Expanding the view on Vuze

Vuze_logo A little more than a year ago, the creators of Azureus -- a file-sharing program based on the BitTorrent protocol -- launched Vuze, a version that ignored bootlegs in favor of authorized copies of TV shows, movies, games and other programming. The idea was to create a file-sharing environment that content owners would want to participate in, and that would present less risky revenue streams. By focusing the software only on authorized files, Vuze could charge fees for files or sell advertising around them without fear of being sued for profiting from piracy. It soon attracted content from dozens of producers around the globe, including the BBC, PBS and TOKYOPOP, although the major Hollywood studios largely kept their distance.

This month, Vuze did an about-face. Unleashing the software's search engine, it enabled users to find and retrieve content indexed by some of the world's most popular BitTorrent search engines. These include Mininova, an index site in the Netherlands now under legal assault from Dutch anti-piracy authorities. As a result, users don't have to fire up a second file-sharing program to find free, pirated versions of the titles Vuze offers on a pay-per-view basis. They can do it through Vuze's search engine.

CEO Gilles BianRosa acknowledged that the move didn't meet with universal acclaim from the companies providing content on Vuze. Yet he said that the change merely acknowledges the reality of the marketplace, and argued that it would help content owners compete better with online bootleggers.

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Promoting new TV through p2p

Factory new Spike TV show distributed through p2p It's a needle-in-a-haystack world for new TV shows, particularly when they're on cable. That's why so many networks put pilot episodes online well in advance of the series premiere. Still, the Viacom-owned cable network Spike seems to be going one important step beyond its peers in its efforts to build an audience. Not only is it making the first episode of the new series "Factory" available in advance on its website and through downloadable video stores, it's also trying to spread it through Limewire and other file-sharing networks. Without DRM, or seemingly any form of copy protection.

Spike is working with Jun Group, a firm that specializes in promoting media through p2p networks. Mitchell Reichgut, a principal in Jun Group, acknowledged that other TV programmers had used p2p technology to distribute shows (witness the broad support for Joost, or NBC's work with Pando Networks). But those distributions "have taken place in enclosed, rights-protected `fish bowls,'" Richgut said in an e-mail, while "Spike is swimming in the `ocean' - open P2P networks - where Spike's viewers regularly seek out the latest and greatest new content." In other words, Spike isn't using p2p technology to cut its distribution costs. It's doing it to chase viewers.

Todd Ames, a marketing vice president at Spike, said in an interview that putting the show on file-sharing networks was an acknowledgment of "what people are really doing, and the way consumers are really looking for content." Using DRM, he said, would be self-defeating. "I don’t think there’s a marketer out there who hasn’t been told, `Get me that viral thing.' And `get me that viral thing' when it’s handcuffed and ball-and-chained is pretty difficult."

It's not something he'd do for just any show, but it made sense for "Factory," a semi-scripted comedy about four working-class buddies (it aspires to be a blue collar version of "The Office" or "Entourage."). "There is no better marketing tool for the show than the show itself, but you’ve got to be seen," he said. "I’m dealing with something that has no real celebrity, and has never been seen before.... We’re trying for a bit of a ubiquity here, to go where the people are."

Still, those file-sharing networks are hotbeds of TV piracy, so Spike's approach is more of a toe-dip than a cannonball. You won't see any TV commercials on Spike touting the availability of "Factory" on Limewire. (All the same, Richgut expects more than 1 million downloads of the pilot. Jun Group's secret sauce is its ability to use metadata and other techniques to help the files it promotes bubble to the surface in p2p searches.) Nor does Spike plan to make later episodes available through file-sharing networks, although it expects bootleg versions to wind up there anyway. "My goal is not website traffic," Ames said. "It's really about driving tune-in for the television network."

Of course, if Spike could guarantee an additional million views of "Factory" through p2p, it might make sense to distribute the whole series that way -- with commercials, that is. But Ames said the medium still has to prove its ability to deliver individual shows to the kinds of mass audiences they can reach on cable. The Spike network is available in 96 million cable and satellite homes, after all. The online video business isn't there yet.

