I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.
One of the early digital lifestyle books that had an effect on me was Being Digital by Nicholas Negroponte, back in 1995. One of his big points was the value of bits. Some bits are very, very valuable.
That concept has always fascinated me. The latest update of AppleTV provides a very relevent example.
With a New Zealand iTunes account, I can now see TV programs and HiDef movies available in the US.
But if I click through the screens to buy that US TV show I get this message.
The bits that stop me downloading US TV shows are very high value bits.
Somewhere, maybe at Apple in Cupertino, there is an iTunes content administration application where someone who gets paid $US40k can click on a box and deliver the latest TV shows and movies to my lounge.
It might be a single check box.
Those are high value bits.
Our entire broadcast TV industry is protected by those few bits. It’s like a piece of rice paper providing a dam that holds back a raging river. Those bits are holding back a torrent (pun intended) of content and new business models.
AppleTV provides a distribution mechanism direct to global consumers. The terrestrial and satellite networks are bypassed. Significant because they were the gatekeepers for broadcast content. That infrastructure is no longer required as content can be sent down our commodity IP networks.
Since MySky the amount of TV I watch live is minuscule. Anyone with MySky is time shifting and quickly experiences the freedom and mindset change of not being tied to your TV at a certain time.
So I wonder a few things.
1. What commercial agreements protect the status quo? I would imagine that the movie studios sell content to local TV networks with deals probably done just a few times a year. Now that a broadcast network is not required, do ISP’s start bidding for the content as well. Could some other entity in NZ bid for the content rights?
2. What if the studios stopped suppling national TV networks and just billed direct?
3. Under a broadcast based model advertising was required. When users pay per show is advertising still required? Perhaps shows with ads are free? What ‘inject local advertising’ players will appear.
4. What of the future of local TV production. Perhaps it is in even better shape if they can sell direct globally? Who do they talk to at Apple to cut a distribution deal? Are the shorty street people up at 1 Infinite Loop now?
5. Who wins as broadcast TV is disintermediated? Is it the ISPs? Media companies? Studio’s?
What do you think?
Those sure are some high value bits.
blog
I think point three is an interesting one.
According to Wikipedia (that bastion of authority) the two-part pilot episode of Lost cost “between $10 and $14 million” to produce, and “Part 1 earned a ratings record for a pilot episode, with 18.6 million viewers.” If you do the math, that works out at about 54 cents per viewer.
With Apple selling movies in the $2-$5 range (which presumably is along the same lines as what they charge for television shows), that leaves quite a tidy profit margin, even if the studios take a significant cut.
Why do we need advertisers in this equation? Because the economics of these things changes when content stops being free. I’m not sure I’d pay for Lost (either with ads or without), but I’ll tolerate ads to get it for free. Potentially, Apple could move into the advertising business, having advertisers pay them, they use that money to buy the rights to distribute shows from studios, which they distribute (for free, to a global audience) over AppleTV/iTunes.
As someone who makes $NZ40K (did ya see what I did there?) I’d be happy with getting Lost that way, especially if it meant getting it at the same time as American audiences.
1. Anyone who wants to stump up the cash can obviously reach an agreement buy/distribute the shows.
2. Not much fear of the *major* studios going direct, they’ve so far been absolutely behind the curve with understanding the changing market/internet. So far those that have done this have been releasing low quality embedded versions. But they will all likely embrace at some point distribution AppleTV and it’s competitors.
3. Depends on what they pay. Watch some studios and AppleTV clones try to foist it on the consumers anyway. Eventually something will ballance out where a certain amount is acceptable for a reduction in price. The bigger argument will be around DRM surely and what you can do with your TV show once you’ve bought it.
4. Local content, who’d pay for it? We only watch it because it’s forced on us at prime time due to NZ On Air funding. NZ On Air can still pay to produce them, but probably less people will watch them. But in that regard, maybe local content benefits from having to compete against higher quality overseas content (i.e. is forced to get better).
5. ISPs, Telco’s, Apple with AppleTV, AppleTV’s competitors, the studios. The consumer because it’ll drive bandwidth increases which benefit other applications. The economy, for the same reason.
Who is out of money? Maybe the Government for putting money into Freeview, and anyone else who stumps up for a new aerial or Freeview set top box.
