SharkJumping

After an exhausting 36 hours of Web 2.0 mayhem, I'm calling it a day, even though there are another 36 hours to go.   The MySpace party at MOMA last night was a really fun event, with Rupert Murdoch bringing a splash of So Cal to the Bay area, but what really stood out for me were 2 lines from very smart people who will go un-named to protect the innocent.

1.  "Remember you're raising cattle, not pets" - a veteran entrepreneur explaining how he looks at each company he starts.

2.  "I sold them a thin-slice exclusive" - a bus dev veteran explaining how he extracts the highest fees possible from his intellectual property

There is another post coming about how we have now officially checked all of items in the "how to recognize a bubble" checklist, but that will have to wait...

At Meez, we're in the process of switching the majority of our bandwidth, storage and computing power to Amazon's Web Services group.  AWS is a suite of web services which seems to be catching fire with many of the smaller web start-ups in Silicon Valley, especially those who are launching Facebook applications when you're not sure how successful it will be when you first launch them.

After spending a reasonable amount of time with due diligence on various current customers of AWS, the benefits seem clear.  Amazon has built a series of massive storage/bandwidth (S3) and server farms (EC2), and they're willing to lease computing power on them to other companies in a utility-like way, meaning you just pay by the byte in most cases.  Your upfront costs are ZERO, and the ongoing costs are incredibly competitive, although there is no guaranteed level of service and it doesn't currently support MS technologies, just Linux.  In addition, there are apparently some growing pains in the services, such as inadequate tools, occasional bugs, and some possible latency issues with certain services.

That having been said, we're huge fans, and it looks to us and everyone I survey that its a really compelling offering vs our alternatives.  So why is Google not doing this, or IBM or Sun?  Rumor is that Google's offering is 6-12 months away since they're over-thinking it, that IBM hasn't even seen the opportunity yet, and even stranger, that Sun has had an offering similar to AWS for a while now, but no one actually uses it since no one I asked could even remember the name.  So it means that Amazon has quite a runway for the next 6+ months, and so far, I'd say the buzz is really good on it.

Chris Sherman (bio here) is someone I have interacted with for 10+ years across digital media.  Starting with Multimedia Wire, followed by UGO, and multiple other mobile, music and conference companies, my personal rule of thumb is that if Chris Sherman is involved in the new sector in some way, then we're 1-2 years away from it being a mainstream phenomenon. 

It doesn't always mean that Chris knocks it out of the park personally on each venture - it just means that he's generally right about what's going to be big, just like the first Casual Games conference he hosted 3.5 years ago in Seattle before anyone major paid attention to the category.

So what's Chris promoting these days after selling his Austin game conference company?  - so obviously, I'm pleased with where Meez is located since it means we have 18 months to make it big :)  That is the Chris Sherman rule...

As word has leaked out today due to regulatory filings, we closed a $5M+ financing round with Battery and Transcosomos for Meez here at Donnerwood, and we also completed a key corporate acquisition in August, so it was a busy month.

Now we're focused on rolling out additional features and partnerships to drive Meez avatars farther into the mainstream, and to continue to increase our revenue through our integrated advertising program which has worked so well with Clinique, Metropark, Marshalls, Panasonic, Hairspray movie, etc.

Given that the most recent Pew Internet study indicated that only 9% of Internet users have created an avatar, we all have a rich market to mine in the next few years.

As was announced everywhere earlier this week, the Google founders & CEO have struck a $1.3M deal with NASA to park their corporate jets at Moffet Federal Air Field, a pristine gov't airfield 2 miles from Google headquarters - see NYT article here, and exact locations -

This is no longer news.  What's astonishing about it is the amount of jealousy that it has triggered among what I call the "geekerati" of Silicon Valley, especially the wealthy venture capitalists who work just a few miles away on Sand Hill Road.  It was one thing when the G founders bought at 767 - that just showed they had more money than anyone else, which may be obnoxious, given the "Do No Evil" mantra (imagine the Terra Pass carbon offset required), but that was just cash, like any other random sheik from the UAE could do. 

What's causing waves here is that this deal is about INFLUENCE, and not cash since no one else could even get this deal done.  It may be that Google has pillaged AMES for a series of employees and discussed building a campus there, but this was the first known instance of the founders getting absolutely preferential treatment in this manner - thus the Valley jealousy and incredible banter about it.

So why the absurdity title?  Here is the big issue.  We all know that Moffet is the most desired real estate in the entire Valley, and that landing rights are insanely valuable, not just from a time perspective (longer runway than SFO, few other planes), but more importantly, from a bragging right perspective.  There are at least 100 people in the Valley who simply have too much money to spend in their lifetime - since most of them have private planes, why doesn't the government open up the bidding on a limited number of slots at AMES? 

