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Monday, 10 September 2007


Selling Yourself

People don't like adverts. Ofcom's Communications Market Report states that 28% of people who record a programme on their DVR do so, at least in part, to fast forward through the adverts. Meanwhile YouTube adverts have been highly unpopular and have been pulled because users found a way to disable them.

This is a problem because the content needs to be funded. It is better because of technology, but that same technology can and is being used to find ways around the things that users don't like about a service - like paying for it.

Advertising can be very intrusive, but if it is to be a viable source of funding for networks, as described in the previous article in this series, we need to get over that problem. The solution, it is argued, is to make adverts personal to you and entertaining to you but in order to achieve this they need to know who you are.

Understanding the Audience
Knowing who you are and where you live will tell advertisers what products to pitch to you because your demographics tell them a lot about what you will and won't buy. Geo-demographics is already a highly refined part of the retail business. Technology offers people who want to sell to you the opportunity to reach out to you through your TV and internet experience.

The benefits to the retailer are clear - reach the customers you want, with a message that talks to them. Eliminate wastage by avoiding customers you can't reach with your stores and fill that airtime with stuff that is of interest to them. Not just brands, but products within brands - the A4, not the A8.

Let’s look briefly at geo-demographics. With data from one of the geo-demographic specialists, anyone can make a very good guess at what the visitor might want from them. How old? Status? Kids? House price? Finance? Loans? Newspapers? Mail order? Attitude to technology

Beyond Basic Demographics
Consider also the loyalty schemes like Clubcard and Nectar. These build up an incredible record of your buying habits and are already used by their owners in product promotions, but consider the opportunity to tie this in too.

Not just refined targeting of the brand, the opportunity is also there to target different products within the brand. Just like the vouchers you get today, consider the opportunity for Clubcard based ads on IPTV.

They will know that my family shop is normally on a Tuesday, so Monday night they can slot in a Tesco advert talking about Finest yogurts or some other luxury that we sometimes afford ourselves. A little gentle persuasion at the right time and bingo! Everyone is happy.

If their records show that we didn't shop today, they can quickly launch into a customer save by reminding me of how good their offer is and what we'd be missing if we went to Waitrose - you see, they also know that my options are limited by geography.

Full Data Sharing
Last week's article argued that by selling your identity and allowing advertisers to know who you are, you can pay, indirectly, for the networks needed to carry the next generation of content. Wastage can be eliminated and a share of the gains could go towards funding the construction of fibre.

Mobile operators are in even better shape when it comes to Mobile TV. They know the user within that household and can therefore be even more specific with what they promote - if we let them.

There is a slightly precarious changeover period as contracts would need to be redesigned and prices remodelled, but leaving that aside for the minute - could we triple revenue per viewer per hour and pay for Fibre to the Home for everyone?

A Controversial Conclusion
This subject has been in the back of my mind since the Telco 2.0 event in March. I was speaking to Chris Barraclough who had just completed his 'Telcos Role in the Advertising Value Chain' report. I was struck by slide 9 which showed the telecoms market to be worth more than 4 times as much as the Global Ad market.

The clear message was that operators should not bet on ads substituting their core revenues from voice, messaging and ringtones. Yes, online advertising will more than double between 2006 and 2010 but so what?

Consider it another way: online advertising will grow by $31bn in that time while core services will grow by $490bn. Even if the entire global ad market went online before 2010, it would only account for 18% of the total market at that point. The danger of dealing in percentages...

Based on these numbers, Chris' conclusion is the only sound one to draw. Even so, ever since then I have mentally challenged the conclusion on the basis that it does not feel right. It feels to me like it should be more equal than that and my perception has been enforced by the number of times I have read of Google's success.

The Danger of Thinking Too Big
I wonder whether or not we lose the trees for the wood in Chris' conclusion. "All" we need it to find £25bn or so of new money to fund the next generation network build. That's certainly more than most of us have in savings, but in comparison to the UK advertising market as a whole (£19bn in 2005, of which £4.8bn went to TV according to one source, although Ofcom's Communications Market Report says this is only £3.5bn) perhaps £25bn is not so frightening.

My thesis in a nutshell is as follows: targeting adverts means that less airtime is wasted and so advertisers will be prepared to pay more. I believe that properly used, we could see TV advertising revenue triple in an undefined period of time. Half of the benefit will go back to advertisers, the TV content producers and the rest, while the other half will generate the new revenue to back up the new investment in fibre to every home. There will be a 7 year ROI.

So we need £10bn a year of new ad revenues and we are there. Fibre for everyone! If we are prepared to sell our privacy...

The Heart of the Problem
I fear that the problem will come from the same people who believe that networks should be open and that content should be freely able to use them as they wish. I fear that the same lobby groups that do not want ISPs to charge extra for premium capacity, will similarly baulk at the prostitution of our identities.

There needs to be a logical debate about how to pay for networks. So far, it seems that people are still on whether to pay for them. It still amazes me that both industry propagates the unlimited* broadband myth. New money is required to pay for new consumption - it is as simple as that - and yet we still see the launch of video ads spun as a value added feature. One of the comments on YouTube's launch summed it up for me.

"To me this is more about honesty and fairness. It would have been fairer if you had said, 'we are doing this because we are in it to make money'. Or not done it at all."

Ethical Concerns
Ethically, the advertising solution is nowhere near as simple as I describe because in it I make no mention of protection against abuse of the data. Maybe this is 1984 after all, for we would be followed everywhere we went online and would have retailers peering through our virtual windows at the first opportunity. It might be happening anyway through the back door as applications like Facebook brazenly use your profile to target you.

At least today we are cloaked by our IP address or can choose not to use an application that may use "private information". We have to have a choice in this because we are selling who we are in the process.

Perhaps tying the IP address to our physical life is such a risk that the concept is a non-starter, but my guess is that if you offer people a discount if they opt-in, cash will win over ethics for most. I wonder though whether privacy can be effectively protected.

It is also possible of course that the bogeyman mentality will take over this argument as it did in debates over Network Neutrality.

Wrap Up
Somehow, we need to pay for the next generation network. Advertising is one option and it comes with the benefit that it can create genuinely new economic value. There is no substitution in anything I have described - the value comes from making markets more efficient and eliminating advertising waste.

But, and it is a very big but, we need to make sacrifices in order to realise the benefits. This is true in any model, but here the sacrifices are very much more complicated than simply paying more for the service.

By revealing who we are and allowing people who want to sell to us to reach us on a one to one basis, we are paying in kind for the services that we are consuming. This means you have to sell your identity. Are you prepared to do that?

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Thursday, 6 September 2007


How Much is Your Identity Worth?

Would you sell your identity? Probably not if that meant people peering through your windows or being followed by CCTV everywhere you went, but I am not talking about Orwell's 1984...

I am interested in your identity because it is a hugely valuable reference point for advertisers that want to talk to you. The more they know about you, the more refined they can make their message to match your requirements, the more likely you are to buy their goods. Facebook for one, are already trying to exploit the opportunity.

Splattercast Advertising
In traditional media marketeers simply do not know who they are talking to or whether the intended audience is even tuned in to the adverts they place. This is particularly a problem for TV where the demographic refinement is severely limited. At best, they know the TV region and the programme playing at a given time, so they have to be general in their messaging and hope that the right people tune in to the show.

Some programmes are targeted at niches broad enough to help advertisers - football and beer immediately spring to mind - so Carlsberg for example, can talk to its potential audience in quite a specific way already.

It gets better in this example because the customer can actually be encouraged to consume the product there and then. Of course this works for other brands too whose products may also be in the fridge, but the bet is that next time you buy beer, you think Carlsberg.