Finally, watch as people start blaming Telecom because their interwebs is slow, and it’s all Telecom’s responsibility to give free interwebs. /cynic
“I would imagine that the movie studios sell content to local TV networks with deals probably done just a few times a year.”
Well, here at BBC Worldwide, they do EXACTLY that. Normally, this means 500+ VCR’s (or DVD players) and TV’s.
This year it’s a WPF app, a LOT of 1000baseT cables and fibre, 500+ PC’s, and some servers. The app (done by a kiwi, no less :) ) is quite impressive - tho really, it’s rather like AppleTV or FrontRow, but with BBC media (mostly all in HD) and no internet connection.
From there, the buyers mark what they want, and pay BBCWW for the rights in their country - or whatever deal they broker. I imagine they can do it more than once a year, but this is the one-off event where they all - or most of them - come, kick back in lovely Brighton, drink lots of coffee, and watch a LOT of TV.
In the US, the major networks (Fox et al) make it, and distribute it to the local affiliate, which is a private company, but they run the local Fox channel. They do their own news, but otherwise, they are just “Fox”.
As for local content - I can’t see why NZ couldn’t put video content on itunes, just as Loop Recordings in Wellington does with audio (they are one of the NZ aggregators - so maybe get them one the phone and ask them!?). The problem isn’t that they can get it on there - the problem(s) is that there is NO video outside of the US (UK has a few small bits, but nothing on the scale of the US), and it would really require some serious bandwidth or caching in-country.
Apple does this already with the Akami edge server network, but as all the NZ telco’s charge by volume, not bandwidth, it’s kinda prohibitive for most people. Again with the free local data…..
Personally, I dont own a TV. I watch CSI (when new epi’s come out) via itunes. Lost via (ahem) another network, and some local stuff (Primevil, Doctor Who, Torchwood) via streaming from the local providers. Thats enough for me - I dont need more TV taking up time.
Now there’s some good questions.
1. Nothing stops anyone bidding for content - rights have been broken down into different channels - TV, internet, mobile. You could bid for rugby rights if you wanted - it’s just that you’d need to show that you can reach the audience that the content provider wants. If you can’t they charge you more. It’s also used by the broadcasters to push rights up - Sky bid for lots of Free to Air last year apparently pushing up what TVNZ paid for properties like Desperate Housewives. ISPs bid for content - just for Internet rights. Rights also come up in different windows - all of Sky’s sport for example comes up on a progressive basis with renewal every few years.
2. Studios and TV networks are thinking about how to manage this - there are some models that might emerge. Studios going direct to customers, TV networks supplementing with customer created content. But basically both are freaked out - they are worried if they can make the same amount of cash as they can now. They won’t if they operate in the same way. Also there is a good symbiotic relationship there - studios are good at content creation - networks are good at monetising. Every now and again you get a Peter Jackson who can do both. Rare but very successful
3. I reckon this is where there is the opportunity to make some money - go into customer paid content, then supplement with ad funded when you get a big enough audience. Flip between the two to maximise margin. Problem is with some of the TV guys (ie TVNZ) is that they use a new business model for the internet (tried to be too smart) when free and ad funded would have been the way to start. Jason has changed this thank goodness
4. There are a couple of local producers who are doing this - Gibson Group are a good example. SPP should be selling Shorty to itunes locally - killer proposition
5. On current models everyone loses - the key is who can marry audiences and content with a business model. Commodotised internet opens that up to all players. Locally needs a couple of players to take risk - someone with content and someone with an audience
Some high value bits that have declined in value
1. Window from cinema release to other formats- used to be a year now a matter of a few months
2. Window from prime time to internet - used to be months now 24 hours
Some bits have increased in value
1. geographic windows (your apple example)
2. electronic programme guide - this is *ultra* critical if you want to make time shifting and place shifting work
3. Format you bought / accessed content in (this will be zeroed out if government goes into proper fair use )
Basically we are a geographic anomaly which is why SKY is churning out cash IMHO
Interesting
I too have been exploring my Apple TV take 2
Its scary what we’re missing
Not just content but also opportunities!
There is a whole revolution we’re not even seeing here!
The only truly “local” content is soon going to be local news and local sport
Anything above that is going to be owned by someone!