Does anyone realistically think that Larry Ellison, Jim Clark, or any random very wealthy Benchmark or Accel partner wouldn't bid more than $1.3M to park their jets there?  I have no doubts that 20 wealthy folk would pony up $5M each per year to park their jets, brag to their friends, and show off to their mistresses - that's $100M a year, far better than the lousy payment NASA is getting now.  So why does the Google gang get this deal?  I love the chutzpah personally, but as a US tax payer, it strikes me like so many other no-bid deals one finds in 3rd world countries, or wherever Halliburton is bidding in the US - let's open it up to a true free market rather than favor one player.

We haven't bought PC's in a while, but since we're still a mostly Dell shop, and we have 2 new employees starting, I went to Dell.com to buy 2 very middle-of-the-road laptops (dell 520 Latitudes with a couple of modifications).  To my amazement, the amazing build-to-order machine called Dell indicated that it would take 10 DAYS to build the machines before shipping them.  Yes, that's right - apparently it's almost 2 weeks plus shipping to get a Dell laptop, even though our employees start in 9 days.

As a comparison, I went to Apple.com to look for a similar box since we had just ordered one there for a developer - it was 1-3 business days if we wanted simple modifications and 24 hrs if we wanted one off the shelf.  Then I went to HP.com to perform the same experiment (although I can just buy it at retail), and HP can actually ship a similar laptop in just 2 business days.

So we're done with Dell.  The quality has suffered for years, hard drives and printers in particular, the customer service isn't great (although we spend only $35K a year with them), and the prices aren't that much better anymore.  But what's finally killing me is that Dell simply can't run a build to order business as well as their competitors.   I realize Michael Dell is bringing in a new team, but this small ship just left port...

We launched a seriously revamped Meez site tonight, reflecting a huge amount of work from our team.  Although we're still working our way through Beta, this new site reflects a lot of feedback from our hundreds of thousands of users, such as:

1. 3D features - try zooming and panning on your Meez by holding one of the mouse buttons and rotating around your Meez.  There are a ton of additional features coming in 07 as we show off why a Java-3D experience blows away flat Flash, just like color TV beats black and white screens.
2. Expanded browser compatibility - for those rabid Firefox/Flock Mac fans, as well as some earlier Safari users, we have a rocking site for you since we're all about providing a great animated avatar experience for ALL users, not just PC fans.
3. Face Close-Ups - when you really want to see those Sinatra-blue eyes, or some great new Goth make-up, go with a close up experience, and feel free to rotate around it for a better view.
4. Expanded Export - "take your Meez with you", whether it's to MySpace, Live Journal or a cell phone, or anywhere you want a cool way to represent your passions.  We have an even greater focus on helping you bring Your 3D ID with you across the Internet.
5. A Better Interface - thankfully designed by the product manager who brought you the award-winning Rhapsody, the new Meez is more fun, with expressive pictures, a more logical lay-out, and a much cooler design than I could ever design.
6. Faster, Stronger, Lighter, etc. - we just keep banging away to give our users a better Meez experience, and we'll keep doing that in 2007 - more speed, more features, and more fun.  For example, our new animated exports are 50% smaller than their predecessors, but are also far more clear, as you can see below (or anti-aliased, as they say in geek land...)
7. Lots of partners - our focus is to give our users many places to take their Meez - we have recently launched relationships at CBS Sportsline, Glam.com, and PalTalk, with more coming.
8. Tons of Content - we launched all sorts of new items tonight, including boyfriends and girlfriends (try Brad Pitt or Jessica Alba), fraternity and sorority items (go Delta Gam), always cool themes such as Zen and Love, and great new backgrounds and animations.  Go wild trying all of the new stuff on...

We have a great set of additional features coming in the next few months as we continue to expand our leadership position in the avatar category.  We believe that self-expression will always be one of the largest human needs - but don't listen to me, click on the images below or give it a try at Meez.com 

The New York Times launched its revamped alpha/beta NYT Reader this weekend (download ).  The NYT Reader is an ambitious and incredibly interesting attempt to combine the look/feel and breadth of the actual paper version with the interactivity and vibrancy of the online version - it has been unsuccessfully tried with options such as Zinio before, but this is a next generation effort.  Let me be clear first that I'm a NYT weekend subscriber and that I think it's the top paper in the US, but that I now read the daily versions only online, so I'm a perfect test market.

The installation process is a nightmare - there is no way around that issue, but one assumes that many of the issues are due to the beta part of the process since the commercial version is allegedly due in 2007.  You have to first download the "pre-beta Microsoft.Net Framework 3.0" which invariably either causes your computer to crash or just produces strange error messages.  Once you reboot and figure out how to return to the necessary page, it's somewhat simpler to download the NYT reader part of it, but it's at least a 30 minute process in total - I assume this will get better over time but you're still looking at a client software install, unlike we what we did with Meez.

Once you survive the painful install process, my early thoughts are that this hybrid service is a great step forward for the NYT in particular, and for the overall newspaper business in general - it just feels like the actual paper online while still being cutting edge.  The software syncs up on some type of schedule, or whenever you feel like connecting - it's almost like the old Pointcast service with far better features and graphics.  Once it syncs up, you have most of the experience sitting on your desktop, whether your connected to the Internet or sitting on a plane. I'm still getting used to the feature set, but it offers an incredibly rich set of photos and features, all with very quick response times since it's cached on the PC hard drive.  To be clear, you need to let it synch up in some time of schedule in order to fully enjoy the experience, but you can always change those options in the "settings" section.

