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March 12, 2007
Volume 16, Issue 12

P2P as New Territory for Advertisers

Excerpted from Advertising Age Report by Abbey Klaassen

File-seeding service INTENT MediaWorks was responsible for the best-known recent example of marketing in peer-to-peer (P2P), an eight-minute Coca-Cola-sponsored clip from a Jay-Z concert at Radio City Music Hall.

While Joost may be the latest media darling when it comes to P2P, it’s not the only company looking to carve out a space for advertisers in what was formerly renegade territory.

Several start-ups are hoping to open up P2P traffic to advertising. P2P networks represent an attractive – albeit relatively ad-untested – market: 12-to-24 year-olds and heavily male. More than half of all Internet traffic is P2P file-sharing.

The timing is no coincidence. Vendors have been trying for years to create ad models for P2P markets, but many of the potential advertisers in the space – for example, the entertainment industry – were wary of adding credence to the networks.

"They would have hated to do something on the marketing side that compromised their legal position that there was no real non-infringing use," said Eric Garland, CEO of DCIA official industry data resource BigChampagne, which tracks online content distribution. But, he pointed out, that sentiment has changed since the Supreme Court MGM v. Grokster ruling.

Mr. Garland also points out that many pundits predicted the entertainment companies would do business with the Kazaas and LimeWires of the world after the Grokster verdict came down. Instead, what has been created is a "little intermediary business" – entertainment companies working through third-party vendors to try to create retail non-copyright-infringing experiences.

The first page of the presentation deck that INTENT MediaWorks is taking around to agencies quotes Supreme Court Justice Stephen Breyer in the Grokster case: "INTENT MediaWorks, for example, protects licensed content sent across P2P networks."

INTENT President Les Ottolenghi said there are 2.7 to 3 billion P2P downloads a month (in comparison, Apple’s iTunes has sold only about 2 billion songs since its inception), and he predicts, "We won’t be talking about P2P as a prospective revenue stream in 12-to-16 months; it will be an established content delivery network (CDN)."

INTENT attaches an ad to a piece of content and lets users pass that content around the Internet, through P2P networks and other file-sharing techniques. It wraps what Mr. Ottolenghi calls digital-rights-management (DRM) business rules around the content that allow it to be tracked among IP addresses. That means a marketer using INTENT to spread content across the web will know exactly how many times its clip was viewed.

"The question is, how do you step into that P2P search stream and meet the consumer at a point of download and monetize the transaction?" Mr. Ottolenghi said. He said studies have shown more than three-quarters of consumers would be willing to take free content with advertising. "The big question for consumers is, ‘How can I get a lot of content very easily and use it as I wish?’ They’re not saying ‘I wish I could rip-off a music artist.’"

Jeff Malmad, Director of Digital Media at Mediacom, said, "If consumers are looking for content in P2P, you can provide them with additional info about content or brands."

Mitchell Reichgut used to head up interactive at Bates Worldwide Advertising, and launched the Jun Group four years ago as a traditional ad-services company. But in the midst of launching Jun he "got hooked" on file sharing. It reminded him of when he first got into web design.

"It’s much harder to distribute to a large P2P audience than you think," he said. "P2P connects users to each other so even if you have something really hot or valuable, putting it on one or 10 or even 50 LimeWire clients isn’t going to necessarily get it out there broadly." His company has worked with Cadbury Schweppes’ Yoo-Hoo brand as well as with Coca-Cola and MTV.

Also trying to forge a business model in the space is Skyrider, which is making the transition to an ad technologist. Skyrider allows advertisers to buy contextual ads around searches in the network, and a few weeks ago the company introduced the ability to serve video ads dynamically into P2P transferred files.

In such a scenario, a content owner could choose to upload a file to a P2P network and then sell ads against it, using Skyrider’s technology to switch ads in and out depending on where in the country the file was going and when the file was being downloaded.

The company is talking to several advertisers, said Chris Redlitz, VP of Sales for Skyrider. "There’s a long path for this to grow into a market that has a large audience," he said. "We have to get through short-term perceptions for long-term viability."

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyThe DCIA commends IDATE and Médiamétrie/NetRatings for their valuable contribution to the distributed computing industry with their new Download Monitoring report.

Download Monitoring is the first ever report of this scale on current usage of the full spectrum of downloading applications in the United States, France, and the UK. The study benchmarks current usage with an unprecedented degree of specificity and will permit future examinations to reveal critical patterns and trends.

That a substantial number of broadband subscribers use P2P applications regularly is a well-entrenched reality on the web. At the end of 2005 the percentage totals were 38% for France, 16% for the UK, and 10% for the Unites States, and growth has steadily increased since then.

