Reason Why I Stopped Pirating is Being Destroyed By Those Trying to Stop It

I know, I know – it’s been more than a year since I last posted. I apologize to my readers for that – all two of you (hi mom and dad!). Now, back to my post: I hate the MPAA, and almost everyone else incapable or unwilling to embrace technology to create a good experience for customers.

Netflix is the best thing to happen to the first world since…the GUI. I’d say sliced bread, but that’s cliche and hard to beat. Can you imagine trying to spread peanut butter on a whole loaf of bread? But I digress. My beef with the MPAA arises at their lack of acceptance that more and more people are streaming movies – and easy access beats out free content. I am more than happy paying for movies online for a reasonable price if it means I’m guaranteed a good quality movie and no risk of a virus (or a a 72 minute limit – I’m looking at you MegaVideo). Starz recently ended negotiations on renewing their content distribution with Netflix. Netflix is one of the largest digital distributers of movies and tv shows, why Starz would do this is beyond me. In the press release from Starz, they state,

“this decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content.”

First of all, Netflix is a distribution channel. I wouldn’t have seen half the movies coming from Starz that I have had it not been for Netflix, nor would I have had any interest at going out of my way to find it. “But what about Blockbuster?” Hah, that’s cute. DVDs are going to become the VHS’ of the 21st Century. Think about Netflix’s recent rate increase for those subscribed to the DVD and streaming service – they’re incentivizing people to stream because they recognize that the user demand for streaming is growing – and will continue to grow, whereas the demand for a physical DVD is decreasing, and will continue to do so. Second, even if Starz were to offer movies digitally through their own site and/or app, it doesn’t have the distribution power that Netflix does (Xbox, Roku, etc etc), and I’d venture to say that most users aren’t going to pay for a subscription to a trillion services (xbox, Netflix, Hulu, MLB.tv, NFL Network, etc etc) once all content is available online – and we ditch the tv. So what’s the harm in offering new movies to Netflix earlier? If anything, it’ll keep more people from watching the movie illegally if there’s easy access to it.

The true competitor to Netflix isn’t Hulu, or vice versa. The true competitor is pirated digital copies (both streaming and torrents). The primary need that services such as Netflix and Hulu fill is that they offer what users want easily and safely (as in, the risk of getting a virus is minimal to none). And until there’s a service that’s both free and convenient, people (lots of them) are going to pay for movies and shows. This concept would have been unfathomable just 10 years ago in the age of Napster, but if there’s one thing that these services have proven, it’s that unless the MPAA and studios embrace the times, the internet is going to leave them in the dust.

And before you start telling me that college students aren’t going to pay for a bunch of services and they’ll still continue downloading illegally. You might be right for the next few years – but there are ways to incentivize students to pay for content (student discounts? targeting the parents that pay for students? etc etc). But honestly, who cares if college students don’t pay for content? With the exorbitant cost of education ever-rising, they’re not paying for much other than their tuition and books. Almost everyone I knew in college a few years ago watched movies illegally, but almost all of these people now have a Netflix or Hulu (or both) account. Some of them will also get their shows or movies off of iTunes. They have effectively gone from piraters in college, to young professionals paying for content. And guess what MPAA? Watching movies legally through a service like Netflix or Hulu is far easier than searching for torrents or streams.

Sorry Tiger, it’s the Year of the Location-based Services

2010 will be the year that location-based social networking services become mainstream. Bold statement? Hardly. With the rise in popularity of Foursquare, Gowalla, and other similar sites, we’re going to start seeing a shift in users from early adopters, to more mainstream adopters. I’ve been using Foursquare obsessively for a couple of months now, and it’s become increasingly hard to hold down mayorships. I didn’t think it would be a service that I could get addicted to – but every time I’m ousted as mayor, a piece of me dies a little. I don’t think it’s how many points I can rack up in a week, so much as it’s a combination of unlocking badges, and being mayor of various locations that keep me engaged with the app. It could also be that more of my friends use Foursquare than Gowalla, MyTown, Loopt, or BrightKite, thus giving me little incentive to use the other services. Despite Yelp having the edge in number of users, I really don’t think they’ll “oust” Foursquare as “mayor” of location-based services. I use Yelp to find new places to eat, thus, I have no reservations about adding random people I don’t know as I may find their reviews useful. With that said, I’m also unlikely to use Yelp’s check-in because, aside from the fact that there are no exciting game-mechanics to it, I really don’t want people on Yelp to know where I’m checking in. The type of people I’m connected to on Yelp, are very different from that on Foursquare.

