While rolling through posts and linking all over the place. I found myself on techcrunch and their determination that paper based TV Guides were on their way out.

Im not going to argue the decline of TV specific magazines. See ya.

What I will argue is that the “traditional” tv listing sites are the way we will receive our tv information in the future. They wont.

Why ? Because they dont pass the couch or bed test.

It aint gonna work if we cant lay in bed or vegetate on the couch and get the information we want. A magazine. A Newspaper. They are vegetation enabling material. Having to walk over to the PC to plan or check out what I might want to watch is like throwing away the remote and manually getting up and changing the channel. If i want a work out, I will go to the gym.

As always, kids are the exception. A laptop in a dorm room or kids room can be the TV and info device, but even then, its not the scenario that will win over the long term.

Here is why.

First, LCD/Plasma TV prices are falling faster than anyone ever imagined. This will make it affordable as a combo TV and full featured PC monitor even to kids.Did i mention they were kick ass game monitors as welland HD games are starting to take hold ?

which means the PC to be used for online info is being tied up playing games or actually enjoying full screen TV.

2nd. Kids and adults multitasking are switching from their PCs to their PDA/Phones to do their realtime IM’ng and TXTing. Not that PCs arent used for IM and email, they are, but thats mostly while using PC bound applications. So the PC isnt “at hand” all the time like it used to be. Yes,people will still surf while they watch TV, but the chances of them surfing on their PC as opposed to a “vegetation compatible” device (ie, one you can lay in bed or on a couch with), is declining. The more power we have in our PDA/Phones and we will have an ever increasing amount of power, the less we will chain ourselves to our PCs.

3rd. The same HDTVs that can act as PC monitors for you , are available to video distributors as well. Meaning your cable or satellite programming guide can offer you the same depth of information right on your TV. Dont want to mess with your remote to surf your way through everything…. Well there is a reason TVs are shipping with USB and FireWire ports and keyboard connectivity is one of those reasons.

Plus there are some great features here and coming from cable and satellite. DirecTV offers a sports, news and kids mix. Six channels playing side by side for each genre . A quick peak and I can easily see whats going on. A quick link, and more information will be available. True, its one way for all but simple interactive responses, but Im a believer that more indepth responses to whats on the tube will come from PDA/Phones and not from a PC.

4. Your remote control is going to get a lot smarter. A USB port, some cheap memory, a little screen and a roll mouse is all it will take to download all the program guide informatin andlistings in a user interface you feel comfortable with. Get recommendations. Program your own channel. Surf at will. Click on the program you want, have the recommendation autoselected, or have your personal network programmed to play. All from your little remote.

5. And of course handheld devices will get fasters, smarter, better connected and moreapplication savvy. Applications will be written that will download programming guides, just like your tivo does, but allow you to customize everything to your liking.

Combine that with thebluetooth compatibility they already have and the possibilities are endless. Turn it on and link to the 20 dollar bluetooth compatible remote control box sitting by the couch that turns the channels for you when you click on a show in your phone. Program it to automatically change the channel , ortake over the Tivo. Easy and breezy with endless possibilities

Now some people may say that this is the equivalent of what techcrunch is suggesting, but with the access from a handheld. I dont see it that way. There is a trade off in using handhelds. Its vegetation compatible, but its less “community” friendly than a PC. We can do all that we do on a PC when we surf from our phones, but we choose not to because of the hassle factor.

The handheld future also will provide less connectivity to web videos and user generated content than the current PC based sites do.

All this talk of going to your PC to pick your shows and then connecting to an IP TV feed (internet based IPTV) is nonsense. Aint gonna happen in the home. In the office , ok. I buy that. Its an easy way to link to a stream of a TV show while you are at work. At home, its too much work.

There is a reason traffic to the TV portion of the sites listed isnt that high. Because TV is supposed to be easy. Its supposed to be an “alternative to boredom” (thank you Aaron Spelling for the quote).

I also want to make one last point. As a country, we areTV savvy. In particular, Americans are well trained in “TV Analysis”. We all have been in “do I want to watch this” training for most of our lives. We canwatch and analysis mere seconds ofa show and determine if its something we want to committ to a Phase 2 on. Phase 2 gets you to the next commercial or until you recognize a keeper or turner trigger. Channel surfing is a sport that I think most of us take pride in. Doing research about TV shows. Well, Im not a believer. I want to nest when i watch.

And while on the subject of TV. Check out a first crack at a trailer for a new HDNet show starring Dennis Rodman that we hope to have ready to go this winter on HDNet

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Shocked and impressed at the response to my Movie Challenge would certainly be understatements.

875 responses, plus hundreds of emails from people who were unable to post to the blog (sorry !)

Im am still going through them but wanted to offer some feedback to those who did, and those who may still want to
respond.

First, there has not been a “why the heck didnt i think of that” response. I havent found one that makes me say “Hell
Yes, thats the answer”. There were many good ideas, but most of those were beneficial on the margin. Meaning if
implemented, they might generate a few more ticket sales, but they would not change the economics of the
industry.