Given the scope of this phenomenon, there is a vital need to provide the sector’s players with precise and reliable data that enables a proper analysis of P2P application users, the way that these applications are being utilized, and how the trend is likely to develop in the coming years.

Download Monitoring has four main objectives: first, to provide a comprehensive view of the current state of digital entertainment including music, video, and videogame downloads on the Internet, taking account of both licensed and unauthorized downloads enabled by P2P software, with particular focus on usage in terms of what content is being downloaded and which applications are being used.

Second, the report takes a close-up look at the P2P phenomenon, identifying the most widely-used software and networks, to help readers understand why some are more popular than others. Beyond that, the goal is to provide a detailed analysis of P2P usage: who is downloading what? How is the phenomenon evolving? What impact is it having on traditional markets? Is it possible to convert a portion of traffic to economically viable usage? How?

The third goal is to provide a more general measurement of the extent to which web users are switching to digitized content. The approach here is quantitative, translating observed usage into market potential and evolution over time.

The fourth and final goal is to establish growth scenarios up to 2010, laying out the various development prospects for content distribution, taking account of the types of devices and the different media used.

Key questions addressed include what percentage of households has switched to acquiring their content digitally? What portion of their budget is devoted to acquiring digital content? What are the different ways of acquiring content on the web? Which entertainment industry sanctioned services are the most popular with web users? What is the volume of unauthorized downloads? What use is made of P2P software and networks? What type and volume of content is being downloaded in P2P mode? How much is the digital content distribution market worth?

Download Monitoring is based on real-time tracking, which involved analysis of Internet usage data, gathered in real-time by the Net Meter application from a sample group of over 100,000 internet households in the United States, 20,000 in France and 20,000 in the UK. In addition, there is an exclusive online survey of 400 web users in each country, aimed at pinpointing users’ motives and providing web user profiles, types of downloads performed, intentions to use P2P applications, types of devices used, etc.

The report also makes a comparison of the survey results with sector-specific analyses from market specialists including Internet, music, video, TV, videogames, and telecommunications. And finally, the report features market estimates and demand forecasts, with a comprehensive perspective supplied by IDATE’s databases and forecasting models.

Studied P2P applications include ABC, Ants P2P, Ares Galaxy, Audiogalaxy, Azureus, BearShare, BitComet, BitLord, BitSpirit, BitTornado, BitTorrent, Blubster, Bullguard, DC++, eDonkey, eMule, FileTopia, Freenet, FreeWire, Frost, G3 Torrent, Gift, Gnucleus, Grokster, iMesh, Kazaa, LimeWire, Mammoth, Mercora, MojoNation, Morpheus, Napigator, NeoNapster, Overnet, PeerCast, Piolet, Shareaza, Soulseek, WinMX, and XoloX.

One of the special features of the report is a close-up on the unauthorized P2P download phenomenon. It looks into P2P as a full-fledged means of acquiring digital content, as a technology recognized as an economically viable distribution mode, and as an environment initially dominated by unlicensed content downloads.

For each country studied, statistics are provided for downloaders’ Internet connection equipment, broadband connection and access providers, composition of flat rates, downloaders’ digital entertainment budgets and breakdowns for cinema, DVD purchase and rental, pay-TV, audio DVD purchases, and videogames.

For these users, the types of downloads – licensed for-pay, free licensed, and free unauthorized – are defined. Types of devices used as well as genres of content downloaded – music, software, videogames, movies, DVD, TV programs, cartoons, etc. – are broken down.

Some of the most interesting aspects of the report are the parts that deal with P2P download practices: the applications involved, the short-term evolution of unauthorized P2P downloading, type and volume of downloaded content, impact of P2P downloading on retail purchases, conditions for switching to licensed digital content acquisition, and whether there is a psychological threshold for the price of a song, an album, a movie, a TV show, a TV cartoon, or a music video.

Finally, P2P software and penetration rates by country among the downloader population in broadband households are explored. Share wisely, and take care.

Skype Downloaded 500 Million Times

Excerpted from New Media Age Report by Richard Simpson

Skype has revealed that its peer-to-peer (P2P) service has been downloaded over 500 million times by users around the world. The figure was reached in slightly over 42 months, starting from the first beta launch of Skype in August 2003.

Skype’s services now include free voice, video, conference calling and instant messaging, as well as Skype’s paid-for communication products including Skype Pro.

Disney Invests in P2PTV Service

Steamboat Ventures, an investment unit of the Walt Disney Co., along with several other US venture capital firms, invested $23.5 million in UUSee, a Chinese peer-to-peer television (P2PTV) service.

