A New Way to Watch

Today our startup launched a new app for the iPad, iPhone and iPod Touch — Showyou. I’ve worked in digital media for almost 20 years now — shocking, that — and of the many products I’ve worked on, I can say without hesitation this is the one I’m the most excited to have helped create.

I love our new Showyou app most of all because it’s a joy to use. But I’m also excited about Showyou because it and other similar apps that are sure to follow have the potential to change how we watch TV — and what we watch.

We spend more time watching television than consuming any other form of media. Kids 8-18 years old watch television nearly 4 and a half hours a day — far more than they spend with any other kind of media.

And yet television has remained the most shackled platform, with the least range of choice.  With books, music, magazines and more recently the internet we’ve become accustomed to an abundance of choice. The television, on the other hand, has been locked down for most of the last 50 years, limited (for most people) to a set of channels chosen and delivered by their cable companies, and with programming on those channels determined by a small, select group. Maybe 1000 people, total, determine what most of us watch — or can watch. They’ve offered up some great stuff, to be sure — The Wire, Mad Men, The Daily Show and Colbert Report. But we’ve also gotten a lot of this.  And this. And this.

Despite the growing power of the Internet and social media, television has continued to reign supreme from 8-11PM in most homes. But cracks are starting to show. Data just released this week from the makers of the ReadItLater app shows that the heaviest usage of the iPad during the prime time hours. And we know that streaming from Netflix now accounts for a huge percentage of bandwidth consumed in the evenings.

And now, with Apple TV and  Airplay, your iPad or iPhone or iPod Touch just turned into a new remote control for your TV. New apps like Showyou have the potential to change where we get programming for our televisions, and indeed what we watch.  Now available: tens of millions of hours of programming from the internet, chosen by our friends, or people we follow on social networks like Twitter or Vodpod who have tastes or interests similar to ours. Other platforms from other companies  — Android, Windows, and more — will surely give us more options and more choice still over time.

History shows us what happens when these kinds of disruptions occur. In 1985, when cable TV was still in its infancy, the viewers watched broadcast networks 45% of the time. By 2009, that had dropped to 25%, and basic cable has risen 10-fold, from  a 3.5% share to a 36% share.

Even though online video has had explosive growth the past five years, it accounts for just a small fraction of the time we spending watching television or video. Just like cable in 1984. There is a now an opportunity for entrepreneurs to change all that.

And so a pitched battle is going to be waged for how we get programming for our televisions — and that will be a good thing for consumers.

The Bogus Speech by Paul Otellini to the Aspen Institute

I read about a speech Paul Otellini gave last week and this lead from CNET caught my attention:

Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

Rather than rely on the CNET report I first read (which was somewhat confusing), I decided to do some primary research and try to find his speech. There is a video here and a transcript here provide so helpfully by Intel.

Otellini spends several minutes bemoaning the current situation particularly in education:

The trends are worrisome.

At one time, the US could boast about the best students in math, science, and engineering.  Our research centers were without peer.  No country was more attractive for start-up capital or global investors.  We seemed a generation ahead of the rest of the world in information technology.

That simply is no longer the case.  Over the past decade, our competitors have focused on the very things that made America’s innovative economy the strongest in the world.

A study released last month by the college board noted that the US has dropped from first to twelfth in the world for people ages 25-34 with college degrees over the past 30 years.

I thought this was all a buildup to some praise for the work done by the Obama administration and Secretary of Education Arne Duncan to fix this state of affairs. After all, initiatives like the “Race to the Top” have garnered praise from the Left and Right (and even Republicans who are convinced Obama is a Muslim) and have done more to reform the public education system in America than all other federal efforts combined over the last 40 years.

But nary a word about that. Instead, Otellini, in an ominous tone, said this (which is what got such attention from folks who reported on his speech):

Unless government and business take firm actions to improve education, create a culture of investment and job creation in this country, then the next Intel or the next big thing will not be invented here. Jobs will not be created here. And wealth will not accrue here. Ultimately, we will face an inevitable erosion and shift of wealth — much like we are witnessing today in Europe.

(I guess he didn’t notice that Germany is kicking our ass right now economically).