Advertising Wastage
But even in this example, there is wastage - and I'm not referring to the dregs that some people always seem to leave in the can. There is a subset of the market that Boddingtons would like to reach and would be prepared to spend more to do so than Carlsberg. Carlsberg could get more bang for their buck too by being more specific with who they talk to. Shandy drinking southerners probably.

There are many sub niches within a broad market as this example shows, however badly. Targeting each of these niches individually, it is likely the sum of the parts is will be much greater than the whole. If brokers can break down the audience into its constituent niches and manage the growth in scope, they can charge advertisers more per viewer per hour.

IPTV Business Model Required
IPTV is the perfect platform for targeted advertising because of the ability to individually target consumption, but there is a business model problem facing the internet. Whichever way you look at it, there is investment required to grow the networks to cope with online entertainment and revenues are not growing to pay the bill.

This new money has to come from you - in the end only the consumer can pay. But this new money need not come directly in the form of a bigger broadband bill: advertising is one of a few examples of alternative approaches. This one needs your consent, but if it saved you £30 a month would you sell your identity to your ISP?

Why the ISP? Because they are the guardians of your internet identity. They have the missing link - they know both the postcode and the IP address of an individual user.

The Missing Link
When an internet content request is received, the website owner knows your IP address, can tell which pages you visited, links you clicked, how long you spent on a page but in terms of who you are, they can determine the network you are on and the country you are in but very little else. MaxMind for example, specialise in the geo-IP field and I use them some of my P2P geo-location analysis. The best they can do though when given my IP address is to say that I am a Zen Internet customer somewhere in the UK.

Of course Google add to this by building up a profile of you through your browsing history, search data and RSS feeds (if you use Google Reader). The problem here is that your internet habits often miss where you spend the majority of your money - on FMCG commodities - where brand and perception are the only real differentiators and where advertising plays the biggest role.

Hands up if you have seen a TV advert suggesting where to buy groceries. Keep your hands up if you have done a Google search for the best grocery store near you. My point is that internet searches are for unusual products, whereas advertising deals most with commodities.

If the advertiser can interrogate the ISP to determine the postcode to match a user's IP address they suddenly have the opportunity to really target adverts for these FMCG goods. They could serve back a set of adverts, specifically to that user for brands and products that are most likely to appeal. You win because you get the ads and the products you want. The advertiser wins for the same reason and the ad broker wins because he can charge more.

The Value of TV Ads
ITV in 2006 reported £1.28bn in advertising revenues. BARB viewing stats can be worked backwards to arrive at approximately 6.5bn viewer hours per year on ITV. Divide one by the other and you can see that ITV gets 20p per viewer per hour in ad revenues.

In the same period, Sky reported £342m ad revenues for approximately 2.1bn viewer hours. This gives a slightly lower figure for Sky of 16p per viewer per hour. Sky gets subscriptions on top of that of course. These are ballpark figures but it is a benchmark nonetheless.

Per household and excluding the BBC, you have around 17 hours of TV viewing per week. At 20p per hour that works out at around £14.50 per household per month.

New Advertising Revenues to Build Networks?
Just supposing that this works and targeting doubles the advertising spend by a given point in time. Assume the ISPs keep half the benefit for their contribution (£7.25 per month) and within 18 years you have more than £25bn NPV of accumulated value to the network industry. Enough to fibre every home in the UK, not just 90% of them...

In all likelihood, investors will look for a much faster return. At £14.50 per month extra to the networks, the £25bn NPV figure is hit in seven years. This is probably acceptable for an asset with an expected 10 year shelf-life before it too will require a further, if perhaps slightly less costly upgrade. To generate £14.50 extra per month for the networks, the effectiveness of adverts needs to triple as a result of the new capabilities. Is this possible?

The opportunity for advertisers increases dramatically because of the interactive rich media capabilities but in order to exploit the opportunity to target you, they need to know who you are. The technology is probably well capable of delivering on this promise, but are we prepared as individuals to sell our identities?

In Part II, we will be looking in more detail at what personalised adverts mean and some of the arguments against this as a means to fund the underlying networks.

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Tuesday, 28 August 2007


Veoh: Different Approach, Same Goal

Joost and the BBC's iPlayer have hogged many of the headlines around IPTV in recent months. These two high profile IPTV platforms work in markedly different ways to the point where they are almost mutually exclusive. I was critical of the iPlayer's lack of streaming functionality while Joost is also struggling for content because of its ring-fenced system design.

It is worth looking at Veoh, not because they are set to take on the world, although they might just get lucky. The reason is that there are bits of their service which others could learn from and if nothing else the Veoh model challenges the establishment in a number of ways.

Veoh Today: Cheap Thrills
Veoh have an existing YouTube clone that seems to be finding its niche in 18+ rated content. Of the most popular 20 videos yesterday, 13 were rated 18+. I could go on to explain the inadequacies of the family filter, but that is not the point of this article.

Perhaps Veoh's new service, VeohTV, is an attempt to move out of the gutter - it is certainly has a lot more respectable content - with its new interface that challenges some of the boundaries of existing services. If it can make its recommendations engine work as promised and if its open network philosophy wins, it could indeed justify it's own hype of being a Joost Killer. There is a game going on between the content owners too, you know...

Very Limited Success
Everyone has heard of YouTube and Joost. Even Babelgum has managed to get itself on the radar by virtue of its "alternative" approach to content. Many people outside the US won't have heard of Veoh though, because it is so small. Alexa ranks their web site as the 27th most popular in the US, in the UK it is number 67. Globally they are down at number 107.

Data from Nielsen/NetRatings shows that there are now nearly 140m viewers of online video, up from just under 60m a year ago. YouTube has managed to grow its share of the market (37% up from 33%) in spite of advances by Yahoo! (11% up from 5%) and AOL (11% share in 2007).

Veoh's share is only 1.8%, up from 1.2% last year. Yes, they are growing but where Google has 69m viewers, Veoh has 2.5m so why am I bothering to write about them? It's not like they are a new company, but there is something about the brashness of it all that is worth noting. VeohTV is an interesting evolution.

A History of Disruption
Currently, is a YouTube like service for a combination of user and professionally created content. It has two advantages over YouTube, although on the face of it, these have not been particularly effective.

For viewers, they offer download and store PVR functionality (like iPlayer) as well as streaming of videos (like YouTube & Joost). Publishers in have their content automatically added to YouTube and Google Video as well behind the scenes. Publish through Veoh and you get Veoh + YouTube. Publish on YouTube and you just appear on YouTube. Clever, if sneaky.

VeohTV: Rising Above
VeohTV is a very different service - although the philosophy is the same. The VeohTV play is to rise above the content owners and emerge as Your Online Video EPG. VeohTV is a Video Browser - users are presented with a consolidated list of hundreds of web sites in a wide range of categories that already host free video on the internet.

The VeohTV Video Browser is a step up, tailored to improve video playback over standard web browser capabilities that power and YouTube. Veoh's value add is the personalisation that its overall set of services learn from the users behaviour. This means that in the long run, the service increasingly recommends content to you that you are likely to enjoy.

On VeohTV you have channel lists by name, category, favourites etc so you can make it work for you. On the standard lists, ABC News right next to the link for CBS News and CNBC. It's an EPG where you can drill down and see a further list of programmes on that channel to watch either streamed live or for download and store.

Controversy Lingers
Users browse videos that are posted anywhere on the web through VeohTV's EPG which has VeohTV adverts on it. Veoh claims not to require partnerships with content owners before they can include the videos in their EPG,
but this is controversial. Users do not see the ads on the content owners site - which VeohTV has disintermediated from the delivery chain.