With location-based services, monetization will be huge. I previously blogged about hyper-local targeted advertising, otherwise known as location-based advertising. Imagine the possibilities with location-based advertising within location-based services. If someone checks in to a location tagged as nightclub at 11pm on a Friday night, they can receive an advertisement right when they check in, on late-night pizza. This way, when they’re stumbling out of the nightclub with their friends at 2am trying to figure out where to satisfy their munchies, the idea of late night pizza is already in their head (or maybe they receive a push notification around 1:30am letting them know of a pizza place open late).

2010 will be the year location-based services become huge. More mobile phone users are getting smartphones, and the smartphone market penetration keeps increasing – though location-based apps are doable on normal phones, the user-experience is a lot better on a smartphone. On another note, it would be interesting to study how many of those with smartphones don’t have data plans, and why they don’t have them (or why they bothered to get a smartphone if they weren’t getting a data plan). So, while it is the Chinese Year of the Tiger, it’s definitely the tech year of the location-based services, whether or not that’s Foursquare, or Gowalla, or some other service, has yet to be seen.

Live Blogging Evan William’s Keynote

10:16am: And done! The keynote for the Online News Association Conference is over. I’m off to the next session!

10:13am: Question from the web – If Twitter allows for tweets to be cached for 14 days, and developers cache it forever, who’s liable?

Evan Williams – “I think I need my lawyer here” He mentioned how phone companies are subpoened everyday, and they turn data over. It’s not an area he’s very knowledgeable about, as mentioned by him.

10:10am: Apparently, Twitter got its name from the word “twitch,” since that’s sort of the feeling you feel when your phone vibrates; so the team looked it up in the dictionary and twitter was right under there. Twitter is something that birds do, hence all the birds around the site. “Tweet” was actually a word which users made up, and they thought it was brilliant, so they went with it. As Williams says, it was brilliant, and much better than “status updates.” Oh snap Facebook!

9:58am: The Beauty of the internet today, as told by Williams, is that you can do things on the cheap. A problem many people make is that you partner with someone because you think you need a partner. Don’t just partner for the sake of partnering. Be smart about who you work with. He says this from personal experience.

9:56am: @ev’s piece of advice for people wanting to start their own companies – If you listen to external voices too much, nothing great comes out of it. Ask yourself, “Do I like what I’m doing? Do I see this happening in the real world?”

Susan Mernit asked, “What advice do you have to this audience on how to start something, what paths to take that’s not a traditional 9 to 5?” and he answered with the following: “The first thing that comes to mind is to start small.” An error that people make is that people try to create things that have to have a bunch of functions. Create something you want to see in the world rather than doing a lot of analysis, or listening to what your MBA friend said has a market in the world (amen brotha).

If you listen to external voices too much, nothing great comes out of it. Ask yourself, “Do I like what I’m doing? Do I see this happening in the real world?”

What advice do you have to this audience on how to start something, what paths to take that’s not a traditional 9 to 5? “The first thing that comes to mind is to start small.” An error that people make is that people try to create things that have to have a bunch of functions. Create something you want to see in the world rather than doing a lot of analysis, or listening to what your MBA friend said has a market in the world (amen brotha).

9:48am: (sorry, the internet is currently very slow right now in here) Susan Mernit is now asking about his experience with starting Twitter. Apparently, it used to be part of his other company called Odeo, which has to do with podcasts. Williams gave this piece of advice: Go with your gut, don’t do what the outside world is trying to tell you. He felt something with Twitter that they didn’t feel with Odeo. And that made all the difference. *Note to self, book rec. from Williams* The Dip by Seth Godwin. Here’s an analogy as reiterated by Evan Williams, from that book: sometimes you can’t tell if you’re in a dip or a cul de sac. If you’re in a cul de sac you need to stop right now, and if you’re in a dip, you should keep going. Sometimes it’s hard to tell.

9:38am: Susan Mernit asked if Evan Williams regrets selling Blogger to Google. He said he does not regret it as his experience at Google was very valuable.

