Monthly Archives: March 2007

It pays to break the rules

Posted by Todd Sawicki on March 26, 2007 View Comments

Mark Cuban’s question in a post below asks us to imagine if my old company – encoding.com aka Loudeye (which encoded lots of a-list music and video) decided to throw all the content it had online.  That would have been one hell of a site from a user’s perspective – movies, music videos, cd’s (in fact at one point every single music CD sold online), and more.  The only problem is that it would have been illegal. 

That trip down memory lane started by Mark’s comment, did get me thinking.  First there was Napster.  Then MyMP3.com and now arguably YouTube.  All skirting the rules or maybe downright illegal.  But this isn’t meant to be another rant on the legalities of YouTube as I will leave that to Mark, et al (and for those that don’t know Mark knows what he’s taking about with regards to the DMCA since he was active in the trade group – DIMA – that negotiated the law). 

My point is how those legal risk takers were rewarded.  Napster got a lot of funding from Hummer Winblad and a buyout from BMG (what were they thinking).  MP3.com was bought by Vivendi Universal making its founder a multi-millionaire.  Kazaa made a fortune for its developers and future owners Sharman Networks.  And we all know about YouTube’s $1.6 billion dollar buy out from Google.  That’s a lot of money for potentially illegal business activity.  Who says you can’t profit from illegal activity ;-)

And what happened to the companies that tried to follow the rules?  Dave Pakman’s mylocker.com with a legal version of MyMp3.com hit a wall (Dave did go on to run the now successful eMusic site).  Loudeye struggled to get commercial music licenses for two years ultimately missing the boat on consumer music apps when iTunes came onto the scene.  Not to mention the gutter of history filled with online video companies who struggled to license content like AtomFilms (think how big that would have been with a nod and wink to copyright).

I am not arguing whether the current laws and rules are fair – I often think they are a major pain in the ass.  Just because you don’t like them does it mean you can ignore them as some VCs seem to want to imply - just ask Cablevision Systems (seriously given the the MyMp3.com ruling I don’t know how they thought they were going to prevail without direct licenses).  But if you were an enterprising person – breaking the rules might be just the thing to make a lot of money. 

being early = wrong v2, the spot runner story

Posted by Todd Sawicki on March 21, 2007 View Comments

Today Henry Blodgett argues Google should buy Spot Runner essentially arguing Spot Runner is enabling targeted TV advertising for the long tail of local advertisers.  Spot Runner’s not the only company dreaming the dream of enabling the long tail video advertising (both online or offline).  And based on a conversation I had a little awhile ago with David Stern, VC at Clearstone Ventures who has a passion for online advertising, VC’s are dreaming the dream as well.   Seems to make great sense as Henry points out – imagine if you can make TV advertising easy – then everyone would do it.  WRONG – at least not this in this generation.

David was looking at the space and wanted my take on it as venture play.  Thinking about it for a second (and I have experience in cable tv and in online video – going back to the earliest, earliest days of that market thanks to my experience co-founding SimplyTV.net) – my answer was video marketing seriously lacks an addressable market.  Video advertising beyond the core (ie. local car dealers, mortgage companies, political campaigns and humongous CPG companies) is a long, long way from crossing the chasm to becoming a mass market phenomenom.

The problem with video is that so few marketers have any experience using it.  They don’t know how it works, how to produce it, how to judge it, how to report on it, or how to buy it.  Seriously how many companies have ever used video advertising in this country? 10,000 maybe?  How many use it regularly? Less then 1,000 more likely.  Therefore no matter how easy someone like Spot Runner makes it – it isn’t anything any substantial number of marketers have any comfort with.  And that’s hugely important – when 250,000 marketers are familiar with search marketing and are comfortable using it and millions more with yellow pages advertising.  The last thing most people have the time and energy is to learn something new.  Seriously how many people over the age of 25 have ever even edited a home movie?

Now that last comment raises a key point because the under-25 set is the YouTube generation.  They are being raised in era of ever cheaper camcorders and camera phones with video capabilities.  They are being raised learning and thus knowing how to express themselves using video.  So in 10 years when they start their marketing careers they will be looking to use video because they know how to communicate and judge video.  Then you’ll be looking at a market that might truly be interesting for spot runner, et al.  But tjhat’s a decade from now and as I wrote the other day – being early is good as being wrong.

it ain’t no damn bubble

Posted by Todd Sawicki on March 20, 2007 View Comments

Alright the title’s really a double negative, but the slang sentiment makes my point.  We’re not in a bubble the way we usually think of bubbles.  The Tulip Bubble was a bubble, the Stock Market 98-01 Bubble was a bubble and in some areas(note: as my friend dave berson, head economist at fannie mae would say – there is not a national housing market there are 300+ local ones) there is a mortgage bubble.  With all true bubbles one of the key features is broad public participation.  Given no Web 2.0 copmany has gone public there isn’t a Web 2.0 bubble.  Is there a lot of investment in internet startups these days? Sure, but given the closures of a number of VC funds (see Apax Partners for instance) sanity still rules in the long run. 