This costs the content owner site traffic, which may be an important source of revenue and branding. It may even be why the video exists - to generate and maintain site traffic. Although the content owner can still embed ads within the video, any branding on their original web site is lost and replaced with the Veoh branding (sponsored by Verizon) on the customer's interface.

See the two different interfaces to the same content firstly an and secondly the same programme on VeohTV. On their own version, ABC is getting paid by QuietAgent for the ad-link directly beneath the webcast link. On the VeohTV version, this revenue opportunity is lost.

AI on the EPG
VeohTV's value add is the AI that they are building to help you navigate the huge volume of available content on the open network. There is a recommendations engine bolt on coming.
This delay is pending the patent of the AI that supports this feature. If they can make this work to predict what people want to watch, they will be extremely well placed to take on the role as the IPTV EPG.

This is where what VeohTV offers touches Arootz because both claim to be able to proactively download what you are going to want to watch so that it is there when you need it. Unlike Arootz, VeohTV is not at present designed for multicast so the implications on the networks could be very different. Where Arootz uses Multicast, VeohTV is a unicast service and this proactive ability in VeohTV promises to increase the burden significantly.

When combined with the recommendations engine, this PVR capability means that VeohTV can download a whole bunch of stuff on the off-chance that you might be interested - using your network resources to their maximum potential. With enough hard disk space and a fat pipe, you could have the whole schedule punted to you every day.

Standards War
There is a standards war being played out for what I have previously termed the IPTV operating system. Specifically these are the components that deal with content upload, EPG, hosting, distribution, caching and the client video player and DRM. Most of the recent developments like Joost have offered this whole set as their core service to the content community.

VeohTV is different because it is just an EPG & video player. It simply directs the user to the content owners own CDN - my stream from ABC news on VeohTV came from a server within my ISPs network, the same source as when I viewed the same file on When a user downloads a file for later viewing, the application has a P2P option although in the ABC news example exclusively preferred the download server within my ISP again.

This isn't some specialised VeohTV caching, it just happens that my ISP has a cache with ABC content on it. A YouTube clip downloaded through VeohTV came from Google servers on the internet, so VeohTV clearly leaves the hosting and distribution costs with the content owners.

The Battle for Eyeballs
The winner of the standards war will be where a significant chunk of advertising revenues land. Joost are aiming for the same pot but offers the whole OS in its value proposition. Perhaps in doing so, Joost gains a little more control than the media moguls want to give up yet. There is definitely some hedging of bets going on, with VeohTV as one of the disruptive forces, but this is a battle where inb the end "there can be only one" (or two perhaps).

Consumers are not going to runs lots of different software applications to watch different channels - there is an aggregator role to be filled. In spite of the technical and philosophical differences, VeohTV is fighting Joost, YouTube, Babelgum and even Kontiki for this role.

VeohTV's stance as a light touch aggregator rather than a value added network provider is interesting as it gives content owners the choice between open and closed networks at a time when the right way to distribute video is still unclear. There are elements of closed networks like DRM which weigh heavily in its favour, but VeohTV effectively deals with other features like specialisation and video playback quality that were also thought to favour closed network applications.

On the other hand, open networks have often won internet standards battles - or at least held onto a position in the face of a proprietary goliath - because no managed service can properly scale to deal with the breadth of the opportunity in an open system. Veoh's model has a chance of survival, even if it may not dominate.

More Than Meets The Eye
While there has been
aggressive posturing and threats of legal action from those who want us to believe that VeohTV's approach amounts to piracy, Veoh is not entirely alone out there - Michael Eisner, formerly CEO of Disney sits on the Veoh board and Time Warner are also investors. Disney own the ABC service I tested - oh, what a tangled web we weave...

Many might not notice the time-lag between a video appearing on and on Veoh's ABC channel, but it is there if you are interested in the above screenshots. Old news anyone? These snaps were taken at 2.45pm on the 17th August, before the webcast from that day was released so is current. Veoh still has the video from the 15th August as its most recent - a day out of date. How does this happen...? Does the day's webcast need to be uploaded into the directory after all, or do Veoh and Disney's owners ABC have a delayed publication deal?

The delay is enough to make me wonder whether VeohTV really is an open network after all or whether it just another publishing platform with gatekeepers at the door. Perhaps given the nature of the content on their first generation service, we should be glad that they are managing content more closely this time.

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Monday, 20 August 2007



A hat tip to WebTVWire entrepreneur Chris Tew for his exclusive scoop on WiTV that was picked up in a number of places including Mashable and TechDigest. It seems that we have yet another name to add to the growing list of companies trying to become the IPTV Operating System.

What is it that everyone is excited about with WiTV? The service is not yet available, even as a private beta so they surely have a way to go to catch up with Joost and the others they are fighting, including the other system out of Italy, Babelgum.

It is too early to compare the service with its competitors. This is not even a pre-announcement, it is an intentional leak, but for me a lot of the excitement hinges on the screenshots that we have been shown. These crucially show a range of Disney films - does
CrossCast System from Lecco near Lake Como have an extraordinary deal with Disney or are these screenshots ripped directly from WebTVWire just mock ups?

Access to Disney's content vault must surely rank as the no. 1 goal of all IPTV distributors. Those of us with children will know how a single one of Disney's products can be viewed repeatedly, unlike almost any other publisher's product. With the possible exception of Dreamworks with the Shrek, Wallace & Gromit and Chicken Run franchises, there is nothing else out there that could remotely fill a rainy day like a Disney catalogue can. Any IPTV network that offers me this is going to get taken very seriously.

There also seems to have been some thought given to user interaction, which although not particularly relevant within the Disney context, could be a very important feature for more grown up broadcasted content. At a time when phone-in shows are attacked for malpractice and termed a rip-off, user interaction may move online more quickly.

The advertising capability of WiTV is also shown on WebTVWire although the commentary is more speculative. It is noticeable that the ads show during the main play-time as a banner on the bottom. Nothing wrong with that of course, as long as the content owner is on board - consider though the Ford branding in recent James Bond films for example. Can BMW sponsor the WiTV copy of such films when they are shown? It won't work if they can...

There are also one or two neat little add-ons like chapter management within the promised content experience, but how these roll out in practice will be interesting to see. Personally, I will reserve judgment until I hear confirmation of otherwise from Disney and until I have tried the service myself. There is no suggestion if / when either of these may happen in anything I have read and as things are changing so quickly in this space I might not start holding my breath quite just yet. We shall see...

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Monday, 6 August 2007


Arootz: One to Watch

Sometimes, you see something so elegant and simple, you wonder why no-one thought of it before. An old colleague and regular visitor to this blog contacted me the other day to advise me to check out Arootz - and I'm very pleased he did.

A Relative Unknown
I wish I could claim an exclusive, but I can't. They have been in BusinessWeek & the Jerusalem Post already but it appears that the point was lost on most people. There are only 53 blog entries on the company, the vast majority seeming to repeat BusinessWeek verbatim while most of the rest focusing on the fact that the company raised some cash recently.

One article I found does add some value, commenting on the BusinessWeek piece rather than just repeating it - more questions than answers, concluded - and I agree with that part at least, but perhaps Mr Rayburn had a lot on that day because he didn't actually ask the questions. I have asked the questions - I contacted Arootz and their CEO replied with a significant amount of detail - and having looked into it, I have to disagree with the negative thrust of what Dan says.

Old Technology, New Ideas
It is true that multicast has been around for ten years or more. I know, I was at UUNET 10 years ago when UUcast was being hyped and developed in parallel. As with most other attempts to use multicast, that product failed to find a market because in the end, all it was doing was replacing broadcast and as we all know, if something isn't broken...

