When Bad Product Trumps Good Strategy

January 10, 2006 By Leave a Comment

I like reading Umair Haque’s blog occasionally, and find much of his thinking provocative.

I suspect this analysis is wrong, though:

Glancing at TechDirt, I see response to Google Video is mixed. Interesting.

Though the product may suck, the strategy is still dominant: leveraging cheap coordination to utilize a market to allocate resources more efficiently than TV stations, Hollywood, etc, can.

At the same time, if you’re worrying about DRM…don’t. This is the real test of DRM. Google’s market, if it’s efficient, should show the DRMafia that the marginal cost is far (far) greater than the marginal benefit.

See, the problem is that “dominant strategies” in the abstract don’t matter when products outright suck, and the products don’t solve real world consumer problems.  Because the market — in this case, the market of consumers — ultimately ignores and discards the product, despite the fact it might be powered by a clever, well-thought through economic and business strategy.

Consumers will ignore the current Google product because it fails to understand what they (consumers) want: content that is portable to another device (preferably an iPod or a TV) coupled with a large catalog of programming that they can’t get through cable, satellite. Google’s use of DRM cuts them off from satisfying this consumer need, media companies in the main will gravitate to a DRM solution as long as one is offered, and so I fear (and would bet) we won’t get that market efficiency test Umair wants. Plus, to repeat, you don’t even get to the test stage where the market decides what is efficient, or isn’t when they don’t use the product at all because it stinks.

What is ironic about Google Video is that Google’s heritage is first and foremost as a great product company — their search won because it offered more relevant results, from more pages, with far greater speed and less clutter, than anyone else. They then coupled their great product several years later with a great, first class business strategy with Adsense and Adwords. Seems to me they have inverted the model with Google video, by starting perhaps with a sound strategy, but without a very good or serviceable product in place.

(Conversely, inferior strategies coupled with great consumer experience and product can sometimes trump dominant strategies — iPod and iTunes, instoppable for the foreseable future, are surely Exhibit A for this argument. Microsoft, on paper, probably had a better market efficiency model, but consumers just don’t care because the end-consumer experience is not as compelling as Apple’s. Maybe that will change this year as Umair and others argue).

I would guess we won’t see Google’s dominant strategy trumping, say, Apple iTunes’ video plans anytime soon.

Filed Under: Uncategorized

Google Video Loses the Plot

January 9, 2006 By Leave a Comment

First: I have to caveat everything I write here because I haven’t been able to look at or use Google Video yet. That the service was announced, but not launched, is in and of itself lame.

Second, based on what I’ve been able to learn about Google video, it would seem they have not really done anything useful. Instead, they appear to have picked a strategy that adds to the tower of Babel that is the downloadable video internet marketplace today.

What should they have done? Simple, same video marketplace idea, but without a DRM solution. Give us paid-for content, but in a more-or-less standard wrapper — MPEG4 or the H.264 flavor, that works on the largest variety of devices and that can be burned to DVD without restriction.

I would guess Google will argue that they are doing that (the Charlie Rose example that has been cited), but that they’re also want to offer media companies and producers a choice between that approach or some form of DRM distribution. Indeed, here is their pitch:

Owners also have the choice to offer their content with
or without copy protection – enabling them greater control over its
distribution.

Sure, it sound sensible and logical. But, by giving this choice they’ve made a real mistake, because they have forfeited the market-making impact they could have had, and their opportunity to build a video marketplace that actually provides consumers a decent experience. Most media companies and producers offering paid-for content will choose to have their content copy-protected, and unless I’m missing something, that copy protection probably won’t work with a significant range of devices (and I doubt it will provide for DVD-burning, so sneakernet won’t be an option, either).

So what Google has ended up with is a second-rate (at best) initial content offering and a third-class consumer experience. With a little bravery, they could have focused on a first-rate consumer experience — and a solution without DRM is the only consumer-friendly option for now. Combining first class consumer experience with their market-making traffic would have made Google a real threat. Indeed, with that combination, they would need just one success — one — to get the ball rolling. One example of a video selling 1 million, 2 million, or 3 million copies, and they’d have folks beating down their door. And without a connected device strategy (like Apple), it would be a lot easier to sell that many copies of a video if it could be burned to DVD; or copied to a Tivo; or to an iPod.