Am I glad there isn’t a bubble? Damn straight.  Having been a participant in the online startup eco-system since ’97, the last one caused even good ideas and investment opportunities to go dry.

:(

Posted by Todd Sawicki on March 20, 2007 View Comments

I just found out someone who I worked with at zango died last weekend in a tragic cycling accident.  Having lived through a similar tragedy when my would-be best man was killed in a car accident a decade ago, all I can say is that I my deepest sympathies go out to her family and friends.  She was a great person and someone who I really liked working with.  :(

Geeking out this Weekend = Monster Whiteboard

Posted by Todd Sawicki on March 14, 2007 View Comments

I’ve often been accused of being a marketing geek and this past weekend I embraced my inner marketing geek.

Like any marketing geek worth his salt – I need a white board to work through ideas, thoughts especially when working on a new business plan (which I am) and/or to just goof around.  I am so beyond using paper ;-)

Not content with simple 2′x3′ or even a 4′x6′ whiteboard you can find in any office supply store – I wanted to go big, monster even.  So after looking around online I discovered you can cover walls with Melamine and walla you have Monster Whiteboard.  So I took the truck over to Home Despot (spelling intentional) this weekend and bought 2 4′x8′ sheets of Solid White Tileboard (SKU #A 253-540 $13/sheet for those tracking at home) and some wood screws to mount the tileboard (or you can use construction glue but that’s not a great idea if you even want to replace or remove the tileboard).  I spent Sunday afternoon mounting the tileboard on one wall in my new home office (ed. note – get your wife’s buy in before doing this if you want to maintain some marital peace).

And so now I have one Monster Whiteboard – 8′x8′ baby!  64 square feet of whitboard mania.  World watch out!

Feeling Good vs. Doing Good

Posted by Todd Sawicki on March 14, 2007 View Comments

I love to needle my liberal friends about how that the reason conservatives find fault with liberal ideas is that a lot of them are about feeling good about solving a problem vs. actually solving the problem.

“Protecting/Cleaning/Saving” the environment is one of those issues that is a standard bearer issue for most liberals.  And so to show their love for the environment a lot of them rushed out to buy a Prius.  Now the truth is getting out that the Prius’s aren’t so green after all.  Check out this article  which  discussed how Prius’s might actually cause more environmental issues then a Hummer!

Of course anyone who understands anything about batteries would have seen this one coming since you aren’t even supposed to dump batteries in land fills any more because they leach toxic chemicals.  Now if I could just get my environmental friends to stop driving their vw bugs (original) for a new car with modern emissions controls I might just help the environment today (for those who are unaware something like 90% of emissions from cars comes from cars built before 1979 despite something like less then 10% of the cars on the road dating back that far).

Too Early = Wrong

Posted by Todd Sawicki on March 14, 2007 View Comments

Thanks to Dave McClure, I had a chance to sit down the other day with Scott Rafer, CEO of myBlogLog.  In the course of our conversation (largely reliving the ups and downs of the online business sector from 98 to present), Scott made the good point that when it comes to a business idea or company – being too early is the same thing as being wrong.  And from a business and investment perspective he’s right.

Seeing an idea born out by another company later on down the road doesn’t mean you were right at the time – it just means you weren’t crazy in the first place.  If you were right, then you would have waited until the timing was right.  As the cliché goes, timing is everything.

For instance, at then encoding.com, we came up with the idea of building a web service for people to upload their home movies to share online with their friends and family called myhomemovie.net.  We came oh so close to launching the service, but could never get the economics to work – users had no bandwidth to support video, servers were expensive, storage was even more expensive and bandwidth was even more expensive than storage.  We even looped in att worldnet to see if we could make it work.  In the end, the numbers never penciled out and we rightly scraped it.  Now just because YouTube came along 7 years later to sell itself for $1.6 billion dollars doing essentially the same thing doesn’t make our idea right since the timing wasn’t right.