9:34am: Apparently Twitter has 80 employees. He got a laugh from the crowd when he said he wasn’t making more money than journalists, and Twitter needs to fix that. (Reminds me of an NPR podcast I was listening to the other day where someone stated that investing in Twitter where its valuation is around $1B, yet, there is no revenue, is irresponsible and reminiscent of the late 90’s dot com bust – may be an unfair comparison).

9:33am: “I’m not announcing any features” <–Evan Williams response when pushed by Susan Mernit.

9:25am:  Evan Williams is explaining how they want to give journalists better and better tools to be able to sift through and capture the more relevant tweets (take THAT spammers!). A new feature called Lists, which is in testing right now, will allow you to categorize the people you follow. This allows for you to control information flow. For example, instead of searching for a hashtag if you’re at a conference, you can create a list and see tweets live streaming. Apparently, lists was a fairly early idea for Twitter.

9:18am: Susan Mernit (@susanmernit) is interviewing Evan Williams (@ev) onstage.

9:15am: Evan Williams is being introduced on stage.

Right now I’m sitting at a table waiting anxiously for cofounder and CEO of Twitter, Evan Williams, to come on stage for the Online News Association’s 2009 conference. He’s giving the keynote speech this morning.

The Gloriousness of Geo-Location

Too bad the Whos didn't have geo-location or Twitter. Horton could have easily found them through displayed longitude and latitude on tweets while looking for their dust speck in the field of clovers. Just sayin'.

Yes, I know “gloriousness” isn’t a real word, but that doesn’t detract away from the wonders of geo-location (and not just because it makes for the ultimate stalker-tool). Sure, you can, through Loopt, BrightKite, and similar applications, find your friends and people near you with similar interests. And with Twitter’s integration of geo-location into their API’s, developers can utilize it for a number of possibilities. But there’s one particular possibility which makes geo-location so great: hyper-local targeted advertising. Think about it.

If users are all of a sudden enabling geo-location on their tweets, posts, etc., it would make it that much easier to do targeted advertising. Small businesses contribute greatly to the economy, and often cater to niche markets that larger businesses and corporations are often unable to do. Currently, if a small business or local business were to advertise on the web on, say, unique ice cream flavors, and they just happened to be located in San Francisco, but someone in Los Angeles tweets/blogs/searches for unique ice cream flavors, that advertisement could very well show up. The problem with this is that it really doesn’t benefit the advertiser (or even the person receiving the advertisement). With geo-location, small businesses can ensure that they target users who are most likely to frequent their establishment (i.e., users that are in close proximity to them). Allowing for hyper-local advertising allows for businesses to maximize their success at reaching their target audience.

Hyper-local advertising also increases the interaction advertisers can have with users. Let’s say a user loves telecommuting and often finds themselves working out of coffee shops. With geo-location, a coffee shop could advertise free coffee with the purchase of a scone for an hour to everyone that’s currently in that coffee shop, and people in the surrounding area. The user that loves telecommuting would likely pay more attention to more deals (or in this case, a steal – if it’s a pecan scone!) that are advertised, and possibly frequent that particular coffee shop more often.

As geo-location becomes increasingly popular in the social networking realm, not only could advertisers utilize it to more effectively advertise to their target audience, but it would allow for a more personalized user experience through location. Geo-location could be used for location-based social networking, geo-tagging pictures and videos, and location-based searches, among other infinite possibilities. The effect of all of this is the increased information about particular locations for locals, by locals. Advertisers would be able to more effectively reach these people, and these users would be able to more effectively sift through information that’s more relevant to them.

Four Screen Convergence

The first cellular device was a huge clunky piece of electronic seemingly from the Paleolithic Era. It made calls, and received them. As time went on, technology innovated and created smaller cellular devices that could also send texts in addition to making and receiving phone calls. Soon after, someone came up with the brilliant idea to converge the mobile device, with the camera. This was the first instance of two screen technologies converging. But people wanted more. There was a demand for the ability to push email to mobile devices, and soon enough, cell phones were being created that allowed one to not only email, but surf the web, and even play games. This is where we are today. For many, their mobile devices are essentially a secondary laptop, where they’re able to view and receive presentations, play Super Monkey Ball, find directions from their current location using GPS or triangulation, and of course, browse the web. But it doesn’t stop there. Although we are currently able to view videos off sites such as YouTube, we’re still unable to view actual, live content on the vast majority of mobile devices. The technology is there, it’s just expensive, and consequently, not widely used. Additionally, while you can view live content now, you unfortunately need high speed internet connection when streaming live content. And this is where mobile technology will likely trend in the next 5 to 10 years, if not sooner.