Now some of you may not agree, but to help understand my perspective better, I thought I would offer the following
:

1. Discounting in any of multiple incarnations wont do the trick.

True, price is always an issue, but the true aggregate costs of getting the sitter, gas, ticket, popcorn, parking, etc
arent impacted enough with ticket and/or concession discounts to make people say they want to go see a movie they
otherwise didnt want to see.

This has been shown time and time again as matinees , coupon books, frequent buyer programs, and multiple ticket
package coupon books are important, but not primary drivers of getting people out of the house. These are what I call
blocking and tackling promotions. EVERY theater has to do them and do them well, and most do.

2. Its expensive to get people to go to websites and not easy to get video distributed virally.

An obvious response that I expected was to promote films in any number of ways on websites, and to upload trailers and
even enable users to upload user created trailers to video hosting sites as a way to drive excitement about a
movie.

Again, basic blocking and tackling. But the missing link is that in order to get MILLIONS of people converted from
going to a site to going to see the movie, which of course was the initial goal, it would take TENS of MILLIONS of
people going to the site and watching and spreading the video and then hoping for a conversion rate that pays for the
cost of all of this. I

None of this is cheap. In fact, its every expensive and more than money, its very difficult. There are few if any
movies that dont put up websites, load some video on sites, do myspace pages, etc, etc.

3. #2 above, is closely related to a response I got quite a bit of which is “influence the influencers”. ITI (like that
abbrev..) can be approached in two ways.

First is the “Get it to the cool kids” and watch everyone else want to do it . Second is to reward those people who can
actually get people to buy tickets.

The first is done all the time with street teams in high schools and colleges and can bring incremental business, but
not 5mm people.

The 2nd actually has been done before, but isnt done often enough, including by our film companies
HDNetFILMS, Magnolia Pictures and
2929ent. The perfect examples are religious, political and social
groups who drove viewers to Passion of the Christ, An Inconvenient Truth and other movies that entertain or try to
educate with a message that supporters of that message go out of their way to support.

Its interesting to me how supporters of the various messages feel they are having their message reinforced with
boxoffice success of the movie they are promoting. That desire to do well at the box office as a message itself,
often leads to a lot of hard work by the groups organizers and followers to get people to the theater. In fact, the
grassroots efforts of these groups can actually bring millions of viewers to a movie. The problem is that this
doesnt apply to every movie. Only a select few. Its an approach we will use with a new Mag Pictures movie we have
coming out called Jesus Camp,
but wouldnt apply to 90pct of what we do.

3. The most overwhelming and telling response has been the distaste for the theatrical experience.

There is a long list of problems that negatively impacts the theatrical experience and keeps people from going to the
movies. From people talking to lines to restrooms and more.

All of which leads me to believe that the theater business has a lot of image building work to do. In a meeting I had
with senior folks at the MPAA, I suggested that the theater industry spend money on improving our image rather than
fighting the “war” on piracy. (A stupid war, thats not really a war and is a waste of money). That ever nickel
spent trying to stop a 13 year old or his grandmother from downloading a movie, or spent trying to lobby our government
into spending millions upon millions trying to stop pirated DVD sales in China could be spent promoting the
positives of the movie theater going experience. (And hopefully our government can spend the millions and
millions over here on our shores doing something that helps our citizens instead of acting as new business development
departments for movie companies who dont need their help. Movie studios have lasted this l ong without any real
business from china and similar countries, they will be just fine without government help for years to come. Sorry for
the political rant )

The complaints about the experience did reinforce what we are doing with our
Landmark Theater chain. Its a place to see a movie that people talk
about rather than people in the audience talk to. That movie chains have to start realizing that one size does not fit
all. That having Saw 2 next to Good Night & Good Luck might piss of both audiences. That having everyone and
everyone going to see Pirates might piss off the older demo that doesnt want kids texting while watching, or yelling at
the screen. Bottom line is that I have always felt that
movie theaters need to be a brand , and they need to focus on serving a more limited demo than 1 size fits
all

In fact, we are currently working on 2 theater projects. One is a theater just for kids under the age of 10. Just
showing kids movies, with tons of amenities for parents and kids, along with retail geared towards kids. No parent will
be able to get out of the theater alive if they dont buy the Curious George goodies we sell when we show a Curious
George movie. And of course we will be able to make our own movies to show, and with our policy of day n date
releases, we will be selling the DVD of the movie as well.

The 2nd is what I call Rock N Roll Theater (ok Im showing my age), but bottom line it will be a theater geared towards
16 to 25 year old demo where the motto will be

“If you expect silence during this movie. leave now. “

Again, lots of retail. Lots of security. Lots of kids who can see what they want to see , txt who they want to txt,
yell what they want to yell. In fact, part of the thought process has been for the movies we make and show, to
post portions of the script of the movie so kids can learn lines from the movie BEFORE they come, or hopefully make
them read it after they saw it the first time and come back , creating our own rocky horror show like
environment.

