Drip…drip…Woooooooosh

That is the sound of your content leaking to the hands of pirates – costing the industry billions. Wolverine, Iron Manевтини мебели and Indiana Jones and the Kingdom of the Crystal Skull are just some of the movies reported to have been leaked. The same holds true for TV content – though some argue that when a pilot or season premiere leaks it falls into the promotion category…..

So why did they choose Signiant? Signiant’s ability to prioritize files, such as large virtual images, schedule file delivery, and send them in the correct order is one of the main reasons a worldwide leader in software, services, and solutions has chosen to work with us. Let the revolution begin!

In this video, Signiant’s CTO, Ian Hamilton walks you through Signiant’s latest version of its Content Distribution Management software. Ian demonstrates the new functionality of the software including enhancements to the workflow modeling engine, enhanced media integrations and agent load balancing in Media Exchange. The video is less than 15 minutes but is packed with information.

Watch this narrated presentation of Signiant to learn about the company and its software. The video provides a brief overview of the company, a clip of customer testimonials, as well as a technical overview of Signiant’s Content Distribution Management software and Media Exchange with a real world customer example. It’s only 11 minutes long.

At the start, the workflow builder simply chooses the appropriate “Start” component and places it on the canvas. In this case, a workflow is starting with a Media Exchange upload….to learn more, have a walk-through this three-minute tutorial.

During her acceptance speech at the 2008 Emmy’s Tina Fey made what was essentially an appeal for more viewers for her critically acclaimed but ratings poor show. This statement represents something more … this is a landmark event in the world of digital media and the revolution that is taking place. Granted Ms. Fey is very intelligent and also a writer and therefore in tune with the business of media. However, when else has ‘talent’ talked about the distribution methods of their work as opposed to thanking someone for ‘opportunity to make such a rich character come alive”.

When you look at the media and entertainment market – the trends are pretty clear:

· Traditional Broadcast Revenue is Shrinking
· Digital Media Revenue is Growing

Some examples:

In addition, Ms. Fey is using her impression of Vice Presidential candidate Sarah Palin to boost rating of not only SNL (up 42% year over year) but also to help 30 Rock heading into the season premiere. Her Palin impression is driving so much traffic to Hulu and nbc.com that according to Solutions Research Group more people have seen the skit on the web than on “actual TV”. That is why I support her as the only candidate for the role of VP of the Digital Media Economy.

So … what does all this mean? Some predictions …

· Tonight’s “SNL Weekend Update Thursdays” leading up to the election will draw record numbers.

· 30 Rock’s already low ratings were slipping as it wrapped up last season. I predict that based on the Emmy wins, Fey’s popularity and the Palin impressions – record numbers turn in to view the season premiere on October 30th.

· Finally … Tina Fey’s popularity will also help CBS’ “The New Adventures of Old Christine” – another critically acclaimed show with low ratings. In her acceptance speech, Fey gave credit to Julia Louis-Dreyfus saying to paraphrase — “when in doubt – I just act like Julia Louis-Dreyfus”. I predict Elaine gets the Emmy next year!

Anyone want to bet a 5 pound lobster on these predictions —- I already have a few “in the bank” from the real elections – want to capitalize on my Digital Media Economy predictions?

As I travel, evangelizing Digital Media Distribution to Media and Entertainment business – I walk through their hallways, I often find myself squeezing by boxes of blank video tapes stacked in hallways or anywhere else that they can find a spot. I usually ask some innocent questions and typically get some startling answers ….

“Wow, how many tapes do you use per month here?”

• It is always a much larger number than I imagined and usually answered with a chest-puffed out pride: “ 10,000 tapes per month” “20 tapes per day” “130,000 tapes per year”. Really wow.

“What is the cost to distribute your content on Physical Media (ok maybe I say Tape)”?

• This question is usually taken literally and typically even looks past the cost of the tape, “well we use FedEx so we pay $15 or $20, whatever they charge now for a standard overnight package.”

$15 … nope, $20 … nope. There have been lots of studies done and the real cost to produce, delivery, ingest and track a single video tape is in the $100-500 range. If you add more exotic factors like VAT or the cost to deliver a print of a big budget feature to an international country – we are easily into the $1,000s.

The Hard Costs of Tape Delivery

Let’s focus on the vanilla distribution of a pro video tape from one location to another – this could be for the production and editing process or for distribution of a promo or syndication of a TV show or movie. There are many factors that add up to the true figure of $100-500.

Duplication Cost – The marginal cost to replicate a 30 minute DVCPro (or similar Beta-SP, DVCam) tape including the labor, stock and labeling will be about $75. If it is longer or HD the cost will easily approach $200. You are paying this for each tape produced each month (of those 10,000 per month!). In most cases, it is seen as the cost of doing business and is either fundamental to producing your product or is absorbed by someone else and is just an accepted practice.