"Factory," which has been available online since Tuesday, premieres June 29. Here's a taste of the show, courtesy of the Spike website:


More on movies going to cable before DVD

Mpaa_petition An astute reader of my earlier post regarding a possible new, earlier window for movies at home pointed out something significant that I'd missed. Rather than being an isolated initiative, the earlier window fits into a continuum of efforts to create a secure, copy-protected pathway into and around the home for high-def programming. Those efforts could eventually give Hollywood inordinate influence over the technologies used in home networks and device-to-device communications.

To recap: the MPAA has asked the Federal Communications Commission to let it use a copy protection technique called "selectable output control" on high-def movies made available through cable and satellite TV operators before the titles were available on DVD. SOC enables studios to turn off the analog and unencrypted digital outputs from cable boxes and satellite receivers to prevent unauthorized copying. The FCC had banned the technique for existing services, such as pay per view, but left the door open to it being used in connection with an innovative new offering.

The MPAA's petition says that titles would be affected only during the period prior to their release on DVD. Once the movie is in Blockbuster, the people who'd been shut out by SOC -- those whose TV sets relied on analog or unencrypted digital inputs -- would have no trouble viewing it. But a pair of footnotes that I'd overlooked in the petition point out that next-generation home-video formats may also include SOC. These include downloadable movies and Blu-ray discs. So if Hollywood restricts high-def releases of movies to the new early-release window, Blu-ray discs and downloadable files, it could make SOC the rule, not the exception -- at least until the films reach HBO and broadcast TV.

That's not to begrudge Hollywood's desire for more protection on high-def titles. The problem here, IMHO, is the potential for the studios to control which protection technologies devices use. Under the FCC's broadcast flag rules (which a federal court struck down in 2005), the commission, not copyright holders, had the power to decide which anti-piracy techniques were acceptable. One example of why this matters: the commission approved the anti-piracy scheme for TiVo's TiVo To Go feature over the objections of the MPAA and the NFL. But with SOC, the FCC has no say over what's an acceptable level of protection. That leaves Hollywood with a great deal of sway over which anti-piracy technologies get deployed. Of course, the studios want their movies to be seen, too. If consumers rally behind home entertainment and networking equipment that's not compatible with the studios' favored  protection techniques,  the studios will have to adapt to that reality. That's one of the reasons the major record companies finally embraced unprotected MP3 files -- they proved to be the best way to reach the largest audience.


Movies on cable before DVD?

Mpaa_logo The MPAA has offered a deal to the Federal Communications Commission that could bring movies to cable and satellite viewers more quickly after their original release. The trade-off, though, is that the movies couldn't be viewed by some high-definition TVs, nor could they be recorded by stand-alone TiVos. The FCC moved quickly to invite public comments on the MPAA's petition, meaning that it could decide the issue later this summer.

Kung_fu_panda Ars Technica reported this story over the weekend, emphasizing the restrictions on recording and the unusual alacrity of the FCC's response. To me, however, the more intriguing element is the studios' interest in creating a new release window for home viewing of high-def movies. Today, studios release the DVD version of a film about four months after it hit the multiplexes (bombs often are released sooner, and hits sometimes take longer). Cable pay-per-view and VOD services have to wait another 30 to 45 days for the movie, although Warner Bros. has started experimenting with simultaneous DVD and VOD release. These delays are designed to preserve box-office and DVD sales, but they also concede the market to bootleggers. There's no legitimate way to watch "Kung Fu Panda" at home today, but there's no shortage of illegitimate ones.

In its petition, the MPAA says each of the major Hollywood studios wants to explore deals with cable and satellite operators that would make high definition versions of their movies available prior to their release on DVD. No details about the price or timing were included, but one would expect the movies to carry a premium. To a family of four, paying $30 to see a (relatively) new movie in high def at home might seem like a reasonable offer, compared to paying $50 for tickets and popcorn at the multiplex. Of course, the reasonableness of the premium would depend on how soon the movie became available.

Now here's the tradeoff.

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Online video bubble alert

Battery Ventures VC talks about online video and advertising Numerous speakers at this week's Advertising 2.0 conference in New York commented on the gap between the amount of video people watch on the Web and the money advertisers spend on online video. The gap represents a huge opportunity to some, with billions of dollars shifting from traditional media outlets to the Web. But the five venture capitalists and investors who spoke Thursday suggested that the short-term outlook wasn't so rosy. As Roger Lee, a general partner at Battery Ventures, put it, the online video field is "dramatically overfunded." Lee said that there are more than 200 companies in the online video market and more than 200 in social media. "Probably 90% of them will disappear in the coming year," he predicted. Other panelists saw overfunding among online ad networks and mobile content plays, too.