UUSee is the only P2P operation currently to have the approval of Chinese regulatory authorities, and is uniquely positioned in the market for online content distribution. The service currently has 36 million registered users, making it China’s largest online video service as well as P2PTV operator.

UUSee distributes live and archived programming, including subtitled US shows, from the largest over-the-air broadcaster in China, CCTV, and the largest satellite TV company, CSAT, as well as Beijing TV.

Its business model is primarily advertising based, supplemented with ancillary premium text-messaging services for viewer contests. Revenue is projected to reach or exceed $10 million this year and the company expects to break-even by year’s end.

UUSee introduces its video files into distribution from centralized servers, and then to reduce long-distance Internet traffic, uses viewers’ computers to redistribute the video to other, nearby viewers.

In addition to Steamboat Ventures other investors included Draper Fisher Jurvetson, Highland Capital Partners, Sequoia Capital, and Susquehanna International Group.

At this time, the US has no equivalent to UUSee, which aggregates television programming from multiple sources for online distribution via P2P technologies.

Joost a Moment

Excerpted from MediaPost Report by Mitch Oscar

Last week P2P backboned video destination site Joost received a lot of press, thanks in part to its content deal – clips and classics for now – with Viacom. The service was either referred to as a YouTube killer and/or a cable company or cable systems killer.

The YouTube killer reference is clear. All user-generated content broadband sites are going after the eyeballs aggregation leader, and thusly, will be dynamically positioned by the trade community as such.

But the latter reference – cable company or cable systems killer – is an appellation that is confusing and too restrictive in the Big Mac view of the world. Isn’t it the mission of any and all of these new video destination sites – YouTube, Yahoo, AOL, Brightcove, Revver, Veoh, to name a few – to become the ultimate destination for all televisual viewing experiences?

And therefore, in the simplest of terms, aren’t the lofty goals of these endeavors to replace all traditional and neo-traditional television distribution systems, whether broadcast, cable, satellite, or telco, as the video repository for all that is worth accessing (amateur, quasi-professional, professional) and multitasking (chat, sharing, emailing, modifying) – you know, the "TV on Steroids" referencing.

If that is in fact the case, shouldn’t we, the media community (traditional, new media, old-new, and newest media) wipe the words "systems and networks," early 20th Century references, from our media lexicon, and replace them with the traditional, old-new media term "portal," a late 20th Century associative.

Shouldn’t we begin to refer to the access point of all things televisual by the entry point and not the distribution methodology? The major cable operators (Comcast, Time Warner, Charter, and Cox) are all access points to entering the world of televisual properties. EchoStar and DirecTV do the same. When the TV stations convert their transmissions from analog to digital post-February 2009, they will claim a similar boast.

And of course, one might argue that the telcos’ IPTV delivery is meaningfully different and an exception, given that it doesn’t fall within the early and late 20th Century media classifications. However, one could posit that the difference is really to be debated by technologically centric theologians, since IPTV in its present FiOS and U-verse offering is yet another competitor in the realm of delivering video content to the population and vying for subscriptions.

The media pundits all seem to agree that the consumer doesn’t really care what pipe delivers video, audio, and data to their abode as long as they have the option of receiving, at a minimum, "fair value" – and possibly one bill, the plethora of program choices and services that their relatives in other cities cherish.

So given that Joost says potato and traditional media distributors say potahto and Yahoo says tomato and the telcos say tomahto, let’s decide on what we call it before the advertiser and its advertising agencies call the whole thing off by making engagement even more difficult than it already is.

We, the media community, can keep debating how many terminologies, classifications, and definitions fit on the head of a media silo – or we could spend more time concentrating on the consumer experience, and how advertising is an integral part of that connection.

CacheLogic Games CDN

CacheLogic, a leading provider of peer-assisted content delivery network (CDN) solutions, announced the immediate availability of VelociX for Games, its unique hybrid peer-assisted CDN which is specifically optimized for large, multi-gigabyte files.

Shown publicly for the first time at the Game Developers Conference, VelociX enables a uniquely cost-effective and extraordinarily fast method for distributing games, demos, and updates with fine-grained control of speed, reporting, and dataflow. VelociX uses CacheLogic’s Asset Delivery Framework, which provides guaranteed delivery, predictable costs and tiered asset-based pricing, billing, and reporting.

The continued evolution towards richer and immersive gaming experiences also brings a corresponding increase in overall file sizes. Game files, patches, and updates continue to grow and with current CDN technology, large file downloads are slow. Demand spikes (also known as "flash crowds") that occur after new releases can stress previous-generation delivery technology to the breaking point. This seriously annoys customers eager for the new game or update and negatively impacts companies and their brands.