Shipping – I guess we are not living in Dr. Strangelove’s time when gas was $0.30/gallon. Or in 1999 when it truly was $15 to ship something overnight via FedEx. Consider the table below which details the cost to ship a 2lb package via FedEx today from New York to Los Angeles. Wow – almost $100 to ship a tape overnight from coast to coast — and what is not an emergency in the entertainment world!

FedEx First Overnight®: $96.21
FedEx Priority Overnight®: $63.09
FedEx Standard Overnight®: $56.60
FedEx 2Day®: $28.90
FedEx Express Saver®: $24.86

So the true cost to ship is not $15-20 but more likely $50 or more for each tape! In addition – there are people staffing the mail room at each end to box it, enter the address, receive it, check it in and delivery it to the intended person. While you could argue there will always be a mail room – when you look at the volume of tapes that you are dealing with – there are incremental heads in your mail room due to the large volume of tapes being produced and shipped.

Courier Cost – In the case where content is either so valuable that it needs to be hand carried internationally to ensure chain of control or where there are multiple local facilities involved in production and ultimately the airing of content (news, sports, episodic content) – couriers are used. Whenever you are involving air travel with a bonded courier – you are easily going to exceed $2,000.

Another example is if you produce content in Manhattan and your master control is on Long Island or in Southern Connecticut – using a courier to shuttle tapes between your facilities costs between $100-200 for each trip. Obviously this is spread over multiple tapes but the cost to delivery content for play to air in this case could easily approach $500-600 per day.

Ingest Cost – When Dr. Strangelove was broadcast on network television – it was likely played to air from an Ampex Quad machine but not before some inappropriate (well for the 1960s) parts were cut out with a blade. Thankfully, tape is becoming more and more of a transport and storage medium versus something that people actually work in. Once the tape is received it needs to be “ingested” as a file(s) into a system for editing or playout (or some other task). Ingest from tape and the associated QC process is a real time process (it takes 30 minutes to ingest a 30 minute tape) is estimated to cost approximately $50 for each tape. This cost includes the labor and tape machine cost including maintenance. In the case where a file is moved over a network and the data integrity ensured, the file can move seamlessly and automatically from one system to the next with no human intervention.

Tracking Cost – Data Wranglers are on staff to ensure that the hand off of these tapes goes smoothly and that all things are at the right place at the right time. A daunting challenge and often involves a “hand-shake” with someone on the other end with the same job. Good Data Wranglers make things go smoothly and there’s usually none of the….“the tape never got there” or “where’s the tape, we’re on deadline”. However, it’s a very detailed and labor intensive job to ensure that everything moves as it should. This does not come without cost. It is estimated that for each tape that is shipped there is $25 of overhead in people and systems to ensure that tapes are at the right place at the right time and that nothing slips through the cracks.

Total Hard Costs

Duplication: $75.00
Shipping: $50.00
Ingest: $50.00
Tracking: $25.00
Total Nominal Hard Costs: $200.00

The Intangible Costs of Tape Delivery

Environmental Cost – they may not be as bad for the environment as “the Bomb” but millions of tapes being produced and shipped each year come pretty close. Imagine the lifecycle of a single video tape cassette and the environmental impact

• From Production of the plastic and metal tape – energy, pollution, waste material
• to the assembly and packaging – energy, packaging waste
• to the shipping to the warehouse – energy in the form of fuel for boats, planes and trucks
• to distribution to the end user – energy in the form of fuel for boats, planes and trucks
• duplication – energy to run tape machines, pollution in the form of heavy metal due to tape heads running across metal oxide tape
• shipping – energy in the form of fuel for boats, planes and trucks, more packaging waste
• ingest – energy to run tape machines, pollution in the form of heavy metal due to tape heads running across metal oxide tape
• disposal – thrown in a landfill at the end of its useful life

Multiply this environmental impact by millions of tapes each year and it is probably much worse for the environment than the explosion of a single nuclear bomb.

International Shipping Cost – Our examination of the “hard costs” did not factor in the impact of shipping internationally. The costs to ship internationally can be dramatically higher – this can be attributed to:

• Actual Shipping Cost
• Delays Due to Customs – in the world of iPods and IPTV, 1 year or 3 month delays from the time that a program is aired in the origination country to when it is available internationally is just not tolerated. Delays in customs can have a ripple effect on the repackaging for specific countries (format conversion, dubbing and subtitling) and ultimately unacceptable air dates.

VAT Cost – Historically, when importing a tape into a country, Value Added Tax (VAT) was charged on the stock cost of a tape. The tax would be charged at the rate of the importing country and range from 5% to 20%. So a Digibeta Tape costs $50. So to import it to Argentina for example would be 21% of $50 or $10.50. The price of doing business. Recently countries have wised up and realized that the Intellectual Content on the tape is worth much more than the tape in the company’s ability to monetize it in the destination country and are taxing that revenue stream. For example, for one company, Argentina was going to charge them VAT on the Intellectual Content on the tape they were shipping. They were going to charge them 21% of the revenue that the content was going to generate. With margins in the 10-15% range, paying VAT is the difference between making and losing money.