Once you get synched up, it's true that the ads are also quite prominent, you need an NYT sign-on account, and it doesn't look like the "Times Select" subscription content is available, but it offers a really rich experience which mimics the paper version while offering the advantages of the online one.  It has a set of cool features like the ability to mark which articles you have already read, a very rich search feature, easy ways to change the fonts, and the ability to optimize it for Tablet users (all 3 of you).  There may be more options, but I'm still working my way through the service.

The service is currently available only for XP users, so one assumes the next steps are to broaden the user base to include Mac and portable/cell phone users, but that will be difficult given the bizarre software requirements of MS Framework 3.0.  There should be some way to create this experience without downloading a strange Windows update, but it seems to offer some advantages as well.  That having been said, if you're a NYT junkie who is looking for either a richer online experience or the ability to have a great offline one, this is a great find.

Have been using for the past few months and was struck today by the fact that I check it once a day, making it more useful than many other sites on the Net.  Alexaholic (not part of Amazon/Alexa) is a very simple "mash up" of sorts which lets you input up to 5 web URL's into a form and then it spits out the resulting Alexa Web Rank results for the past year, with the usual ways to further refine it.  You can then save it as a bookmark and check it each day to see how your sector is changing.

There is a vibrant debate about how useful Alexa rankings are since I believe the service hasn't been included as a default option in a browser since IE 5.5, which means the data can be erratic when I dig really deep.  However, everyone I know (bloggers, ad agencies, companies, etc.) uses it as an alternative free way to check site rankings, and given that I know exactly what our Meez traffic numbers are each day, I'd say that the Alexa rankings are at least directionally accurate, if not factually accurate on page views per day. 

This means that Alexaholic is a good, but not perfect, way to track how your site is doing against its competitors on a directional basis.  Where Alexa/Alexaholic definitely falls over is on client software like Rhapsody or on any type of site which is mostly behind a membership wall, but it's definitely worth trying out as yet another data source on the Net.

We launched a partnership with US Soccer today (see my Meez in top right corner), just in time for the World Cup, the most popular sports event in the world.  We're offering official US Soccer virtual items (male only for moment) at Meez.com, as well as through our first co-branded distribution deal, available at ussoccer.meez.com - support our soccer team, ranked #4 in the world! 

This important relationship complements our existing deals with National Hockey League (Stanley Cup Finals begin shortly) and with Major League Baseball (MLB.com), giving us the widest range of premium merchandise in the category.  We also have a category focused on Graduation this week, for all of the lucky ones moving on to the next phase of their lives - celebrate by posting your Meez in full graduation garb in your favorite blog and social media sites.

Next steps are to continue to enhance the speed and stability of the service, as well as expand the set of benefits available to users, although we did sneak in a basic Download to Phone option in the last release.  Come Create and Share your Meez!

Most Popular Backgrounds in May
The Coconut Beach - always at #1
Echo Park Gardens - serenity is popular
Luxury Limo - a product of prom season
Sunset - our fastest riser - great for surfing shots
Sunset Park - continuing our peaceful theme

Newest Animations
Hotdog - go diggity...
ATV - 4 wheeling monster
Chopper - Vrooom
Conga Drums - summer relaxation
Coffin - Halloween come early

We released an update to Meez this week, which brought a series of bug fixes and performance improvements, but best of all, Meez now offers animated MeezCards and animated exports.  I have attached one here (click on it to see animation), or you can see another with my profile in the top right corner of the blog - it's a great way to show friends your Meez in full animated glory on your blog or social media page :) 

Our merchandising focus this week is on our partner National Hockey League since it's the NHL playoffs, and we have an array of Prom merchandise available for those high school students getting ready for the big day.  We also launched a virtual Tringo T-Shirt to celebrate the release of our Tringo GBA game, so come pick one up for your Meez after you purchase the game at Amazon or other game retailers. 

Other popular items are:

Best Selling Scene:  Golden Gate Bridge
Most Popular Male Animation:  the laptop (come on guys, get a life)
Best Sellling NHL Jersey:  San Jose Sharks (go Sharks!)
Most Popular Male Shoes: Downtown dress shoes

I'm clearly biased, but I'm thrilled that my brother Kevin (former CEO of Doubleclick) officially launched a new venture today, an innovative shopping search engine called Shopwiki.  Co-founded with Dwight Merriman (former CTO and co-founder of Doubleclick), Shopwiki is addressing the large, but fast growing commerce market by offering unbiased results, comprehensive site coverage and additional editorial information through what I think is the most innovative use of a wiki since Wikipedia. 