VelociX is a unique combination of traditional CDN technology with a P2P backend that delivers a high-performance, scalable content delivery solution. Games, patches, and updates are delivered fast, ensuring that new updates are available to a broad user-base in minutes, not hours or days. Flat asset-based pricing ensures costs don’t increase for large download bursts, making it economical to deliver large digital assets to many users.

CacheLogic’s low latency network offers consistent performance across peak hours necessary for optimum online gaming experience. The network has the global reach necessary for optimum performance, regardless of location. Patch downloads are not susceptible to download corruption, avoiding costly retransmissions and improving overall delivery satisfaction.

Using VelociX, it is possible for game developers and publishers to control the speed and delivery method of their content. For example, with VelociX, it is possible to control the speed of critical patch delivery for maximum throughput, whereas region-specific updates can be delivered with fastest speeds only to selected geographies to manage costs.

Older game demos can be delivered with slower throughput to preserve bandwidth, while the latest demos can be sent at maximum speed – all while providing detailed reporting to enable specific marketing analyses of the games, demos, and updates being provided by the publisher. Using VelociX, increasing or decreasing the speed of network downloads to customers is as simple as flipping a virtual switch.

It is also possible to monetize asset delivery using VelociX by allowing users to make micro-payments to receive the fastest possible delivery time, or to purchase time-based speed increases on the network.

"VelociX for Games is the next-generation of CDN, providing game publishers with all the tools, speed and control they need to really generate value for their users while simultaneously controlling costs – it’s a win for everyone," said Andrew Parker, CTO of CacheLogic. "By fusing P2P technology into our CDN, we can deliver unprecedented speed with predictable cost, and we are very excited to be showcasing VelociX at GDC."

Indie911 Launches Hoooka

Indie911.com, a leading online music and media destination for independent artists and fans, announced the public beta launch of the hoooka, a personalized media store and player that enables both artists and fans to play, share, promote, and sell their favorite digital media. Allowing users to instantly become their own mobile media store, the hoooka showcases play-lists that can be posted anywhere online, from P2P networks, to blogs, to social networking and personal websites.

"The biggest challenge facing any new artist is finding an audience," said Justin Goldberg, Founder & CEO of Indie911. "We have created a cool, easy way for independent artists to spread their music and videos directly to a large audience and empower fans to share in the commercial success of marketing and selling their favorite media to family, friends, and fans anywhere on the web."

The hoooka is a unique technology that combines the community and networking aspects of MySpace with the digital sale opportunities and exposure of iTunes. It was designed to give consumers and artists an easy tool to share and sell media, with the following unique features: chat live across multiple social networks; videos; customizable; and stronger value proposition for artists, labels and consumers.

"Media companies need to move away from their walled-gardens toward an open-platform where free commerce is enabled and embraced," said Ted Cohen, advisor to Indie911 and current Managing Director of digital media consultancy TAG Strategic. "The best digital media companies are moving quickly to take advantage of the rapidly growing online audience for music. Embracing new ways to promote artists and tools for artists to directly reach their fan base is the wave of the future."

Izimi Launches P2P Social Network

Excerpted from Digital Media Asia Report by Carla Moore

Social networking site Izimi has launched a free self-publishing application, which allows users to serve an unlimited number of files to the Internet directly from their PC using only a URL.

The application removes the need for users to upload their files to online content-sharing sites. Izimi users can instead use secure P2P browser techniques to connect other users directly to the files on the publisher’s own PC.

Izimi places no restrictions on file type, size, or quality that users can share and does not require recipients of the URL to register or download any client application. The Izimi website complements the Izimi application and provides a social networking environment around users and their content.

Registered users get their own profiles plus additional community features including comments, ratings, adding friends, adding favorites and messaging. Any content published using the Izimi application is also available to be searched and found on the website.

AllPeers Leaps to Open Source

Excerpted from Ars Technica Report by Ken Fisher

The folks behind AllPeers are hoping to stir interest in the Firefox-only P2P application by announcing the move to an open-source licensing scheme for the client application. The source code has been released and is dual-licensed under the Mozilla Public License (MPL) and GNU General Public License (GPL).

"We’re proud to announce that we’ve opened up the source code for AllPeers to other software developers. We hope that this will encourage developers to join our community, help us to improve our code and create their own applications on top of our platform," read a statement on the company blog.

The company unveiled AllPeers near the close of 2005. Promoting AllPeers as a secure "private" P2P system, the company champions a system that, in theory, would be impossible for third-parties to spy on.

Interest peaked and then quickly died down shortly after the application was released. A quick glance at Google Trends shows AllPeers largely flat for a significant portion of its history, and the service also seems to indicate that AllPeers has been largely dominated by interest in other P2P systems.