The responses to the challenge, reinforced that this could be a good idea !

4. The other response was along the ideas of what i call “personal tagging or networking”. In other words, i have
something Im going to give you, and you in turn can use it and pass it on and we shall cherish our communal experience.
We can write about it. Talk about it. Meet about it in any digital or real location. Call it theatrical marketing
2.0.

I love the idea. The problem is that its a downstream idea. It works in response to something that is working well. You
need to get the right demographic in the sufficient number in order to build a base strong enough for it to
matter. Just as bands and their fans acted as the foundation for myspace, there has to be a means to aggregate a
critical mass of the people who will exchange or pass forward tickets and who feel rewarded in doing so.

I dont think I have all the elements in place to make this work yet, but it will certainly be considered.

So in a nutshell. No eureka moment … yet. But i love the responses. Certainly quite a few ideas that reinforce the
things we are doing at our companies. Certainly some food for thought for things to do in the future.

Im not done going through everything yet, so maybe I missed your brilliance, but I promise, if its there, I will read
it and when I find it, the job is yours !

Keep the ideas and discussion flowing !

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This is an open challenge. You come up with a solution, you get a job. Seriously.

This is the problem that consumes me more than what Free Agent we are going to sign. How to get the NBA to get their act together. Which 7-11 Im going to run by to get a sandwich. Its that important.

Only HDNet takes more time out my day than trying to solve this problem. Its the holy grail of the movie business. How do you get people out of the house to see your movie without spending a fortune. How can you convince 5 million people to give up their weekend and go to a theater to see a specific movie without spending 60mm dollars.

For those of you doing the math. You are right. Its not unusual to spend 8, 10 , 12 dollars PER PERSON that goes to a movie in the opening weekend. Shoot, its not unusual for studios to spend that much per person to get people to go to the theater through a movies entire run !

How crazy is it to spend more on marketing than the revenue recieved when they go to the movie ? Its double crazy because that revenue is split with the theater. So if a studio spends 12 bucks to get someone to go to the theater, they might only be getting 4 dollars back in return.

You would think that there has to be a better way than spending 1x, 2x, 3x or more times the initial revenue received opening weekend or week ? Right ?

For all of you thinking that there are other downstream revenues such as PPV, DVD, TV, whatever….no shit. Yes, those revenue streams will benefit from the initial spend, but they dont make the economics of getting people into theaters any less frightening.

We are looking at affiliate programs. So people with lots of myspace or other social network friends could get a buck or 2 or 3 if someone goes from their myspace page directly to fandago, moviefone, movietickets.com etc and buys a ticket to a film of ours prior to its release. Get 100 friends to buy tickets to a movie, get a 100 bucks from us.

We are looking at other similar ideas.

We already do movie marketing 101. We do buzz marketing. We put up videos all over the net. We set up websites, myspace accounts for the movies and its characters, we work with movie forums, we buy ads, etc, etc, etc. If its been done before, we are doing it.

So if you want a job, and have a great idea on how to market movies in a completely different way. If your idea works for any and all kinds of movies. If it changes the dynamics and the economics of promoting movies, email it or post it. If its new and unique, i want to hear about it. If its a different way of doing the same thing you have seen before,it probably wont get you a job, but feel free to try.

So go for it. Come up with a great idea that i want to use andI will come up with a job for youto make that idea happen.

for real.

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Imagine if you could sell all the stock you own in a company and get paid a bonus for doing so ? How great would it be if you could just look at a stock in your portfolio and say “I quit. Im tired of owning you. Pull me from the shareholder rosters im out of here ! Oh, by the way. I need to get paid to leave. I want you to cover my losses, and pay me a bonus, and of course, I need access to the company plane.”

CEOs can quit. Shareholders cant. CEOs have ridiculous exit packages. Shareholders have nothing but risk exit packages. There is no way on earth that any of the existing pay packages can say they align with shareholders interestswhen quitting means you hit the lottery.

Thats ridiculous and an insult to shareholders.

So i was pondering the question. What would work with executive pay ? How can an exec’s interests even somewhat lie with Shareholders ?

Well first, let me put out there that I am HUGELY bias to dividends. I loved MicroSofts special dividend, I think the huge buyback they just announced is the epitome of stupidity. You dont reward shareholders who sell. You reward shareholders who stay. Buybacks are a sign that the CEO and Board really dont understand shareholder return. Its a sign that they understand pressure from large shareholders who mark the price of their stock to market on a daily basis and what to see it get a bump and want an exit strategy they can sell into.

Dividends on the other hand, do just the opposite.

They send a message to shareholders that you want them to stay as shareholders and are rewarding them for their committment to your company. Its a reminder to shareholders that the business investments you have made have actually worked and the reward is that cash can be returned to shareholders . That profits are more important to shareholders over the long term than trying to convince wall street to increase your PE.