I even wrote a business plan in 2003 that is strikingly similar to what the Fon guys in spain are trying to do these days.  I pulled the plug on the project feeling a consumer wifi play was too early (though I had nibbles from angels so I knew I wasn’t crazy).  Scott made the counter argument that my plan wasn’t too early but that my idea and Fon’s awere and are likely just wrong.  His point is that given the rollout of 802.11n, public wifi networks, and high speed wireless broadband from WiMax to affordable 3G effectively marginalize the market potential for a personally deployed wifi network like Fon is trying to build.  Time will tell on Fon, but sometimes you’re not too early, you’re just wrong.

windows vs. os x – windows 1, os x 0

Posted by Todd Sawicki on March 9, 2007 View Comments

to all the apple maniacs out there who love to tout how bullet proof their os is, all i have to say now is – b.s. last night my shiny six week old macbook began crashing every time i tried to boot it up. all i got (and am still getting) is the lovely apple equivalent to the windows blue screen of death.

and i have tried everything, boot discs, os x install discs, everything, with nothing working. i have never experenced something so intractable in the 15 years I have been using ms windows (i have used mac’s on and off for 20 years so i am no windows bigot). never. what a pita. and to top it off, applecare take support, unlike ms tech support, is only available via phone until 6pm pac time. seriously does apple not think someone might want to tech support at night? what a pile of crap. can you tell i am pissed off right now?

i know it’s not the hardware either since i have boot camp and i can run windows just fine (the os I am writing this from). how’s that for an irony? windows works, while os x doesn’t.

score: windows 1, os x 0.

cuban takes on gootube

Posted by Todd Sawicki on March 7, 2007 View Comments

Mashable covers the story here and comes to the conclusion that mark’s personal feelings are driving magnolia’s decision to go after youtube users.

Two things come to mind – who cares if its personal? Mark’s business has the right to do what they are doing and they are doing it.

I’ve had the chance to meet Mark and he’s one shrewd cookie – too bad Martin wasn’t able to sell then encoding.com (later known as loudeye recently sold in parts to Nokia and Muze) way back when. We were close but then mark had to go and sell broadcast.com to yahoo. bastard ;-)

Personally my bet is that Mark’s doing it to either prove or disprove the legal standing the gootube is using to avoid content licensing deals with content owners. And as a content owner, Mark’s right.

The bigger question to me is why didn’t Mark follow his own advice and flood gootube with promo videos for magnolia’s content like he explains here.

the post e3 world

Posted by Todd Sawicki on March 6, 2007 View Comments

I will have to see as a geek having had jobs that have allowed me to go to shows like e3 and ces has been awesome. For gaming, e3 was nirvana though its success ultimately led to its implosion. Thankfully ces isn’t going anywhere soon and now with convergence finally here after being promised for the last 15 years (John Malone’s 500 channel speech was over 13 years at the western cable show) it’s the holy grail for all cool devices that aren’t a phone (unfortunately due to our balkanized approach to wireless we lag hopelessly behind europe so all the cool mobile shows are over there).

e3′s roots were in Atlanta and when the show went hollywood – literally and figuratively it was the beginning of the end. Shows actually do serve a business purpose. Trust me, shows are never close to the boondoggle we as participants might wish. They provide an easy way to do a press push, announce new products and initiatives, conduct sales and bus. dev meetings, and offer a forum for the tech folks to catch up on the latest and greatest. But what happened to e3 is that it imploded due to its own success. It became so popular that parking was impossible, traffic jams caused 1-2 hour back ups, and there were no places nearby to conduct meetings. So it was easy to see why the major players all pulled the plug.

But the need for a central annual meeting place still exists in the wake of e3′s absense. Looking at the landscape for gaming that leaves GDC and maybe CES. The problem with CES is that for marketing and PR puposes its too big of a show and historically tied to CE releases (and these days of ever cooler gadgets – I admit I have a problem when it comes to gadgets) for any other sector to get much play in the media. Sure XBOX and PS3 will get covered but that’s because they by their nature are CE devices. But the rest of the gaming space is left out in the cold.

So that leaves GDC as the next logical choice. Unfortunately, GDC has its flaws too – is it a console gaming show? pc gaming? or casual gaming? Given its root as a developer show, does it have enough business focus to attract the right business people and deals? Is it the right venue to get press if you are not a tier 1 console developer or publisher? As I head to GDC tomorrow, it will be interesting to get a perspective on GDC and it’s new status – can it be the replacement for e3? Will it become e3 lite instead (lots of glitter and less and less business).

Now as a casual gaming guy by experience, GDC is far from perfect for the casual games space. We need a show where we can look forward to cutting deals, promoting new products and announcements and getting a chance to generate some press on as standalone basis as possible. Then the larger public and media will see just how large and legitimate the casual gaming space is. Perhaps its time for the Casual Game Conferences to emerge as the proper venue for showcasing the casual game industry. For the US, the Seattle show has potential given the industry’s concentration in Seattle as well as Seattle in July being as close to as good as it gets (sunny, dry, water and mountains). Now what needs to happen next is that the casual gaming companies work to make the event truly worth covering – then – the casual gaming space will have a solid home and perhaps even an annual boondoggle.