Start-Up Takes Hybrid Media Approach

Excerpted from New York Times Report by Brad Stone

Several cable television veterans are putting their band back together and taking their act to the Internet.

Next New Networks, a New York-based Internet start-up run and backed by former executives of MTV and Nickelodeon, announced plans to begin a series of video-oriented websites — what the company calls micro-networks — on niche topics like do-it-yourself fashion, comic books, car racing, and cartoons.

The company’s founders include Herb Scannell, who as a top executive at Nickelodeon in the 1990s was responsible for introducing such enduring fare as SpongeBob SquarePants. Another founder, Fred Seibert, was the first creative director at MTV and was behind many of the channel’s early flourishes, like the "I Want My MTV" slogan.

The company also announced that it has received $8 million in seed capital, in part from the Pilot Group, a media investment firm run by Robert W. Pittman, who created MTV and later overhauled Nickelodeon.

Jonathan F. Miller, the former chief executive of America Online, who was a Nickelodeon executive in the 1990s, has also invested and will join its board. Other investors are Spark Capital, a Boston venture capital firm, and the European division of Benchmark Capital, which backed eBay.

Next New Networks plans to blend elements of old and new media into a type of hybrid entertainment that is different from traditional television and user-generated sites like YouTube. Its various web properties will revolve around professionally produced videos of three to eight minutes, which it plans to pitch to sponsors as safe and predictable places to advertise online.

Many of the programs will solicit contributions from their audiences, but the company will screen submissions before they approve the final product. The company plans to generate some programming itself while also identifying talented video contributors and bringing them into the Next New Networks fold.

It is starting with six websites, including Fast Lane Daily (fastlanedaily.com), which features a daily news program for auto enthusiasts, and ThreadBanger (threadbanger.com), which offers a five-minute weekly show with MTV-style anchors who discuss the homemade-clothing culture.

Mr. Seibert, the creative director, is bringing two existing video sites to the network: Channel Frederator (channelfrederator.com), a weekly program on animation, and VOD Cars (VODCars.com), a curated collection of video clips from the car culture.

The founders believe the Internet offers a programming opportunity similar to the early days of cable, which traditional media firms are not exploiting.

"The nature of big media companies is about incumbent brands and repurposing and refashioning their material for the web," said Mr. Scannell, the chief executive. "We have no incumbent brands. We’re a white sheet for creative people."

Mr. Miller, who left America Online last October under pressure from his bosses at Time Warner, cited the founders’ cable experience as the reason he is backing the company.

"To me these guys are returning to their roots," he said. "They are unshackled from large media environment where it is much more about what your quarterly goals are, and can go back to developing new networks and ways of communicating with audiences."

In part, Next New Networks is also challenging the idea that the chaotic terrain of sites like YouTube and MySpace can be a friendly place for advertisers.

"Video sharing is awesome, but advertisers are knitting their brow," Mr. Scannell said. "They want to know what they’re backing. There is a place for brands to deliver something that is consistent."

Some statistics may support those doubts. According to recent estimates by Bear Stearns, YouTube earned only $15 million in all of 2006. Google bought YouTube in October for $1.65 billion. MySpace, owned by the News Corporation, has also struggled to bring masses of advertisers onto the social network, where much of the content is unfiltered and therefore a concern to advertisers.

Though it is beginning with just six websites, Next New Networks has aggressive plans. It says it has the capital to begin or acquire 30 new shows in the next two years, each serving a specific hobbyist community. Possible new topics include pets and the world of ideas, as well as additional shows about cars and fashion. If the business flourishes, the plan is to expand to 100 programs in five years.

The company, with 13 employees, says it will experiment with various concepts but will not hesitate to cancel shows that are not attracting enough viewers.

"It is built into our emotional palette from the beginning that we have to be ready to kill the things that don’t work," said Mr. Seibert.

DCINFO Editor’s Note: Fred Seibert was the conference luncheon speaker at P2P MEDIA SUMMIT NY.

VeriSign Releases Industry Report

Excerpted from Web Host Industry Review

Digital infrastructure services provider VeriSign released on Monday the VeriSign Domain Name Industry Brief for the fourth quarter of 2006.

According to the report, which highlights key industry data for worldwide domain name activity, total domain name registrations reached 120 million, representing a 32 percent increase over the previous year and an eight percent increase over the third quarter of 2006. The domain name industry also continued to experience strong growth in the fourth quarter of 2006, with more than 11.6 million new registered domain names.