Opportunity Cost – Kinetic Content – you all have it. You might be inspired to watch Dr. Strangelove but how do you get it now? Content stored on a tape on a shelf getting dusty that has value to someone is Kinetic Content. It has value to someone but that value is locked in a pile of dust and lack of movement. In the case of Dr. Strangelove, NetFlix could ship you a disk or you could go to YouTube for some clips. But how much content with value is still locked on the shelf and not being monetized – representing lost opportunity cost. Maybe someday Comcast’s Project Infinity will deliver the “Any Dream” (Any Content on Any Device Any Where at Any Time) – but for now, the long tail content is sitting on a shelf with stored value. Distribution of physical media is not going to unlock that Kinetic Content and represents lost opportunity cost.

The shipment of tapes is going to go the way of the Cold War – it will end. Maybe as suddenly as November of 1989, in a flash files will move seamlessly over networks, each one representing a dramatic incremental cost and environmental savings. When added up, the impact will be as dramatic to your business as the end of the Cold War was on the way Dr. Strangelove is viewed today.

I think we have only looked at half the story – now that we understand costs, when I get some time I will examine the ROI of implementing a Digital Media Distribution Management solution. I am thinking of titling it:

Gee, I Wish I Had One Of Them Doomsday (opps Digital Media Distribution) Machines.

Let’s ask a simple question … “why would anyone go to a bricks and mortar storefront dedicated to entertainment rentals to get something that can get from the comfort of their own home?” Seriously, does it make any sense at all? People want to get away from the bricks and mortar / physical media experience at least when it comes to entertainment rentals. iTunes, Amazon Unbox, Netflix Streaming / Set Top Box, Comcast Project Infinity, Apple TV are just some of the initiatives aimed at giving people spontaneous choice from the comfort of their home and eliminating the need to drive somewhere for what you want when you want it. Why does anyone think that anyone is going to say “let’s drive down to Blockbuster to fill up my iPod with some videos”. It is just counter to what consumers want.

But as my Patriots/Giants download approaches 82% on my high speed broadband cable connection, I think of a recent article I read in Wired “Free! Why $0.00 Is the Future of Business”. Very interesting reading about cross promotion and the difference in perception of $0.00 and $0.01. But connecting this to the Blockbuster Kiosk .. and kiosks in general – there may be a place for kiosks after all. While I maintain that Blockbuster is not a “destination trip” and replacing a DVD with the same file download I can get from the comfort of my home makes no sense. Putting a kiosk in a place that is a “Destination Trip” or a “Necessary Trip” —- Starbucks, Dunkin’ Donuts, Airports, Supermarkets, Borders/Barnes and Noble – could be very logical.

I have to admit that I like the Red Box at my Stop and Shop – it is a kiosk I use. I am there anyway, it is a simple transaction to get a DVD plus it is $1 / day / movie. Can’t beat that. The drawbacks – the selection is limited and I do have to return the movie. Now, where this gets interesting is the use of cross promotion. Imagine if you spend $100 on groceries and then you get a free movie? Or if for every 5 overpriced Soy Vanilla Lattes – you get a free movie? Or if you are a member of an airline club, you get a free movie download? If you purchase 5 books, you get a free movie download? You buy an iPod from a Best Buy and you get 3 movies free. All from a conveniently located kiosk.

Would I make a loyalty decision based on this perk? Well I have to admit that I don’t know the difference between Barnes and Noble and Borders – they are the same in my eyes, can’t even tell you which one I am in when I am in the store. Would either of those chains want to participate in this sort of promotion to get me in their store? Seems like they would and oh, they could also be selling downloads at the same time – since Borders and Barnes are true Destinations. Common sense – right. Logical – right. Not like that David Tyree catch in the Super Bowl – that defies logic and common sense.

Having just attended my 19th NAB, it is interesting to note how much has changed and how the M&E industry is adopting IT-centric approaches. What were those early Avid systems doing? Replacing 3/4” tape-to-tape cuts-only edit systems for offline editing. The landscape today? A variety of digital nonlinear editing systems (DNLEs), all of which can accomplish finished, uncompressed HD programming (provided the hardware, I/O, etc. can support the data rates).

It was also clear that file-based workflows, integrating with other applications, and digital media distribution are all factors that are entering into the equation of solutions for the M&E industry.

Last week, I participated on a Digital Hollywood Panel, which was titled “Revolutionized Digital Workflow Experience – Understanding How IT, Broadcast and Entertainment Production Merge”. This was moderated by Joel Ordesky, and was an excellent example of the themes that are characterizing the M&E industry. Adoption of file-based workflows, digital media distribution, and how adept organizations must spin up new workflows at a moment’s notice. Further, the interconnections between and among business-related systems will fuel knowledge demand to learn more about web-services implementations and service oriented architectures.