TVNZ is I think already worthless, it doesn’t control enough content
SKY is better place because it controls customers (at the moment) but it needs to get a lot smarter
If you go into the Podcast or You Tube sections of Apple TV there is already lots of great content there!
A year ago I radically changed my viewing habits when I discovered the long documentaries that were available on Google Video.
But that was nothing compared to my Apple TV and seeing first hand what convergence of the real (I’m on a 100Mb/s CityLink connection) internet and Television really looked like!
I was in the room at the first Netscape developers conference when Macromedia (remember them?) first demoed “Shockwave” with a postage stamps sized video of “Deep Forest”
People cooed how it was the future of Television!
As usual it was the timing that was wrong!
The lesson for me is that any “channel exclusivity” will get bypassed
The real deal is the direct sale
I’ll subscribe to some things (the Super 14) and buy or rent others individually
SKY need to focus on what they really want to do otherwise they will get bypassed
(they actually do get this with the way they want to protect the IP tied up in their EPG)
But the Government need to get FreeView out there too (as in make IP streams available - now)
Then you get back to our dire infrastructure - who really thinks 10-20 Mb/s by 2012 is going to be that useful?
Fibre now!
The rest will follow
C
Mate - I’ll just say it simply. Don’t bother fighting the system - these things will work themselves out in time.
For now, get a US credit card. F’k it - get a US debit mastercard (that’s what I have) that let’s me use the US Apple Store all I want from my apt in Sydney. It’s not IP based restriction, sheerly CC billing address.
Rod
Check out http://www.hulu.com
Perhaps a start of the disintermediation you long after
Ben
See also:
http://www.joost.com
for a legal alternative (favourite bit: the dot that fades at shut down)
and http://www.joox.net for a completely illegal alternative that’s just so damned easy to use.
It’s already here and the TV networks don’t want to know/won’t do anything about it (I’m talking about NZ networks here). They blew their last chance when they decided to hold back the last four episodes of The Sopranos to fit their schedule instead of mine. They blew it again when they failed to screen Battlestar Galactica in a timely fashion and once again when they held on to Torchwood for aeons. Let’s not mention Top Gear.
It’s over. They’re busy guarding the gate while we’re all jumping over the back wall aided and abetted by the TV producers themselves.
1. Yes
2. The World Would Surely End
3. “Who is Going to Pay for all this,” is the most often asked Question in TV
4. Local Production is in general more important than any one realizes. However it should come as no surprise that only locals want to watch it, in rather small numbers.
5. There is a pot of money it is finite, the question is if you start to slice thinly will anyone win?
It is all so simple isn’t it? Anyone can bid for the rights to content but in the end the bidder has to pay for it. Very few business models can turn a profit with the numbers involved. Do we need terrestrial networks, the “big” shows only work on Network TV, Live Network TV. That Network need not be through the traditional means but live events need huge live audiences to work. Idol, Dancing with The Stars are shared experiences mass delivery is exciting.
There is another aspect to live network TV, it is a community, it is a tribe, it is like all brands a love experience, a place of belonging that has a unique feature. While I was watching my entertainment shows they were broken into, “live” telling me of events that united the world - 9/11, Diana’s death, the London bombings, Madrid. I cannot experience this connection through Facebook or utube in the same way. In the uk in times of national strife people actually turn to the BBC or Sky so they can have exactly the same experience as the rest of the audience, there is no confusion, you were there and can talk within the same terms of reference. In the future if we have individual experiences in small groups we actually effect society in a way that takes us backwards to a more fudal communication system.
Funding is an issue with huge misconceptions. $2.99 for a movie or $1.99 for a TV show. Great, in the UK I pay 36 pence (about 70 cents) per day for 24 hours of shows on the BBC and with no adverts. Show me better value legally - I’ll bet you 24 hours of quality programming you can’t. Why would I want or expect any one to pay such a huge amount more.
Sure My Sky, Tivo etc are great but I still want to watch idol before anyone tells me about it at work the next day.
You tube is great but be honest it has its limitations. Searching for hours to find anything of substance.
