Network Monetization 101: Degrading vs. Metering

January 20th, 2008

During the last few days, much has been written in the popular tech blogs about the throttling actions of Comcast vs. the proposed metering actions of Time Warner — suggesting that metering might be the preferred and fairer approach to restricting subscribers’ growing bandwidth usage habits. That discussion only focuses on a small part of the bigger picture, however.

From the network operator perspective, degrading service and metering service are mutually exclusive actions that create opportunities for monetization on each side of their operation at the application layer.

In the media distribution food chain, cable companies and telcos have always monetized either side of the communications relationship they are facilitating — at the application layer. Connectivity and access at the transport layer are not monetized by legacy communications infrastructure as it is with IP networks.

Cable companies charge, demand ad revenue opportunities or otherwise negotiate remuneration from television networks requesting availability to their subscribers and then turn around and charge subscribers for access to the television networks.

“Network Availability” (what AT&T and others are suggesting they need, in opposition to “Network Neutrality”) is about restricting and monetizing media availability to subscribers.

“Conditional Access” and DRM are about restricting and monetizing subscriber access to media.

In an application layer monetized world, if an operator can’t negotiate a revenue stream from a media producer or aggregator, availability of the media producer’s product is degraded or disallowed — If revenue can’t be obtained as a result of a subscriber request of a media product, access is prevented.

Meter vs. Degrade

With the Internet, network operators have been left out of the media delivery monetization pie, other than deriving income by supplying “Naked” transport in to and out from their infrastructure.

Comcast and Time Warner are approaching the monetization of Internet-delivered media completely differently.

If Comcast can successfully negotiate frees from media producers and aggregators in exchange for not degrading their Internet-delivered media, Comcast has successfully generated a huge stream of perpetual income that didn’t exist until that deal.

If Time Warner can successfully implement fees from subscribers in exchange for delivery of their Internet-delivered media, Time Warner has successfully generated a huge stream of perpetual income that didn’t exist until those subscribers signed on.

Top Ten Twitter Toys

January 19th, 2008

I’ve been a Twitter user since April or May last year. It’s a neat way of communicating with people in a “stream of consciousness” way.

Twitter released an API that allows people to create applications that improve upon (and sometimes not) the service users receive. Below are my top ten favorite twitter toys.

  1. Twitter Karma by @dossy — a really cool follow/followed dashboard
  2. Tiny Twitter by @kcbigring — A mobile twitter client
  3. Twitter Stats by @dacort — twitter statistics script (see my statistics below)
  4. Snook’s Twitter (snitter) by @snitter — An Adobe AIR-based twitter client
  5. Twittervision by @davetroy — Google Maps + Twitter live mashup
  6. Tweeterboard by @tweeterboard — a twitter conversation analytics site
  7. Tweet Scan by @weex — simple Twitter search engine
  8. Twitterverse by @emilychang and @maxkiesler — Tag cloud representation of the Twitter public timeline
  9. Twitterholic by @tw_tterholic — Leader board representation of the Twitter public timeline
  10. Jott — not an "official" twitter service, but this free voice-to-text service integrates with Twitter

Screen capture from Twitter Karma

Jenn's Twitter Karma

Results from Twitter Stats

Jenn's January 19, 2008 Twitter stats

Edited to add: Yes I am aware of Hashtags. No, I’m not convinced of their utility over just searching on the public timeline on keywords.

Media: A week in context

January 18th, 2008

This week, NetFlix and Apple launched online film distribution services and Time Warner Cable reluctantly announced their metered Internet trial. In context, this was a turning point in the evolution of home entertainment.

The future of film and television is definitely going to rely upon the world of IP networks. Between the NetFlix and Apple services, consumers will begin to relate to films and other visual media online, just as consumers learned to relate to television through a box of buttons when cable services began to dot communities.