What's great about this sector is that the top 3 players (Pricegrabber, Shopping, Shopzilla) were sold for around $500M each (see Forbes article here), but if you ask most women (who control household shopping dollars), they will usually tell you they don't use shopping engines, making this segment feel like search did a few years ago - it's big, but will be much bigger going forward, and I think Shopwiki is clearly differentiated from the others.

The online gambling (as opposed to gaming) market is obviously a very attractive one, as seen by the huge success of PartyPoker and similar companies, but it's always been difficult for American entrepreneurs & investors to directly participate in that sector due to the aggressive anti-gambling stance of the US government.  And yes, we have seen skill-based gaming (betting to a certain extent, but outcome based on skill, not luck) sites such as WorldWinner and Skill Jam appear in the market, but they didn't really move the needle since the games were not classic "gambling" style games - e.g. World Winner was just sold for $23M - nothing to sneeze at, but certainly not a billion dollar market outcome like Party Poker.

So I recently stumbled across Betzip, a gaming/gambling company started by former Looksmart (where my wife used to work) CEO Jason Kellerman.  What is really clever about this approach is that it brings you the classic poker-style gameplay and lure of cash prize tournaments, but with what appears to be a clear end-around the US gambling regulations since there is no actual money wagering - you have to pay $20 to be a member of the club, but you can't lose any money in it.

I have only played a bit, but the concept seems strong.  You have the opportunity to win good-sized prizes ($5,000 first prize) in the weekly or monthly tournaments, so it probably keeps you from really doing dumb wagering like you would if no money was at stake, but the lack of actual money pots keeps the event from being a gambling enterprise, so it's probably legal in the US.  At $20 a month, it's a decent amount of money, but it's not so large that you're going to gamble away your house and your first born child - however, it's a step above the $.50 wagers one often sees in true skill-based gaming sites, which is good since those low wagers don't keep stupid bets from happening since the price is too low to limit moronic behavior.

The downside?  It feels like a traditional online gambling site without having the upside to the company of taking large amounts of money from each user - I have received 3 emails since registering 12 hours ago, which feels a little aggressive.   And the the $20/month fee may not keep the really stupid gamblers (AIWCC - All In with Crap Cards) from still screwing up games since it's a free play site, but I'm not sure that's as big an issue as it is with free sites.

I'm not an online gambling expert, but BetZip feels like a really clever mix of poker-style gaming with a subscription style economic method which appears legal in the US - give it a shot

The CEO of Tivo, Tom Rogers (earlier post here), announced that Tivo may give away its DVR's for free with a long term subscription.  What was the market and industry reaction?  Yawn....   Why is that?  It's because Tivo is unfortunately no longer a market or thought leader.  When was the last time someone talked about their Tivo?  It's a big change from being featured on sitcoms ("My Tivo thinks I'm gay) a few years ago, and where users like me were bragging about how cool this service was.

Why the changes?

• Tivo hasn't kept up with the technologies - there is still no stand alone dual tuner box (can watch 2 shows at once) and still no High Def box, leaving the opening wide for the cable and satellite companies to pitch their superior offerings.
• The cable and satellite firms have redoubled efforts to address the category after ignoring it for the first couple of years - the bundled offerings give users fewer boxes and are easier to set up.
• News Corp's DirecTV unit, responsible for 2/3 of all 4M Tivo subs, has started to sever ties with Tivo in order to very aggressively push its own DVR's.  Tivo doesn't have any real control over its existing DirecTV subs, so its actual addressable customer base is much smaller than what it first appears.
• The better Tivo software and user interface hasn't improved all that much in the last few years, allowing competitive services to get closer in functionality and appearance.  Although Tivo is probably still better, it's not $5-10 a month better...
• Which is why its announced deal with Comcast to offer Tivo as a premium DVR option no longer is attractive as it first seemed since the market has caught up with them.  I just don't believe that even a small percentage of users are going to choose to pay an extra fee to download the Tivo interface to their Comcast box.
  
• Finally, some of the really cool offerings with the Tivo2, such as the ability to offer extra functionality through the box like movie tickets and Tivo-to-Go portable content, haven't taken off due to either better alternatives or a lack of applicable portable hardware.

So what's the future?  Not much, unless Tivo can protect its IP with a win in its lawsuit against DISH/Echostar, which would then presumably be followed by additional lawsuits and possible settlements.   A year ago I would have thought that they would be an attractive acquisition for a variety of companies, but I think they're instead just sliding into irrelevancy - Comcast would seem to be the most likely buyer, but I suppose any set top maker, such as Cisco, would be interested as well.

I blogged about my lousy experience a few weeks ago attempting to have Comcast install TV and High Speed services at my house - see post.  We tried again last week, and it was a much better experience, with a great technician who showed up on time and who was pleasant, knowledgeable and efficient.  The short of it is that after a few days with the Comcast high speed and DVR/HD/OnDemand services, I don't think the satellite gang (DirecTV and Echostar) or telcos (ATT, Verizon) can match the cable offering, at least without the staggeringly expensive and time-consuming fiber build out that the telcos are doing.

