Live (sort of) from the Video on the Net conference, our publisher Rich Ord delivered notes on the session titled “Venture Capital: Leadership for Future” (no, I don’t know where the “the” is, just think of it like the missing “a” everyone wants to insert into Strother Martin’s quote from Cool Hand Luke.

One of the most notable names in online video, the popular sharing site YouTube, has been heard in conversations throughout the Fall 2006 VON conference halls. From their high traffic volume to even higher bandwidth bills, the site has been a magnet for discussions of the business potential for video on the net.

Video makes greater demands of a business than other forms of digital media. The text in this article occupied a teeny-tiny bit of bandwidth. If you were so unfortunate as to have to see my face in a 60-second video report, my publisher would pay much more for the bandwidth to provide that to you.

(Jason Lee Miller talks costs in his article about another VON session; naturally he didn’t see fit to include my suggestion about micropayments as a digital media revenue option; boo Jake! – David)

Even the coolest startups in the world have to pay something for their Internet connectivity. An investment of capital, if it can be obtained from outside the company, can be the difference between 10 people seeing a great idea take shape, and a million.

That’s where the venture capital community comes in, and where an online video startup may turn for seed funding.

David Weiden, Partner, Khosla Ventures, offered a cautionary warning. While he sees some companies doing well in the short term, “There is a definite bubble with many web video businesses,” he said. “There are some businesses being built that I’m not sure could be stand alone businesses.”

For those who are receiving money, many need further rounds of funding beyond that initial seeding. George Bell, Special Venture Partner, General Catalyst Partners, said, “There is more money chasing deals right now… so B and C deals are getting funded. This is not necessarily a good thing.”

“It is also more difficult to get an IPO done,” he noted, since companies need more of a stable history and track record for one. “This means it is harder for investors to get a good exit,” said Bell.

There’s no reason to despair. Weiden looks at plans he receives by email. “It is not that hard to get in to see us,” he said, to which Bell quipped, “If David looks at it it makes me more interested!”

When it comes to those plans, the VCs want to see something with home run potential. The company has to grow sufficiently so they are large enough to distribute to a variety of investors, according to Bell.

So why so much interest in web video, then, one person at the session asked. Weiden said, “When I think of video on the net more broadly…I think of companies like Spot Runner. It’s not over a 1 or 2 year period but where is that company going to be in 10 years.”

There could even be a time when citizen journalists can get in on the venture capital action. They would need a good business plan, and Weiden said he wouldn’t be surprised if some type of grass roots company came along this way.

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David Utter is a staff writer for WebProNews covering technology and business.

Delivering Web Video The Rocketboom Way

Our men on the scene, Rich Ord and Mike McDonald, continue to feed us reports from the conference. These notes come from Baron’s industry perspective chat on The Implications for Media in a Global Internet Culture to attendees, which we’ve excerpted for presentation here.

VON organizer Jeff Pulver welcomed Baron to the conference, and effused on how much he enjoyed being around “a bunch of people who really get it. I want to thank all of you for making this really cool.”

Baron thanked Pulver for his welcome and opened his talk. (Readers: please note this is a raw cross-section of Baron’s talk; we’re giving it to you this way to give you a feel for the impression he makes. Any perceived deficiencies in the flow or content are the fault of your humble scribes, not Andrew. – David)

Quickly, Rocketboom is a 3 minute blog style program where Joanne … our host … does quirky stories. One of the things that made Rocketboom so popular (about 350000 views a day)… is because we were one of the first adopters. I took an approach that I didn’t have fear of people grabbing RocketBoom and redistributing it.

By letting this go these people are becoming aware of Rocketboom as a brand. I feel that people online are inclined to come to us at the home page if they liked the content. We don’t allow commercial use without something worked out, but for any other reason I have no problem with that. Essentially, Rocketboom is like a big catcher’s mitt. We don’t do press releases or PR.

I found that if people want it over here I think we should make Rocketboom available …. So, we have an obnoxious number of file types.

Another thing I noticed is that the mainstream media does a good job with mainstream entertainment. Then there is the other side, and that is more about information. The qualify of production and effort for those kinds of programs is somewhat incidental.

So I thought ‘why not put entertainment and information together?’

Another element of a successful web video site is the sense of belonging. At least 25 percent of the content comes from viewers. We also have barely filtered comments off of every video cast. If you are watching a video on your iPod or on TV you can’t comment.

