As I clean up or find old emails for whatever reason, its always interesting to run across old interviews I did about the future of streaming media. This interview was with Kevin Werbach who along with Esther Dyson wrote one of the leading newsletters of the time.
Here is the entire email, the good and the bad
At 02:48 PM 8/9/99 -0400, Kevin Werbach wrote:
Thanks for your message. I’ll definitely be in touch when I put the piece together (probably either September or October), as your perspective would be very helpful.
The primary question I’m asking is how streaming video will develop as a mass medium. I’m certain it won’t look like today’s broadcast and cable offerings, with all the channel and time constraints… but I’m equally sure it won’t simply be random access to an infinite number of on-demand streams. What (not just who) takes the place of broadcast networks as a
video *service* that brings together audiences and efficiently trades eyeballs for dollars?
My Answer>it will be a progression. First it will just be a random collection of on demand. Its the fun of walking in to the NY Public Library. So much stuff you are awed and you just walk through the stacks till you find what you want.
But quickly of course people will tire of this, and so we will have to package . The packaging will be in “stations” and user generated playlist stations. These will evolve as people pick their “programmers” that they trust.
Remember, the only revenue source is not eyeballs. I personally dont think you will be able to aggregate enough eyeballs to be a mass media in the tradtional sense of a single channel. All you have to do is look at what cable has done to network tv. The more choices you have, the more you get to choose exactly what you want to the exclusion of traditional programming. So the numbers fof the networks have fallen off a cliff, but the cable networks havent garnered “mass media ” numbers individually
So there will have to be newer models. To pay for content creation and for the distribution itself.
In a world of digital delivery, there is no reason to distinguish between audio/video/data as the widget that is being sold, so they will be sold together. It could range from watch this movie for $1 and when you are done, the entire soundtrack will have been streamed to you and saved to your hard drive.
Or it could be the Barry Manilow channel where its all barry all the time, and included in the $2 per month, or 25 cents per month for that matter is all the barry you can watch AND all the music you can download. This could be a windfall for Barry and his label, given that most artists and labels together make less than $3 per cd combined. And for 1 CD per year, that amounts to 25 cents per month as break even, plus all the other things you can up sell them to
Or it could be if you are an exclusive customer of American Airlines, they will provide you with this programming for free, and the guide is downloaded as part of the stream. In otherwords, sponsored programming to enable the delivery of digital data or user patronage will be the way. Probably not much different then the origination of the soap opera.
Or you are a huge sports fan, and you are willing to pay 1 buck a month to watch on demand every Emmet Smith Run, or go back in the archives to watch Michael Jordan play in his last season at UNC.
But then who really knows. The key for us is to have the infrastructure and audience to enable learning and growing. If you dont have these, it doesnt matter what you do, and that is why I think the DENs of the world are doomed. Its way too expensive to acquire an audience
The following, as you can see below, is in response to my request that he look at Index.broadcast.com where we indexed closed captioning and meta data from audio and video content we had
>And I’ll definitely check out the index site. I met with the
>Islip/MediaSite folks a week or two ago, and what they’re doing sounded
>very cool. (I’m embarrassed to admit, though, that our whole office runs
>on a 384k fractional T1, despite my best efforts to get DSL installed, so
>I’ll have to wait to try out the 700k streams.)
>
>-k-
>
>At 02.23 pm 8/7/99 -0500, you wrote:
>>hey kevin
>>saw you are going to be doing a feature on broadband video.
>>
>>dont forget to check out broadcast.com/broadband. We have several thousand
>>hours of on demand video, and we also offer a growing list of live TV and
>>Network feeds and even movie trailers and 700k
>>
>>and also check out our beta for indexing at
>>index.broadcast.com
>>
>>just register and pick topics to search on. it only supports up to 150k
>>now, but will be increased to 300k and then 700k.
>>
>>if you want to see some fun, but not public tests, of 700k, go to
>>www.broadcast.com/mgm and check out the 700k feed
>>
>
>
Streaming away from middlemen. From a traditional content network perspective Netflix is just a phase shift of a reborn aggregation. When the user can visit a show’s website and click less than three times to microbill to their account – that is when the system will stabilize. Whether the RIAA is involved or not depends on how it evolves. Artists need management, management needs organization but how complicated is it when the viewer DIRECTLY pays the producer?
Perhaps that is a standards driven development. Perhaps a startup that can explain it to both providers and consumers.
Some users will opt to pay with cash, some will opt to mix in some level of commercials. Just as we drive round wheels on pavement, so will we view some level of out of band visual salesmanship. Commercial Video Advertising is as fundamental as eating and exercise.
Isnt there a global model that looks and feels like a lemonade stand?
It smells like netflix or youtube, I assure you.
Comment by dkraftjr -
Netflix
Derekdirect1099@gmail.com
Post below.
Comment by crawfordd1099 -
Netflix
I share your optimism in regards to Netflix’s future. Here’s an email that I’ve been trying to get across. Let me know if you think I can help.
Marketing, promotions, and business partner alliances,
Thank you for taking the time to read this email. I can’t imagine
how many people send you emails like this. There must be thousands of
companies that want to be a part of Netflix’s success. Netflix is
doing a wonderful job providing a very affordable and convenient form
of entertainment. The growth of Netflix since it started is truly a
great success story among thriving businesses. I want to assure you
that I can only benefit from the following proposal, if I help Netflix
become MORE successful.
I have a way to increase the number of new subscriptions to
Netflix by 20,000 households per day, without any up front cost to
Netflix. Before you say “too good to be true”, please, keep reading.