For boards that believe in the same dividend reward strategy then the solution to executive pay is very easy. Phantom Shares.

Phantom Shares in this case would be the equivalent of an Executive Tracking Stock.

Execs in a public company would be issues non-trading shares that would entitle them to only 2 financial opportunities.

1. They can be paid dividends equal to dividends paid to common shareholders – This way if Im a shareholder and I get paid a nickel per share per year. So does the exec. That is true alignment of interests.

2. The tracking stock is assigned a price equal to the price of the common stock on the day the exec is hired. If the company is sold, the tracking stock is “converted” to a common shareand the execis entitled to any premiumin thesale price of the stock above theassignment price on the day of employment.

With this approach, it doesnt matter if the CEO plays games toget the stock price higher, it doesnt help him or herunless the company gets sold. At which point there is certainly riskhe or she could play games with the stock and groom the company to sell it. However, given the sale of a company is something that shareholders have to approve far more often than not, it truly can be up to the shareholders to do the deal or not. They can control the financial destiny of their stock, the company and the executives involved compensation.

Its also possible that the board of a company could offer management far more shares of the tracking stock than some may deem reasonable. If the board did give a ridiculous number of tracking shares, they still would have to declarea cash dividend each quarter before the executives could benefit. The cash impact on operations from having to pay out to everyone would hopefully minimize this risk and prevent this from happening. (And yes i know that sleazebags everywhere will find a way to abuse this approach, but what that is, is not obvious to me right now)

So thats my idea to solve executive compensation issues. A phantom or tracking stock issued to execs that only pays them when shareholders are paid a cash dividend or when the company is sold. That is alignment with shareholders IMHO

Would it be difficult to attract top quality executive management to a company with this compensation program ? Hell no. if anything there is an excess of good management talent out there willing to work a job that challenges and interests them.

Its a very simple approach. Its one that would work.

Now whether any boards would do it, thats a completely different question

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When does an employee deserve a bonus ? When should you as an employee ask for one or expect one and when should you as the person responsible for paying bonuses offer one.

The answer comes from the expectation you have when you hire someone.

When I hire someone, I hire them because I expect them to be good to great at what they do. I dont want to hire some shlep that goes through the motions to collect their money. I dont want someone who does whats expected of them as an employee and nothing more. The people who will find success working for me are those who love the challenge of excelling at their jobs and find away to exceed all expectations.

Now if you are a person that does just that. Challenges yourself. Excels. Makes the company more competitive, our customers happier and our bottom line bigger, should you automatically get a bonus ?

Of course not. You are doing exactly what you were hired to do. You were hired to be great. You are expected to do great things. We pay you to do just that. You dont deserve a bonus.

On the flipside, if you are doing all those things, then its going to be my goal to keep you happy. There in lies the challenge for employers. Happy means a lot of different things to different peope. Happy can be where you live, what projects you work on, what personal satisfaction you gain from the job, or maybe just making as much money as possible. Its my job as an employer to know what makes you happy and to try to get you there.

If i cant, you are going to take those special skills of yours and go somewhere else.

Of course the problems come when an employee thinks he or she is special and invaluable and the employer doesnt. One thing i have learned over the years is that self evaluation is not something anyone is very good at. Few people think they suck at what they do, but the ones that are the best at their jobs spend the least amount of time worrying about how valuable they are to their employers and the most amount of time working at excelling and improvingat their jobs.

My rule of thumb is that the people who tell you howvaluable they are usually arent, while those who dont, usually are.

Which leads to my perspective on paying voluntary bonuses.

I pay bonuses based on the FINANCIAL success of the company first. If the company is making money. Actually cash flow positive, then Im always going to be open to paying bonuses that reward those that have earned rewards. If the company is making progress, but is not yet profitable, but on its way, then Im open to paying bonuses that are more in line with saying “thank you for sticking it out with me, together we are in the process of building a company. When i make money, you will make money”.

This is all a long form way of telling a very short story.

employee: I just did something great. I want a bonus because I did something great.

Me : I know. Its wonderful. You are wonderful. Which is exactly why I hired you. I expect you do to great things and I pay you to do great things. Dont you remember telling me how great you were when we interviewed you ?

employee: Yes, but, shouldnt I get a bonus ?

Me: No. But if you keep on doing great things, you will get far more opportunities and we will both will hopefully benefit from that.

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So you want to be in the basketball business but cant afford an NBA team. Well guess what ? There is never going to
be a better time to own a minor league basketball team than there is now. IF and only if you follow my nifty little
handbook on how to make money at it.

Before you ask, I cant own a minor league team not associated with the NBA. I couldnt start or buy a CBA, ABA,
etc team. I could get an NBDL team, but what Im about to tell you is not allowed in the NBDL. As a result, what I am
about to tell you is of no use to me as long as I own the Mavs.