Multicast has again come back into people's thinking recently as IPTV services have been rolled out using the technology for the linear (live viewing) portion of what they offer. The problem there remains that multicast has not catered for timeshift behaviour. If you want on-demand, IPTV has to unicast and that means that you use a whole stream all to yourself.

I was discussing this problem with an eminent industry architect back in April at the ISP Forum event - his suggestion was staggercast, which effectively means a multicast stream of a programme being distributed every N minutes, much like Sky's multistart service for prime time movies. It was a definite improvement on multicast / unicast combinations already in use, but doesn't really tick that on-demand box. is also correct in highlighting that personal storage has also been around for ever. Quite right, it has, but what Arootz has done is combine this with multicast so that the network sees one stream and yet everyone gets a copy that they can watch what they want on demand. It's a mashup of two very well understood technologies and that is the simplicity that I refer to in my opening statement.

The Solution in a Nutshell
In summary, there are 3 elements - Distribution Servers where the content owner injects content, a Multicast enabled network and a set of user Multicast-2-Storage (M2S) agents sitting on PCs or STBs. Arootz sells this CDN as a managed service to content owners and works with the ISPs to make sure that multicast is turned on over the network. I'll come back to the web of relationships later in the article, but I will focus first on the service piece.

Targetted Adverts
My initial reaction was: ok, sounds good they've dealt with on demand but if you are multicasting, you miss the personalisation capability that must be at the centre of IPTV to make it a step beyond broadcast. Erm no, they've thought of that.

"The ads are delivered to storage ... based on the advertising targeted parameters, the decision which ad to show is targeted individually (based on a doubleclick server somewhere) and then the ad is inserted in real time into the video stream but since it comes from storage, it is fast, high quality and real time." Arootz's CEO Noam Bardin.

That's clever - the media and the ads are delivered separately and reassembled to create the final, personalised media file...

Navigating Uncharted Waters
What about navigation and finding what you want among the wealth of possibilities?

"We allow users to subscribe to RSS like feeds from a variety of sources ... We provide interfaces for preference engines to assist in selection of content such as 'the highest rated channel based on yesterdays actual viewership' or 'all content with the word Shark somewhere'" (Shark is of course an example of something you might be interested in.)

Hmm, I like that too. This is the elegance - mashing up social networking, RSS and an EPG into something that can cope with the huge volumes of content...

Huge Volumes of Content
Arootz estimates that the average user consumes 125GB of content per month. Obviously it depends on resolutions: it might be a fair bit less than that for standard definition TV, but if we were talking about 1080p, we could be looking at four times that figure. Is 500GB a lot of data? I think that depends on whether you are a unicast network or a hard-drive.

Terabyte drives are the basis for Arootz's business model and that starts to explain why you have not seen this model previously. Storage has always been far too expensive to make plans like this work but Arootz reckons that by 2010, you will be seeing cost effective drives offering 5 Terabytes... At this point, the limitation is back on the network.

Multicast takes care of the core network capacity issue because as with caching models I have discussed previously, each media file need only be sent once to each exchange and not once per user as with unicast delivery. This saves many thousands of identical 2Mbps plus streams and brings us back and the point where the bottleneck is again the physical speed of the local loop.

Use Case Example
While Arootz claims that its service only uses off-peak capacity, this is a configuration option that can easily be changed. The idea is that you watch live TV via the live multicast feed. If you are not watching (or are watching and have some spare network capacity), other programmes are sent down to you and stored on your machine. You pull these up on demand.

Of course you can't download the entire programme catalogue. Lets say there's 10 channels that make up your regular viewing, you can't even download everything on each of those unless you have a very very very fast connection. Choosing which programme to download (because you might want to watch it) is the job of the M2S AI agent.

The question then becomes whether the AI is good enough to make sure that the file you want is already on your hard drive when you come to watch it. Backing that up, there's the fall-back unicast option in the event that you are feeling a bit wacky today. It looks like it might hold together.

You might even find that the model allows you to escape some of the shackles of the local loop speed as it allows you to watch delayed feeds at 720p (6.4Mbps) even though your line may only just be good enough for 480p (2.5Mbps). A 2.5Mbps connection maxed out enables you to receive something like 800GB per month. For 720p content you need the AI to give you a 40% hit rate (you watch 25 hours a week, it downloads 65 hours that you "might" be interested in).

So Far, So Good
Arootz links multicast with storage and adds personalised RSS subscription with targeted advertising. Sounds good so far doesn't it? The software assets they have are clearly well thought out and fill a growing need. But what about the issues?

The weakness of the Arootz model is that it requires each link in the chain to be working in harmony. The content distributor must plant the content on the CDN, the ISP needs to multicast the channels and the PC or STB hardware requires the M2S software to take advantage of the storage and run the channel selection process.

Conflicts in the Supply Chain
These three parties are not exactly in cahoots. The interests of content and network are juxtaposed and that led to the Network Neutrality issues of 2006. Sitting uncomfortably with a foot in each camp are the hardware companies. Only Sky, with assets in each area following their acquisition of Amstrad last week, seem remotely aware of the need to align the interests of the players in the supply chain.

Although Arootz has an elegant solution to the video unicast problem, they need all elements in the chain to see it and play along to make it work. Without any one element, it breaks down. If they work together, everyone wins. So who is pulling it through so that the vision becomes a reality? As with other efforts to bridge these gaps, is it a question of chicken or egg?

"Look at it differently – if you believe (and I do) that most of video is going to be consumed off IP networks then there is a scaling problem with the current technologies. This scaling is quality, cost and technical. The main bottleneck is the network and our solution is the only cost effective way for this to happen. It may not be us but it will be multicast based. Just like internet advertising was dead in 2001, premium content would never go online in 2005 – Multicast will have to rebound because unicast cannot scale to deliver the cost/quality we expect.
" Noam Bardin again.

I agree with everything he says there, but it doesn't really answer the question. What is the incentive for each party to play ball? I think the answer is actually much more simple.

Cash. Cold, Hard Cash.
The commercial model is that content owners pay Arootz either as a straight arrangement or as an advertising revenue share. Simple enough so far, but in parallel, they are selling to ISPs.

"Our offer to them is 'let us accelerate your content on your network such as VOD, Internet TV and other components'. We will then wholesale the access to 3rd party content owners and provide them with a revenue share back so that they get more content distributed on their networks, more efficient distribution (less load), they get a slice of the action and thus are part of the value chain, unlike P2P where they carry the cost but are not part of the upside."

Aha! Someone is taking the bull by the horns and putting in place a way to route the money so that the networks open up and get paid for carrying content. It would be easy to think that the netcos should be happy with cost savings, and try and keep the distribution fees to themselves, but this statement above all the others shows that Arootz is pragmatic and understands that a virtuous circle needs to start somewhere. And the hardware?

"It can be embedded in software or hardware, it provides distribution and targeted advertising capabilities" and "we are not the brand"

Where Next?
As with every small company, there are a million things that can go wrong as larger and better funded alternatives try and achieve the same thing. That said, the technology that Arootz has and the pragmatic approach shown by their commercial model is an excellent starting point.

Channels to markets (they are in many) still threaten to derail the company as putting together the video supply chain involves dealing with some very heavy hitters. It may require the sponsorship of one of these big players to get the ball rolling, but this is a solution where without compromises, everyone wins. Worth keeping an eye on...

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Thursday, 26 July 2007



It's not even a month since the last i launch, but tomorrow sees the launch of another service that could disrupt its industry to an even greater degree than Apple promises to do with mobile telecoms. This time though, thankfully, we won't have to pay the homeless to wait in line for us to get hold of it.