How to accomplish more with less is a resounding business reality. But reality for the M&E industry lies in the hands of the consumer, who is no longer waiting for content to be programmed at a certain time and certain date. The complexity of being able to provide multiple content formats at multiple resolutions, and to do it globally is not trivial. Intelligent systems that programmatically move content through its lifecycle will ultimately change the entire landscape of what we now know as “the edit suite” or the “post production facility” or the “broadcast news operation”.

And, like all of us, adaptation is key. This is why I saw more software on the show floor than hardware. And when I did see hardware, there was much more emphasis on added-value software to differentiate the hardware. Software, software, software. Or, as they say in Vegas, “Software-baby” (yes, that’s what they say in Vegas, in case you were wondering).

NAB was a fantastic show for Signiant. We are very grateful to our existing customers with whom we had another chance to visit and to all of the kind people who came to our booth to talk about their requirements. We are honored to have received a Broadcast Engineering NAB “pick hit” award.

So in 27 minutes, I have a meeting with a “physical media distribution company”. Anyone who knows a lick about Signiant knows that it is our mission to Make Media Move. Move unencumbered over networks, bits flowing without boundary. The distribution of physical media is like a rodent to us – something to be exterminated. Won’t life be better when all files move across networks and CDs, DVDs and tapes are things that kids will look at with curiosity like 8 tracks and LPs?

So – why blog about something that is so core and fundamental to Signiant’s business? Well, my reflection carries me to the challenges facing companies that distribute physical media – video rental stores, DVD retailers, DVD-by-mail. This weekend I was driving through my childhood neighborhood and had a Lost flash-forward moment. The chain Video Rental store had a big “Going Out of Business” sign out front. Can we see this scene repeating itself thousands of times over the next several years as more and more content is moved online, more and more people smoke the hookah and get on board with the digital media revolution? Imagine if you are making the decisions for one of these companies — they probably feel like Jack on the bridge.

Well – the good news is that crisis always presents opportunity for someone – the blacksmith that became a tire store, Williams Oil becoming Williams Communications are a couple that come to mind. So the opportunity exists for these companies to transform their business and capture an even bigger share of the entertainment dollar. My meeting in 20 minutes is with one such company that is adapting their business model and plans to flip their business model to digital media distribution over the next several years. There’s a good chance they can pull it off — they have a cultist loyal following and have progressive thinking. The challengers are fierce — IPTV, Project Infinity from Comcast, movie rentals from Apple iTunes and all the other companies adopting the Any Content, Any Time, Any Where, Any Device (A4) mantra.

Clearly, if you do not have a Digital Media strategy – it is a lost opportunity. Time is passing and while some people are predicting that it will be 5 years before the demise of the disk, I am not buying it. Unlike adoption of other technology – there are no barriers to delivering digital media with a high quality experience. Last week, after a DVR hiccup (I am the biggest DVR fan out there – had Tivo on day 1 – but the DVR’s day is coming too) cut off the last 10 minutes of an episode of Lost – my wife and I ran up to the study and caught it in full HD on abc.com.

So instead of making predictions about the longevity of the DVD, companies should be trying to figure out how to capitalize on what makes my wife and I stand around a 22” monitor in a cramped study as opposed to on the big HD downstairs. I can tell you, at the end of that Lost episode, there was some $$ figure that I would have paid – $10? $20? to watch the next episode right there! Why not take that money out of my pocket?

Coffee drink finished, blog post finished, soaking in the sun – 10 minutes until meeting. What to do…ponder what business the shells of old video rentals stores could be transformed into – there will be a surplus of them in the next few years (check out “Pump It Up” – gold mine I tell ya)… maybe go get a real drink – a diet coke …

Maybe we can turn them all into Super-Starbucks … where you can watch and listen to digital media … off to find a diet coke.

Postscript:

In true Lost fashion, on my way to the meeting, I opened the trunk of my rental … the only thing in my trunk was one little plastic card: My Blockbuster card… what does that mean? What symbolism is hidden here? Did The Others have something to do with it?

Here are my thoughts on the subject…

The practice of limiting bandwidth utilization on a sustained bandwidth basis is extremely invasive to the media and entertainment industry. Imagine you are a professional journalist or a citizen journalist. You PAID and you PAY for a monthly contract with your Internet service provider for a guaranteed upload speed and download speed. And you just happen to have some footage that you’ve captured of a news-worthy event. And you start uploading that content to a news organization. Let’s say that you shot this on mini-DV tape which captures content at 25 mbits/sec (megabits/sec). And you have a “premium upload/download” package that “guarantees” you 5mbits/sec upload and 10 mbits/sec download. Now, in theory, you’re uploading 25 mbits/sec content and you can do this at a sustained 5 mbits/sec. (in other words, a 5:1 ratio. 1 second of video you want to send will take you 5 seconds). Well, that means your 50 seconds of video should take 250 seconds. So, you start uploading it and it seems to be going at the rate that’s part of your service level contract. But, say, 40 seconds into the upload you start to see a pronounced slow down of the upload. And, as time goes by, the upload progress bar is moving even slower. You are a victim of your provider throttling down your upload speed. And the ramifications? It’s great that you got the only footage of a newsworthy event. Now, why don’t you forget about uploading it and get in your car and drive the tape to the television station?