Turns out all this fear-mongering was really just a set up for Otellini’s central plea — America is in jeopardy because our corporate tax rate is too high. And like a petulant baseball owner who threatens to move his team to another city unless the public builds him a new stadium, Otellini essentially says Intel will take its toys and move abroad if the corporate tax rate isn’t lowered.

(As an aside, I’m inevitably stunned that folks like Bill O’Reilly and other dime store patriots never jump on corporate yellow-bellied traitors like Otellini who’d stab their country in the back, throw their countrymen overboard, and move their companies to China to increase their profits by a few pennies per share. I’ll have to come back to that sometime).

Otellini could have noted for balance and context that the United States has the one of the lowest overall tax burdens in the world (and the lowest among developed nations) as a percentage of GDP. And that our corporate tax rates are high because we have insisted on absurdly low individual tax rates and aren’t willing to contemplate other ways of raising revenue through things like a consumption tax. All policies lobbied for by folks like Otellini and his peers. But that would have required intellectually honesty.

It was the lack of logic, of intellectual cohesiveness, that was so striking in the end.  Otellini argues (1) that government ought to do more, particularly with regard to education; (2) fails to acknowledge the stunning achievements in just the last 18 months by the Obama administration on this front; then (3) says his taxes are too high and Intel shouldn’t have to pay for anything or they’ll move.

Why all this hyperventilating about one speech by some guy who is the CEO of Intel? Because people who know better seem to take him seriously, even though they ought to know better. For it’s pretty clear he’s just a hack and a shill for the Republican party and not some Sage of San Joe — at least when it comes to public policy pronouncements.

One last note: folks like CNET ought to learn to do a little reporting and provide some context next time. Even a simple sentence like “Republican and Carly Fiorina supporter Paul Otellini said in Aspen…”

It’s What You Node

Chris Dixon has an excellent blog post up about social graphs — a must read if you’re in the social media or social apps space (Mathew Ingram wrote a nice follow up here on Gigaom).

Chris says:

In social graphs, the nodes are people and the edges friendship. <emphasis is mine>

And he goes on to suggest that we’ll see, in the coming months and years, new types of graphs around taste, endorsements, payments (“financial trust”), and local data. I think that’s right, but just partly.

The starting point for this discussion really ought to start with the node — that is, how and where we represent ourselves digitally.  Given  the gigantic success of Facebook, there is an implicit assumption that all our nodes are belong to Facebook — that it will be the primary place we express ourselves digitally —  and Facebook will thus own all the graphs that matter as a result (I think this is, essentially, the argument Mathew makes on Gigaom).

But for most of us, one node to rule all graphs just won’t do. Think about your interests, what you like doing, how you spend your free time, what your passions are, what music you like. Can you really express your full sense of self — all those things you both love and do — on and through Facebook, with your contacts on Facebook? Are your Facebook friends truly interested in all of the details of all the things you do and like?

For most, I suspect, the answer is no. In fact, one of the biggest complaints I hear from people about Facebook is how “noisy” it is — that we’re subjected to a flood of information from friends and acquaintances we really don’t care about. I care about my friends and their families and where they went on vacation. But I might not care as much about my friend’s obsession with, say, fly fishing. Or how much they just loved that Rush song. I suspect this is a large part of Facebook’s poor consumer satisfaction results compared to other services. Their rush to facilitate sharing of everything, instead of sharing by and between friends of things related to their friendships, has come at a cost.

We need different nodes to express all the things we like, all the things we do. Ironically, though we mock Google’s cluelessness  when it comes to social, the best research I’ve seen on this comes from a Google employee. Each of us has different interests and passions which we in turn want to share with different groups of people. It’s why many of us share some things on Facebook, others on Twitter, and more still on our blogs or other sites and services. We each need to express ourselves through many nodes, on many different graphs.

Indeed, we’ve already see plenty of examples of this: communities on Flickr for those into photography; or last.fm for people passionate about their music; or flixster for movies. Big opportunities still exist to create services that allow for distinct and specific expression of self combined with the right graph. And these opportunities don’t play to Facebook’s strengths, because so much of this is about expression and publishing — not just the graph mapping the nodes. Indeed, this may be where Google still has a few very strong cards to play with assets like Blogger and Buzz and YouTube.

