:

More than half of the screen is occupied by functional space (ca. 55%), then there is a spacer (ca. 20%) and then there is ad space (ca. 25%). The key insight of Google Search is that if you use more than 50% of space effectively for functionality and you fill part of the rest with things that are sponsored, and potentially useful, then you have a great money making machine.

Just imagine you achieved the same use of space and the same principle of placing sponsored items next to functional elements on YouTube as you have on Google Search. You could totally change the way in which the site becomes useful and make money at the same time. I made a quick mock-up of what I mean below:

I removed all the items that I termed as a ‘waste of space’. People go to YouTube to watch videos. So I gave all the space to videos. I removed the comments. I removed the AdSense. I removed all the unecessary words next to videos (who cares what is written there, is it important, it is essential?).  Below the video, I have placed more related videos (a very useful feature). I indicated you could have the ability to toggle there to the page of the creators of the videos, to see more of their videos or to subscribe to their channel (also very useful).

On the right, I have placed sponsored videos. AKA ads. In the search field above, I have indicated that the search term here is actually ‘holiday’. I am sure lots of companies would love users to watch their promotional holiday videos…

These days, companies are actually producing videos to be seen by people on YouTube. They do this in the same way in which they produce websites to be seen by visitors. These videos are then placed on YouTube and a lot of work goes into making users watch them. I am sure that the companies who spend money and time producing these videos would have no problems at all to pay Google a certain amount of money for each watched clip. After all, this would be similar to what happens on TV. You could bid on VideoWords (I just made this up, feel free to use it Google) in the same way in which you could bid on AdWords. You could also have VideoSense that places sponsored videos on the side, when somebody didn’t search by keyword, but came via a hyperlink or via a connected video. Companies could bid on the position of these videos in the same way in which they bid on AdWords.

Another useful feature would be the ability of video creators to insert a hyperlink (maybe with a maximum length) into the video that they created. What I mean with that is a hyperlink that sits in between the video and the control functions. This would allow users to follow the hyperlink, if they want to find out more about the maker of the video/the product/etc. This hyperlink should obviously be clickable:

If you had such a hyperlink, people could use videos more effectively to drive traffic to their sites. You could obviously also monetize them by charging advertisers when users followed such a hyperlink in a video that was opened from the sponsored section of the site…

So, lots of ways in which you could make better use of space and give more functionality to users and make the site more useful to advertisers. My guess is that Google will have to radically overhaul YouTube to make it work. Three years of gradual innovation haven’t gotten them anywhere. It is probably time for a major re-think.

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Content Reference Library

Last year, Viacom filed a lawsuit over $1bn against YouTube/Google. Viacom’s claim is that youTube illegally distributed to its users content owned by Viacom. The problem is that actually nobody knows what content is owned by whom. Even Viacom doesn’t know which content it actually owns.

Here is an example of what I mean. Viacom ordered an independent film maker, Joanna Davidovich, to remove from YouTube a film she made and that they thought was owned by them. The problem was that this film actually wasn’t owned by Viacom, they contacted her in error. A Viacom executive got in touch with her later to explain what happened.

Joanna wraps it up as follows:

I was personally contacted by an executive at Viacom, who explained how my film got mixed into their system. Juxtaposer was in a film festival that was presented by Nicktoons, which is of course a Viacom company. They offered selections of the festival as downloadable content, and Juxtaposer was one of them. They just forgot that Viacom’s rights to those films were all nonexclusive. He personally assured me that Viacom is no longer making a claim to my film and YouTube should be sending me documents affirming that shortly.I don’t think this would have been over with nearly as fast if not for the publicity I got from your post. This could have been a nightmare, but it wasn’t. Count this one a success!

Effectively what that means is that nobody knows with 100% certainty who owns what content. Not even Viacom. Now, Mike Arrington says the copyright law should get changed. I disagree. What should get changed is not the law as such, but how the law is actually implemented in practice. What we need is a reference library with referencing technology attached to it, where every distributor of electronic content material can automatically reference check the content they are distributing. When a distributor is not doing so, and they end up distributing copyrighted material illegally, they could be deemed to have not complied with the law.

For example, you could easily translate the sound in videos to written text and create an index of that text. You could subsequently query that index with text you discover in your video/music/text/etc sharing site. Content owners could publicly claim their content in that reference library (in certain geographies and for certain distribution channels).

Having such a reference library would actually indirectly increase the value of the overall ecosystem, as it would help all creators of content to claim (and offer for distribution and license) their content.

I am not sure whether any content company would want that reference library. Probably too much work. And it would only indirectly generate revenues. It is so much easier to sue Google than to try to get the job done right in the first place.

Maybe Umair should have a word with them. Maybe they can be made to understand that this would actually increase the value of their business. Sounds like quite a long shot.

PS: See the little (R) sign next to the Vicom logo? Bad bad me for including it in this post!

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