The Motion Picture Association of America (MPAA) estimates that U.S. studios lose more than $3 billion annual to piracy. Consider recent issues:

• “American Gangster” is pirated and available on DVD for $5 two weeks prior to its theatrical release.
• The Writers Guild of America and studios negotiate for important slices of the digital media pie.

And, in the midst of all this, consider how digital media is being consumed. Are we listening to songs on compact disc or on .mp3 players? The truth, of course, is that we’re doing both. But, will (and that’s the important tense — future) .mp3 listeners overtake CD listeners? This is one example of just how one form of digital media — “the song” — has the power to change everything, upset the business model, force it to change and to morph and raise countless discussions and opinions on piracy.

Read the rest of the article…

In New England on Saturday night… the Patriots game will be on ABC, NBC, CBS and the NFL Network. In addition, ESPN – both the station and on-line, have transitioned to Patriots All Access – All the Time. The backlash to the overexposure of the Patriots (America’s team just a few short years ago) has lead to questions like “How much do you hate the Patriots?”.

Aside from us Patriots fans and season ticket holders, I am not sure this is what they mean by Any Content Any Where Any Time — as long as it’s the Patriots – the new Kings of New Media.

It is pretty clear to me that Google is executing a finely tuned strategic plan, one with little incremental skirmishes aimed at winning the war. Their motivation is obvious and I admit that I have not been inside any strategic planning sessions at Google but it is pretty clear to me how this plan plays out:

Step 1: The Trojan Horse: Acquire a popular Video Portal company with large audience using their stock as cheap capital. CHECK.
Step 2: The End Around: Roll out an ad model that expands on their dominance in on-line advertising to capture additional revenue from YouTube. CHECK.
Step 3: The Axis: Cut deals to make YouTube a prominent application on devices other than computers (mobile devices like iPhone). CHECK. Expect more to come – set top boxes, DVRs, televisions.
Step 4: The Secret Weapon: Start sharing revenue with content providers to motivate them to continue to supply content and make higher quality more compelling content. CHECK. Hmmm … now you have the model for Google setting the ad rates and revenue sharing model that is crucial to winning the war. This is the traditional Media and Entertainment company’s worst nightmare.
Step 5: The Blitzkrieg: Continue to drive people to YouTube so you become the Kleenex of content aggregation. Do for content aggregation what you did for search – become the first stop for entertainment. Become the “home page” of people’s IPTV applications – whether on the computer, phone, set top box, on the planes, trains and automobiles! Working On It.
Step 6: The Grassy Knoll: Orchestrate a writer’s strike where the battle line is over the very business model that you enable so that quality content dries up. Gratuitous Conspiracy Theory I Had to Throw In (but could it really be possible, is Google handing out stock on every street corner in LA to the writers?). Actually, I am flying back from London as I write this and I found an article about how the strike is going to lead to a “bleak winter in programming” and how it will have a ripple impact on television and movies for seasons to come.
Step 7: The Atomic Bomb: Begin “paying” for compelling content with either tiered-based advertising sharing or direct payments that cut out much of the entertainment supply chain. Accelerates the shift of traditional television advertising dollars to on line including YouTube. Coming soon to a press release near you.
Step 8: The Treaty of Versailles: Force the traditional content companies to syndicate on YouTube or risk total obsolesce. Google now dominates all entertainment advertising and controls all ad rates based on the auction model that it uses for on line advertising.
Step 9: The coup d’état: Force the cable and satellite operators to the table and dictate terms that force them to offer ala-carte pricing to their customers or risk becoming obsolete. Hmm – wonder why Google is interested in spectrum?

Watch for the following product or technology releases that cements their place:
• Contextual video search. The Holy Grail – if there are not a team of rocket scientists working on this in the Google labs, I would be shocked.
• Demographic / Ad tracking software that helps target content and ads – I know of a number of start-ups working on this and I would not be shocked if this is not in the labs as well.
• On-line Video Editing with a vast library of stock content that can be mashed up into custom advertisements at a low cost.

Not possible? Well, we’ll see, but something is going on that is bigger than those little gun shots you hear in the distance. The Digital Media Revolution is on and it’s being fought every day. Google’s motivation is clear to me, I am guessing Google has a plan that reads beyond 9 simple steps but I am sure it’s guarded with more security than the formula for Coca Cola. Wait – is there a man across the street on a grassy knoll looking in my window?