Speaking of cable, Time Warner has set itself up to be the first sacrificial lamb of the MSO infrastructure evolution in response to the growing amount of bandwidth used by its subscribers. In my previous post on the Time Warner experiment I suggested that TW customers should bail on their broadband provider. In the near-term, I still suggest they find more lubricated pastures (I.e. unmetered, unlimited service).

As media products evolve to an online state, the infrastructure that delivers media must also evolve or become inoperable or obsolete. Cable companies really operate two competing video infrastructures:

  1. The original RF-based television feed of 24/7 content pushed into the homes over 300+ simultaneous channels, and;
  2. A newer IP-based “Broadband Internet” connection facilitating the pull of attention-derived content into the home.

The old television feed infrastructure is not optimized for the realities of an “A La Carte” attention-derived media. It’s interesting to note that even with 300+ channels of content available the average american television viewer rarely strayed outside of their five favorite television channels to view programming.

cable spectrum
1990’s Cable Spectrum

Clearly, cable as a business and an incumbent infrastructure is no longer efficient or relevant and must eventually be sacrificed as consumers adapt to Internet-based media delivery.

The cable evolution has been helped along by federal mandates declaring the end to analog-based television signals. Cable operators have been repurposing their Analog spectrum into their digital tiers

cable spectrum
2000’s Cable Spectrum

In the next decade, Cable operators will need to abandon their philosophy of spectrum slice segmentation that dates back to the early RF days of television and open their entire operation to packet-based organization.

cable spectrum
2010’s Cable Spectrum

Cable has a phenomenal amount of bandwidth capacity deployed, the challenge for them is adopting a consumer-friendly business model and organizing and optimizing the capacity going forward.

Cable will eventually adopt “metering” industry-wide, but as they open their entire networks to IP, one will hope that they will learn how to productize “unlimited” and “capped” services once again.

(As a comparison, here is the typical incumbent telephone carrier network spectrum allocation:

cable spectrum
1990’s Telephone Spectrum

Unlike the fiber coax hybrid-based cable networks, telephone companies rely upon a mesh+star configuration of fiber and twisted copper. The available spectrum of twisted copper is far lower than coax, influenced by the frequency footprint of the legacy service of the telephone company, voice communication — exponentially narrower when compared to video. This is why telephone companies are the champions of fiber to the curb [fttc] and fiber to the home [ftth] initiatives.)

The Other Shoe Drops

January 17th, 2008

This week two major Internet-based video distribution overlay services were announced for consumers in the US — And predictably, the first major operator reaction occurred today — not far behind.

Time Warner Cable, the second largest cable system operator in the US after Comcast, announced that they will “experiment” with use-based pricing on their Internet Access products, virtually guaranteeing extra service fees for anyone contemplating video delivery to their home over the Internet.

Hopefully Time Warner customers who use the Internet for more than stock quotes, email and the occasional lolcat move to a competitor.

iTunes Rentals: Is It Evolutionary?

January 17th, 2008

Yesterday, Apple officially launched their new iTunes Video Rental service.

The film rental service is built upon the existing content management and distribution system that facilitates the sale of audio and video products across the Apple CE line, including a newly untethered and upgraded IP-based AppleTV set top product. I presume it will also work on iTunes for Windows.

Is this service revolutionary? No. Evolutionary? Yes.

Cable operators in the Americas and Europe have offered VOD-based rentals for almost a decade (in Asia, almost two decades), but have not expanded their focus beyond their prized set-top box — some have started developing parallel stream-based services on the Internet, but there is no cohesive product relationship. Cable-delivered services have started and ended at the television set.

In relation to online services, Disney’s MovieBeam and film industry venture Movielink both offered film rentals by all the major studios in the same price range as the new Apple service, but their products were not very accessible and alienated consumers.

Apple’s agreement with Hollywood enables iTunes to rent movies 30 days following a DVD releases. This is presumably done for the same reasons that Hollywood fragments their DVD distribution amongst several region codes.