High Speed
I'm seeing real world download speeds of 6MB+ from Comcast, about double what I was seeing before.  I didn't think that would matter in most cases, but it starts to be noticeable as we spend more time with rich media and as we attach more Internet-connected devices in the house.   I'm noticing a slight delay in the initial connection, but am not sure if that's Comcast or my network, and the speed is snappy right after it.  On the upload speed, 350KB+ is what I'm seeing, which is fine, but I still think the telcos could differentiate a bit for a decent group of users by focusing on a robust upstream offering (and no, I have not had the energy yet to dive back into the port-forwarding situation that is Sling Media to see if I can get that to work).

DVR and HD
I have a Motorola DCT 6412 dual tuner HD DVR with a 60 hour video capacity (15 for HD).  This was a key reason for the switch since DVR's break about once a year in my experience, and I definitely didn't want to pay $500+ for an HD one, as the satellite services want consumers to do.  The interface could use a little bit of work since searching isn't quite as easy as I hoped, but all of the basic DVR functionality is there, and the integrated box works nicely, especially now that I programmed the remote to skip 30 seconds forward.  You can record 2 shows at once, although not 2 HD shows.  You can't access the DVR from the other television, as I could with the Dish 522 box, but we never really did it, and you can access On Demand from there, which is a great alternative.  The HD programming is a little more limited than I have seen from DISH, but it has all of the basics such as local networks (key, especially for Olympics), premium channels, ESPN and a couple of others, and after watching the Olympics in HD, there is no way to go back to SD.

On Demand
I originally thought that the smaller hard drive size would be a big issue (vs my DISH 522 with 100 hours), but what has been the revelation to me has been the strength of Comcast's On Demand free VOD system, especially as a parent.  The non-kids offerings are a mixed bag of content, with some real gems, but also a lot of random stuff, and an interface overwhelmed by the amount of content.  However, the children's offerings are so good that there is no need to record any shows on the DVR since there is such a breadth and depth of kids shows.  Given that this is a feature which satellite can't easily match due to its delivery method, I can see why Comcast is pouring it on in this area, especially since it is almost like having a DVR on every TV.

Conclusion
When I switched to DISH 2.5 years ago, it was because the because the integrated DVR/satellite system was simply a better offering - more channels, high quality, big DVR and lower price.  On the high speed side, the DSL offerings were slower, but cheap enough that it didn't matter for that type of content.   I can definitely say that the landscape has changed right now, and that the Comcast offerings are clearly superior to the alternatives, and probably worth a 10-20% premium over competing systems, which is the premium I'm paying after discounts.  The only way I see that being challenged in the short term is by the new fiber systems from ATT & Verizon, but we're a long way from seeing wide spread distribution of those offerings.

Dick Cheney - just sticking in random hot search words to see if it matters to blog search engines

For the small percentage of those readers who have not yet installed StatCounter, I must highly recommend the software/service.  The free version gives you very detailed data about your web site visitors (visitor count, key word analysis, user path, visitor length, browser, etc.), and the reasonably-priced paid versions increase the log files to track more popular sites beyond the last 100 visitors.  It's easy to install on your web site/blog, and it appears to be a very reliable source of data, especially if your statistics from Typepad keep falling over like mine do.

I assume there are better and more expensive enterprise-style paid tracking services, but I'll say that we will launch Donnerwood's consumer platform next month with StatCounter as our primary tracking mechanisms since it's the best value for the money (we'll pay for the higher level service).  It's amazing to me how far we've come when I think that this service provides far better data than we had when we launched Listen.com's music service in 2000, in spite of the long hours we put into creating the tracking service of that time.

This is a key example of the new types of web services available today, along with the improved Shareware-style business model which allows a company to provide a robust low-cost service at very little cost while making up the revenue on the upgrade options - the log file premium option allows Statcounter to offer a full product experience without any type of DRM or time-out measure, but still incents many of us to upgrade to the paid package - a great model for the future.

3rd and Final Sling Box Blog

Spent 30 more minutes tonight finally getting the Sling Box to work correctly by fiddling around with connectors, rebooting the router and switching some plugs.  Was actually working well as I walked out the door for the weekend - could remotely switch channels, record shows, pause, etc.  Got up here to Tahoe, and it no longer works at all.  My guess is either the DVR has gone into Suspend mode (which I'm pretty sure I turned off), or more likely, I have had some type of router bounce, and the connection is no longer working perfectly since I've seen that warning light on the Sling Box once or twice before.

End result is that I think the concept is really cool, but that there are too many failure points at this time, between the various hardware units and the connectivity points, not including the significant issues setting it up.  Unless one has a rock solid AV/Internet system which never suspends, bounces, shuts down, etc., then you can't seem to leave the unit alone for more than a few hours without some problem occurring, which doesn't really work for remote viewing since I can't rush home tonight just to reboot it again. 

It's a good start, but I'd wait for the next gen system before buying one.

This ongoing hardware saga may be painful for some, but it points out the opportunities and inherent difficulties in connected-consumer hardware businesses.