If you noticed we kind of have a Google aesthetic to the site…. websites are like your house or office…. it is a space where you want people to feel comfortable to watch your content.

Over the next year I will probably become a real proponent for wikis. This allows my audience to come in and really belong, really take ownership of the site. So far we only have 24 articles in the wiki I just set up. I showed which camera I used, and what happened is that the audience came into my wiki and corrected spelling and formatting and sort of cleaned it up.

We recently posting a question in the wiki; one was ‘where were you on September 11, 2001?’ It was fascinating to watch and see how people are reacting to it.

Imagine you come onto someone’s website, suppose you are a fan of the show… oh here’s Steve Garfield in my wiki…. it is interesting that the audience can come in and mess with this …. the audience feels like it belongs. That’s really powerful and important.

Now lets jump into monetizing web video. I have a sense that monetization is what people are interested in …

So far over the last 2 years because we all know that the level of entry is so low, you don’t need to raise money or even have money, but what you need is time. So then, where am I going to make my money?

I say set that aside and focus on building your audience. If I have 200,000 people or 400,000 people viewing, anyone on Wall Street will say that there is value there.

We charge $60,000 for a weeks worth of ads. We aren’t yet selling many ads because I am selling them myself at this point. I’m good at making the sale but I don’t have any feeling for it. I’m sorry but that’s me.

We like to create ads for our advertisers because I feel I know our audience best, and I know what works and what doesn’t work.

Our advertisements increase in value over time. As an example we used a Guinness commercial at the end of a segment on a brewery called Brooklyn Beer. Now here it is a year later, and because Rocketboom has a good link value on Google, there are over 6 million links in. It is more likely if someone is searching for a brewery in this area Rocketboom will come up. I see this as value for the advertiser.

We have a larger audience than many TV shows.

Another way to monetize your content is a premium subscription. For the hardcore fans, we will give you extra content and our newsletter, and ask them to pay $3.50 a month. For 10,000 people that is $35,000 per month.

Another method of monetizing is merchandising. At CollegeHumor.com these guy were making $400,000 per month. It’s crazy. At Rocketboom we are lousy at this, but still make $3,000-$4,000 per month from our one T-shirt.

Later I may plug in other shows to my huge catcher’s mitt of Rocketboom.

Blogging is so important to Rocketboom. How does blogging translate to video blogging? The answer is making the videos compelling and interesting. If you can find bloggers with a lot of authority to talk about you, that prompts the thousands of other bloggers to comment and take action.

Then journalists who feel threatened by bloggers notice what bloggers are saying; their big megaphone talks about you.

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David Utter is a staff writer for WebProNews covering technology and business.

Exerting More Control OverContent Delivery

The discussion about such shifting took place at the Fall 2006 VON conference in Boston. Like the lyrics in the Queen song, media consumers want it all, at the exact time when they want it.

“Not only is the consumer king but we don’t even know how they’ll rule yet,” said Thom Kozik, director of business development for Yahoo! Media Group. “The way video on the net is exploding you would be foolish to predict how this is going to be used by consumers.”

Larry Gerbrandt, senior VP and general manager for Nielsen Analytics, also acknowledge the change in consumer expectation when it comes to media like video. “The consumer has embedded in their mind that they can watch whatever is out there wherever they want when they want,” he said.

“YouTube came into national prominence from a Saturday Night live clip,” he continued. “The one thing a TV show wants is buzz. Networks are now using short form clips as a promotional tool.”

When it comes to television versus broadband, Kozik said a short-form clip couldn’t be an ad that will drive people to watch a TV show. At Yahoo, he has seen news clips from ABC News rank among the highest viewerships of any clips seen on his company’s video site.

Nancy Dunn, VP of ClipSyndicate, agreed, saying short-form and other certain types of formats will work online.

“For certain types of content in the PC environment, there is incremental value to reach audiences via syndication or other models,” Dunn said.

Apple’s debut of movie downloads from iTunes caught the panelists at the session off-guard. Gerbrandt thought the announcement was unusual because Apple tends to launch finished products, rather than something that is a work in progress.

(We’ll disagree here, since Apple did this last year with its TV episode download announcement. They started with ABC/Disney and it expanded from there. – David)

The advertising industry, particularly those on Madison Avenue that have been enriched for years by conventional broadcast ads, haven’t fully embraced the concept of online video advertising.