Spark Capital VC talks about online video and advertising One reason for the spending gap, said Dennis Miller, a general partner at Spark Capital, is that "advertisers are lazy." He added, "They talk a big game about getting involved in the brave new world.... [but] they've spent the last 50 years buying [advertising time on] three TV networks and playing golf." They're reluctant to buy time on sites featuring user-generated content for fear of running ads next to something inappropriate, Miller said, yet they don't hesitate to run commercials during the Jerry Springer Show or the Ultimate Fighting Championship. "We're in the very early days, it's very challenging still, but a lot of the onus is on the advertising community to step up, take some chances and stop with the double standard." (Spark's investments include EQAL and Veoh.)

Greylock Partners VC talks about online video and advertising James Slavet, a partner at Greylock Partners, said much of the viewership online has been for videos produced by professionals and semi-professionals (think broadcast TV for the former, lonelygirl15 for the latter). This content is "relatively easy for advertisers to embrace, compared to viral, user-generated stuff," so it's likely to drive a lot of growth in online advertising, Slavet said. But advertisers also have to adapt to content getting chopped into smaller pieces and redistributed unpredictably by viewers. So, too, do content companies -- Slavet said Viacom's lawsuit against YouTube "makes no sense at all," and that the company needs to "embrace users as a distribution channel." (Graylock's investments include Facebook, LinkedIn and Digg.)


Lonelygirl15 goes to Italy

Lonelygirl15_still_2 EQAL, the digital entertainment start-up behind the lonelygirl15 phenomenon, announced a deal today with M.A.D. Entertainment of Milan to develop a version of the serial online drama for Italian Internet users. It's the first foreign-language version of the show, now it its third season online. EQAL will co-produce the show (due out late this year) but will rely on M.A.D. Entertainment to line up Italian distribution and advertising partners. The announcement comes less than a month after EQAL landed a partnership with CBS to build interactive experiences online to complement selected TV shows.

The new version of lonelygirl will have different characters and plots, but will follow the same strategic path as the original, founders Miles Beckett and Greg Goodfried said in an interview Wednesday in New York. The goal remains to make the short video episodes the heart of a social network where fans interact with the shows -- not in a "choose your own adventure" sense, Beckett said, but in chat rooms and other settings that blur the line between the characters and real viewers.

EQAL's first two serials (lonelygirl15 and KateModern) have built audiences large enough to attract advertisers, whose products have been integrated into the story lines. Product placement has its detractors, but Beckett said there are practical reasons for EQAL to go that route. Long pre-rolls are unpopular, those shown after a video have very little value, and EQAL's videos are too short to support interstitials, he said. The company also found that the tactic supported the illusion it was trying to create of real people communicating through videos. After all, Goodfried said, real people are more likely to be holding a Pepsi than a can of generic soda.

lonelygirl15 photo courtesy of the lg15 website.


SpiralFrog signs EMI

SpiralFrog free music downloads non-MP3 WMA DRM not Apple iPod compatibleSpiralFrog, the ad-supported music-downloading service, announced Tuesday morning that it has signed a distribution deal with EMI, the country's fourth largest major record company (out of four). The news comes nearly two years after the company signed its first (and only other) major label deal, with market leader Universal Music Group. Ahh, remember when EMI used to be the first in line to support new business models online? At any rate, the deal brings an odd assortment of notable acts to SpiralFrog's roster of free downloads, including Coldplay, Norah Jones, Keith Urban, Frank Sinatra and David Bowie. Company chairman Joe Mohen has said he expects SpiralFrog to line up the remaining majors by the end of the year. Until it does, its service remains intriguing but incomplete, with a growing user base despite some handicaps that will be hard to overcome (e.g., it doesn't work with iPods).


Time Warner doesn't love online TV

Time Warner Cable opposes advertiser-supported free online TV by broadcasters ABC.com NBC.com CBS.com Hulu.com Glenn Britt, head of Time Warner Cable (soon to be a pure-play cable operator), recently engaged in a revealing Q&A with the Wall Street Journal's Vishesh Kumar that highlights yet another impediment to TV networks putting their shows online. Britt warns that cable operators such as Time Warner won't be willing to pay a network as much for the rights to its programming if the same content is available online for free. As he put it:

If all of the programming goes to the Internet, and it's free, then there is a whole source of revenue that the entertainment business is not going to have anymore.

