Something
Ventured:
August 26th, 2005
By Brent
Holliday
Greenstone
Venture Partners
Being Digital - Ten Years Later
“So go do what you like,
Make sure you do it wise…
You can't go forcing something
If it's just not right” – Green Day, When I Come Around
In his well-read book in 1995, called Being Digital,
Nicholas Negeroponte of MIT’s Media Lab predicted that
the evolution of the Internet would dramatically
transform the world of content (print, entertainment and
work related. Sometimes referred to back then and now
as “Negeropompous”, he nevertheless helped the
non-technical reader see the power of digitizing and
delivering content back and forth to one another. Like
most pundits who condescendingly tell the world that
their view is gospel, he got it mostly right AND he
predicted it quite a few years before it became
mainstream.
If you had bet on some of the themes of digital content
in the late 90’s, you might have missed the meat of the
market and likely died trying to make a business work.
VoIP was working in labs and demonstrations in the early
90’s, but it did not become mainstream until 2003 or
so. Digitized music was helped by certain formats like
MP3, a standard developed in the mid-90’s, but it wasn’t
until the peer-to-peer networks emerged in 2001 that the
format took off. Digital photos were an anomaly in
1997, when I bought my first camera that stored photos
on a 3.5” floppy disc, but it wasn’t until five years
later that digital cameras were outselling film
cameras.
Everyone gets caught up in the promise of dramatic
change. Those of us that make a living investing in
early stage technology have bought into the hype
sometimes and invested too early. In March of 2000, we
invested in a company in San Francisco called Eveo. The
premise at the time was that the evolution of digital
media (images and video in this case) would mean that
the world would be flooded with new consumer or
user-generated content. This flood of content needed to
be organized, edited and presented to the world through
the web so that the amateur videographer had a portal to
display their work. Imagine, as we did, the world of
advertising being changed by user-generated content
around a brand. Imagine, again as we did, the utility
of live or near-live journalistic content from people
with digital cameras on all corners of the earth.
Well, uh, Eveo was a little early. User-generated
content did not explode in 2000/2001. Luckily for us
and our investors, Eveo re-focused and is a profitable
multi-million dollar company using its skills in
formatting and re-purposing content for the
pharmaceutical industry, which needs to get training and
marketing information to the thousands of professionals
in its sales and marketing networks every day.
Being early to market is fraught with risk, but Eveo’s
original premise would have had great promise today.
I’ll get back to the user-generated content idea and its
explosion in a minute.
Many of you geeks like me have already had this “A-Ha”
moment when it comes to music, but for those that
haven’t yet, why do you need a CD player? Portable?
IPod. Home stereo, kitchen, bedroom? Airport Express,
Squeezebox (the network connected devices that stream
your music from your computer to your stereo through
wi-fi). Car? Connect your iPod to your car stereo
directly or through FM modulation. Or get XM satellite
radio and have digital music anywhere in North America.
So, what are you doing burning CDs still? If you can
have 1,000 songs in your pocket or 300 channels of music
in your car… what is the CD for?
Music has been a very interesting beach head in our (the
consumer) understanding of Negerponte’s world. We are
now at the point where we are getting the full
understanding of the utility of digital content,
portable storage and interconnected networks. And we
did this with someone else’s copyrighted content, the
artists of the music world.
What about our own stuff?
Your Dad has a basement somewhere full of carousel film
slides, betamax tapes and vinyl records. Tons of
content that is completely analog and impossible to view
unless his slide projector and turntable still work. It
will take a lot of work to get that content digital.
But stop for a second and look around your digital
life. We all have digital cameras. We all have
camcorders that record digitally, while some of us have
those that record directly to digital media, not tape
(You won’t buy a tape-based camcorder next time out).
We buy wireless phones that have digital cameras or
digital music players in them. We create tons of our
own content. We also get tons more from web sites with
funny videos and pictures that we save to our devices.
Your basement today is your hard drive, fast filling up
with un-organized content. To share it, we all send
this digital content around the Internet in its most
bandwidth clogging and inefficient manner – attached to
a text-based e-mail. This means that you have gobs of
content buried in a set of esoteric folders in your
Windows XP that you will never find and wrapped up in a
compressed monster file on your hard drive called
outlook.pst. Attaching digital content to e-mail
(pictures, music, video) is like using a turntable… it’s
so, like, 1997.
The explosion that is coming in 2005 and 2006 is how we
share and use our own content. Finally. Because we now
“get it” thanks to digital music. We understand how it
can be used in our own house and when we travel to other
places. We get how peer-to-peer makes attaching to an
e-mail hilariously useless. We understand on-line
storage and how to keep our content up on the web 24/7.
Have you got the new Google Sidebar? All of a sudden
images on your hard drive are in a tiny slideshow on
your desk in full view (um, not to worry guys, those
photos from Cowboys in Calgary are not visible now that
I moved the folder…). It’s like finding the carousel
projector in your Dad’s basement. With instant
messaging clients and dedicated sharing services, these
photos I forgot about can be available, tagged
appropriately and shared with a group of friends I can
control (or deleted, ahem). Easily. Add that to the
VoIP function at Skype or Yahoo and you can talk and
share in real time as opposed to “I’ll send you the
images on e-mail later”.
Wireless images are improving dramatically as 3
Megapixel camera phones come to market and videophones
are not far behind. The knuckleheads at the wireless
phone companies have not allowed the different networks
to share images yet, but that is soon to end and the
power of real time user content sharing will be
unleashed. Think of the London bombing photos last
month for impactful user images. Entrepreneurs are now
dreaming up and implementing software and services to
make good use of that content.
Then there is video. Bandwidth clogging video.
Hollywood studios are bound and determined to not let us
share their content the way we did with music. Movies
and TV shows are different than music because of the
time and attention commitment involved. Getting
copyrighted material for free is an issue, but the
portable storage and bandwidth in the networks is not
yet at the point where it can support easy sharing of
big video. Small video, user generated clips, is
absolutely ready. From 5 second MPEG clips on your
phone or digital still camera to edited chunks of
creative content made by your camcorder, the sharing of
video becomes as easy as the sharing of digital images.
How2Share in Victoria has a brilliant little app for
this functionality. Right now, you still burn DVDs of
video material for distribution around your home (to the
TV) or to your mother (by mail). But the newer PVRs and
wireless streaming appliances are ready for video so
that soon, the burning of a DVD becomes as useless as
the burning of an audio CD today.
From the business side, it is clear from the success of
Internet content companies like Yahoo and Google that
the ad-supported model is evolving and growing. Clever
ad-supported business models around user generated
content communities are starting to emerge. Eveo’s old
idea of bringing advertisers brand-focused user content
would be in vogue today. Leave the distribution of
copyrighted material to the big boys like Apple and look
for ways to monetize the avalanche of user content now
that we are all making, organizing, storing and sharing
it efficiently. It’s a digital world out there now.
I’m sure Negeropompous is taking some credit for
predicting it, although the digital, flexible, wireless
newspaper is still another decade away… and that is
where he bet his money. Oops.
What Do You Think? Talk
Back To Brent Holliday
Something Ventured is a bi-weekly column designed
to supplement the T-Net British Columbia web site with
some timely, relevant and possibly irreverent insight
into the industry. I hope to share some of the
perspective and trends that I see in my role as a VC.
The column is always followed by feedback (if its
positive or constructive. I'll keep the flames to
myself, thanks).
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