The BBC launches the iPlayer tomorrow, but unlike the iPhone launch where all you could find was praise and hype, the BBC faces nothing but criticism, doomsday scenarios and even calls for a ban on the eve of it's big announcement. No wonder the folks behind it have decided to find pastures new.

The problem is that the BBC is publicly funded. It gets its money from everyone in the UK with a TV set because we all need a license to own a TV. The BBC's license revenue comes in exchange for a responsibility to deliver a universal service, free of advertising to anyone who pays the license fee. Foreign readers may find this curiously eccentric in the 21st Century, but the BBC is a national institution and we are British so that's the kind of thing we do.

This is where the problems lie. The license fee was designed at a time when the BBC was broadcasting: it had no competition in 1922 when the license was introduced to cover radio. The TV + Radio license was introduced in 1946. The Sky empire was still just a twinkle in the eye of James Murdoch's grandfather at that time.

The company (if you can call it that) is now operating in a very different world, but for many reasons (most of them sentimental), the BBC is still funded this way. As a result, it competes with other TV channels (and web sites) on an unequal footing because their funding model does not expose them to market forces.

Because the BBC is publicly funded, it has been free of the commercial pressures that competitors face on a daily basis. Has this given it an unfair advantage...? How many R&D departments would be given 4 years and £3m to deliver a project? Surely, anyone else in the same position would have lost the faith of shareholders well before now and management would be history. The BBC's unique position has shielded the iPlayer and given it breathing space in which to develop the service.

On the other hand though, how many R&D departments would face an Ofcom Market Impact Assessment, a Public Value Assessment, a full review by the BBC Trust and scrutiny by parliament before it could launch? The kerfuffle about the lack of service on Macs and Vista - there is a petition with 11,000 signatures with Downing Street asking the PM to ban it - is frankly pathetic. Do people really expect the BBC to be able to launch the service working 100% and available to everyone on day 1 with no testing?!?

Anyone who has ever been involved in product management will know that this is a recipe for disaster. The BBC cannot eat the elephant in one bite, but because of its funding model it will be forced (they might say "easily persuaded") to deal with standards issues like no other entity. The elephant will be consumed.

The Mac and Vista options might be addressed by making the content available through other media players as long DRM issues can be resolved. I suggested in my LUI Part 6 piece, where we described a prototype of the future of IPTV, these players are likely to include the likes of Joost. Because of its universal service obligation, the BBC is not in a position to say no.

The BBC's obligation extends beyond the internet however. For those without a PC, the BBC is investigating Virgin Media's on demand platform. This still leaves a chunk of people with no access to the service because of technology constraints on the user's side (no PC, no cable, no broadband).

Even though Freeview does not offer the bandwidth, the BBC is sure to get embroiled in how to serve these users, where other competitors would simply write off the niche as too expensive to serve. This is the flip side to the breathing space they have had to develop the service.

We already have video on demand from Channel4, an evolving service from Sky and a promised launch of a service from ITV that looks spookily like that promised by the BBC. So what's the big deal with the BBC's launch tomorrow? I've said it could disrupt its industry to a greater degree that the iPhone, so I had better explain myself...

Driver for IPTV Adoption
Ofcom's MIA states that by 2011, the iPlayer is likely to account for 3% of TV viewing hours, which doesn't sound like a lot. This is in fact about 45 mins per household per week, assuming total viewing remains as today at around 25 hours per week.

But, as with Freeview, the BBC gives this new(ish) technology the credibility to go mass market very quickly. There will undoubtedly be a knock on effect on all other broadband television services because there may not be a more trusted organisation anywhere in the world than the BBC. If IPTV is good enough for the BBC, it's good enough for me...

Looking closer at the Ofcom projections: 3% of total viewing is 9% of the BBC's current viewing. It would be reasonable to suggest that competitors services might grow in line with the BBCs. This would mean every household in the UK watching on average 2 hours and 23 minutes a week of IPTV by 2011. Over 3 billion hours a year...

The MIA also says "The costs of the broadband capacity required to support the services could in aggregate be between £399 million and £831 million over the next 5 years." Once the capacity is there "the additional capacity would also be available for use by a wide range of other services, including commercial on-demand services, [so] it would not necessarily be appropriate to attribute the associated costs to the BBC services in isolation."

Ofcom's model says that the average capacity increase from the iPlayer will be 3GB per user per month by 2011.

Assuming that other broadcasters follow the same adoption curve, you are looking at almost exactly 9.5GB extra per user per month to serve the 9% of viewing hours at standard definition. This will add around 46kbps per user to an ISPs peak traffic load (approximately doubling what they have today). This is low, because I am using data that shows that early iPlayer alpha trial users had web-surfing-like peak to mean traffic profiles.

TV usage profiles tend to be much more peaky than web surfing traffic. Where you might get a peak to mean ratio on web traffic around 1.6, on TV viewing profiles, this looks more like 2.8. Cutting a long story short, this would push the traffic impact of the iPlayer from 46kbps per user up to around 81kbps additional traffic (easily tripling today's usage, from just one application).

Reverse engineering Ofcom's 3GB per user per month figure from the 3% penetration rate shows that they assume a 2Mbps encoding profile in their models. This suggests that high definition is not being taken into account.

If the BBC were to deliver at 1080p instead (as in the US have announced they will), you might want to multiply the total capacity requirement by 5. With all content (ITV, Sky etc) as HD, the 9.5GB might be 45GB extra for every house connected to the broadband network. This would push the incremental peak load per user up by between 220kbps and 385kbps depending on peak to mean profile.

Where there is demand, there is money, right...?

Actually, no. This is the other major problem with the BBC, the license fee and the universal service requirements. The BBC's iPlayer will not generate money from adverts (the BBC does not do ads), from subscription (the license fee already covers the service) and any other creative sources of income (including abroad), are likely to be relatively trivial.

This is not an issue for the BBC because the content is paid for already (its a catch up service of stuff already produced for broadcast). The service creation costs have been kept under control at £3m and rather than having to pay a big hosting bill, Kontiki's P2P client is being used, theoretically relieving the BBC of the burden of distribution costs.

The big losers are the networks who have to carry all this extra traffic and have no way of monetising it. This is again a BBC-specific problem because with other commercial broadcasters, the ISP is in a position to do an ad-revenue share agreement based on the unique element that the ISP can provide - the postcode. (We are going to come back to this point and the revenue opportunity from commercial broadcasters other than the BBC in LUI Part 10 early next week.)

The use of P2P actually makes the problem much bigger for the ISP. Historically, the BBC's web traffic, although significant, has been manageable via direct peering relationships between the ISPs and the BBC. Replacing this with P2P looks (to me at least) like a two fingered salute to the businesses that have to transport the BBCs product.

Even using the lowest results in the analysis, the iPlayer promises to double the traffic on the UK internet between now and 2011. On top of that the iPlayer opens the door to other broadcasters, which could mean that instead of doubling the volume of traffic, the iPlayer launch could drive an increase by tenfold or more.

I'm going to be watching the iPlayer's use of bandwidth very closely over the coming months. As I have done with Joost, Babelgum and 4oD, I will be running traffic source analysis and looking at where the Kontiki client gets its traffic from. Channel 4 also uses Kontiki, but using their service, I found that the scarcity of peers meant that much of the traffic was client server from the seed caches instead of actually using P2P.

I will be keenly examining the peer hit rates as that will determine the BBCs costbase. I will also be looking at where these peers are and whether BBC/Kontiki keeps traffic within the service provider's network or whether (like other P2P I have tested), in-country traffic source management is random. I will be publishing the findings here at periodic intervals.