“The last person to this party is Madison avenue,” said Kozik. “I’m still fighting with agencies that simply want to take the 30 second ad from television and put it in front of web video clips.” That just annoys the consumer watching the video.

Dunn summed up that contention. “The relevance of the 30 minute network TV broadcast is not there anymore. It is a challenge to them to make us interested again.”

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David Utter is a staff writer for WebProNews covering technology and business.

Instant Messaging Solidifies Role In Every Day Life

WebProNews publisher Rich Ord and managing editor Mike McDonald are in Boston for this week’s VON. We will report on their observations throughout the conference.

Pulvermedia Content VP Carl Ford moderated the evening discussion at Fall 2006 VON that featured members of Yahoo, Microsoft, Google, AOL, and Skype talking about presence. As a concept, presence means knowing that an individual is available and online regardless of their physical location.

While that has great appeal for businesses that want to keep track of valuable staffers, it may not have as much appeal to consumers. Ford said his daughter thinks integrating voice with IM is stupid. “Should voice really be integrated with instant messaging?” he asked.

Mike Jazayeri, product manager for Google Talk, said, “”It’s natural to let another layer of communication integrate with instant messaging. It may not work in the classroom but it has its place.”

Jeff Bonforte, director of voice product management for Yahoo, saw another role for the combination of IM and voice. “The role of voice could play is transactional…. it could help finish transactions,” he said.

“We don’t want to push your daughter to use voice,” said Dan Casey of Microsoft, where he is director of Windows Live VoIP and Messenger product management. “We just want to make simple tools available for those who want them.”

Presence will have to take other factors into account, according to Nitzan Shaer, director of mobile devices for Skype. He noted how many people tend to have multiple identities and roles online.

Because of this, presence will be much richer both on and offline in the future. Some people are embracing that now, in a way, as Shaer said Skype has users who leave their microphone and webcams on continuously. They are always present.

Casey’s take on presence reflected on a context-centric model. He cited a need to get the right message to the right person, wherever they are. It’s a considerable technical challenge with the vast number of ways people can be present online, on myriad networks and systems.

That becomes more complicated in Casey’s opinion because IM is a “schizo” combination of communication platform and social networking application. Yet people have taken to it by the millions. Casey said Microsoft sees 25 million people interacting in a video session each month.

The humble webcam is a powerful instrument as the various services consider presence and its future development and implementation. “”The sexiest thing for many people around the globe is the ability to see and talk to their family and friends,” said Bonforte.

He perceives the webcam as underestimated when people discuss voice and IM. Bonforte said 100 million people use webcams and their old protocols. It becomes more compelling when camera phones can interface with webcam users.

AOL’s Ragui Kamel senior VP and general manager for Voice Services, called webcams the “talking head” model, with limited appeal beyond certain niches like gaming.

“Our research shows that video telephony is not something that most people are particularly interested in,” said Kamel.

Despite the features available to people today, presence will be the one that eventually proves the most compelling. It has concerns to address, though. As shown in the recent Facebook kerfuffle, a number of people do not want everything they do to be duly recorded and reported to anyone who is watching.

Bonforte acknowledged that and predicted that expanded presence would be accompanied by Facebook-like privacy settings. These would make a user visible to certain other users in different ways, based on their identities and roles as Shaer suggests.

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Online Video Continues To Grow

Our publisher Rich Ord passed along his notes on Jeff Jarvis’ talk at VON. We’ve buffed them up for your perusal.

…or we should say a complete lack of service as he recounted in several “Dell Hell” posts

Jarvis is doing just fine, and he spoke at pulvermedia’s VON about online video coming along to explode TV.

“Trust is the King. It turns out that trying to own content and control distribution is really expensive,” he said. “If conversation is king then all of us content creators are partners not competitors.”

That means the big guys in media are not in control of that conversation anymore; the people are. The big old networks are in catch-up mode, and some of their actions look desperate.

The networks and the TV stations have been antagonizing each other, by posting video content online. Jarvis illustrated why the Internet is so important now that longtime partners like these would anger the other side.

“When Jon Stewart went on CNN Crossfire he had 150,000 viewers … but then he published his appearance on iFilm and as of this moment it has been viewed on the web over 2 million times,” he said. “The free network has power.”