If you currently own a minor league team, this applies to you as well. Its simple. Not easy. Simple.

Not cheap, but the upside is big.

Currently in minor league basketball in the US, the leagues pretty much try to copy the business of the NBA. Tickets.
Sponsors. Sell entertainment at the games. Fun family entertainment. All of which are nice and important. None of which
will make you big money in the minor leagues.

The money comes from copying the player development and contractual relationships of foreign leagues. They are in the
business of developing and selling players. So should every minor league team. So in short in simple terms, here is
what minor league teams should be doing.

1. Sign up high school kids. Work with their parents. Pay their parents. Add high school kids as young as you
can sign them up. Not after they graduate. WHILE they are in high school.

2. Copy the contractual structures of the European leagues. When a player comes from a European team to an NBA team,
that team can pay 350k for the contract of the player (More if the NBA team is under the cap). Plus, the player (or
team if under the cap), can be responsible for a buyout. Paul Gasol, when he signed with the Grizzlies was supposed to
have at least a $1.5mm buyout from his team in Spain. Its been reported that he paid the buyout out of the salary
he receives from the Grizz. Good deal for Pau. Great deal for his former team. They developed him and got paid for
it.

I dont know if Tony Parker had a buyout he had to pay himself, but his team signed him at 14 or 15 and developed him
and probably got at least 350k from the Spurs. Again, good for the team.

What makes the timing particularly good for the minor leagues to get in the player development is not the NBA age
limit. That is irrelevant. What makes the timing good is how messed up AAU , High School and NCAA basketball are.

AAU is like a meat market at the top levels. A brothel with pimps might be a better description, but it comes
down to who can get who paid by who at a far bigger premium than how to develop boys into men and into basketball
players.

What is worse, is that the only reason the AAU brothel exists is because High School summer rules
are ridiculous. In trying to not give any one team a competitive advantage, and who knows whatever else
they are trying to accomplish, they turned lose the pimps on their most talented kids.

And then there is the NCAA. Has there ever been a more hypocritical, half ass backward organization when it comes to
“trying to protect the student athlete “?. America is the home of the American Dream where with hard work and
initiative you can be anything you want, unless you want to be an athlete. For athletes in NCAA schools, its more
like communist Russia where they assign a 4 year plan and so many work rules you expect Lenin to show up on the
court with a whistle and a compliance officer.

One summer I went to IU to visit . I wanted to meet then Coach Davis and wanted to see how things were done. I
couldnt believe what I sayw. “Work Rules” that limited the number of players on the court to 4 at a time. Number of
coaches on the court. Length of time on the court. The message was… “we all know the rules are stupid, but they
are the rules”. Ridiculous.

All of this has created a golden opportunity if done right. Here is how to do it right.

1. Signing and preparing the kids to play bball is the easy part. The hard part is making sure they get educated,
family support and real world skills. if you are going to make this a profitable LONG TERM venture, then
your ability to sign young players is only as good as your ability to develop young players into men who can be more
than just basketball players.

If they dont succeed in your program, it wont be possible to stay in business. It wont be like there are hundreds of
teams doing this. There will be a bright light shining on those that try this, so they have to make sure they do it
right.

Part of the process is having tutors, homework monitors and counselors to work with kids AND their parents or
guardians to make sure that all involved are firmly grounded in reality.

The truth of the matter is, if you are paying a family who needs it 10k or 20k per year, you have to make sure the
money is spent wisely, including probably putting at least half of it in a trust for post graduation from high school
.

Gauging the impact on the family. How it responds to the money, the program and the responsibilities will not be easy
at all. But if done right it can be rewarding.

The good news is that educators (note I use the term educators) in every city at community colleges and at
public universities can be found to help put together specially designed programs that are tailored to each individual
student. Will this cost you money ? Absolutely. But it will be well worth the cost.

2. This is the basketball part.

Bring in great coaches. Make it their responsibility not to win games against the other teams, but to develop the
players. That is the business you are in after all. Player development.

Bring in great players who may have played in the NBA already, and who want to get into coaching someday. Guys who
while playing with these young guys can teach them on the court and off.

3. Limit the players to playing home games.

This team isnt about winning. Its about profitability and developing young men to be the best players and people they
can be. If they are in high school, travel , going away from home creates too many temptations, and of course they
still have responsibility to their school work. Keep em home if they are in high school.

4. Practice the shit out of them.

Musicians often practice 8 hours a day. Your players will practice far less of course, but anyone outside the reach of
the NCAA in sports that wants to be the best, could work their butts off as long as they could while still excelling at
their school obligations. With enough practice time, you can work on their fundamentals and their minds and teach them
the value of hard work

5. Sign them to multi year contracts

You arent going to sign a ton of players. You are going to sign the best players you can sign. This isnt a numbers
game. This is about quality. Identifying quality boys and integrating them into a quality program. That takes time and
money. Minor league teams cant afford a lot of mistakes. Mistakes kill Euro teams. They would kill your minor league
team as well. So you need time to work and develop them as they grow up. 1 or 2 years aint gonna cut it.