We’re increasingly focused on building a very particular graph at Vodpod, based on our unique type of nodes — collections of videos, many of them very deep, many of them very focused.  For the first couple of years, we concentrated just on the utility of our service — making it dead simple to build a video collection, using your favorite videos from any site on the web, and to share it on your blog or elsewhere.

But now that we have attained significant scale (nearly 6M videos, nearly a million members with many thousands with very deep collections, 10M unique visitors each month, videos from over 17,000 sites) we have the opportunity to build one of these more specialized graphs. In our case, it’s about connecting you with the right collector so that you can get a video feed tailored to your interests and tastes. Whether you’re interested in soccer, politics, viral videos, technology, or electronica.

We’re now able to do this with increasing sophistication at Vodpod. For example, if you visit my collection and sign up from that page, we’ll recommend other, similar collectors for you to follow:

While we’ve enabled “following” on Vodpod for years, we’ve not focused on building out a graph between and around our video-centric nodes until now. The data represented in these nodes  – these video collections — enables us to do this in ways other cannot.

We started this effort in just the last week, and are beginning to see very profound results. Will we build a graph as big and as important as Facebook’s? Probably not. But that doesn’t mean the opportunity isn’t huge — we think we’re in a unique position to provide the best way for people to find and watch videos, via our members’ extraordinary collections and the graphs we’re building around those nodes. That’s nothing to sneeze at, and I suspect there are other, similar opportunities out there.

The Digital Revolution: Lessons from the 19th Century

Last summer I spent a fair bit of time reading up on the history of the newspaper business. Biographies of Hearst, Pulitzer and E. W. Scripps, along with a few more academic books on how these newspapers actually became big businesses.

The most suprising thing I learned?  That without the twin forces of urbanization and industrialization, there would have been no modern newspaper business, no modern advertising business, and no modern media business.

Those two tectonic shifts in the 19th century created new neeeds; those new needs created a huge array of new markets that flourished well into the 20th century. The newly created needs most relevant to the newspaper business produced by urbanization and industrialization were:

Need for ready-to-wear clothing
Up until the mid-19th century, most people in the West made their own clothes. Buying clothes was beyond the reach of all but the very rich. But with urbanization and industrialization, it suddenly became possible to buy clothes. And, in large urban areas, getting the right clothes (even though mass produced!) became a marker of your status and position in life. Department stores, an invention of the 19th century city, built huge new markets catering to this new need.

Need for Packaged Goods
Most people in the West also grew and produced their own food up until the middle of the 19th century. But as the West became increasingly urbanized and industrialized, that just wasn’t possible. People working at factories or other jobs in cities needed to be able to buy packaged foods and sundries, giving rise to businesses like P&G, Kellogg, and Colgate.

Need for Entertainment
Finally, those living in cities were no longer bound to a full day of work tending to the land or to their animals. The middle and upper classes, and even the poor, suddenly found they had time for leisure, made more abundant still by electricity which extended the day.

Newspapers flourished in late 19th century as they built huge audiences among urbanites catering primarily to this need for entertainment.  The great papers of the late 19th century offered a steady diet of crime trials, sex scandals (tame by our standards today), and increasingly sports news. Publishers like Hearst and Pulitzer added muckraking journalism that entertained and agitated for change.

With millions of readers every day, newspapers offered packaged goods companies (P&G) and sellers of clothing (department stores) the very best way to grow their businesses. Buying an ad in an urban newspaper with a big circulation was the most effective way to market to city dwellers who needed to buy clothes, or packaged goods.  And this gave rise to an entirely new market — for media, and for the creation and making and selling of advertising. That had never really existed, in any meaningful way or at scale, until the late 19th century. And it would not have occurred without the forces of urbanization and industrialization.

It’s obvious to most anyone now that the huge tectonic forces at work in this generation are the combination of computing and digitization (or, digitalization as the English would say).  These new forces have fostered new ways of making existing markets more efficient — you can now buy nearly anything online, for example.