We’re likely to see a convergence of an additional screen into the already convergent three screen technology we’re seeing with mobile devices now: the television. Soon enough, our cell phones will act as a secondary television in addition to a secondary laptop, camera, and phone. In all likelihood, we’d still probably need TiVO, but if we’re at, say, a wedding, but we really want to catch the intense Barça game against Manchester United, rather than relying on a live score feed, we could pop in headphones and watch away, in real time! Or, for you baseball fans out there, the Giants are playing the Dodgers, the Red Sox are playing the Yankees–would you rather go shopping with your significant other as they try on a million pairs of the exact same shirt when the game is going on or risk their monstrous wrath? Shopping would probably be more bearable if you could catch your game in real time, from wherever you are. Although you could do that right now, you’d need high speed internet, and unfortunately, the reality is that you’re not guaranteed high speed internet on your mobile device at all times.

Soon enough, as companies in the streaming live content for mobile devices space innovate, and as the demand for live television on mobile devices grow, we’ll likely see the convergence of this additional “screen” on our mobile device. I, for one, certainly can’t wait. I can watch that new episode of Lost, Fringe, or Dollhouse right when it airs (okay, fine, Gossip Girls). Take THAT spoiler meanies!

An Archaic Revenue Model

Archaic, kind of like ad-based revenue models.

Handed down from generation to generation, revenue based on advertising has been around since the dawn of the newspaper (possibly even before? I don’t know my advertising history). Unfortunately, little has changed in terms of media revenue models. Sure, there’s subscription based revenue models, but that’s hardly viable in the age of free, instant information (take note, New York Times). One would think VC’s would be more cautious investing in companies based on a primarily advertising-based revenue model especially since it’s not a recession-proof revenue model. It’s okay if that’s one component of a company’s revenue model, but not the only component.

However, while there is a façade of cautious investing, investors have on rose colored glasses when it comes to internet companies with popular appeal, but zero ability to be cash positive or zero ability to create a sound revenue model. This is especially true when it comes to Facebook–a startup created by a Harvard dropout which incidentally has become one of the most visited sites on the web. Whether or not Facebook’s value is inflated is an argument that could be made into a thesis–arguments going in either direction. However, the fact remains that Facebook has valuable market data on its users, yet, has been unable to effectively utilize it. What is the point of sitting on top of valuable market data if it doesn’t profit from it? On the other hand, should their revenue model consist partly of selling private user information to a third party, or giving third parties access to personal user data, this could undermine user’s trust in Facebook and result in a decline of users sharing their personal information with the social networking site, which would consequently deflate Facebook’s value.

Not only has Facebook burned through their revenue, but they’ve burned through their VC funding. Although Facebook is looking to create more personalized targeted advertisements (a venture which, if successful, would prove Facebook critics wrong, and could potentially be a threat to Google), it has yet to capitalize on the personal information its users entrust in the site. In fact, it’s current method of targeted advertising is fairly unsophisticated. I often receive targeted advertising in Swedish, or it’s based off of the information I put in the “Personal Information” part of my profile. For some reason I also receive a lot of shopping related advertisements. I have no idea why as I hate shopping. Overall, Facebook is a social networking site surrounded by hype, but lacking in substance. And by substance, I mean, benefiting from its vast database of personal user information.

Which brings me to my next point, although Facebook is lacking in the ability to be cash positive, it’s not nearly as hype-inflated as startups based on Facebook applications. For starters, why base the foundation of your startup on another statup (which, to reiterate, has yet to create a sound revenue model). An advertising based revenue model is hardly sound, especially considering that model is a copy of the model used by traditional media (and look at the state of traditional media now). A startup based on creating Facebook applications is a lot of hype, with little substance. Sure, they have access to select personal user information, which allows them to use this information as a marketing tool–possibly even utilizing this information to sell to third parties, but as far as monetizing on the product and service they’ve created, most Facebook applications have hardly been able to add any tangible value. Should Facebook start some sort of monetization off personal user data, Facebook applications can kiss their chance at monetizing goodbye. Creating a startup based off of Facebook applications is hardly innovative, and surrounded in overrated hype. Creating a viable revenue model that’s not based on advertising, with a foundation not based on another startup, now THAT is innovation.