After yesterday's aborted attempt to install my Sling Box, I called customer service this morning.  After a somewhat long 6 minutes on hold, I worked through the issue with a helpful customer service rep, but it was not an easy set of fixes.  The audio and video issue turned out to be a connector problem - my guess is that this is a common complaint due to a potentially less than perfect design, since the rep immediately understood the problem - he directed me to pull out the audio/video plug, clean off the tip, push it in hard, and then twist it.  Lo and behold, I had a picture.

The downside was that the picture was of the 2nd tuner in the DVR, not the primary one (since we had connected the Sling through the free secondary output plugs, not the primary ones which were already being used), and the Sling can't control the 2nd tuner, which is a problem in all newer multi-tuner DVR's, not just mine.  So we had to plug the DVR directly into the Sling, and then plug the Sling into the home theater receiver.  This solved the problem so that I could now control and see/hear video on my PC from the primary tuner on the DVR - Success!  The not-so-minor problem was that there is now no TV reception on the TV itself, but we ran out of time, so I had to run for work.

Unfortunately, after gathering people around my PC to show them the Sling functionality, it doesn't appear to work anymore, even when I go off of our network and connect through a wireless card to avoid any firewall issues.  So it's back to working on it this evening...

I may have more problems than some users, but our set-up is not outrageously complicated or expensive, especially for a an early adopter Sling user.  It's a standard heterogeneous mix of hardware pieces, ranging from 1-10 years old, and yet, it's incredibly complex to set up new devices, in spite of a lot of help, and good documentation.  Hopefully, this process will get easier, but the need to support all legacy plugs and formats really makes this more complicated than most users will put up with, and I can see why the phone and cable companies are scared to death of these types of devices since they can't easily or financially support them.

I received my Sling Box today ($219 at Amazon with no tax or shipping) and attempted to set it up.  just raised a $46M round of financing (from Liberty Media, Echostar/DISH, and others), and has won numerous awards for its hardware which allows you to use your PC (and soon, your cell phone) to watch your TV from outside the house, including accessing your DVR.  We don't have cable access in Tahoe, so I thought we'd give this a shot, and in any case, it's the geeky toy of the moment, so it was worth checking out.  The good news is that I have a fair amount of experience setting up digital media adapters, TIVO, etc., so I'm familiar with some of the more complex issues, but the bad news is that after 2.5 hours, I had to give up for the evening without getting it to really work.

I'll say that Sling Media goes absolutely out of their way to make it as easy as possible - there is a huge assortment of cables included within the box, the device is quite attractive, relatively small, and incredibly well labeled.  However the end result is that it's still too hard to ask average users to add yet another device to their AV stack, especially one which requires both connections to the legacy AV units such as your cable box, TV and/or DVR, as well as connections to your network router.

The first big issue is that you have to attach an IR emitter, the bane of many people's existence when adding new devices.  This is because you're asking the Sling box to control a legacy device (a DISH DVR since Comcast never showed up to install their system two weeks ago - see post), and the only way to do that is through an over-ride of the IR emitter on the DVR - it's not complex, but nowhere does DISH actually tell you where the IR emitter is on the front of the DVR, so it's a trial and error approach until you correctly place the IR device.

The rest of the AV set up is nicely laid out, but the second touch point is the router connection.  In my case I needed to move a secondary router into the home theater system, but it apparently conflicted with the primary router in the basement, so I had to go deep into the "Port Forwarding" section of each router's online menu to open up a port so that Sling could make it outside the walls - that's a lot to ask for most users, but I'm not sure how many have their primary router already near where the Sling Box will be connected, so this may be a common issue. 

So at this point I can remotely change the channel on the DVR, as well as turn it off and on, but I can't yet see any video or hear any audio - clearly not working.  This is not all Sling's fault since they have one of the best set-ups I've seen, but similar to the problems I've had getting the XBox 360 to work as a media extender with Windows Media Center, this process is sometimes just too hard due to the issues with connecting legacy AV devices to newer IP connected devices - or it could be just my incompetence   And you wonder why Best Buy is excited about the revenue potential of the Geek Squad...

Hopefully Sling's customer service can help tomorrow.

The running joke in SF is trying to peg the next bubble.  Last year we called the current rising consumer phase "frothy" to differentiate it from the late 90's/early 2000 phase "bubble".  But the signs appearing now seem to call out "Bubble 2.0".  So what are those signs we all recognize from last time?

1.  Every candidate has multiple offers, some from seemingly insane companies - during the last bubble, I lost an employee to "BBQ.com - the portal for outdoor cooking", which lasted a total of 9 months after that period.  We're seeing early signs of this - e.g  a friend's company recently lost an account manager who doubled their compensation as a VP at a new start up, and we now hear people say "I have an offer from XYZ You Tubes-like site, or XYZ Xanga-like 2.0 site - it's going to be huge!"  What's going to be huge this year are the search firm fees.