But they’ve also given birth to new needs, desires fresh and new and that perhaps we didn’t know (or still don’t know) we had including these two:

The need for self expression and self-representation
For many on the Internet, it’s no longer sufficient just to go online; you need to be online.  As we spend increasing amounts of time on the Internet, or engaged in a digital life, many people want to have a presence there and assert there personhood there. This began with early online communities like The Well and other BBS, but has gotten a fuller expression with blogs, sites like Digg and Stumbleupon, and media publishing platforms like YouTube and flickr and even Vodpod. Myspace and Facebook (and to a much lesser extent, Twitter) were the first mainstream incarnations of this need.

The need for immediateness
We now live in a world where we expect — and crave — access to anything from almost anywhere at anytime. Google has been the most obvious outlet for this new need, and a whole new market — search-related advertising — was borne from it. But one could also list Amazon, Netflix, Craigslist, e-mail, IM, and real-time services like Facebook and Twitter as tapping into our new need for immediateness.

Other, more recent services and products can be explained as illustrations of these two new needs. I would argue that services driven by game mechanics — Foursquare and Farmville for example — are primarily driven off the need for representation of self. “Leveling up” and earning badges helps to define who we are online, helps to foster our sense of digital personhood.

The iPhone, Blackberry, and other smart phones show the need for immediateness made manifest in the mobile world.  The iPad, if it succeeds, will do so because it satisfies our need for immediateness in some more profound way than laptops and smart phones do (and this is why I’m skeptical about it); and not because it’s a “consumption” device.

Just as markets for clothing, packaged goods, and entertainment begat the entirely new market of media and advertising in the 19th century, it’s interesting to contemplate what new markets might get created from our newly created needs for self-expression and immediateness. Virtual currency, curiously, can perhaps be understood best through this prism; we want Farmville dollars to facilitate our self-expression; we buy virtual currency to satisfy our desire for immediateness.

But what else? What might come next? What other markets might be born as the result of all this?

Apple’s Big iPad Mistake

When Apple launched the initial iPod in 2001, they made two critical strategic decisions:

  • They focused on providing really great PC support on iTunes, and made the iPod a great device for PCs and Macs (remember, the Mac was not yet ascendant as a laptop); and
  • They supported MP3s

People bought (and loved) the iPod because it allowed them to take music they already had (through Napster, or that they’d ripped). The iPod became a dominant force in music by embracing and supporting an existing landscape (the PC, MP3), not by trying to circumvent that landscape (or trying to create an alternate reality right off-the-bat). People forget all this now, but the iTunes Store didn’t arrive until 18 months later; and only the huge wave of initial support for the iPod assured it would be a success. Apple changed the music industry paradigm only after they got tons of people to buy iPods, and they got people to buy iPods by making a great device that worked with MP3s they had on their PCs.

Turn to today’s launch. This was Steve Jobs’ lede today at the iPad unveiling:

You can browse the Web with it. It’s the best browsing experience you’ve ever had.

Indeed, the Internet should be without doubt the killer app (initially) for the iPad.  What a joy to sit on a couch, or bed, or plane, or train with an iPad, using natural touch gestures to navigate and browse the web. I would buy this thing in a heartbeat if I could do that — everything else (iBooks, movies and video, games) would be gravy.

So what gives? Well, turns out you can’t truly browse the web with the iPad.

By ignoring Flash, Apple has basically made most of the web broken, as so clearly illustrated by the screenshot of their demo of the front page of the NY Times! It’s not just 10,000s sites which provide their videos in Flash (Hulu, yes, but also CNN, MSNBC, MTV, Comedy Central, BBC, and many, many more), but it’s the millions of flash widgets and other interactive elements on the page.  To get a sense, try this experiment — remove Flash from your computer, and start browsing around. If your web experience is unimpaired, maybe you’ll like the iPad. But I think most people will think: “Who broke the damn Internet?”

The iPad did, that’s who.

Now, I’ve seen some arguments today that this misses the point — that Apple isn’t just satisfied with replicating your standard web video experience, that they want to transform the entire video business.  Ryan Lawler at NewTeeVee argues:

The iPad will cause ripples in multiple industries — including news, book publishing and gaming — but at the end of the day, I’m betting that what the iPad will be used for more than anything is watching video. Like the iPod, it’s only a matter of time before the iPad becomes the defining product with which to consume that type of media.