I think we will have to have a new formula for financing television programming, or else we just aren't going to get the same quality and quantity that we are used to today. That's just pure economics. People should think things through before they just go willy-nilly putting things on the Internet.

His argument makes sense if you believe the Net induces TV viewers to abandon the prime-time version of their favorite programs faster than, say, TiVo does. But it's hard to believe that many people skip watching "Gray's Anatomy" on their living room sets because they can tune it in later on their computers. Today, at least, programs transmitted online are viewed on computers, which suggests that the audience is separate from the TV-watching audience. It's time- and place-shifters, or college students who don't have TVs in their dorm rooms.

Britt may have a valid point about the long-term impact of ad-supported online programming. TV sets will eventually become smart enough to tune in ABC.com and Hulu as easily as they do over-the-air and cable broadcasts. But by discouraging programmers from making shows available online, Britt's conceding the Internet to content providers who represent a bigger threat to the entertainment-industry economics, including independent producers, user-generated sites and video bootleggers. Cable operators can try to stand in the way of online content reaching the TV -- after all, they're the ones whose set-top boxes have high-speed modems but no browsers -- or they can try to capitalize on it. Oddly enough, Britt himself said last week that his company planned to help consumers get more Web content to their TV sets (although his comments left some key questions unanswered). Go figure.


Napster and MP3, together again

Napster_kitty_loves_mp3 The original Napster didn't invent the MP3 format, but it did more than any other software company to popularize it. That, of course, was its undoing. Now, almost seven years after Napster went under, the company that bought the its name in a bankruptcy auction is making its first foray into selling MP3s. It's late to the party, but at least it's making a big entrance -- the new Napster has more than 6 million MP3s for sale, the largest collection of any online retailer (excluding those with dubious licenses). Like Amazon.com, it has MP3s from all the major record companies. But Napster Chief Operating Officer Christopher Allen says his company's selection is about three times the size of Amazon's because of the extensive offerings from indie labels and artists.

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The future of entertainment, USC style

Usc_entertainment_technology_center The entertainment industry has been pressuring colleges directly and indirectly to teach students the do's and don'ts of copyrights, hoping such lessons will help abate online piracy. But at USC's Entertainment Technology Center, students often are the ones giving lessons to Hollywood and the high-tech world about the right way to deliver movies and TV shows to consumers who are increasingly mobile and digital.

Etc_screen_grab_3 The ETC, a 15-year-old branch of the university's School of Cinematic Arts, was established as a forum for tech companies and studios to collaborate -- a good example being the center's work on digital cinema. A more recent project is the Anytime/Anywhere Content Lab, a place for ETC staff to put a variety of cutting edge (or even bleeding edge) entertainment equipment and services together to see how they work. Or don't, as the case may be.

David Wertheimer, the ETC's executive director and a former digital guru at Paramount, said that while studios focus on their product, the lab concentrates on the user. The hope, he said, is that its work will show studios and tech companies how to "meet in the middle and provide new kinds of products" that appeal to the next generation of consumers. In addition to interviewing USC students on campus every week about their media consumption habits and attitudes, the ETC brings about 20 students into the lab to talk to its board and try out some of the gear it has assembled. It's not a scientific sampling, but the ETC does try to draw specimens participants from a range of backgrounds and fields of study.

The lab takes up a portion of the ETC's office, which is planted in an industrial strip between the USC campus and the 110. The current configuration includes a home theater, a conference area and a room for testing and experimentation (i.e., a place to answer questions like "Can I make it do this?"). The centerpiece, though, is an 18' x 20' demo room with eight flat-panel screens hung on the walls at eye level. Below the screens sit black metal boxes of various shapes and sizes -- amplifiers, disc players, computers, hard drives, iPods, cell phones, networking gear and the like. It's a bit like an electronics retailer's showroom, designed to make it easy for the staff to add, subtract and connect things. "It could end up looking like NORAD and be totally stressful to people," Wertheimer cracked. The intended vibe, though, is more like the living room you wish you had at home. If you were me, that is.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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