Finally we are living in an age of choice, it is brilliant but I have one huge worry. People will only watch things they want to watch. In the days of one channel we were challenged, to horizons we may not have peeked towards, views we may have hidden from and opinion we may have opposed. Today we can chose to only watch look and listen to the things we like. It’s fluffy, it is comfortable but in the end it will diminish our experience of the world. I hate natural history shows I don’t make an appointment to view them, preferring star trek or deep space nine, but I watched survivor or Attenborough, faffing around with farting gorillas, because there was nothing else on and no utbe and my life was enriched for the experience. Sure give your audience what they want but there is an old saying in TV land, if only they knew what they wanted.
In short content is king, entertainment is a shared experience look at a U2 concert! Facebook is all about belonging its what humans crave. Solo individuals rubbing sore eyes, watching a screen of recorded material for hours on end is the profile of a porn addict.
What ever networks we watch or how our entertainment is delivered, I will venture to suggest we will all want to watch the same as our friends, neighbors and colleagues at around the same time.
We are left only one unanswered question, How are we going to pay for it!
Jonathan Glazier
Media Consultant
Yet another comment but this is interesting
Television is Tribal
When others Zig, Zag.
Clutter, is the buzzword of the decade and finding white space is the solution.
TV is no longer driven by demographics and neither is advertising. My partner is a household shopper with kids, she is 41, my assistant is a household shopper with kids and she is 24. Apart from nappy brands what else do you think they have in common?
I am happy to know lots of 50 pluses, with views and opinions far more progressive than my 18-year-old goddaughter, who is more traditional then my 82-year-old mother. The assumptions we make are killing our industry, they are arrogant, backward and with no basis in a world we have forgotten how to know.
TV networks and the programmes they broadcast should no longer be defined by their USP, unique selling point. It is a buyers market and we, the producers and executives no longer decide what our networks or programmes are, the customers do. What we offer them and how we offer it, defines our brand, a brand is a viewers gut feeling about a Network or Programme.
UBT is the new USP, the only remaining concept is “uniqueâ€. UBT’s are “unique buying tribes.” “If I watch this channel or programme,†they ask, “what does that make me?†Tribes no longer seek features or benefits (clutter) they look for tribal identity.
What do we, the TV professionals, do to counter the death spiral of TV as we know it? We add to the clutter by selling harder, our beloved networks spend millions to tell us what they are. People don’t like one-way conversations and people do not trust advertising. What do we do? In the Words of Tom Peters, “We don’t just flog one dead horse, we flog two and then three.†Our customers simply turn us off, or over, and once they join the ever-increasing tribes of You Tube, Online-Rentals, iTunes, or Apple TV users, they are lost to us forever.
Where is the White Space in all this noise? Where do we aim? Where do we look? Should our programmes and networks be niche?
“Good and Different†will always test badly in Focus Groups. People like “Good but Not Different,†talent shows are a classic example of “Good but not Different†so are CSI, CSI.Miami and CSI.NY oh, did I mention SVU, NCIS, at least Cold Case and Without a Trace are not acronyms! But have you seen the BBC Drama “Life on Mars?†A policeman goes back in time to 1973 to re-live the classic Sweeny times, sounds Not Good and Not Different? Is the time travel mad? Or is it mad enough to be good? Turns out it was pretty good, winning an audience and a BAFTA. Was it a demographically defined audience? No it was a progressive and then a new mainstream audience, a very big broad audience.
In the UK the idea that a schedule could be pulled and taken over by a daily prime time strip was derided by all. It was Different, very Different the problem? Was it different enough to be good? Over 3 days it launched “Who wants to be a Millionaire†and later, “I’m a Celebrity, Get Me Out of Here,†this time over 14 daily prime time slots. It was Different and it was Good. It found the white space, the unique part of Network TV that can’t easily be created elsewhere a live shared Experience, you couldn’t even record it, if you missed it, you missed out because people talked about it the very next day and those who didn’t watch couldn’t join in, people had to join the tribe.
Now find some white space, create the tribe and Zag while others Zig. (Inspired by Mart Neumieir’s fantastic book ZAG.)
I’m gonna post this anonymously for obvious reasons..
I do try to buy content legally, online, or via fatso or whatever. But the reality is, that when seemingly abitrary and pointless rules of ‘regional distribution’ get in the way of watching that latest, greatest movie or tv show or whatever - i do reach for the bit torrent.
The danger to the studios is that when they make people find out how to get the movie the ‘illegal’ way - they’ve already figured that much out and may not come back to iTunes the next time.
Like you say, its a dam with little rice paper wall.
