BUILD IT AND THEY WILL COME?
In a post titled "On emergent Internet Pulp Fiction and Distribution Networks", May 1 2005, I highlighted non-profit Open Media Networks (OMN) as one of the new and many distribution networks that emerging to provide viable, efficient, and economical video distribution over the Internet. One of the founders of that organization is Mike Homer (formerly of Apple, Go, Netscape and AOL), who is also the chairman of Kontiki, a provider of platforms for peer to peer internet content delivery.
Business 2.0 (subscription required) has an interesting interview with Mike regarding both efforts. One thing that becomes clear reading the piece is that much of the technology and economics around video distribution have almost been worked out to be doable and affordable by mainstream consumers. Mike notes:
Say you have a TV show that's 500 megabytes, which is typical. It costs anywhere from 20 to 50 cents to deliver that from a traditional website. Well, if you want to charge $1.99 for that show, the delivery cost represents a significant part of what's left after the producer's royalty. OMN can deliver that 500MB package for around 2 cents. The cost of delivery is just radically lower.
The enabler for the OMN service is Kontiki's "grid network" technology as Mike describes it:
I call it peer-to-peer plus. In a peer-to-peer system, one PC delivers content to another PC. In newer systems like BitTorrent, multiple PCs deliver the content -- but it's still only PCs. The main "plus" of grid delivery is dedicated servers. That collection of PCs and servers gives you a network -- a grid -- that ensures reliability.
The major gating factor now seems to be, surprise, surprise, the availability of lots of affordable, and LEGAL video content. As Mike says:
The thing that gates it is the availability of popular content. It's exactly what happened in the music industry: No one really wants to be first out on the Internet. It's time either for Steve Jobs to show up with an iTunes for video or for somebody else who has major popular content to make it available. I think once that happens, the floodgates are open. When iTunes came out, after that there were 20 music stores in 20 months.
Well, if the industry is waiting for Apple and Steve Jobs to do something on the video front besides Google, Yahoo!, Microsoft's MSN and many, many others, it may not be too long a wait. Anticipation is high after the most recent upgrade to iTunes, version 4.8 now allows video files to be displayed and played via the iTunes store (click for larger image).
The date to watch is June 6th, when Steve Jobs kicks off Apple's Worldwide Developers Conference in San Francisco at 10am. We may get an announcement on iTunes for video, and perhaps even the long-awaited Apple Motorola iPod cellphone to watch videos on...gee, I'd better set my alarm clock now on my soon-to-be eBayed iPod Photo...
Michael, I'm curious as to how Mike came up with that number. Essentially, you can seed as much content as you want over any pipe. The initial download might be painful, but one the content is seeded with a few people, Bittorrent begins to take care of the rest. The $0.02 seems arbitraty. Frankly, my big problem with OMN's business model is that they're going after the studio content. Studio's don't want to open up their archives yet (for a variety of reasons, most of them silly). It's going to be a hard slog to make that happen. Meanwhile, the rest of the world is moving towards open ad supported models. I think they might get stuck in the middle, neither being able to deliver on the bredth of studio content necessary to drive participation, nor the citizen's media content that is going to be a big driver of participation faster than most people realize. I wish them luck, but the model is a bit of a kluge in my mind.
Posted by: Alex Rowland | Friday, May 20, 2005 at 11:39 PM