Finally. Think of the impact you could have on the future of sports in America. Competition from minor league teams,
if done correctly and grown over a period of years, could force the NCAA to make huge changes. Or better yet, force the
NBA to buy you because of the quality of work done, and put the NCAA out of business completely.

Now it wouldnt put the concept of college athletics out of business. IU vs Ky, Duke vs UNC would still be a huge game.
Kids going to those schools would still want to play for those schools. The kids playing however, wouldnt be the kids
with the professional aspirations. The sports would be more like club sports where kids play because they want to play
and no other reason.

To do this is simple. The concept is simple. The execution is difficult. Its not a no brainer, but it is a far better
opportunity to make money for a minor league team than what they face now. If Im a CBA or ABA team, Im calling my local
college tomorrow to see what they think and how they mght help

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No i dont hate technology. I just prefer a little realism with my technology planning. Broadband Video is smoking hot right now. Why ? Because thats where the money is. Advertisers have gone bonkers over it. For good reason. Its a great use of the net for advertisers. A video directed to the right demo can generate far more value for an advertiser than many other advertising opportunities. Advertisers have caught on and are putting their budgets to rich media. Thats a good thing.

Its also why content providers, particularly major media players are putting content into broadband offerings. If you can get a great CPM and sell “name brand” content that commands a great CPM, you are stupid not to do it.

But offering broadband content in order to gain a bigger share of the advertising pie is a completely different realization of broadband than the expectation that broadband video delivered over the internet is going to be a viable alternative or as some future gonzos are suggesting, a future replacement for tradtional delivery of TV. A replacement for TV ? Over the open internet ? Now that is crazy ! (for definition’s sake here, Im exluding private end to end controlled networks like cable or telcos who are using IP delivery of content. Switched delivery of content on an end to end owned network is not “internet delivery”)

The first problem for broadband is bandwidth. DVd quality at 1mbs is fine today, but have you noticed you cant do live consistently for any size audience at even this minimum bandwidth level ?

If someday the internet can support live delivery of 1mbs unicast streams, the cost will be prohibitive (every live stream requires a direct stream from source to end viewer), It adds up very fast. 1 stream per person. X number of streams per server. All the routing and internal backbone equipment to get it on the net. All the monitoring equipment to make sure it gets to the viewer in some semblance of decent quality. All the people to make sure that all works. Thats big bandwidth and overhead and hosting costs. Which is why 350k simultaneous streams at 300k quality for march madness and a concert were considered huge events in 2006. Every single incremental user for a 300k stream of a 2 hour event can cost more than $1 PER USER. (Dont think so ? call a broadband video provider and ask them how much they will charge to stream a live 300k stream to 350k simultaneous viewers with TV level quality of service).

Compare that with the cost of delivering TV today.

Then of course there is the consideration that if broadband will replace TV, what happens when we go High Def ? Lets see we can get by with the lowest quality and only 6mbs of bandwidth (and all you “we have a better codec people, your stuff still looks like crap doing HDTV at 6mbs) . If its a challenge and costs a fortune to delivery 300k streams at 350k , DVD quality , how long do you think it will be before we can do the same over the internet with 6mbs or the required 8mbs for low end and 12 mbs for high end content ?

It aint gonna happen anytime soon. Not this year. Not next. Not 5 years. Not 10 years.

Want to deliver the SuperBowl or American Idol in HD in realtime to 10s of millions of simultaneous viewers ? Not in this lifetime without some breakthrough technology that hasnt been invented yet. (DO NOT SEND ME EMAILS SAYING YOU HAVE THIS. YOU DONT)

So if you want to look at broadband as the future of tv delivery, you can completely eliminate live programming. Of course thats not a big deal. Right ??????

Its feasible of course to do on demand, in a netflix type model. Let it download over night (equal to postal overnight). But it does tie up your PC, so shipping on a hard or optical drive is much more efficient, and thats not the internet.

But wait there’s more. You still have to pay for that bandwidth somewhere. Yes peer to peer helps save bandwidth at the originating end. But it doesnt help at the destination end. 100 peers on a network segment will still use the same amount of bandwidth on that segment as 1 destination with no peers. 10gbs of programming still has to find its way to the destination. So clogged pipes in that last mile are going to clog further as more content is delivered is delivered at higher bit rates. Which in turn mean that fewer broadband bits can be delivered at busy times to last mile users. Net Neutrality will pretty much guarantee that this is a problem forever and ever.

Finally, there is the home experience. Everyone who thinks that analog and sd channels look Worse on an HDTV than they did on an analog tv raise their hand. Now everyone who thinks its worth the hassle to hook a PC up as a media center, connect it using HDMI or DVI to their new HDTV and then connect to the net as their primary source of content, raise the other hand….