2.  New acronymns entering vocabulary - after CES I needed to look up the term "UGC", which apparently became mainstream in the 6 weeks between Thanksgiving and CES - yes, that would be User Generated Content.  And the Facebook or MySpace vocab changes so quickly I can't keep up

3.  Internet Companies Sponsoring TV Shows - tonight I watched Match.com sponsor a new show called "Love Monkey" from the former Bowling-Lawyer guy "Ed", who's now an A&R exec struggling to find love.   Now Match.com is no where near as hilarious as a sock puppet showing Super Bowl ads, but I think we're well on our way.  Given that Fox decided to show MySpace ads during Arrrested Development a few weeks ago (because 50M viral users really needed to see an amazingly fun, but niche show watched by a few million viewers), I'd say we'll see more of this nuttiness.  But the real sign will occur when no one even recognizes the company which is in the commercial - we're not quite there yet.

4.  Companies going public at ludicrous valuations with almost no revenue - See Digital Music Group posts - 'nuff said...

5.  The Term "Feature Flip" becomes common nomenclature - when you meet with a new company, they will often say that they don't think that it's a standalone company, but that they don't need a revenue model since "someone will buy it", aka "Feature Flip".  Every music recommendation or new indie aggregation site is like this - Sounds like 2001...

6.  Enterprise VC's and Non Standard VC's funding Consumer Companies - I now receive the most bizarre calls from VC's (names have been concealed to protect the guilty) who have formerly funded only micro chip firms and enterprise software ideas, but have now decided that they must invest in casual games or User Generated video firms.  On the other hand, a good friend at a private equity firm just admitted that his firm is now investing in VC-stage companies in the search for higher returns - yet another sign of the last bubble.

7.  Better Parties - the stakes are going up again.   The party after the Web 2.0 conference was just rocking, outside of the 90% male ratio and total geek focus (no one should scream and beg for Flock T-shirts, a company soon to be featured on VH-1's "Where Are They Now?").  That having been said, the Xmas parties from the VCs went up a notch this year, and I've seen marketing budgets for all events, including companies I've never heard of, start getting more fun for all involved - Huey Lewis should be excited since his gigs should increase.

8.  Commercial real estate in SF going Up - I can't speak for other cities, but higher-end real estate is finally firming up in SF, with the other lower end  leases seeing at least a little bit of interest.   You used to be able to dicate terms to landlords, but we saw them firming up on terms as we finalized our new deal in downtown SF.  We're still 50% below the peak rent during the last bubble, so this more of a recovery than a bubble, but everyone I know is looking for more space.

Is there a Bubble 2.0 emerging?  Yes, the bubble is emerging since mainstream companies finally figured out that most of their consumers are now on line vs off line - I mean who actually listens to late night radio shows like I did as a teenager?  In addition, the opportunities are now emerging since investment capital is now widely available for great consumer ideas, although many will admittedly fail as the key consumer sectors consolidate.  e.g do we really think P&G and Kraft want to advertise in front of the hypothetical Worlds Dumbest Internet Videos?  It will shake out by later 2007 when quality finds its value.

Selfishly, it's great from my point of view since it's especially SF city-oriented vs other former chip or enterprise-oriented trends which tended to favor Silicon Valley.  It's clearly going to end badly for a lot of firms when the bubble collapses, but it's going to be a great year for those who succeed since a lot of consumers are waiting for new  opportunities.  Just like last time...

We're hiring a 3D game engine developer for Donnerwood to expand and enhance our existing engine.  Spec is below, but the developer would preferably have handheld, mobile or casual game experience since this engine is about addressing as broad an audience as possible vs pushing as much performance as possible.  If interested, email

Donnerwood Media, a digital content and commerce company based in the South of Market neighborhood of SF is seeking a Lead Game Engine Programmer to enhance and expand a small, fast 3D game engine for our upcoming digital entertainment service.

Donnerwood offers a competitive base salary, plus options, benefits and a fun work environment.

Responsibilities
·Develop and maintain a small, fast 3D game engine
·Write clear technical design and specification documents
·Communicate well with designers, producers, artists, QA, and other engineers

Required skills
·Must possess strong game programming skills
·Expertise in C/C++ and/or Java
·3+ years experience working on mobile, PC, or console titles
·Experience with the complete life cycle of software development
·Bachelor's Degree

Additional skills and qualifications
·Previous game engine development experience
·Strong vector/matrix math
·Solid 2D/3D engine background
·Experience with animation algorithms
·Experience with lighting/shading algorithms
·Experience with collision detection/resolution
·Experience with game-AI
·Experience with low-level rendering concepts (software rasterization, etc)

The news coming out of CES regarding possible pricing for next generation DVD players continues to grow, but I'm more curious about what it means for Sony and the cost of the PS3.  Toshiba HD-DVD models for a March launch at $499 and $799 - that's high, but maybe not outrageous for a next gen platform with very cool capabilities, if not a lot of content.  Pioneer announced the first Blu-ray DVD model for the astonishing price of $1,800, presumably with a launch date around the Summer, which is when Sony announced they would ship their first models, as will an announced $1,000 player from Panasonic.