If I can get the client from the website, the first set of data will be published here by lunchtime tomorrow...

UPDATE: no client = no data = no update. Sorry folks...

I got to the site by 7.40am, regsitered but have yet to receive the invite. I wouldn't say that the message board is on fire yet (10 ir so people grumbling about the same thing), but there are people who stayed up until midnight to register who are in the same boat.

They let Mashable in though, so if you are looking for a sneak peak that's the place to go. If you want a different perspective on possible adoption rates, I also found this.

IWR were able to run an initial test and reported that a 30 minute programme was 108MB, which suggests an encoding rate of 480kbps. It is not known what the download speed was, which may be different from the encoding rate to allow for buffering. The picture defaulted to 400 x 200 screen size, which sounds small.

More on this when I get my prized invite...

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Monday, 23 July 2007


LUI Part 6 - Television over the Internet

This is part 6 in the Leeds Unbundled ISP (LUI) series that Keith McMahon and I are producing. The aim is to deliver a view on the commercial prospects of a hypothetical ISP, serving a niche community (Leeds in our example).

Before we can properly present the numbers though, we need to describe what those numbers are modelling. We have already looked at backhaul, staffing and our short and medium term product set. Today we look at the biggest variable in the future of our made up ISP: video.

IPTV is better for viewers than broadcast because it is truly on-demand. It gives viewers timeshift capabilities for BBC, ITV, C4, Five and Sky so that they can watch what they want on TV around the rest of their lives. So what is the variable?

While we are confident that video services like YouTube will continue to grow, we are not sure whether mainstream TV will successfully move online because of economic, marketing and technology challenges. IPTV is competing with established digital platforms (satellite, cable and freeview) that already penetrate 18m homes (more than have broadband). Getting mainstream TV online means replacing these distribution networks with the internet.

Consider the scale difference between the two extremes of service adoption: YouTube consumption is a few minutes at a time, a few times a week. TV is 25 hours per household per week. YouTube is currently 200kbps, IPTV as a vehicle of HD means 10Mbps.

There is very little that LUI can do to make any money from YouTube, but conversely, once we have our gigabit backhaul links in place, we are not too concerned about the cost of carrying its traffic. If they cranked up the resolution to the levels used by Veoh (700kbps), we might be a bit more concerned but as it stands, we are happy enough to carry the traffic.

What cannot be allowed to happen is for us to end up in a situation where we are a simple transport network for everyone else's broadcast-replacement services. Our commercial model, and that of every other ISP in the world, is based on carrying relatively small files (peak traffic over total users equals around 35kbps). TV viewing moving over to the internet and adopting HD resolutions will make this closer to 5.5Mbps (159 x the current dimensioning).

This needs to be paid for and the value is in the content: people buy music, video and TV. They don't buy bits and bytes. This means that we need payment for our bits and bytes bundled with the payment for the music, video and TV services. This means adopting a Fed-Ex model for superfast delivery of premium, newly released content and ad supported models for the rest.

Will this happen? Maybe, but only if the economics are right - we know that IPTV offers better functionality than broadcast because the internet uplink opens new doors for interactivity. With the public becoming disillusioned with telephone based interactivity on TV we think that the internet can rescue what had until recently been a popular genre of content.

Furthermore local loop speeds of 20M or so means HD at 1080p is practical and can be made available on demand. It's all technically possible but all these developments will only be attractive at a price point that is competitive with broadcast.

So where does that leave LUI?

Nowhere, right now at least. We just have a basic access service with some customers on CPS. Next up dev wise is the photo blog (due Q4 2007) and starting work on the softswitch (due 2008 perhaps). Enhancements to the photo blog and community stuff are mid 2008 launches.

We looked at buying in a wholesale IPTV service, even before we unbundled the access service. When Tiscali bought HomeChoice, we heard some suggestions that the HomeChoice platform would be wholesaled alongside Tiscali's LLU platform. While the attractions were obvious, the differential advantage was not, so we rejected that option.

More recently, we have looked at Iliad's platform and the service that Fastweb offers with a view to buying that in lock, stock and barrel. These are not currently deployed in the UK and although we could overcome the competitive issue to some degree, we just felt a little underwhelmed by the idea of taking something that had been done before.

LUI wants to do something a little differently and has to exploit our core concept: our localness. For LUI, IPTV has to be build around the community, but we also have to remember that it is still essentially a distribution network for mainstream TV that replaces the satellite dish, cable or freeview aerial in the home.

LUI's problem is that our customers can get all that from other operators, notably Sky & HomeChoice, so where we need to be different is in the EPG. We need to offer social networking in the EPG that exploits our localness and the social groupings within our customer base.

We are a network company and a small one at that, we need someone bigger to bring us the content. That means the content won't be exclusive so we have to add value to it another way. Hence the EPG and social network mashup.

That means things like the ability to recommend a programme to your circle of friends and comment on what you have seen, perhaps with an SMS gateway tacked on for alerts. When you turn on your EPG you see the linear TV option and the timeshift scroll back for the mainstream channels plus a Friends Recommend Channel.

We also have the Leeds Community Channel which will be developed before our IPTV service, but which needs evolve onto the TV when IPTV does arrive. The Community Channel is where local interest groupings (schools, community education, sports teams etc) can post virtual private videos to their members - much like the Iliad offer. All this is built on top of a core of content based on today's free local press.

We are already lobbying to force the publicly funded BBC content to be made available via public API so that anyone with a delivery solution can use it to deliver BBC content. The others are different because they are commercial entities, so why will ITV, C4, Five and Sky let us carry their stuff, sometimes in direct competition with their offerings?

Money. Pure and simple. They can get more from our subscribers if they deliver content via our network than they can via other means.

How? Because we know the customer's postcode and we can deliver that when we place the request for content. We also deliver the ip address of course, but they would get that anyway. With the postcode, they can then use Geo Mapping databases to paint a very good picture of who the consumer is, so they can use a) demographic and b) personalised advertising. They can't get this postcode without the ISP.

We could also consider sharing any special interest profiles that the user may create on our social network but this raises some ethical issues I suspect, not to mention the technical challenges.

But all of this needs to be pulled together: content, advertisers, client software, DRM and CDN. We are looking for one party to bring this to us. LUI's plan is to work with them and vice versa to prototype the future of IPTV.

The prototype is based on Joost, or Babelgum or Veoh (we haven't stitched it all together yet, it's just a plan). Something that runs on either an AppleTV-like STB or on the TV itself. Their job is to aggregate the content and provide us with an efficient distribution using P2P and local caching. They also handle all the advertising including the targeting and pay us a revenue share.

In order for this to work, Joost (or whoever our chosen partner is) must bring a deal with the major broadcasters. Joost does the deals with the content owners for us because they can and we can't.

Our BBC, ITV, C4, Five and Sky content comes through the deals that Joost has with them. Joost can pay better ad revenue than the producer can get by themselves from broadcast because we give them the postcode. As a result, they can target ads much more effectively. We get a rev share because we are adding value to their proposition.

Furthermore, we are solving one of Joost's problems - the EPG and social networking, which are currently lacking in their product - and we are leaving them to concentrate on their role as the IP TV operating system. We carry Joost's traffic and help them develop their intelligent localised P2P routing.

We provide the EPG (or at least our software partner behind the photo blog / community web stuff do that for us) and that has a two way API into Joost (or whoever). The EPG is our value add, our brand, our directory of content and the portal through which users can get to the array of services that we offer. Of course, they can go onto the open internet but with our gateway offering them RSS-based access to the world, we reckon that we can hold a fair proportion of the screen-time on our own services. Which is great for our ad revenues.