You can hook any HDTV today up to pretty much any recent PC and use it as a conduit to get internet content to your HD set. You know how many people are doing it ? Not many at all. I dont know of any families gathering around their brand new HDTV to watch internet content they just grabbed from Youtube. I know millions that are doing it for HDNet, HDNet Movies, TNT HD, HBO HD , ESPN HD.

The reward for connecting a PC to an HDTV isnt worth the hassle and that wont change for years. Dare i say, not even in 10 years, if ever.

Two years ago i wrote that it will be easier to deliver content on a hard drive than it will be over the net. That is the case today, and it will be the case for a long time to come.

Remember, your broadband throughput hasnt increased 5 mbs in 5 years. What makes you think that its going to give you 5mbs more of THROUGHPUT to enable you to do a SINGLE hd stream at a time to your home in the next 5 years ? Or 15mbs more to do 2 HD streams ? (you do want to use your PVR for HD shows dont you ?)

And finally, for all you content creators that think broadband video, whether to a PC or PDA will be the greatest opportunity to make money since…. Podcasting, well read my posts on podcasting. You aint gonna make crap from your broadband video efforts that are drawing zillions of downloads (dont you realize a download isnt the same as actually watching ? do you watch every minute of everything you download ???) unless someone hires you to create programming for TRADITIONAL VIDEO DISTRIBUTION METHODS LIKE TV or DVD !

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TV vs Broadband Video.

For the first time ever, more people this year will buy HDTVs than analog TVs. Given that few of these sets that will be sold in this and future years will be smaller

than 26″, I think its a safe assumption that many of those sets, if not most of them will be installed in what could be called a least a “marginal” home theater system.

In fact, some people think that as the sales of HDTVs grow to the point where High Def sets become ubiquitous, that so many quality home theater systems will be setup

that people might prefer to stay at home watching movies that box office in movie theaters may be impacted. Hold on to this thought.

There are people out there that think that the internet is the ultimate delivery vehicle for video content. That all those HDTVs mentioned above will be connected to

Set Top Boxes (STBs) with internet connectivity or to PCs or MediaServers with internet connectivity. That the value in this connection to the net is unlimited choice.

Get all the video you want, anytime you want it. All through the net.

We read about it every single day. Youtube and its brethren are the homes for all the amazing, stupendous, incredible, fascinating, content. Every cable and broadcast

network is offering broadband content. SOme are creating new content for broadband. There are

Makes some sense, doesnt it. To most people unlimited choice is the best choice and the service that content consumers will always choose. They arent right, but lets

pretend they are for now.

downloads dont mean squat.

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The Internet is Boring. Its old news.

THe biggest compliment I can pay to the net and to all those pioneers who got it to this point is that its boring. It works. It’s not perfect, but it works andhasabsolutely become a utility. We get water, electricity and now digital bits shipped to our homes. Its our choice whether to purchase any of the above, and we tend to choose all 3.

I dont get excited about enhancements made to the electrical or plumbing infrastructure andI no longer get excited about the marginal enhancements being made to our digital distribution infrastructure.

We havent seen anything new for the net itselffor years.

Web 2.0 ? Not as exciting as going from Dos to Windows. Not by a long shot. Heck, its not as excitingas going from WordStar and all its keyboard combinations to WordStar 2000 was. Now that was progress !

Broadband ? Been around for years. Remember @Home ? Most of you probably cant, which shows just how long its been around. When did ISDN come and go ? Sure connections are getting faster, butthe net throughput for downstream and upstream bandwidth to the home have increased by a only few Mbs IN THE LAST 10 YEARS !

The prospects for the next few years are about the same. Maybe you will get fiber to your house. Maybe not. But your connection is only as fast as the rest of the people in your neighborhood let you get. Your network connection throughputwill continue to be limited not only via provider capacity constraints, but by usage of your neighbors. Its our net and it is what it is.

But what about all the new things you can do with the net ?

Web Based Applications ? Are they much more advanced than writing multi user based network applications accesible via dialup ?

And come on now, blogging ? If GeoCities had created a script to add dated journal entries and gotten rid of those ugly floating ads that made everyone hate it, would this be posted on GeoBlogMaverick ? And my goodness, if GeoCities had the foresite to add the Myspace concept of friends instead of rings and host people’s media files, would we call it a revolutionary social network ? Or just a webpage and file hosting service ? Which is exactly what Myspace and other social networks are.

There is nothing “oh my god” unique that has happened on the net in forever.

What we have seen are incremental applications that have been powered by the amazing ongoing drop in pricing of PCs, hard drives, memory and BACKBONE (not last mile) bandwidth.

None of which are “the internet “

In 2000 at Broadcast.com, I remember SPLURGING and buying 500MB drives for our programmers and our servers. They cost almost 1k dollars per drive. I remember sitting with drive manufacturers and telling them that if they could get my cost down to 1 dollar PER MB, i would step up and make a big purchase. They couldnt do it.