Jarvis has six suggestions for web video, which we will list here:

1. We must get on advertising act together. We must do this in an open way and an appropriate way…and 30 seconds will not be appropriate.

2. Redefine network. It is the job of the network to find the good [stuff] for us … it is not about distribution anymore. We are no longer one size fits all. Prime time is my time. We will be networks. Our new TV needs its own remote control.

3. We need to get the old networks to distribute our content on TV. They can help bring advertising dollars. We should be convincing the networks to put their stories up on YouTube. If it is good we will distribute it for them.

(For our take on advertising and television, please read Google TV Ad Partner: Guess Who? – David)

4. Avoid the bubble. We just don’t want to be stupid.

5. Don’t let our videos become soulless. Realize that the golden age of TV wasn’t that great. We need to encourage the good stuff.
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6. Think live. I want to see live TV on the net and mobile because it gives us the ability to communicate with each other live.

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WebProNews publisher Rich Ord sent us his account of the Fall 2006 VON session, ‘Film and Television Incorporate the Internet.

Moderator Nick De Martino said Hollywood has noticed in a bigger way the opportunities for content distribution the Internet offers. In making this content available, metadata, the descriptors of the content, becomes increasingly important as well.

GoFish CEO and co-founder Michael Downing made an observation about movies and PCs. “Web delivered movie services are not yet popular. What is important is that content be watched on the TV. People don’t want to watch a movie on a PC,” he said.

That is of particular interest today, now that Apple has finally announced its updated iTunes store, now with movie downloads.

“I’m going to say something controversial,” Downing said. “If everyone at this conference is successful with video we are going to have a bandwidth crisis. I hear some hear some say that bandwidth is unlimited. I’m sorry to say that they are wrong, especially at the metro level.”

Revenue will come from online distribution eventually, said Adam Shapiro. He has made a bet on this, as his production company, Automatic, will release the horror film “Incubus” online in partnership with AOL on Halloween this year.

“The idea being that if anyone is going to bridge the convergence of the Internet and TV it is going to be young people like my 14 year old daughter,” said Shapiro. “This film will be the first theatrically budgeted film for the Internet.”

Downing believes the number of people with the skills to make movies should be a significant number. He claimed 80 percent of Hollywood is unemployed at any given time, so why shouldn’t they be willing to work in a new medium?

Expense will be one reason why not. Shapiro said, “The reality is that when you move away from video blogs to long form video, it is actually very expensive.” Bandwidth would be one of those costs. Right now, people like Shapiro are looking at what kind of price points will be needed to entice people like his daughter to purchase movies online.

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WebProNews publisher Rich Ord contributed his account of the proceedings from Boston, where VON will run through September 14th. Here are some quotes and impressions from the talk given by Ted Leonsis.

“Today is the worst day the Internet will have,” said Leonsis. He was not forecasting something bad, but something good instead – the rapid improvement of the online experience, and video as a part of that.

Search drives the functionality of the web now. In the beginning it was about utility; the web came about because of a need to share information more easily. With so much information available online, people need search to get to what they want.

He noted how utility has changed into something different as people changed their expectations of the Internet. Instead of just a desire to be “needed” online, now people want to be needed and loved. It motivates them to create content.

People control the steering wheel when it comes to navigating the Internet. They aren’t going to give up that control. Search provides the navigation, and this makes the algorithms especially important, because now companies market to that.

Timeliness goes hand in hand with relevance. Leonsis noted how the Google algorithm does a great job of showing how people point to a site based on that timeliness.

He also criticized Google and Yahoo for their minimalist approach to search page design in an increasingly broadband world, calling their look and feel a design for the dialup world ten years ago.

Leonsis contrasted that with AOL Search. “We now have search designed for a broadband world with pictures and video and sound enhancing search results right on the same page.”

Online video enables the ascension of the mega next-generation media and entertainment business. He offered AOL’s TMZ.com celebrity site as an example.

“This site has become how Hollywood starts its day because we break stories,” Leonsis said, citing the Mel Gibson DUI incident as an example.

After discussing some AOL-specific initiatives, including a deal with chipmaker Intel on displaying AOL Video on televisions, he closed with what he called the most important part of the presentation: encouragement to be more generous, respectful, and sharing in all of one’s endeavors.

“We are really in the happiness business and that is a great business to be in,” he said.

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