Inside Digital Media is a place where you can see and hear interviews with thought leaders in the Digital Media industries.

And what does that mean for technology adoption and transition? Digital cinemas, digital projectors, digital cinema mastering and, yep, you guessed it, eventually those files aren’t going to be delivered on a set of redundant disk platters, but will be electronically delivered. The digital cinema supply chain issue is rapidly approaching and will require solutions for the managed movement of content. It will be necessary to administrate the clean-up and maintenance of those drives (ahem…perhaps I should say: solid state…); the transmission will have to be secured; there will be strict verification that the content arrived, and, ultimately, the content will need to be deleted. All automatically, according to contractually mandated schedules.

We’re getting there…break out the 3D glasses and look behind you. There ain’t no film up there, Ma…!

Should the writers be allowed to double dip and get paid on internet based programming after they have already been paid to produce the content once? Should they be forced to work overtime in the coal mines on these vignettes or clips to promote their main body of work?

Should the producers and networks be able to open up all sorts of new syndication models and revenue streams without sharing with the writers? Should they be able to package up their content in all sorts of new ways and not share?

These are all relevant questions. I will admit that I have not followed the negotiations to the point that I know the exact positions of each party but there are some very relevant truths:

1) Viewing habits have changed — this is not at the traditional broadcast, cable, VHS or even VHS dollars. Those methods of distribution are as dead as train travel was once the Wright brothers took flight. While many people looked at that strange bird and said it was not practical and would never have mass appeal – just like today when the naysayers say 50 million television downloads on iTunes is not mass adoption. Don’t tell me that I did not fly on a plane this week or take an episode of Survivor with me (one that my damn DVR decided it did not want to record the last 10 minutes and I had to pay Apple the $1.99 for).

2) People need to get paid. If you attract a crowd – you will get paid. Just ask Tony and Paul who after 3.8M YouTube viewers watched their stopmotion video they found a home on IMDB, are linked all over the blogosphere and ultimately jumped the fence to Hollywood (I wonder if they are ready to go on strike now too?). I am sure that all those people working at the train stations migrated over time to the airport terminals and their lives went on.

3) Strike at your own risk … let them strike at your own risk. Holy crap – if the writers strike – what am I going to do with my time! No more Scrubs! Brotherhood! No more Grey’s Anatomy – my wife may want to talk . I need to run to the video store and fill my basement with VHS tapes and DVDs. In all reality, there are so many entertainment sources vying for our time (not to mention soccer games) – do the writers and networks really want to risk alienating their customers? Do you both want them to become more comfortable watching things in non-traditional methods? When I could not stay up (due to all the celebratory partying after the Sox won the World Series) to see Jonathan Papelbon on Letterman, I simply went to YouTube with no commercial interruptions. Look to the future, Pabelbon is being interviewed by the hot new VLogger and that YouTube page has a pre-roll, post roll ads as well as click on the ad for Steiner Sports to buy Red Sox memorabilia and click on the copy of SI to get a subscription (we can debate how much longer you will pay for a print copy of SI). Is this the world that you both want?

The world has changed and there are billions of dollars ($170+ to be close) at stake. Seems like one that is worth fighting over but also one that you share the same vested interest. I have to go … I have to see if I can exchange these shares of Union Pacific Railroad stock for Pan Am.

Tom Ohanian joined this panel discussion at Digital Hollywood this week and was joined by several industry experts including:

Stephen Jacobs, Vice President, Sony Corporation of America
Kenneth Yas, Market Development Manager, Cameras, NA, Grass Valley
Thomas A. Ohanian, Chief Strategy Officer, Signiant
Bernie Laramie, CEO, MOS Sync, Inc.
John Dietsch, CEO and Founder at Hook.TV
Ben Weinberger, CEO at Dgitialsmiths

The discussion was fantastically moderated by Joel Ordesky who has been kind enough to host a video of the panel discsussion on his blog – please visit his blog to have a listen in.

Each week Creative Planet’s Digital Production BuZZ keeps listeners in touch with trends and technologies, people and practices in order to keep their audeince up to date with digital production, postproduction and evolving distribution opportunities.

You can download Creative Planet’s interview with Tom Ohanian here.

After the presentation, there were a lot of great questions so it’s clear that moving digital media content over networks is of concern and that, if anything, being part of the digital media supply chain whether you’re an editor, graphics designer, sound mixer, etc. will continue to place demands on working in distributed, collaborative environments.

But, of course, because it was an Avid event, prior to my formal Signiant presentation, I told a few stories about the early days at Avid (I was employee #8). While preparing for the event, I had done some rummaging through my Avid archives and started off the night by playing back what I believe is the earliest known video of “The Avid/1 Editing System”. This was done in August 1987 and prior to the system being given its formal name: “The Avid/1 Media Composer” (that came much later, in 1989). The video that you see below is the early prototype that ran on an Apollo workstation. Notice that the editing model is quite different than the eventual source/record model that defined the product in its first release. In this video, however, the filmstrip model is much more similar to early Quantel products. In any case, enjoy. It’s a piece of digital nonlinear editing history.