Apple Ecosystem

Apple operates the world’s most popular electronic media distribution service and is clearly the manufacturer of the world’s most popular portable media players. This dominance feeds directly into the adoption of their iTunes audio and video manager/player, compatible with both Microsoft Windows and Apple’s own OS X — and closes the loop on a single-provider “fully integrated” Virtual Walled Garden Overlay.

Apple will be the first effective solution to bring wide-scale video from the Internet to television. On the other hand, YouTube and its clones that drive traffic through novelty and news will not escape the immediacy of the social media-driven browser universe — regardless of mobile and television-focused efforts.

While this product will be the service to popularize electronic film rentals to the general public, other services such as the unlimited electronic streaming delivery products from Netflix will equally share this vanguard, but in a more constrained and restricted manner.

After an agnostic media management and delivery infrastructure reaches the edges of the Internet, Hollywood will pull back control over their media and begin to pursue direct delivery of media themselves

Hollywood has a history of taking control of media delivery channels that cross over the boundary from experimental to mass market — acquiring their video tape manufacturers and distributors. Affiliate television stations are finding the territorial relevance that solidified their existence in the traditional television delivery value chain has been erased by the global and direct reach of the Internet enabling the parent networks to deliver television directly to consumers through websites.

Eventually, the proprietary FairPlay format of Apple will also be superseded by a consumer-friendly format, popularized by consumer media generation — enabling/allowing consumers to integrate their own personal media with acquired media across consumer-chosen devices.

Apple’s iTunes Rentals service is evolutionary — as a stepping stone. It’s not going to kill DVDs or DVD rental services because the majority of the movie viewing public won’t immediately change their habits to pay apple $3-6 to watch a movie.

Apple will see the world to the time when Hollywood (and all media producers) will be have the capability to deliver media directly into consumer’s lives with commodity technology, infrastructure and players with flexible billing/usage models allowing for purchase, rental, subscription, advertising-support, gifting, freebies, exchanges and situations not thought of yet.

MacWorld Keynote

January 15th, 2008

Well the MacWorld Keynote is over and the two big announcements were a new MacBook and Video Rentals.

First, the new MacBook is named the Air. It’s a beautiful tiny computer that Steve Jobs called the thinnest laptop in the world. I don’t know enough about the thin computer market, but it looks mighty thin.

I am wondering what Apple was thinking (other than “wow cool we have a thin laptop!”). I own a couple of the PowerBook Pro aluminum shell laptops and while the 17″ lasted just over the three years that AppleCare pretended to provide some coverage by virtue of it’s size and mass, the 12″ is dented, warped and the screen top barely closes when I put it to sleep.

Apple is asking for a torrent of service calls from people who have it slip through their fingers at TSA checkpoints, find fido crushing it to pieces, or have it folded as someone tried to squeeze by them on a crowded subway/train. This product isn’t going to be good news for apple’s return/service people at all.

MacBook Air Prediction: More than 20% are returned for service within the first 6-12 months.

MacBook Air Prediction 2: At least a couple blogger-originated memes every month about dead Airs and their owner’s experience with Apple Support.

I’m saving the new iTunes Video Rental service for my next post.

Edited to add MacBook Air Prediction 3: Air owners will eventually start purchasing rigid exo-skeleton covers for their Airs, which defeat the whole “thin” esthetic of the laptop — but they will still be the owner of a wikkid cool portable computer!

On Netflix Unlimited Streaming

January 14th, 2008

Today, Netflix announced they are offering their subscribers “Unlimited Streaming” of movies and TV shows “on their PCs” — beginning today their “unlimited” DVD rental subscribers (tiers beginning at $8.99/month) may start streaming unlimited movies and TV shows.

The Netflix press release specifically refers to PCs as being the destination device for their unlimited streaming plan, but depending on the formats and encryption selected, a “PC” could mean any IP-based device connected to a television — an AppleTV or Mac Mini, Tivo, Slingbox or Microsoft Media Center. But, this information is conspicuously absent from the Netflix site which has me suspecting it’s a not-so spectacular Windows-only format.