Of course this is all made up. LUI doesn't exist and there are holes in the plan and some very rough edges. With any luck though, this might give you a few ideas...

Part 7, back on Telebusillis is going to look at Hardware, which Keith will publish later this week!

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Thursday, 7 June 2007


Be aware or beware?

My apologies to those who have seen this before. Maybe I'm just dumb. I am certainly dumb-struck...

Whilst catching up with my morning reading, I saw this advert for the iPhone on

"Whatever it is, it's incredibly advanced...", oh yes?

"It seems to have sort of a touch-screen interface...", that's the blue flecks mate.

"Is it an iPod, captain?", "No, its something much, much more, and it's going to change everything", I'd better get my coat then. Or do I need a spacesuit?

For further amusement, also have a look at the "I'm an iPhone... no you're not" and the "iPhone Commercial - Newton" where the cool new device on the block has a swipe or two at the current geek-squad.

When I did my marketing-101 courses, I was always told not to slag off the competition. It makes you look like a bully. Either the rules have changed, or Apple have chosen not to play by the rules. Perhaps Apple's target market want that edginess? It certainly gets you noticed.

Marketing is changing and here is a prime example. Does it work for you? Do you want to be associated with the brand? Will your teenage kids...?

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Tuesday, 5 June 2007


Joost is not a TV station

"What Joost is - a ... high quality ad-supported ... secure ... cost-effective delivery platform." Mike Volpi, officially now the new Joost CEO.

The edit is mine (you can read the full interview at GigaOM), but Volpi seems very clear that they are a platform for content owners first and foremost.

Since I first tried the service, I have held a certain amount of scepticism about whether Joost is really the consumer-play that some might believe it to be (like Skype, is it the centre of the experience?) My scepticism surrounds the fact that although you "buy" Joost, and you see the Joost interface, Joost is not really why you are there. You are there for the content. Unlike how you Google a word or you Skype someone, you don't Joost a TV programme.

Janus Fris on his blog, describes Joost as meaning "great quality Internet TV". That was back in January, when the Venice Project became Joost, so perhaps this evolution towards a service provider model shows how they have refined the concept over the last 6 months since its early Beta testing days.

The big success of these tests has been the P2P network by all accounts. I have seen this in the improvements between the two snapshots I have taken of their peer hit ratios (in April and then about 6 weeks later in May). My tests suggest that between 5 and 10 peers is enough (at current resolutions, which are poor) to take the load off the Joost Level3 hosted servers. In other words, it won't be long before the bulk of distributed content is an optional (performance enhancing) cost to the company.

I wonder whether Joost is actually more of a technology-play (the Intel inside model or even operating behind the scenes as the internet equivalent of SES Astra and Eutalsat birds to deliver Sky TV and others)?

Those comments from Volpi increase my suspicion that Joost sees itself as the latter, but is hedging its bets and getting itself off the ground by acting as the former. Perhaps Volpis experience at Cisco is telling also: "Most recently, he headed the company's $11 billion division that builds network equipment for telecom companies and network providers", Total Telecom.

Is the company going to take on Sky as a multi-channel "channel" or will it link up with the Murdochs as a delivery partner for Sky Sports? The comment from Volpi on Apple TV (a tie up that I think would be a mutually beneficial move), seems to indicate that Joost might well be preparing itself to act as the aggregator network and not the retailer.

In that position in the market, Volpi's background with Service Providers might again be highly relevant. He is better placed than most to diplomatically (and technically) solve network bandwidth issues by working with the major networks to minimise traffic tromboning. He knows network providers and he knows networks. He was at Cisco...

By controlling the distribution platform, Joost is in prime position to adopt the responsibility to aggregate and target the adverts to individual users. Joost will know far more about each of its users' preferences than will a dumb broadcaster (without the internet uplink), so they will inevitably be able to get more £s per user per second of airtime than would Sky or others. For sure, the content-co will get a large share of revenue and may even get more than they do today because the ad value will be so much higher.

Two words for anyone who thinks that being a wholesale platform is a low margin business: Bill Gates. Is Joost an application or is it a potentially ubiquitous operating system...?

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Friday, 25 May 2007


Joost about on track

Joost is a hot topic. It deserves to be. There are many things about the service that aren't quite right, but underlying it all are three key ingredients for success: big-name backing, excellent PR and efficient, adaptable technology.

Of course they have issues. The project has spent less than a year in the public eye and there remain three other factors threatening the success of the venture: programming, devices and networks.

The programming is not right somehow - perhaps they need to consider adding "broadcast channels" because finding what you want from a static list seems to ensure the content gets stuck in time. The first time you go there, you find one or two things of interest, but when you go back you are left trawling somewhat. It makes the whole experience too predictable.

But, the backing is in place to fix these problems. The number of content producers is already impressive, even if their offering isn't. No-one is putting their best stuff up there yet - it's early days. Viacom own Dreamworks, who produce a large chunk of the most popular kids movies. If you have kids, what price an online archive of all Dreamworks films, on tap? Its not there, yet.

Before that happens, something needs to be done with the channel guide to give it a bit more life. It is surprising that there aren't more "social networking" buttons. If it were easy to rate content, you could be sure that there would be more turnover and better filtering of the good stuff. Make it less miss and miss.

This can all be done. A bit further down the line though, they are going to have to face up to the device question, which is to some degree, out of their hands. I don't know that Joost are betting on the PC being the dominant, always on device in the home, but if they are, then they may be swimming against the tide. Everything is a computer now, there are processors in everything. This will surely mean that specialisation wins over generalisation - TVs do video and HiFis do music. PCs do publishing. Multi-purpose devices are for mobile users who have a premium on weight.

But this is where the PR can help. Here, even the screw-ups are working for them. Colmmacc posted a link to a set of slides he had produced on the network architecture on my last post on that subject. I hope he didn't get into trouble for this because it turns out that hidden beneath the visible layer on the PDF was a whole host of info on Joost's 3 month strategy goals.

This leak, just serves to increase the buzz about potential partners and shows that the team knows what they are doing. An example is the combination of US Soccer and Real Madrid as launch partners, showing a clear appreciation of the David Beckham PR phenomenon that is about to hit the US. It has been suggested that this leak was a Machiavellian PR exercise, which is almost certainly not true, but it shows how highly regarded "The World's Hottest Start-up" is that people are willing to believe that this may be part of the plan.

I just hope that this doesn't cause the company to clam up, because a big part of what is making the PR work is the open approach of the team. Openness always makes you more vulnerable to leaks of "sensitive information", but it also allows you to get on with stuff and build partnerships. The reverse is also true - if you are afraid of giving the game away, you don't give partners enough to make them want to join you in your adventure.

The PR is the way that Joost can solve the device problem they face. Just as Skype became the must-have bolt on to cheap IP phones, it is quite possible that a Joost installation could become standard on the television itself, requiring just an ethernet or wireless uplink before it is ready to go. Of course, a set top box could do that job too in the interim period. At this point, the platform becomes a de-facto standard for online video distribution, with anyone and everyone as possible paying customers.

Joost: YouTube for Professionals.

I can't see Sky liking that very much, but it gives Virgin, the BBC, ITV, C4 and the other content owners and distributors a way around Sky's possible IPTV content / network monopoly.

Which brings me onto the network, which is growing on the back of version 0.10's For Friends offering. It seems that there is quite a bit more content added and a few tweaks here and there, but the programming remains as was. The main development is that there is a lot more advertising with discrete logo hyperlinks displayed throughout whatever you are watching.

