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Rumors are flying high today about an iTune's $30 / month "TV Subscription" service. It would give users "all you can eat" downloads of current (and some past?) episodes of TV shows - playable your computer, iPhone, iPod, or even up on your TV. No need to pay Comcast anymore, right? Sounds great for users, but it does force the TV networks and cable channels into an uncomfortable and unwanted political mess. The content providers remain quite reliant on fees paid to them by the cable / satellite companies; it represents a large percentage of their overall revenue, in fact. Further, iTunes downloads would potentially erode their primary revenue stream: broadcast advertising. Why would NBC, Fox, CBS, etc risk any of that? While Apple would love to disrupt the TV industry as thoroughly as it did the music industry, by disintermediating the MSO's (cable co's), I just don't think it will be that easy. In the case of TV, unlike music, the content providers hold the cards and they have little interest in pissing off their existing distribution partners. That's ESPECIALLY true if the MSO's go on an expected content binge (a la Comcast gobbling up NBC). Story: http://mediamemo.allthingsd.com/20091102/apples-itunes-pitch-tv-for-30-a-month/#content-main
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Let's all say a collective "Duh!" If Comcast buys NBC, Comcast won't be allowed to remove NBC channels from TimeWarner or DirecTV offerings. "Duh!" If Comcast buys NBC, Comcast won't be allowed to delay airings of NBC shows on rival MSO offerings. "Duh!" If Comcast buys NBC, Comcast won't be allowed to limit online viewing of NBC content to only Comcast subscribers. Again, a no-brainer "duh!". Comcast's interest in NBC is not to gain unfair distribution advantage. It is to move up the media value chain, closer to content, diversify its assets, and acquire a "safer" revenue stream as cable TV increasingly becomes a "dumb pipe". Comcast won't screw up those objectives by pursuing clearly short-sighted and probably illegal content hording (which also severely limits the value of the content!). Here's the WSJ blog post: http://voices.washingtonpost.com/posttech/2009/11/a_comcast_buy_of_nbc_raises_sl.html Sent via BlackBerry
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Part One – The Revenge of Moore’s Law
James Fee made an eloquent case for why he made the leap to WeoGeo. While I would like to claim the powers of a Jedi knight, I think the true motivation of his choice was the hard economic realities of the spatial IT business. As James mentioned, the pricing pressures in basic spatial IT integrations are increasing, which are resulting in a falling revenue flow for many integrators.
The future of Spatial IT as a technology sub-discipline.
I think this is happening for many reasons, but here is the major one. Spatial technology is becoming more robust and easier to use for repetitive business functions, i.e. building a slippery map that shows points-of-interests (POIs), lines, and polygons no longer requires a specialized GIS technology stack. Just getting an organization’s information on a map that can be viewed internally (intra-net) or externally (inter-net) used to pay a lot of bills. The problem is that it doesn’t anymore. To a large extent, we are the victims of our own success at demonstrating the power of spatially-enabled business content and services.
In addition, for other types of higher-order analysis, display, and spatial enterprise operations, you don’t need a proprietary specialized database any more (i.e. Oracle Spatial 11g ) as Microsoft SQL 2008 and others built geometry and geography natively into their applications. And of course there are the plethoras of open source options that allow you to avoid proprietary databases all together (e.g. PostGIS). With these databases, one does not need the spatial data engine abstraction layers (e.g. ESRI’s SDE, which might be why they quit selling it as a stand-alone product) to expose your organization’s spatial data to those that need it or other applications to consume it. These spatially enabled databases also provide for some high-order geospatial analysis to be preformed without the need of desktop- or server-side products (like ArcGIS Desktop or Server), and in many cases without the need for GIS Professionals to run that analysis.
Part of this enhancement in the spatial technology stack could be laid at the doorstep of web advertising companies (e.g. Google), which are bringing billions of new dollars to bear on spatially enabling web services. Yet, I believe the trends were there before the release of Google Maps and Google Earth, as Oracle was putting spatial operators into their main release in version 9 in the early 2000’s. Innovations in web mapping systems have been occurring at an ever-increasing rate; and we in the spatial field are just the latest recipients of the impacts of Moore’s Law on complex business services. As the spatial IT stack continues to evolve, one should expect the distinct separation between the “GeoWeb” and the “Web” to become increasingly fuzzy, with the distinction eventually becoming irrelevant.
What does that mean for the specialized services of the spatial technology integrator? The simple mapping stuff will be just part of the web programming stack, with little separation between web programming and spatial web programming. Spatial technology integrators will have to evolve to create more value from enterprise technology operations, where spatial is just one part of their enterprise project. This can be successfully done, and one only has to look at Dave Bouwman’s group DTSAgile (which is just kickin’ it) to see that it can be accomplished.
However, the competition will be fierce because the specialized spatial IT stack will evolve into the plain vanilla IT stack, with more competitors and easier-to-use technology. This will mean much lower margins per spatial project; and that is just the way of the economic “force”. In addition, I have been hearing stories of increased competition from specialized software vendors like ESRI for consulting revenues on increasingly smaller and smaller projects. This suggests that the integrators will be squeezed from multiple directions, setting up the potential for a shakeout for integrators in our industry.