"With the number of global DNS queries increasing, the infrastructure has to be ready to respond," says Ken Silva, Chief Security Officer of VeriSign. "The network is changing, and with new services like voice and video migrating to the Internet and the proliferation of Internet-enabled devices, it’s important that the security and capacity requirements keep pace."

VeriSign publishes the Domain Name Industry Brief to provide Internet users throughout the world with significant statistical and analytical research and data on the domain name industry and the Internet as a whole.

European Ventures Revolutionize TV

Excerpted from International Herald Tribune Report

Free television from anywhere, streamed to your computer. That is the vision of two new Europe-based ventures: Joost, developed by the Scandinavian co-founders of the Internet telephone service Skype, and Babelgum, launched by the CEO of Italy’s No. 2 telecommunications company.

Both have begun test phases of their platforms – heading down a path that could revolutionize the way we watch TV.

Unlike the recent wave of Internet Protocol Television (IPTV), high-quality video delivered over phone lines through a set-top box to your television set, these new ventures are offering free video streamed directly over a broadband connection to a PC via P2PTV.

Joost, pronounced "juiced," is offering comedy, sports, music, and documentaries, and has recently snatched up a content deal with Viacom, which owns Paramount pictures and networks including MTV and Comedy Central – staking out a claim to the mass market.

By contrast, Babelgum, which is testing nine channels including movie trailers, animation, sports, and news clips, is going after the niche market by seeking to offer a broad catalog of specific content that potential viewers would have a hard time finding on their own. Central to their strategy is development of smart channeling, which will allow viewers to customize videos streamed to their computers based on stated preferences.

Both are using P2P technology, which allows delivery of huge files more efficiently, and will look to advertising to generate revenue.

But whether you adopt Joost or Babelgum in their early stages may well depend on whether you are a teenager at one with your PC or a middle-aged viewer accustomed to taking your video entertainment reclining on a sofa.

With these ventures still in their infancy, analysts say there is little question that television will continue its reign as the primary source of video news and entertainment for the immediate future. But they predict that soon – and estimates vary from three to 15 years – these ventures will converge with television in a sort of big bang of media delivery.

Out of the chaos, analysts forecast a broadcast universe of anything, any time, delivered on-demand to your television set via an Internet connection. But not quite yet.

"Although PC-based content definitely has its own place, especially for niche content, normal television will not go away," said Arjang Zadeh, a London-based Internet TV expert for Accenture, a technology consulting company.

TV’s dominance will be supported by the current trend toward high-definition television because "the best way of delivering HDTV content is to go through the normal satellite and cable delivery systems," Zadeh said.

Among the key obstacles faced by Internet TV ventures are the strength and diffusion of broadband connections, affecting video quality, as well as questions about the availability of "compelling" TV programming, according to a recent survey conducted by Accenture and the Economist Intelligence Unit.

Both Joost and Babelgum are focusing on professionally produced video, contrasting with the amateur footage that has fueled YouTube’s popularity. But because they are delivered over broadband, neither can provide the same quality guarantees of even the current batch of IPTV offerings.

Zadeh said he doesn’t think Internet delivery can compete with the quality of satellite or cable television until broadband speeds increase to an average 25 to 30 megabits per second.

Still, analysts see the market growing. According to iSuppli, the market for TV over the Internet is likely to increase to $2.6 billion by 2010.

"As long as they are computer-based, these types of services are going to be very, very limited. It is when those services reach the television that we are really going to see changes that will be revolutionary," said Mark Kirstein, Vice President for Multi-Media for iSuppli.

The revolution is not just technological – it’s also social, said Francesco Monico, a professor of media at the New Academy of Fine Arts in Milan. As individuals tend toward niche content tailored to their interests, television will loose its social and political power to influence society, he said.

Monico says television as we know it is already dead, and he has already stopped teaching it in his media classes because his students, who range in age from 19 to 30, simply don’t watch enough to get the references.

"Last week, one of my students told me that technology is for old people," Monico said. "They use the Internet in a relaxed way. They are part of the Internet. They don’t care about this kind of TV or that kind of mobile phone. They say, what we need is just the Internet."

Zattoo Cooks up More P2PTV

Excerpted from NewTeeVee Report by Jackson West and Liz Gannes

Just when you get jaded, along comes something you should have known about for months but is totally news to you. Like Zattoo, a peer-to-peer television company currently in testing in Switzerland, which streams live channels using P2P packet sharing.

Zattoo, dually based in Zurich and Ann Arbor, sounds a bit like P2PTV efforts we’ve recently reviewed such as UUSee and MediaZone.

And of course, there are the inevitable comparisons to fellow European contenders Joost and Babelgum. In Zattoo’s case, the core difference is that programs are not time-shifted, but shown linearly in the same way they are on TV, currently including the existing interstitial ads.