Netflix has, and continues to do a wonderful job getting new
subscriptions. I’m not sure, but I would imagine this topic comes up
in meetings at Netflix corporate all the time. I imagine people
asking, “how do we get more subscribers, faster, for longer, and for a
larger subscription plan?”. I have a way to get people to subscribe
sooner, for longer, and for a bigger subscription plan, again, without
any up front cost. What I can do will only benefit Netflix if you
want to increase the speed, the length, and the size of the
subscriptions we would acquire for you. With the increase of
competition in your industry, and the fact that your competitors are
already doing one form of this advertising. I can only guess that
this would be something worth looking into.
I believe there are tens of millions of people in the U.S.
that want to subscribe to Netflix. But for some reason or another,
they don’t. How do I know this? Well, I was one of them. I was
introduced to Netflix around 2001, but I did not subscribe until just
a few months ago. I am very pleased with my purchase. I wish I had
done it 10+ years ago. I will always be a Netflix customer. Why
didn’t I subscribe sooner? The answer is simple. “No one asked me.”
I will not try to lay out my entire plan in this email. I will just
tell you that I have worked with, and run many subscription sales
teams with newspapers all over the U.S. and Canada. Our current
clients include some of the largest publications in the world. Our
relationship with some these clients goes back 30+ years. We are the
ambassadors for our clients. We provide customer service and a
friendly face to go with the product and service we represent. Our
job is to get people’s attention, qualify them as a potential
customer, and show them the special offer. Most of the special offers
we give are for “your first month free” or “a free upgrade”. That is
something Netflix already does. The similarities don’t stop there.
Newspapers are an affordable and convenient form of entertainment too.
They also bill people automatically on a monthly basis. This model of
subscription acquisition has kept most newspapers alive for the past
20-30 years. For Netflix, I see it as a way to stay ahead, and
possibly defeat, the competition. Because I have worked all over the
country selling subscriptions, I have a network of people that would
jump at the opportunity to sell Netflix instead of newspapers. That
network covers all 50 states and most of Canada. We work on
commission. We only get paid when we get new subscriptions for our
clients. This is how, without any up front cost, we would be able to
acquire 20,000 new subscribers per day for you.
I can explain our complete plan and how it works in less than 60
minutes. I promise it will be worth your time to meet with me. I will
look forward to flying to California on a moments notice if you
require.
Thank you for your time. I look forward to keeping Netflix at the
Front of the Pack.
Derek Crawford
Front of the Pack Advertising Group
773-957-6850
Comment by crawfordd1099 -
Great read! really nice to see that besides bandwidth, nothing has changed!
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Comment by 4QuarterStrong (@4quarterstrong) -
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Blog fantastic
Good luck to you
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Comment by marco jouve -
Awesome foresight! I develop channels and content for Roku and that’s exactly what’s happening. With Roku, for instance, we can be super flexible in creating programming; we can be as broad- or as targeted as we want/need to be. We create content channels like our music channels, which can be on-demand OR linear (streaming continuously) but also “branded” channels that can be used to distribute product information, build product/brand loyalty and/or “brand community” and even offer premium content to select customers. The revenue model however is not limited to paid content — we employ such revenue models as streaming advertisements (paid per view), per inquiry advertising, content sponsorship, and even selling channel swag. What I’m working on now is developing the ecommerce element to allow for direct purchases right on the channel (imagine a BUY button on the Home Shopping Network). I believe the term “mass media” is becoming dated, with “targeted mass media” being the new model. The goal of streaming media now, as opposed to other forms of mass media in the past, is to aggregate content to like-minded viewers who share a specific interest or passion (i.e., a channel devoted entirely to one specific sport or to one specific team (hint), or a hunting or fishing channel, or even more specifically, a deer hunting channel or a bass fishing channel) — targeting a specific audience, rather than trying to build an audience around the content like broadcast and most cable networks have to do. A good example of that, right now I’m working on creating a series of “branded” channels for each NFL, NBA and MLB team — with team-specific content, advertiser-supported model and with added, paid premium content. The advertisers of the streaming media future aren’t looking for reach, they’re looking for precision or laser-focused targeting. One targeted viewer — that diehard Mavs fan, for instance — is worth more than 10 or even 100 random viewers. Of course this creates new challenges for the advertising rate card — ad pricing isn’t/can’t/won’t be based on the same sort of demographics, reach, frequency, etc., but more precisely on exactly how many people view the ad. I have Roku channels right now that are reaching more viewers than broadcast channels, and some cable channels, and the advertisers are getting what they pay for: real EXACT numbers, not just general viewers, but real, relevant eyeballs interested in the content — and as the technology continues to develop so too will the ability to pinpoint exactly WHO that viewer is. Streaming media is the future happening now. Like the Internet in 1994, we’re at the birth of something totally new and exciting, something YOU had the foresight to see so many years ago! I’m anxious to see what role, if any, you will play in the development of this technology!
Comment by Phil Autelitano -
Mark, are you interested in holograms as a near future display for media (as in to eventually replace TV screens and tablet screens)?
Tim Fisher Founder/President RTF Consultants http://www.RTFconsult.com (859) 806-5001
RTF Consultants. Articulate. Stimulate. Your Business. Your Life.
*sent from my iPhone, so my apologies for any potentially misspelled words
>
Comment by RTF Consultants -
Or – instead of watching a barry manilow channel and be all barry 24/7 – how about mixing that channel with michael jordans and bette midlers channels and the one from one direction and maybe you think louis ck is funny – so mixing all of those topic channels together is what we do NOW at WatzOn.TV – the future of smart tv – where you decide WatzOnTV!
Comment by Brad Waddell -
Awesome. http://broadcast.com/broadband redirects to https://www.yahoo.com/broadband/ with a redirect loop. Looks like the folks at Yahoo! are slacking!
Comment by AlphaWolf -