More Wall Street jabs at Hulu, and specifically at CEO Jason Kilar. Check out this scathing excerpt from the Media Post story below: ------------ "The problem is, the 27 year-old geniuses (running Hulu) have run amuck," Needham analyst Laura Martin says. "They are clever, dynamic and understand social networks, and they go, 'oh, let's get on the Web, let's innovate. It gives us lots of flexibility on what to do with the content,' and then they steal from the guys spending the $3 billion dollars and they don't do anything about it." Martin says it's not difficult to take a $3 billion product and give it away for free, then pat yourself on the back for attacking millions of viewers. --------------- Ouch! But not necessarily untrue. Story: http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=116559 Sent via BlackBerry
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With over 300M consumer accounts and adding 5M new accounts EACH DAY, Facebook will likely reach the 1 BILLION in 2010. It is therefore safe to assume that the vast majority of Comcast, Time Warner, DirecTV, and Dish subscribers will have a Facebook account. Without any doubt, Facebook has now become the "identity gatekeeper" of the web. Facebook is the defacto openID provider. As such, there ought to be an easy way to leverage Facebook to solve TV Everywhere's authentication challenge. Imagine if we could link our cable / satellite accounts to our Facebook accounts. A couple clicks using Facebook Connect on the cable provider's web site is all it would take. Once a link is established between DirecTV and Facebook, for example, DirecTV could provide Facebook with that user's content access rights (such as: user has rights to HBO content but not Showtime). Here's a back-of-the-napkin use case of how it might play out:
- Let's say I am a basic Comcast cable subscriber and have a Facebook account.
- I sign into Comcast.net with my Comcast-assigned username and password. I am prompted to click on a FB Connect link and then the "Authorize" button. Comcast sends my cable TV account info to Facebook, which Facebook stores as part of my Facebook profile.
- I then go to Yahoo and select the latest Simpsons episode to watch. Yahoo's TV Everywhere "enabled" video player (see explanation below) prompts me to sign in via Facebook Connect. I click "approve" and Facebook sends the video player my Comcast profile, which tells the video player what I'm eligible to watch. The player stores my cable profile info via a cookie and begins streaming the episode. When I try to watch a HBO content, the video player knows to block the stream.
- The above example could take place on ANY website that uses a TV Everywhere "enabled" video player. This could simply be a "chromeless" Flash-based player with Facebook Connect implemented and logic to interpret content provisioning based on cable account profiles.
- Using Facebook Connect for authentication, any site would be able to present TV Everywhere content and (almost) every cable subscriber would be able to participate after only a few "I Authorize" clicks.
OK, I know the above may be overly simplified, but hopefully you get the gist. The big question here is whether the MSO's would be willing to share any customer account information with Facebook. To make TV Everywhere work easily for consumers, I believe they will need to share.
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This is my uninformed prediction, but it would be a bold move, backed by the National Research Council since 1980. It is the kind of game changing move that would help solidify their position as the number one search engine for localized business advertising.
A Halloween Treat - Gazing into Google's Future
I alluded to this possibility the other day when I looked at the possible importance of Google Map’s new parcel data layer and suggested that some mapping content that is currently very valuable will be given away for free in order to support a larger location-based advertising market. The release of their free navigation application for Android 2.0 seems to back these thoughts and suggests that mapping is just a means to an (advertising) end for Google. I believe the mapping community should get ready for more game changing moves.
Forbes also made the “free navigation” connection. It seemed pretty consistent with their overall strategy of building on their strengths to leverage into the localized search and advertising market. This local advertising market could be worth $40 B in new revenues to the industry. Since Google has ~70% of the current search related advertising market, a back-of-the-envelope estimate would make it worth ~$28 billion in new revenues, doubling their current revenues. Google has some room to make investments to secure this local search business that others cannot make, and they seem willing to push their advantage without regard to previous players.
The Forbes article specifically mentions a price per device for turn-by-turn navigation data of $5 – 10 per device. Worldwide mobile phone sales are on order of 300 M units, so if Google wanted to “own” the localized search and navigation space, it was going to cost them billions for the navigation data. So it appears they made a classic build vs. buy decision and came down on the side of build. We can argue about whether Google will be a “trusted” data source for navigation. However, the very fact that three very prominent “geonerds” in our industry are fixing Google’s maps for free suggests that there may be some value to the crowdsourcing of mapping data (see also – Open Street Maps).
The key to building a successful localized search and advertising service is the accurate navigation and business listings (and here as well). This requires highly accurate and timely cadastral data. For Google to be dominant in this space and double their revenues they have to solve the problem of accurate parcel data on a national scale.
The desire for a national cadastral map dates back to 1980 with the release of the National Research Council report, “Need for a Multipurpose Cadastre”. There are lots of issues as to why 30 years later we still do not have a national parcel map; and I believe some of these include the “ownership” and licensing of the localized parcel vectors as a revenue source for municipalities.