Could be. But they have to sell a ton of iPads first. And, by not embracing the existing landscape — the tens of thousands of video sites that provide hundreds of millions of videos encoded in Flash — they’ve cut off a natural, intial reason to buy and to use the device (and yes, I know all about HTML 5 video, and no the iPad is not going to cause a stampede to that overnight). If I have to choose between a lightweight, fully functional wireless enabled laptop that works well on every web site and that allows me to watch videos from Hulu and Netflix and a gazillion other places, and an iPad that doesn’t support Flash or any site that  uses Flash and only lets me watch videos from iTune and YouTube, which am I gonna use?

Simple. I’ll stick with my Macbook for now, thanks.

Google & China

Big news from Google today announcing a “new approach to China” as a result of cyber attacks they’ve launched against Google and others. The news is early and incomplete, and we’ll certainly learn more in the coming days.

But reaction seems to be divided in to these two camps (roughly):

  • Wow, Google is so great and they really aren’t evil

OR

  • Wow, what a cynical ploy by Google to cover up the fact Baidu is kicking their ass

I haven’t seen anyone really grappling with the astonishing facts Google alleges. Here’s a taste from their post:

First, this attack was not just on Google. As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses–including the Internet, finance, technology, media and chemical sectors–have been similarly targeted….

Second, we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists

In short: China apparently initiated cyber attacks against Google and apparently other corporations and institutions to help them hunt down human rights activists. If that’s true, it’s wrong, offensive, and reprehensible.  And people should say so, without equivocation.

Now, there are China apologists out there already beginning the lectures: “That’s not how you do business in China.” “Google should know better and do this behind closed doors.” Having spent some time in China this decade, I’ve heard that lecture a zillion times. And I understand and appreciate it when it comes to normal and quotidien matters of business.

But this isn’t about setting up a tire factory or arranging to manufacture gadgets. This is about the government of China (or so Google alleges) launching cyber attacks against companies and institutions in other countries as part of an effort to crack down  on their own citizens and their effort to secure basic human freedoms — of religion, speech, organization.

As I’ve written before on this blog, this is a defining moral issue of our time if you’re a technologist, tech writer, or member in some other way of this community. I love to see the world in grays, but this is one of those issues that is purely black and white. And if you in any way side with China, or advocate a position that excuses their behavior — well, I think that’s just utterly immoral and you should be ashamed.

Real-Time Web: It’s about the publishing, not the consumption

So much of our attention on the real-time web focuses on consumption — the notion that we want more information, faster. This was indeed the focus of our discussions at GigaOm’s “What Comes Next” session earlier this week (see my notes).

But then we all complain about information overload and continuous partial attention. At the very same Bunker session, alpha geeks complained of the Facebook and Twitter overload problem.

I’ve become convinced the real reason people love the real-time web isn’t for the glut of information it produces, but instead because it makes publishing more fun and enjoyable.

It’s all about the near-instant gratification from an “@” reply, or retweet, or a “like” on Facebook. Publishers (and by publishers I mean people who blog, Tweet, foursquare, etc) love this.

Blogging provided some of this in much earlier days, when it was a means of expression for a much smaller, insular, alpha-geek community  — but with a much higher degree of latency. You might write a blog post and  get a comment, or trackback, several hours (or days) later. But this kind of gratification fades over time — in part because so much of what we publish is so perishable — so services like Facebook and Twitter which provide more immediate feedback loops have come to dominate.

The response rate doesn’t have to be high, or targeted, with real-time. It has to be timely. Three or four immediate replies or retweets are ample reward — one can feel heard, listened to, a part of something bigger.

The fact that it’s all about the publishing, and not the consumption, is readily apparent to anyone who digs deeper into Twitter stats. Look at the average click-through rate of a link passed through Twitter by an A-list Twitterer, and you’ll be shocked how low it is. Folks with a million followers are lucky to get a couple of hundred, maybe a couple thousand, people clicking on a link.