The P2P hit rate that they seem to be getting is certainly improved over my earlier analysis, at least for the popular items. Level3 seems to be taking full responsibility now for the seed network, there is little or nothing now from the Infonet Luxembourg centre that there was a few weeks back.

On the "Most Popular" clip of dudes surfing in Hawaii, only 18% of the traffic came from Level3, and there was a broad distribution of 8 peers who between them delivered a further 74% of traffic. 66 other peers gave me the remaining 8% of bytes. When I did the same, while watching Rockie + Bullwinkle (not the most popular...), I found that there was only one peer hit, delivering 15% of bytes, but leaving 81% to the Level3 network. Only 4% of bytes came from the remaining 56 peers in that sample.

There is no crunch point yet, but if traffic does grow (still an if, given the programming issues), changes need to be made to the way in which Joost works with the networks to route the packets more efficiently. The huge amount of tromboning that currently takes place needs to be addressed by the networks as well as by Joost (this is a link to colmmacc's slides minus the "secrets").

Joost's card in this gambit is its efficient, adaptable technology. Used in the right way within a network, it offers an extremely powerful publishing platform offering the ISPs using it a potential differential advantage. That level of integration is very hard to do however (for the ISP more than for Joost, I suspect) for an ISP fighting a price war. Joost may have to wait a little before going down this road.

Alternatively, they could launch a guerrilla war against the networks. Of course they'll say that they won't, but it might not hurt the service providers to think that a possibility. Joost could entirely disintermediate the network from the video value chain.

But like I say, all this talk of global domination is a few years away, and it will not happen until Joost addresses the core programming and makes the service something you watch, rather than something you play with (as you do today). Toys get boring after a while.

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Wednesday, 16 May 2007


That precious hour

Ten days ago, quite unexpectedly, my wife had a baby. Of course, I knew she was pregnant, but the little guy wasn't due until the end of May so we weren't ready - I'd managed to paint the ceiling of his room, but not the walls. He didn't have anywhere to sleep or any clean clothes to wear. It was all a bit chaotic, as I'm sure you can imagine.

All's well that ends well, but all this meant that I was unable to write anything last week as my job suddenly became Chief Entertainer for our two year old son. They say that it's easier the second time around and they are right - looking after a newborn is infinitely easier than looking after a two year old...

On Monday night this week I got a bit of time to myself. Not much, but between 8pm and 9pm I managed to catch a bit of telly. Fortunately for me, there was not one, but two programmes that I wanted to watch. Unfortunately for me, we don't have a Sky+ box and my old VHS recorder let me down badly when I tried to tape the Australian Grand Prix a few weeks back so I have consigned that to history. So I had to make a choice: did I want to watch Panorama's programme on Scientology or Dispatches' character assassination of our next Prime Minister, Gordon Brown?

Again, last night (Tuesday), I had an hour to myself. A precious hour. An hour I had worked hard for all day. But what was on? Nothing!

(Strictly speaking, that's not true as I have hundreds of channels, but there was nothing there to float my boat and I ended up watching Hugh Grant's truly dire American Dreamz on Sky's Comedy Movie Channel)

So one night I miss something I would like to watch and the next I'm forced to watch Hugh Grant pretending to be Simon Cowell because there's nothing else on.

"A sample of one", said an industry expert when I described my problem to them. "The best thing about television is that it is not interactive", and while I agree with them to a point, I can't help feeling that what I experienced last night (not for the first time on a Tuesday night by the way), would be enough to convince me to go for a genuine time-shifted / catch-up TV service. Given how precious my time is now, I would be willing to pay for it too - on a subscription basis, not pay-per-view as the last thing I want to do after reading The Gruffalo for an hour is to analyse whether watching X is worth £Y.

So why don't I get a PVR? Jolly good question that - maybe I should - but I can't help thinking that this just adds one more problem to my already busy life. A PVR requires planning and foresight which is something most people with kids are short of at 8pm. For sure, I would have been able to watch Lewis Hamilton's debut in Melbourne a couple of months back because I would have set the thing to record (as I tried to with the VHS), but you don't often get a programme like that, that you know you are going to miss and want to watch enough to get off your backside to do something about.

I am talking about that veg out time. That precious hour, when you really don't want to think "if only I'd set the PVR last night", when it would be so much easier just to go "back" through the programme guide and find something, anything, better than is on offer right now.

If you are the BBC, ITV or C4, making quality programmes, why do you want to restrict your audience to those that happen not to have anything better to do when your work is aired? Don't you think that more people would actually watch your stuff if they could do it on their own terms. Maybe they would watch less imported tosh and maybe Sky have more to lose than gain from on-demand?

Clearly, the BBC and C4 are with me on this. The iPlayer is
horribly caught up in bureaucracy, which is a shame because the BBC have most to offer when it comes to quality programmes. C4's 4oD is available now, so as part of my research into this article, I have caught up on the half hour or so of the Dispatches programme that I missed when I switched over to Panorama on Monday.

The quality of the 4oD download was good. The file was 348 MB for 48 minutes of film, which is very slightly under 1 Megabit per Second. Interestingly, it was 48 minutes because the 1 hour broadcast had been stripped of the adverts - which I consider peculiar in the extreme. Surely, here is a great vehicle for ads to help pay for the service provision. Although, with the ability to fast-forward in the current media player, you might not expect people to watch them...

So I watched the re-run of Dispatches on my PC and as I worried about whether my country was going to end up with a control freak as its next leader, I also considered some research that I had seen from CacheLogic into online video watching habbits. Was I happy with watching TV on my PC? Yes, but it was "during my lunch break": I would not want to do this at 8pm during my precious hour of veg out time. I didn't last night... I watched Hugh Grant "acting" the twit instead.

The picture quality was equivalent to broadcast TV (and better than Joost, which runs at around 700kbps). You have to download the 4oD application which has an embedded Ioko Kontiki P2P client, which obviously aims to spread the distribution burden.

I checked my download with Wireshark (fka. Ethereal) and found that over 90% of the data was coming from Ioko's own network, indicating that the seed file had not been distributed sufficiently to allow P2P to have much impact on Ioko's (and C4's bandwidth costs). I'm sure they weren't helped by the fact that I turned off my 4oD client as soon as the download had finished in order to save my bandwidth cap. This all meant that someone on BT's Central Plus that had been receiving data from me, had to find somewhere else to get it from - probably back to Ioko...

It is also interesting to note why I wanted to watch Panorama. Like many other visitors to the BBC's web site I had been intrigued by John Sweeney's tirade at Tommy Davis (official BBC version). As a blogger with an emphasis on online video, I was further intrigued by the use of video by the BBC to promote their programme and the use of YouTube by the Church of Scientology to counter the position taken in the programme - Scientology getting its retaliation in first.

So whatever your views, whether or not you believe we are descended from aliens or not, you can now make your views known to the world and with a bit of time and effort (and £2,000 of electronic equipment). I have no doubt that there will be a lot of long term fallout from this very high profile example of an electronic propaganda war.

On demand allows me to fill my precious hour with something I want. But it's not just about me, it's also a vehicle for advertisers who want to reach me. Consider for a minute how much you have learned about me by reading this article and hearing what I like to watch.

Put yourself in an advertiser's shoes and ask yourself how good a profile you could build of me if you could monitor what I watch when I really do have a choice. The uplink on an IPTV service is pretty much ideal for transmitting such detailed one-to-one demographics back to you, the distributor. You could be pretty sure to "know me" with a picture of my likes and dislikes over time. You can hit me with what can genuinely be called targeted ads. And, because you are in control of the content feed to my TV set, you can place personalised ads, just for me, that you know will be most likely to get a reaction from me. Even when I am watching The Bill, just like everyone else.

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