If Google really wants to create a national parcel map for navigation and business listing purposes, they will need to go through municipalities. They could obviously buy the data from Pitney Bowes or 1st American. These companies have built relationships with these municipalities over the years to provide high-quality cadastral data at the local level, which these companies then aggregate to provide a national-level geo-coding product. However, it does not appear that Google has bought their current parcel data from them; and considering that Google is leaving the existing navigation data providers NAVTEQ and TeleAtlas, it would seem that Google plan may be to go directly after the parcel data without the middle man.
So how do they get the parcel data directly from the municipalities without worrying about individual licensing with the 10,000s of local, county, and state governments? One approach is to commit to creating a national cadastre map, and then open source the project by giving yearly updates to the USGS National Map. What municipal GIS professional is going to argue against opening up their data to their users through an open source cadastre project that is backed by the NRC, federal government, and Google?
Google would still run the use and updating of “Google’s” parcel data via its APIs. They would still have the easiest and most recently updated service to drive their navigation and business listing services. They could sell “geo-services” directly to local and federal agencies based on their cadastral maps, which would save government agencies millions a year in maintaining cadastre data in databases that have little interoperability, i.e. a new business line for Google Maps Enterprise. It would also bolster their “Do No Evil” marketing, and perhaps keep the regulators off their backs (re: Microsoft in the 1990’s).
And oh-by-the-way it would speed their creation of a better turn-by-turn routing system and business listing service that would help them dominant a new $40 billion dollar localized advertising market. They could spend $1B on creating a self-perpetuating National Parcel Map, and still generate an enormous ROI on the expense.
Avner Ronen, Boxee's chief executive, shares his thoughts with the Washington Post about the Internet's slower impact on TV compared to its media cousins, music and newspapers: http://voices.washingtonpost.com/posttech/2009/10/the_web_has_overhauled_newspap.html My theory is more basic: the larger the file size (in megabytes), the slower the erosive impact of the Web on traditional business model related to that media. Music was hit first and hit hard because the MP3 file format squashed songs down to just a few MB's each, making it super easy and fast to spread peer-to-peer on the Web. Similarly, text and image-based news content is easily emailed among friends, posted on blogs, etc. Classified ads, once the cash cow of newspapers, have naturally migrated to free online listing services like Craig's List because they're free and because they've attracted a massive demand market (same with eBay). TV content is very different, of course. Much, much larger file sizes for a half hour or full hour episode, coupled with a much shorter shelf-life for a TV episode (compared to a song). TV executives are taking advantage of this naturally slower business erosion to be more thoughtful on how to best embrace and capitalize on the inevitable transformative power of the Web. Sent via BlackBerry
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Hulu CEO Jason Kilar defends the economic plan for Hulu:
Hulu CEO Jason Kilar responded to TV industry critics who complain that Hulu is undermining current models, saying they haven’t seen his business plan. Talking to B&C after the closing session of Denver, Colorado, cable conference CTAM, Kilar said, “We’re very bullish about the future of Hulu, we’re well ahead of plan.”
He wouldn’t comment on whether the site was profitable but added, “I like to say that I’m a capitalist,” adding “We don’t do this overnight.“ Hulu recently signed an upfront deal with MediaVest, which transferred a couple of million dollars from the media agency’s TV budget to the Website. Hulu is also exploring subscription areas of its service, which provides network TV content without charge to consumers.
Read full story here: http://paidcontent.org/article/419-kilar-hulu-isnt-giving-it-away-for-free/
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I love Pandora. It gets very close to the perfect, utopian radio experience: fresh selection of music you love with amazingly accurate recommendations mixed in. The more you use it, the smarter it gets about what you like. And it's portable across almost all devices. But, like Hulu, I'm concerned they don't have a sustainable biz model yet. They've secured the rights to stream practically the entire commercial music library in exchange for giving back a percentage of revenues to the content providers. They make money from selling display ads in their apps and (supposedly) short audio ads (I've NEVER heard one). This is similar to Hulu's model for TV content. Pandora also has a premium account that gives paying customers more control over their music stream and other enhancements to the experience. Leaving their premium upgrade aside for now (I don't know how much % revenue that brings in for them), Pandora can't possibly make much money from their current ad products. I can't imagine how they will keep the content providers happy AND retain enough margin above streaming costs to build a large profitable business. They have the same fundamental problem that Hulu has: consumers have much less tolerance for commercials in on-demand content environments (or pseudo on-demand, like Pandora) as they do in the traditional, force-fed broadcast environments (radio and broadcast TV). As a result, Hulu makes just 1\3 the ad revenue per viewer episode of The Simpsons than Fox makes via broadcast and cable. Now I don't know this for sure, but my very strong hunch is that the same dynamic is at work for Pandora, if not worse. Display ads in streaming music apps? Come on! People plug Pandora in and walk away. No ads seen. And audio ads? Again, I have never once heard an audio ad and I listen to Pandora almost every day. Even if there were abundant audio ads, Pandora would still run up against the same problem Hulu has in dealing with consumer intolerance for disruptive ads in streaming content. I've probably listened to 1,000 songs streamed on Pandora and have never clicked on an ad or even heard an audio ad. That's not a business model that I'd bet on. Like Hulu, Pandora will have to go with a subscription model. And I will gladly pay for it!
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