You can also find the video on YouTube. May the force be with you.

How people consume content is changing …

Just last Sunday morning, I sat on the couch with my two kids with “some” TV show on (I really don’t remember what show and I am in tune to what they watch). I was able to steal my kids’ attention away from the big tube to old Underdog cartoons on my iPhone – score one for YouTube vs. transitional viewing habits. Why? Well, because, I was able to watch what I want when I wanted it without having to move.

Just this week I was at a business dinner and the topic turned to Boston Sports (after all this is the “Golden Era of Boston Sports” or the good old days as our grandparents used to say). Well we brought up Fitzy from www.townienews.com (rated M for maturity) since many of the people were from out of town and he represents the stereotypically Boston fan. To the joy of everyone at the table, I was again able to access Fitzy videos on YouTube. Score two for YouTube.

Why is this relevant – well, people are going to get paid – whether it is pay-per-view / download, ad supported viewing, product placements, subscription, etc. In order to create high value content, there needs to be a business model in place to support it, that is, an undeniable truth. The difference is – people want to consume content on their own terms and not be held hostage to the old distribution models.

So – if the cable companies or any of the other traditional delivery companies do not want to respond to the consumers’ demands, they are going to become just a dumb broadband pipe. Imagine the impact on your stock value if you strip out the revenue associated with the delivery of high value content and just become a commodity connectivity company. This is the precise reason that Verizon is investing so heavily in FIOS. This trend has a name “over the top”, where Media companies and other upstart Video/Content aggregation portals are able to bypass the content middlemen (read: cable and satellite providers) and deliver their content right to the consumer.

What does this enable them to do? Since cable got a foothold in our homes in the 1970s, media companies have had to share their advertising revenue with the cable operators. If you are sitting in the board room of a broadcaster, this was a necessary but unholy alliance. You were basically forced to share your revenue with the cable company because they provided the entry into the home.

Since broadcasters controlled ad rates since the days of Sarnoff and radio, they did not like this sharing model. Fast forward to October 6, 2006 and Google buys YouTube — wow $1.65B for a cute little video portal. The reverberation you hear today is the tremors that were heard in the board rooms of both the broadcasters and cable operators. Why? Because Google is attempting to muscle their way into their unholy alliance and do what it has done for Internet advertising (projected to be a $40b market this year WW) to every form of advertising worldwide (projected to be a $430b market this year). Google’s intention to capture market share away from the broadcaster/cable alliance is built into their $639 share price and imagine what will happen to the share prices of broadcasters and cable companies if Google succeeds in controlling ad rates and forces itself onto the content providers as their new partners?So what is going on is the Digital Media Revolution and there are at least 3 camps (I have not mentioned Apple, Tivo, Cisco, Microsoft yet and they all want to be heard from and to get their fair share of the pie) all vying to control how content is consumed and ultimately how we pay for it. Is all lost for the broadcasters? Well, no. Actually, the “Interweb” has armed the content providers with a weapon against their unholy “partners”. NBC has two weapons in this revolution – Hulu and NBCDirect – both aimed at delivering their content to the consumer without having to share revenue – either PPV or Ad generated with their “partners”. If content truly is King, then these two services are the queens or at least the Rooks and Knights.

So, if your cable company wants to send you their 800 number so you can cancel your service, they are merely setting themselves up to be just like one of the many failed dot-com companies of the late 1990s (anyone remember Pets.com?). You will find another way to get the content you want, when you want it on the device you want to view it on. The revolution is ongoing and if you prefer Fox Business over CNBC or you demand both – you will be able to consume them on your own terms. There are some very powerful companies with their eyes on dominating the media and entertainment markets – and thus ad revenue. All they have to do is meet your terms.

As far as I’m concerned, this is a non-event! People’s appetite for larger and cooler flat panels will continue as prices continue to fall and new features are added. Just look at Craigslist to see all the 42″ plasmas for sale with the comment “upgraded to a bigger set”. Look at all the CRT sets that people are begging others to take.

Strong sales of new TVs have nothing to do with the FCC’s magic date of 2/19/09. This problem will get solved by the cable providers (and to a lesser degree by IPTV and SAT providers). In fact – no one could be happier about this problem than the cable companies! Why? Well, two reasons…

1) Analog channels are sucking up valuable cable spectrum! The cable companies only offer analog channels because they are required to – based on legacy contracts that they made with the individual towns years ago. Each analog channel consumes 6 Mhz of bandwidth, whereas you can fit around 10 channels in the same bandwidth using Quadrangle Amplitude Modulation (QAM). Why is this important? More bandwidth for the cable companies means more channels, more phone services, faster data rates. There are approximately 78 channels of analog that now can be replaced with 780 (yes 780 channels of digital) or some smaller number of HD channels. The cable companies have been dying to orphan Granny and her old analog TV set and rent her a cable box for $10 per month and overwhelm her with new tiers of service. The only thing that has been preventing her from doing so – the FCC and the local cable commission. Well, now, the FCC has given them the license and the cable companies can’t wait!