PS: my support for a non-DRM solution isn’t borne out of some anti-copyright agenda. It’s just a practical view, outlined here.

Filed Under: Google, Internet, Video

Why DRM Won’t Work for Video

January 9, 2006 By 1 Comment

There was a time, during my final years at Real (say, 2001-2003) I thought there was a chance DRM for video could work.

I don’t anymore.

I believe that the only way to create a durable, winning service for paid-for video delivered over the Internet is without DRM. I don’t take this position because I think copyright is inherently bad — that’s a more complex issue for a later time, and besides I’m undecided on that point — but because of practical considerations.

The main practical consideration is that DRM will work only if it is easy for consumers, and that in turn will happen only if there is a single-approach that works for nearly all of the content on most of the devices. That has been the key to why the VHS and DVD were successful. It is highly unlikely to happen with digital video delivered over the Internet because it would require either (a) coordination among a significant number of companies not likely to work together, or (b) one or two companies to establish a DRM standard by significant control of the marketplace (and only Apple appears like the might be able to do that as of now).

Neither of these scenarios is likely with Internet video because there are:

1. Lot’s of device makers
Arguably, this has been the case with the consumer electronics industry for a long time, and yet they’ve managed to herd the cats and get support for agreed-upon standards, DVD being the best example of that approach. But the list is even bigger here. Not only do you have the traditional television component constituencies, you also have mobile phone industry, the PC industry, chip-makers, game boxes makers, pvrs, portable devices kings, and many others all wanting a piece of the action. Getting them to agree is unlikely, and because the stakes are so high and the competitors are so numerous, it is equally unlikely that one or two will gain some type of hegemony over the others. Only Apple appears to have a chance, and it would be the equivalent of shooting the moon if they pulled this off with video (see below on why they’ve succeeded with music).

2. Lot’s of service operators
Folks like Yahoo, MSN, Google, Apple, and maybe eBay or Amazon or Real all will offer video services over the Internet, not to mention the large media companies like NewsCorp, Disney, TimeWarner; or “delivery” companies like the traditional telcos, the cablecos, satellite operators, or the mobile phone operators. Indeed, MySpace just announced today a video download services. None are so powerful to be able to dictate a standard, and doing so would require collaboration with some alliance of device makers. Microsoft has essentially been trying this approach for the past six years with Windows Media and it’s associated DRM, allied with PC makers and various device makers. Apple has kicked their ass by having a better, more integrated consumer experience with some degree of openness. If MSFT couldn’t pull it off at the height of their power, and it’s deep reach into 90% of the desktops out there, how will a consortium of theses companies get enough traction to make a single approach work?

3. Lot’s of content producers
Video is not music. The field of play is altogether different, and the biggest difference is the absolute range in both kind and number of video makers, owners and producers.

Apple (and Real and Napster and fifty others) created more or less complete, compelling catalogs of music for sale or rent by licensing 2-3 million songs in deals with essentially four partners (Universal, EMI, Warner, SonyBMG). No one company, not even the most powerful company, will be able to do that in video or even get close. There are too many producers and owners of video content, ranging in type from the big mega-media conglomerates (Viacom, NBC Universal, Disney, NewsCorp among them) to individual film-makers, artists and individuals.

The only chance of success is to get a significant majority of these producers to gravitate organically towards a single proprietary DRM. The only company that appears to even have a chance of doing that now is Apple; clearly, their hope is to get enough momentum so that success begets success, that more and more video owners distribute through their system to their devices, and that over time they achieve a position of hegemony.

While they are off to a good start, and could shoot the moon, there are too many powerful competitors with too much to lose standing in their way. Not just Microsoft. Or Google. Or Yahoo. Or Sony. But Comcast (already selling way more VODs than Apple is video for the iPod). And DirecTV/Sky/Newscorp. And any number of other folks with a real or quasi- distribution platform at risk.