All of which is to say: if I were an investor, I’d stay away from companies focused on creating the best possible way to consume “real-time” information. The truth is, other than stockbrokers and traders and people in the news business, most of us don’t really have a need for that. But, there is probably lots of money to be made still from services that use real-time feedback loops to get people to participate, publish, and contribute to a service or platform.

On Immigration and Silicon Valley

TechCrunch offers a guest post today by Vivek Wadhwa titled Beware The Reverse Brain Drain To India And China.

It caught my eye.

Wadhwa suggests that many younger Chinese and Indians who have come to the United States to work in the technology business are returning to their native countries, and provocatively concludes:

It is very possible that some of the smart Indians who sat in the room with me holding their hand up on Columbus Day will start the next Google or Apple. Many of them will build companies which employ thousands. But the jobs will be in Hyderbad or Pune, not Silicon Valley. (emphasis mine)

Really?

Wadhwa essentially implies: if smart Indians and Chinese leave, well, there won’t be many smart people left here in the Bay Area. “The jobs will be in Hyderbad or Pune, not Silicon Valley.

I don’t pretend to possess a definitive history or deep understanding of Silicon Valley. But it seems to me that the genius of the place is that it attracts interesting, smart, able people from all over the world and all over America, and from many diverse ethnic and racial backgrounds. Not just from one or two countries.

To the folks going home to Shanghai and Pune and Bangalore, best of luck. Yes, our economy is a mess, but I suspect some smart kid from Romania, London, Mexico, Brazil, Cleveland, Alabama, or Vietnam will arrive to take your place. And Silicon Valley will go on.

Power of Passed Links

Fred Wilson, a VC and blogger and investor in Twitter, talks about the power of Twitter to drive traffic.

more about “Powere of Passed Links“, posted with vodpod

He says that among their portfolio companies, traffic from Twitter and Facebook is now about 20% the amount of traffic driven by Google; that it is growing about 3-40% per month; and that if that growth rate continues, Facebook and Twitter will drive more traffic to their portfolio companies (excluding Twitter, obviously) than Google within a year or two.

As I wrote two months ago, I get that the potential for traffic growth is very attractive. The question for me remains is there some fundamental benefit that will allow this to happen, or are we just seeing a bubble inflate right now:

So why the hype? Traffic. People — bloggers especially, those in Silicon Valley or the tech industry even more particularly — have realized that Twittering can send traffic.  This is why Jason Calacanis offered $250,000 for one of the 20 recommended user slots on Twitter.  It’s why so many top twitterers include links in their tweets, usually to their own properties. And why so many in the SEO/SEM business have flocked to use Twitter.

So it’s all good, right? Twitter is the new Google, a new fountain of traffic for web properties? That depends on how you look at it, and whether you think Twitter provides some essential, fundamental value. If you question whether it provides much value other than the potential to drive you traffic, the Florida real estate cum ponzi scheme analogy goes like this: people are flocking to Twitter mostly because they believe it has the potential to drive traffic, and as long as people flock in that perception is fulfilled.

The problems start occuring when the growth slows down, or stops.

And this movie, we’ve seen it before. Digg and Facebook got the same (ok, not quite the same) levels of hype in their days of ascendancy, for the same reasons. People thought they could be tamed, harnessed, used as traffic hoses. As growth (or the perception of growth) in traffic from those services decreased, so to did the hype attendant on them decrease, at least among the digerati. But unlike Twitter, one could argue Facebook, and to a lesser extent Digg, provided some more meaningful, underlying value to their end users.

I still think that the jury is out.

Microsoft Earnings

I haven’t digested in any depth, and I won’t. Just know that the headline is bad.

My main reaction: how could anyone be surprised? Their products stink. Have for a long time.

I adandoned the Microsoft OS, and almost all MSFT software, in 2004 and have happily never looked back. I bought a $500 HP PC with Vista last year for testing, and it was so stuffed full of craplets and so horrible to use I had to move it to another room.

Between more full-throated web applications, the Apple renaissance, and open source, you really don’t need to use a PC any longer. And once you know you have a choice, why would you want to? That’s what is killing Microsoft; the economic downturn is just the accelerant.

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