Zattoo, which is based on research done at the University of Michigan, doesn’t currently have any channels available outside of Switzerland, somewhat hindering our review. However, initial testers such as blogger Bruno Giussani say they’re impressed.

The service offers the equivalent of Swiss basic cable, said Zattoo spokesperson Doug Wyllie, with about 65 channels in English, German, French, and Italian. The current agenda is to expand throughout Europe for the next couple of quarters and move to Canada and/or the United States in the Fall. Wyllie said the startup has raised seed funding but declined to specify the amount or the funders.

Zattoo is currently free to all comers. The startup is exploring replacing existing ads with its own sales (in concert with the networks, of course), as well as subscriptions and payments. It will also try to recruit web-only content.

What TV Will Be

Excerpted from Blogspot Report by Stephen Simmonds

We should seriously expect to see a merger between TV and Internet. You will have simply an Internet-enabled television and a remote control. Rather than selecting a channel, you will access a web-page that will act as a channel. These pages will link to either content or other pages. Content will be television quality (high definition, by then).

There will also be new paradigms to redefine the televisual experience. These will provide a blend of the passivity of TV-watching with the flexibility of web-browsing. This might be, for example, some sort of hybrid of the three paradigms of TV channels, web pages, and DVD selection menus.

You might also find methods of choice that involve programming ahead, linking (shorter) content, and generating targeted random programming based on selected criteria.

There’s a lot of reasons we’re not there yet, but just as many reasons that we will eventually get to that point. The overriding driver is that people – as a broad mass – want that combination of passive spectatorship but greater choice, and greater access to content. We’re seeing a few baby steps towards this.

Microsoft, for example, has tried it with its Windows Media Center, but it’s going to remain a half-baked toy while hardware, websites, and viewing patterns remain unchanged. In fact, many people are already presenting Internet TV as a fait accompli, but they mostly tend to be varieties of watching TV on the Internet, whereas the endgame will be watching the Internet on TV.

Of course, the clearest barrier to this is that broadcast is broadcast, whereas datacasting is directed to a single receiver. The bandwidth demands would be absolutely crippling with current technology.

Babelgum is a product that has tried to solve this. It’s a variety of P2PTV or peer-to-peer television, where each user, while downloading, also uploads to other users. Bandwidth demands remain mighty, however.

The net has flexibility, and some rudimentary televisual content (few people watch TV-length video streamed from the web). Television has full-length content and broadcast reach, but rudimentary flexibility. It is only a matter of time before the technology is solved. Watch for the blur in the space between the TV and the computer.

LimeWire Installation Levels Grow

Excerpted from Digital Music News Report

LimeWire continues to gain in popularity this year, though onlookers are eyeing an imminent legal hammer.According to recent figures published by the Digital Music News Research Group, the LimeWire application is now found on nearly one-in-five PCs worldwide. Specifically, LimeWire was recorded on 18.71 percent of all computers, a bump of 3.23 percent over comparable figures last year.

During the month of January, the application expressed its dominance over file-sharing rivals like BearShare, Sharaeza, and Morpheus, all of whom fell below the 2 percent mark. Meanwhile, parent company Lime Wire LLC is soldiering through its legal challenge, and attempting to reverse a seemingly-sealed fate at the hands of the RIAA.

The drawn out legal process is an expensive one for all parties involved. LimeWire could become financially exhausted by the RIAA, especially considering the modest revenues that file-sharing applications generally draw. But LimeWire has been on the scene for years, drawing crowds with a cleaner experience that minimizes unwanted add-ons and nefarious surprises.

During a recent focus group panel in Los Angeles at Music 2.0, most expressed a preference for using LimeWire, seemingly the default choice for swappers. That popularity is becoming an ever-growing liability for the RIAA, which seems unable to quickly put the high-flier to bed. The RIAA first issued a cease-and-desist against the application in September of 2005.

The LimeWire installation figures are pulled from the Digital Media Desktop report for January, 2007, which tracks installation levels across thousands of music applications. The report can be purchased for $195 here.

Forget DRM, It’s the Music

Excerpted from CNET News Report by Charles Cooper

Pushing my vacuum cleaner around the living room last week, I suddenly did a double take. Chockablock with records, cassettes, and CDs, the wall unit across from me contained my 35-year-old history as a music consumer.

Truth be told, I did download a few digital-music files here and there during Napster’s heyday in the late 1990s. (Personal note to the RIAA: They’ve all since been deleted. I swear on my pet rock.) But I paid for most of the rest of my collection, down to the last penny. I bet you can say the same for the majority of the music-listening public.