So Apple will get stuck with a subset of wanted and desirable content, with a subset of consumer experiences (will they ever get DVD burning for video, for example?). And as consumers we’ll have the Balkans; a mess of warring and incompatible video DRMs and content offerings to wade through, which in turn depresses both the availability and demand for content through these services. And plays into the hands of folks like Comcast, DirecTV, Sky and others who will do just enough to satisfy most of the people most of the time.

So, the only way out of this mess is rallying around good standard codecs and formats that work on most devices, most machines, most of the time. The device makers and the service operators (except maybe Apple, or Microsoft) can be brought around, as they would gain. It’s the content owners and producers who are most scared of this approach. They have been scared into believing (by themselves, each other, and DRM proponents) that delivering content in MP3, MPEG, or h.264 without DRM will result in piracy. Conveniently forgetting that piracy is already occurring.

The only way to bring the content owners around is to give them proof. Show them an example of a video selling a couple million copies, available say in h.264, without DRM, and with not much piracy. I think this is possible, and would have happened with music except that the stores were forced by the labels to use some form of DRM. So we never got to see what might have happened.

The sad thing about Google’s announcement Friday is that they could have been the company to push this approach. They didn’t, so maybe Yahoo! or someone else will. Indeed, there are worse ways Yahoo! could employ their burgeoning LA staff than to evangelize the merits of video without DRM…

Filed Under: Internet, Video

Yawn

January 7, 2006 By Leave a Comment

Google Video announced, much gushing in some quarters.

Underwhelming from what I can tell.

Filed Under: Uncategorized

Real Citizen Media and Sago Mine

January 4, 2006 By

From Editor & Publisher, we learn that a 21-person local newspaper (led by Linda Skidmore) out of Elkins, WV still knows how to gather news. Maybe CNN, Fox and even blog cheerleaders will take a pointer. This is an example real citizen media and professional journalism:


Skidmore adds that her staff never believed the
miners had been found alive because no official word was ever given.
She said no update about miners being found alive ever appeared on the
paper’s Web site, either.


“I was on the phone with her and I was hearing things
on CNN and FOX that she was not hearing there,” Skidmore said about
reporter Becky Wagoner. “She heard that the miners were alive just
before it was broadcast, around midnight. She talked about hearing
church bells ringing and people yelling in jubilation–but nothing
official.”


Wagoner, a seven-year veteran of the paper, told
E&P she had been covering the story since it broke Monday, and took
a photograph at the site that was widely carried by national news
outlets. She said rumors about the miners being found alive began
circulating at 11:00 p.m. last night, with broadcast reports beginning
at about midnight. “We heard that they were found alive through CNN,
then it snowballed to ABC, then FOX and it was like a house afire,”
recalled Wagoner, who said she was at the media information center set
up by the mine’s operators, International Coal Group Inc., when the
reports spread.


“A lot of the media left to go to the church where
family members were located, but I stayed put because this was where
every official news conference was given–and we never got anything
official here,” she said. “Something was not right. Then we were
hearing reports that 12 ambulances had gone in [to the mine area] but
only one was coming out. There was so much hype that no one considered
the fact that there was no [official] update.”

Filed Under: Uncategorized

Woeful Night for Cooper (Rivera Unspeakable)

January 4, 2006 By

Like others who watched all three overtimes of the Orange Bowl game, I switched back and forth last night between the final moments of the game, and the opening moments of what looked like a surprise rescue of twelve miners trapped in the Sago mine. It was three hours of gripping television, gripping because it felt throughout like we were watching a terrible car crash in very slow motion.

It was about forty five minutes into the drama when my wife turned to me and said, “Something’s fishy here. I’m nervous they’re getting too carried away with this. If they really knew the miners were safe, we would have gotten some official announcement by now.” If she thought it, surely Anderson Cooper and his producer(s) should have thought it. Stunning, at the time and especially now in retrospect, that he never used the words “unconfirmed reports” and that he didn’t try to introduce a wee bit of caution and uncertainty into his reports.

One can imagine Aaron Brown, or another seasoned anchor or reporter, maintaining a degree of skepticism and reminding us (and frankly, the families in the church) that we didn’t yet have all of the facts and that the story was still developing.