A eminent German economist once said to me that people want to pay for their entertainment legally, they feel better and they want the real thing with quality assurance but there was a line. Once the consumer felt ripped off they would think nothing of going illegal - totally guilt free. The trick is to find the line.
Jonathan Glazier
Media Consultant
“What commercial agreements protect the status quo?”
Ooooooh nooooo that is a can of worms, and a core problem. It’s an incredible costly morass to work though which creates a huge barrier of entry for little markets like NZ.
Just think when tv and movie distribution started out, and the way the world was then. Now think of exclusive long-term distribution channels set up to match that. Add large doses of ambiguity and uncertainty from poor contract wording and generations of new technology. Mix it with rampant online piracy today, and understandable fears from media owners about protecting their assets.
Tv broadcast rights are not the same as music are not the same as performance are not the same as rental are not the same as showing a movie.
Now try to untangle relationships with a dozen interest groups, to justify downloadable movie rentals for a few dollars each, in a small market.
It will change in time but it’s far from simple, and it’s not really anyone that’s to blame. It’s that the industry has tied itself in knots over the course of several decades.
For now, really, it’s not really soooo bad to have to go to the local video store to rent a movie. Assuming the store is still in business.
[...] and Akami has servers at all the major Telco’s in New Zealand - the game changes for music, tv, movies, and anything else, really. It might get the ISP’s back at the peering table, which [...]
We are niche ISP, we’re into the student market and also apartment buildings, fibre sites using open access networks and ethernet service to the desktop.
For the last two years we have been trying to find a partner to work with who could provide us with access to content and billing. Were too small to talk to any studios, but we have talked to Sky, and others about getting this sorted.
Last year in November we were close reeltime.tv in Australia they have subsequently failed as a business. Our ambition was to get content hosted via the peering points so or customers could get immediate access to locally served content…hell we didn’t even want any money on the content theres not much there, we just thought it would a great point of difference that we would not count for any data traffic, and it would be cool to be there.
We get two licence / DRM issues back normally - “we can do this but you need a Setop Box, we not licenced to sell the desktop directly” and the second point is around the “internet”….as unbelievable as it would seem I think the media houses really don’t have clue about the concept of peering….how else is this going to work??
What I can tell you is that there are a heap of people who are happy to pay for legal content - they just don’t have the mechanism that works best….
Any suggestions would be nice.
[...] Meet some high value bits [...]
Picking up on the Apple TV Take 2 blog and many of the IT global player’s future direction around SaaS, have you seen this new disruptive video on demand technology just released from Pacbyte, an Australian owned company?
True video on demand is finally here. This technology allows users to stream uninterrupted DVD quality content via a 1 Mbps connection within a minute or so of hitting the play button. To the best of my knowledge this is a world’s first.
For a demonstration, check out http://video.pacbyte.com
You’ll need:
- at least 1 Mbps of bandwidth (wireless in fine)
- the VLC media player
- the latest version of Java
They have a couple of freeware movies available to watch in both standard and hi definition. The later will require up to 3 Mbps bandwidth. This service can be provisioned to user’s televisions via a set top box.
No longer do users require copious quantities of bandwidth (if they can get access to it) and expensive plans to stream movies, nor do they have to wait hours for their content to download over more mainstream broadband networks.
Imagine the possibilities this technology would provide for the likes of Apple, Google, Yahoo, Microsoft, Sony, Amazon, etc, etc. If one party got a hold of it exclusively, they’d effectively have a global monopoly on the provision of true content on demand……..providing instant gratification to the masses, and clipping the ticket on both hardware and content along the way.
Imagine the impact to Apple alone…….on global hardware sales of Apple TV, iPhone (3G), iTouch, Mac Mini , iMac, etc They’d have a key differentiator that no one could compete with…….at least not until the world catches up by getting fibre connected to the homes (not anytime soon). Then there is the reselling of all that content via iTunes, for entertainment, business, education, etc.
And on the topic of some “Bits” being very valuable, check out Pacbyte’s data compression patent for their MMT application, re-iteratively compressing a file until it’s a fraction of its size……and then decompressing it:
http://www.patentstorm.us/patents/7224293/claims.html
Rod - am I missing something or is this revolutionary? I tried the demo and was impressed.
Cheers
Mike