2) With approximately 70% penetration of the 111 million US households – cable and SAT are looking for a catalyst for the rest of the market to buy their services. But people act for two reason: fear and greed. HDTV is one. After years of admiring my DLP, my father-in-law called to get me to install his 50″ plasma above the mantle in his retirement pad. We have crossed some chasm. Greed – check. Granny fears that Alex Trebeck, Katie Couric and that nice Regis guy with that perky girl could be leaving their lives soon. Well — here comes the bombardment of ads on how big cable or SAT company can make the world safe again and make sure that your friends enter your house every day (all for the low introductory price of $29.99 per month). Fear – check.

Will there be lawsuits, of course. Like soldiers holding out on an island at the end of WWII – there will be people that feel the public trust has been violated. Why should they have to go to their closest big box store and shell out $19.95 for a converter to extend the life of that 1982 Sylvania set? But ultimately, this will get all get sorted out. Why, because there is lots of money in it.

Let’s just hope Granny gets taken care of and that the lawyers don’t get too much of it.

Put a fork in it. Put digital media on networks. Move that content around. Schedule it and get it to where it needs to be. We have a customer who we spoke to yesterday who said that they needed to get a half-gig file from LA to Santa Monica and to a really creative guy who works out of his house. No gas, no traffic, no crazy lost productivity time. Cable modem, baby, open Internet!

WAN-accelerated software that secures and maximizes that open Internet connection. Voila! Happy customer, happier environment.

Whether or not Fox or CNBC becomes the first to put live, free, and streaming video on the web, there is an underlying thought that I think all of this is prefaced on. And that is that people want choice: choice of what content they’re going to watch, where they’re going to watch it, and when they’re going to watch it. And sites like YouTube only force us to understand that “choice” isn’t just the notion of programs online. The bottom line is that these “channels” enable you to see content from people who, for the most part, have no chance in hell of ever being on “broadcast television”. And what about the sheer nature of video on the web serving as either a fix for what ails you or research for something you’re working on? Wanna see close-ups of cataract eye operations? Yep, they’re right there. Wanna give your kid a quick introduction to Alvin and the Chipmunks? Yep, those frenetic furries are there too.

There was a point not too long ago when I watched Geoffrey Rush’s Oscar® winning performance in the 1996 film, “Shine”. I had seen the film when it first came out but watching the film again made me seek out “The Rach”, which for those of you who’ve seen the film know that this refers to Rachmaninoff’s Concerto No. 3—third movement. For a week or so, I was intensely interested in seeing as many performances of this piece. And “in the past”—oh you know—a year or so ago—I’d have gone to the library and hoped that there, in a fat chance, there would be an old, tired VHS tape of a performance. But, naturally, I didn’t do that. Instead, I went to that beautiful World Wide Web of interconnected computers and found some amazing performances, one of which is the unbelievable Horowitz who doesn’t even look as if he’s broken a sweat after 15 minutes and 13 seconds of playing.

The point: I entertained myself, found as much as I could handle and did it without turning on “the television” once. For that need, that Internet connection was beautiful….

And to Kedrosky’s point, would I have put up with ad-supported? Did it have to be free for me to partake? All I can say is that when you want to find something that’s meaningful to you, and immerse yourself in that subject, as long as it’s not an egregiously large output (money, banner ads, etc.), you’ll do it.

The alternatives for consuming content just continue to grow and grow. And they are doing so with dramatic acceleration. NBC-Direct, the newly announced initiative to offer ad-supported long form content of such shows as “Heroes” and “Bionic Woman” equates to yet another option for consuming media and entertainment programming.

Creating content and moving it to the appropriate locations, in the appropriate format and making it available not before, and up until, specific time periods involve a dizzying set of requirements to actually pull it off.

Moving content FHTTH (from Hollywood to the Home) means connecting to a server where content is ingested. It means moving that content from raw form to systems that are used to edit it and finalize it. It means moving it to and from the audio editorial and mixing stage. It means encoding that final content into the various forms that are needed for the final deliverables. Then it means adding the ad-supported commercials, banners, promos, etc. and adding DRM (digital rights management). And, of course, it all has to be populated on the viewer-facing website and moved to the CDN (the content delivery network).

To accomplish this at the dizzying rate that the Media & Entertainment industry is moving is no simple accomplishment.

I’m afraid I can’t help myself: I watch “television” on a piece of glass connected to a coax cable in my family room and on a computer screen and on an iPod. I’m not there on a mobile, but as a Red Sox fan, as we get closer to the playoffs, you never know….