But no, Cooper kept pouring his own quirky brand of hyperbole onto the hypefest, while trying to his best to fit in with the locals (has he ever said “gosh” so much?). Geraldo Rivera was worse, unspeakably creepy, but we’ve come to expect that from him. 

Jeff Jarvis writes today that we saw professional journalists grappling live with a breaking story “trying to find their ways (sic) through the fog of war” and that “next time I hear someone being haughty about professional news vs. citizen’s news, I’ll remind them of the West Virginia tragedy.”

That’s the wrong way to look at it. What we saw last night on the television was not professional journalism, at least not from the cable news networks. It was entertainment hypefest journalism, with an anchor on the scene not even doing basic j-school 101 reporting. If the citizens media is to work, let’s hold them to a higher standard than CooperRivera.

When we crawled into bed last night, we were saddened both by the turn of events, the horrible double tragedy for the miners’ families, and the sad reminder that the country is without a 24 hour news network that practices good, basic journalism.

Filed Under: Television

China, Blogging, Censorship

January 3, 2006 By Leave a Comment

Rebecca MacKinnon, Dave Weinberger and Robert Scoble provide a great public service today. MacKinnon first and most importantly with her post on Michael Anti (Zhao Jing), and Weinberger and Scoble with their follow posts to bring the issue more public attention (I saw it first on Weinberger this morning, and then again on scoble through memeorandum, leading ultimately to MacKinnon). These posts are evidence of how blogs can actually be good and useful and important (I’ve been a skeptic in the past; posts about important issues, written with authority and passion, like these three cause me to revisit that skepticism).

We don’t know all of the specifics yet about this case, but I think the latter half of MacKinnon’s post about her tests of Chinese language blogging tools is as troubling as this specific report about Michael Anti’s blog. I wrote last fall about this issue more broadly, and have been surprised there was less reaction to Yahoo’s actions last fall (and other companies, like Cisco, I might add).

I have some limited personal experience and opinion to bring to the dialog. When I headed up Real’s international consumer business in 2002-04, I travelled often to China, and spent a lot of time talking with friends and colleagues there about the potential censorship of our services (it was clear the Chinese authorities would not let us bring in streams from CNN and BBC, for example).

Whenever I broached the censorship topic, my young Chinese friends would tease me about my paternalistic ways, and never hesitated to remind me about my own government’s alleged human rights abuses (our captives at Guantanamo Bay being exhibit A at the time). They would also tell me how it was easy to find Tianammen Square massacre video, or other anti-government video, on the Internet (none was so brazen as to actually show me), and not to worry so much about censorship. These were smart, thoughtful, independent, well-educated people, some of them “Sea Turtles” — American citizens either Chinese born or of Chinese descent, returning to China — who lived there full time and just didn’t seem as worried as I was about the issue.

In the end, I didn’t have to confront the ethical and moral issues personally — I was let off the hook. Real decided not to invest as much in our efforts there as I wanted at that time, and the things we looked at were in music and games. It would be easy for me now to claim I would have made the right decision; I personally felt the powerful lure of that market, and understand why western firms are so intent on getting a beachhead there.

But ultimately, I do believe there are universal principles and human rights at stake, and freedom of speech is without a doubt one of them. While I personally understand the lure of the Chinese market, and appreciate the advice from my friends there not to behave paternalistically towards them, it’s just wrong for us to use digital tools, technologies, and inventions we’ve created to help the Chinese government censor speech of individuals, especially political speech. We have export restrictions on many technologies, including most importantly armaments. Why not also make it illegal to export technologies that enable governments to censor the speech of their citizens?

I “get” that others will fill the void (perhaps Europeans, ever willing to court the Chinese, perhaps other Asian countries, perhaps even local Chinese companies). But isn’t this an issue where we should be on the side of the people (generally, as a people and government), and not on the side of shareholders of Cisco, MSFT, YHOO, and maybe GOOG?

Filed Under: Blogging, China

Mapping Me (Stupid, Grossly Simplistic, but Fun)

January 3, 2006 By
  You are a
Social Liberal
(71% permissive)

and an… Economic Liberal
(36% permissive)

You are best described as a:

Democrat


Link: The Politics Test  on Ok Cupid
Also: The OkCupid Dating Persona Test
Filed Under: Politics
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