Today ? I can buy a 4GB Compact Flash card for $70. A Flash Drive for not much more. (By the way, when is someone going to do a box that bonds flash drives across USB ports as a single Drive ???, or let us create a HUGE ram drive using Ram Memory for video media server apps ?). I can buy 1k times as much storage as I could 6 years ago for $175 dollars.

Back then, the PC to host those servers cost thousands of dollars ea. The applications we ran had minimum CPU requirements. Have you noticed these days that its almost impossible to NOT buy a PC that is fast enough to run any application you want to run ? Do we even pay attention to how fast processors are any more ? Are there any apps we cant run with an off the shelf PC that costs 500 bucks and has 1gb of memory ?

The net hasnt made the net better. Its better pricing, capacity and performance for all the things we use to run all the applications that attach to the net that have made the net better

Flickr, MySpace, Digg, Google, Filesanywhere.com, Goowy.com, IceRocket.com, YouTube, etc, etc, all happened and have had an impact because the cost to create each of these companies have fallen to next to nothing.

Want to create a Youtube video ? The camcorder, PC with editing ability, and home broadband connection have all fallen in price.

Want to create the next Youtube ? The cost to host and store all that video has fallen a THOUSAND times versus the cost 5 years ago. The quality of video delivery for someone with a 1 or 2mbs home broadband connection hasnt changed all that much, and where it has, its more attributable to encoding and codec enhancements than any internet throughput improvements. Of course its not easy or cheap to scale to millions of users… because the internet itself hasnt gotten better !

I can say without any doubt in my mind that if Overture had popularized Cost Per Click a few years earlier and costs for computing equipment were in 2000 what they are today, the hot sites of today would have been the hot sites of 2000.

Its not the net, its the applications stupid !

Falling costs to create , host and deliver digital bits enable entrepreneurs to be entrepreneurial. Kids can save enough money these days to buy a computer and create applications their friends can use and maybe even buy year round for less than they can buy a decent lawnmower to mow lawns with only in the summer. Its the brainpower that is changing our world. THe internet is just a utility to deliver the digital bits they create.

I cant wait for my daughter to ask me why people used to get so excited about the internet and I can tell her that after the first few years it made no sense to me either.

The net is boring. Get over it.

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There has been a slight upturn in the debate over clickfraud.

The generic response seems to be that its “self correcting”. The logic goes that if advertisers using CPC services arent getting the return on investment they expected or need, they will bid lower for the clicks to reflect the reduced success rate.

Sounds right. Except its wrong. It doesnt work that way for a material percentage of advertisers impacted by clickfraud.

First of all not all clicks are purchased to lead to directly to transactions. There can be any number of reasons to purchase a search keyword or contextual link. Do a google search for Corvette. GMs Official Corvette site comes up as a sponsored link opportunity. Click Fraud or not, think GM wants that positioning to go to promote a competitive product ?

Then there is the competitive positioning issue. When i do the same search, Google responds with sponsored links for multiple Chevy Dealers who use the exact same interface to acquire pricing requests and are all based in and around the Dallas area. How long will it take for those Corvette dealers to figure out whether the reduced sell through rate by quotes generated via Google are caused by Corvette vs the competition issues, competitive pricing between local dealers, or clickfraud ?

In fact, its reasonable to presume that the “hotter” the sales of a product, the more vulnerable to click fraud the keywords related to that product are. If Corvettes are flying off the shelf, those pricing inquries are worth more and more because as long as inventory isnt constrained, the dealers are getting a ton of bids and are happily selling a ton of cars. They may bid up the price for Corvette related keywords knowing their product is hot as could be and they want to acquire as much market share for that product as is possible.

Smart clickfraudsters know this as well. They also know that a hot product makes for increased clicks, which in turn creates a greater buffer to hide behind which fraudulent clicks could be hidden.

Then there is the market for branding and saturation advertising. Think Disney is going to care or analyze for clickfraud when they buy every possibly related keyword to market the new Pirates of the Caribbean movie ?

Then there is the bad guys side of the good guys. The sites that just want clicks no matter who the pageview or video viewed comes from.

if a site is selling advertising and needs to hit a critical mass of traffic to their site just to be able to sell advertising, they arent going to care how they get it. As long as the CPC is reasonable versus their traffic needs. clickfraud actually does them a favor. They buy cheap keywords in huge quantities. At a nickel a click, if they are selling CPM based advertising, its obvious what they have to sell their advertising for to get their moneys worth.

And doesnt Google now sell CPM based advertising ? So is it possible a click through from a Google ad to a site selling CPM based advertising from Google could be clickfraud that pays Google twice.

Remember this. The worst bad guys are the smartest bad guys. They use the strength of the CPC system against the advertisers , where they are least susceptible to be discovered. clickfraud is real. its not going away. Its making CPC sellers a lot of money. How much, i dont know.

What i do know is that its not a self correcting problem

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