So it was with a mix of amusement and disappointment that I read about the recent get-together for music industry executives, where the folks invited as talking heads took turns bashing Apple CEO Steve Jobs and offering pale prescriptions about how to fix what ails their business.

I don’t want to get into an argument about which generation created the best music. Personally, I’m partial to jazz and classical, though I can’t deny that I dig a lot of hip-hop. But is it possible – or even likely – that the falloff in music sales has more to do with the quality of contemporary music than with digital infringement? We obviously have an enormous appetite for schlock, but there are limits.

With all due respect to the high-quality bands working for a living, the studios have always chosen the easy out by shoving numbingly formulaic, bad music down the public’s throat. For most of the postwar era, that was the way things worked. Then came the Internet, which ushered in the revenge of the music buyer.

The studios shouldn’t be surprised at what happened. Throughout their history, they routinely targeted Top 40 titles at teenagers and early twenty-somethings. The irony is that these folks make up the demographic most likely to infringe music copyrights.

Instead of threatening to sue their own (potential) customers, why don’t they do more to monetize the growing demand for oldies and indie music? Fans clearly are willing to pay it. What’s so hard about finding a way to make that work? With a little creativity, the studios could find ways to better promote musicians who cater to these – and other – demographic categories, in which digital infringement isn’t the fashion. All the consumer wants in return is a fair value.

Instead, the industry’s best and brightest continue to look elsewhere.

For instance, they insist on clinging to DRM as if it were a lifeboat. Pardon the cliché, but that ship has sailed. The endless wrangling over Jobs’ call to get rid of DRM is so irrelevant. Same goes for their tired refrains, blaming the likes of you and me for their plight.

To wit: Ted Cohen, who directs music consulting for Tag Strategic, says the solution is "to get money flowing from consumers and get them used to paying for music again."

Really? It’s not as if we haven’t been paying all along. With all the high-powered MBAs in their employ, it’s hard to fathom why the music industry can’t move beyond finger-pointing and develop a more creative approach. I can understand the angst expressed by Cohen and his music industry cohorts about the future, but squeezing music fans for a few more shekels isn’t the answer.

These folks are still shell-shocked from the Napsterization of their business, which has suffered a 23 percent decline in worldwide sales the last six years. Blaming P2P technology has become the convenient undertaking of our times. But it’s useful to recall that people didn’t stop buying books or maps when the Xerox machine hit.

Customers will pay for worthwhile products, even if they can get free lower-quality copies. There’s a better reason to explain what’s gone wrong. It’s the product, stupid. Then again, maybe I’m simply showing my age.

Coming Events of Interest

  • National Association of Broadcasters (NAB) – April 14th–19th in Las Vegas, NV. Whether you’re making the transition to HD; looking to invest in new technologies like P2PTV; seeking new tools to create content and build revenue streams; or just trying to stay ahead of the competition, NAB 2007 is your essential destination. The DCIA is participating.

  • MUSEXPO – The 2007 showcase line–up for MUSEXPO, April 29th – May 2nd, at the Bel Age Hotel in West Hollywood, CA, has taken shape and is poised to be the strongest to date since the conference first launched back in 2005. Over the past two years, numerous acts have procured US and international recording contracts, publishing deals, synch–representation and management deals after showcasing at MUSEXPO. The DCIA will participate.

  • Streaming Media East - The Business & Technology of Online Video - May 15th-16th at the Hilton New York, NY. Streaming Media East is the only trade show dedicated to coverage of both the business of video on the net and the technology of streaming, downloading, IPTV and mobile video delivery. The DCIA is a show sponsor, and DCIA Member BUYDRM’s Christopher Levy will speak on the P2P for Large Scale Video Delivery panel.

  • P2P MEDIA SUMMIT LA – June 11th in Santa Monica, CA. This is the DCIA’s must-attend event for everyone interested in P2P. Keynotes, panels, and workshops on the latest breakthroughs. Held in conjunction with the new Digital Hollywood Spring conference and exposition.

  • International Broadcasting Convention (IBC) – September 6th-11th in Amsterdam, Holland. IBC is committed to providing the world’s best event for everyone involved in the creation, management, and delivery of content for the entertainment industry, including DCIA Members. Run by the industry for the industry, convention organizers are drawn from participating companies.

  • PT/EXPO COMM – October 23rd-27th at the China International Exhibition Center in Beijing, China. The largest telecommunications/IT industry event in the world’s fastest growing telecom sector. PT/EXPO COMM offers DCIA participants from all over the world a high profile promotional platform in a sales environment that is rich in capital investment.

Copyright 2008 Distributed Computing Industry Association
This page last updated July 6, 2008
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