The announcement of a “Hollywood-fed” full-feed pay-one-price video streaming service is huge, but only if the format is eventually transportable and compatible with mobile and wireline devices. If it is tied to Windows or restricted to a specific player, it’s just another proprietary footnote on the pathway to a useful service.

The number one loser in the market today due to this announcement has to be your local cable company. Cable companies will try to launch stream-based services, to keep their customers inside “The Garden” while they are out and about in Internet land, but will largely fail because cable doesn’t have the mind share when consumers start thinking of feeding their IP-based video devices.

If Comcast scrapes through the FCC hearing on their practice of degrading P2P services used by their subscribers unscathed, you can bet that they (and other operators) will start degrading all third-party streaming services on their networks unless direct per-sub revenue shares are negotiated.

None of the streaming deals are exclusive as far as I know, so as soon as someone in Hollywood starts to see a winning model emerge, they will start feeding the streaming channel directly. Netflix should enjoy their market success now, while it lasts — they will be in Blockbuster’s shoes in three to five years unless they develop some extreme competitive technical and marketplace advantage (highly unlikely).

Track Backs

January 13th, 2008

I guess Intense Debate removes the ability for one’s blog to display trackbacks as it wrangles control over the entire feedback subroutine — at least in WordPress.

I’ve had a couple blog mentions on posts since moving my comments to Intense Debate:

On November 25, Brad Feld wrote about my Foreign Entrepreneurs and US Visas post in a politically-themed post.

Yesterday, Micah Baldwin wrote about my New Year’s Resolution 1: Seek Partnerships post in his weekly Friendly Intelligence post, and also linked to a few other of my recent posts.

The Whole Communications Show and Conference

January 12th, 2008

In my recent post about not attending CES, I referenced an idea I have about a conference I’d love to attend, but doesn’t exist — sort of a “Whole Communications Show and Conference.” Later, I shared a little of my philosophy about media relationships and how devices and infrastructure play a facilitating role rather than a central role.

Media relationships are rare in today’s communications environment — In fact, media producers seem to have been actively trying to avoid them. The cable system operators and telcos have amplified this inclination, by locking media and communications products behind Walled Gardens.

Media Evolution
Click for larger image

However, both audio and visual media have reached the point where their consumable and broadcast formats are universally available on one hand and universally usable on the other. This optimal state enables the media products to escape proprietary devices and networks and exist wherever the format is understood.

The recording industry has been very slow to adapt to this development and the motion picture and television industries appear to be a little more cognizant about their future, but seem to be hesitating when it comes to fully embracing change.

There are several high-profile examples of television networks developing Windows-only media download services and film studios still encourage the formation of operator-based exclusive content deals.

Tethering media products artificially restricts media’s availability to consumers and conversely constricts a consumer’s access to media — this is why “Network Neutrality” is important. However, if media producers were truly invested in neutrality, they would be enthusiastically pursuing the formation of media relationships, and they aren’t — yet.

Features
Click for larger image

Under the misnomer of “Convergence,” media producers have been sold on a vision of the future that advises them to adapt their existing products from one old media device or infrastructure onto another old media device or infrastructure.

The “Triple Play” concept invented by the incumbent infrastructure operators is a perfect example of the linear thinking and tunnel vision behind “New Media”.

Media producers are best to forget about Triple Plays and start conceptualizing media products for features that exist across platforms and networks — there are no more televisions or stereos, there are players.

The days of remonetizing assets across and upon new platforms are also over, as demonstrated by the fact that everyone has re-encoded their music collections for use upon audio players — it’s only a matter of time before consumers start re-encoding their film and television collections for use upon video players.

“Mobile Video”, “Mobile Web” and “Mobile Commerce” do not exist — short of operators obfuscating access to their platform to inflate the size of their Walled Garden. There will be no logical reason why IP video, web or commerce can’t exist natively within a mobile environment as it does on any other Internet-connected device.

Media Conferences
Click for larger image

There are a couple dozen media industry conferences produced worldwide. Most have been around for decades, begun as their respective industries took shape. Until the 90s, most of the media industries were segmented along proprietary infrastructure — For example, cable television shows were all about the newest set top box, largest head ends and widest coax cable and mobile telephony shows were focused on how to deliver more voice calls, of a higher quality through a matrix of smarter cell towers from smaller portable telephones.

As the Internet gained users and growth, an avalanche of digital media applications were tacked onto the formerly-proprietary networks and devices courtesy of IP-inspired technologies. The trade shows however, remained very linear in their focus. Even their “New Media” context was all about identifying and segmenting off the newest digital services within their old, proprietary business models.

I believe there will always be a need for shows for device manufacturers, for media producers and game developers to meet separately amongst others in their field to formulate standards, discuss best practices and whatnot.

Infrastructure operators across platforms need to begin thinking of meeting together at a large IP Network shindig (less NetWorld + Interop, more outward-facing) or else become naked transport against their will. Whole Media will commoditize incumbent infrastructure into raw transport, they will need to become the best, most efficient transport they can to compete effectively in a Whole Media economy.

The Whole Communications Show will give media producers a place to spend a little time at the 50,000 foot level with device manufacturers and work on products that create media relationships independent of infrastructure and allow for license federation across devices — Whole Media.

Producers that ignore Whole Media will find their existing and planned business models and partnerships disrupted — and eventually, their assets outside of their control.

Consumers are quick to understand that they can move abandoned media wherever they desire with or without the producer’s participation. Whole Media is about grabbing hold of the media relationship with consumers and actively working with them to facilitate a relationship wherever it may go.

Whole Media is a relationship without segmentation — concerning products without boundaries.

2008 New Year’s Resolution 1: Seek Partnerships

January 11th, 2008

One of my 2008 resolutions is seeking out and developing more partnerships with people and companies.

I’ve been operating websites since 1994. Not as long as some, but early enough that I have acquired a few domain names. Most of the names below were registered as "Web 1.0" projects that came and went as companies or projects that were started, acquired or dissolved.

During the last year, I’ve developed (I think) a more cooperative view about the creation of websites and Internet-directed efforts. I have witnessed the excitement in spontaneity and strength of teams as people join and participate in Startup Weekends around the world. I have servers, I have domain names and I have some experience with Internet stuff — let’s talk about creating something new.

Yallery is my primary focus and has been my full-time job for almost two years. While it is still a few months away from an unrestricted launch, I’ve been working on tour.net and ShowMedia to figure out and learn some technical and programming stuff to bring back to Yallery. I would love to work with others on turning the domains below into useful, prosperous products and/or services. Email me at jenn@jenn.com or leave a comment below. (Truth be told, I’m also interested in speaking with developers and designers who may wish to get involved at an equity level in Yallery, tour.net and ShowMedia.)

distributed-video.com
distributedvideo.com
distributedvideo.net
distributedvideo.org
video-peer.com
videopeer.com
videopeer.net
videopeer.org
equaliz.com
equaliz.net
equaliz.org
file-management.com
file-management.net
file-management.org
metropeer.com
metropeer.net
metropeer.org
metro-peer.com
metro-peer.net
metro-peer.org
metropop.com
metropop.net
metropop.org
metro-pop.com
metro-pop.net
metro-pop.org
nichecast.net
nichecast.org
niche-cast.com
niche-caster.com
niche-casting.com
nichecaster.com
nichecaster.net
nichecaster.org
nichecasting.com
nichecasting.net
nichecasting.org
psychicdata.com
psychicdata.net
psychicdata.org

id-xml.com
id-xml.net
id-xml.org

concert-cam.com

mostmusic.com

roving-i.com live-i.com
culturecast.net familycast.net

This post is an invitation to start a dialog with marketing and technical folks about working together on new ideas. This post is not an invitation for “domainers” to tell me about a great google/yahoo ad parking scheme.