What's interesting is that analysts seem to feel that Toshiba will actually lose money on the $499 model, but is selling it below cost to jump start the HD DVD marketplace to keep Blu-ray from running away with it when PS3 ships.  The first question is "what costs so much in a next gen player?" I assume the casing, power supply, external connections, and basic memory/chip are not radically different than today's $100 DVD players - it's the laser and related new technology parts which cost so much more, as well as the need to ramp up overall production and pay off the cost of new equipment, but that's a huge jump in cost, some of which is due to royalties, mostly paid to Sony.

So let's assume the raw cost of the new core technology components of a Blu-ray DVD machine is $400-500 if Pioneer and Panasonic are selling the initial SKUs above $1000, and if Toshiba is supposedly losing money on a cheaper HD DVD player priced at $500.  iSuppli did a thorough teardown of an XBox 360 in November, estimating that the motherboard components (core processor, graphics processor, memory, etc.) cost around $370, with an overall cost of $525 - but that was with a simple DVD-ROM costing an estimated $25.  So for PS3 add in the guts of a next gen Blu-ray drive costing $400-500, as well as a presumably more expensive Cell processor and graphics CPU, and Sony is looking at a Bill of Materials above $1,000 for the PS3 - that is compared to an estimated $499 retail price point.

It's normal to lose money on consoles for the first few years since manufacturing efficiencies bring the cost down once tens of millions of units ship (and software royalties kick-in), but I don't know that there has ever been a loss of this magnitude on a per unit basis.  This starts to make that Blu-Ray bet look more expensive than I first thought, although I'm sure Sony regards this as one of the key wars they need to win since the royalties from a winning bet would more than pay for the PS3 subsidies.  If you're Microsoft and Intel, they're probably going to go out of their way to subsidize HD-DVD in order to increase the pain threshold for Sony, so it's going to be a bloody battle for everyone.  Unfortunately, consumers will inevitably lose out while the battle is waged, just as we did with the DVD Audio/SACD fiasco, which destroyed that promising market and left the music labels with today's non-secure music CDs since consumers became so confused that the machines never caught on.

When I started Donnerwood 9 months ago, I definitely was on the VOIP bandwagon.  I did my research, looked for small office solutions and went with the 8X8 solution since it seemed to offer the right mix of up front costs, monthly costs, and overall features.  To be blunt, it has been a total disaster for every month we have had the system.  Our CTO JP has had a hilarious time with this choice, constantly switching the phone system between our DSL line and our T-1 line in order to reduce the load, re-configuring the firewall, and downloading every patch in existence, all to no avail.  Multiple times a month I have callers ask if I can call them back on another line since this one cuts in and out - and conference calls are a joke, lasting a few minutes before we switch to Skype.  The end result is that all of our calls take place on our personal cell phones while we wait to move to new offices where we will use a combination of old fashion analog lines and Skype to speak to others.  There may be other good 8 x 8 experiences, but after a hell of a lot of effort, we have not had one of them.  Buy something else.

Having now fled the mayhem that defines CES, my initial thoughts are that this was an evolutionary show, not a revolutionary one, as some were initially hoping.  The show was full of the usual bigger TVs, more capable phones, and unlimited ways to upgrade your car audio system, but there was not a single device or product that stood out as a "wow" product.   

The overall digital media trend was about new ways and devices to network your home theater experience, with Intel pushing Viiv and Microsoft pushing Windows Media Center, but it still looks too hard to do for an average user, without enough strong devices to deliver the content to the TV.  The rise of the XBox 360/Media Center Extender may address that issue by 2007 since there will be 10M+ of them in the marketplace, but none of the other options seemed like potential large sellers.  And on the portable audio or video side, there was simply nothing to threaten Apple's dominance of that category (even before we see what happens this week at Macworld) - only a compelling subscription offering tied to an great device could do that, and the ones I saw were still not as compelling as a video IPod.  If Sony could get its act together on the PSP, that would be the only device I can see which could compete with the iPod as a great media player, although it's too big to carry in a pocket.

From a buzz perspective, I'd have to give the award to for their Sling Box, which seems to be a pretty easy way to access your video content from a remote device.  I'll pick one up this month to review it, but the demo was compelling, especially since it promises to work with almost any device you have in a home theater system, and it allows you to access the content already stored on your DVR. 

On the business model front, there was a bewildering array of announcements about various ways to buy video content, from paying $2.99 to watch shows before they're broadcast, to paying $.99 to watch them a week later on demand, to paying $1.99 to take them portable, either with an iPod or Portable Media Player.   With the Google Video and Yahoo Go announcements, this set of options will continue to expand, but none of them feel like a consistent and broad proposition tied to exciting hardware, so I believe we'll see another year of Video iPod growth, especially since one of the labels told me they were surprised how many music videos are being sold already on iTunes.

Next is MacWorld and the rumored Apple announcement of a Mac Mini DVR or some type of home theater component.

Update:  A day after I wrote the post below, Starz today announced that they would be launching their own downloadable video service, called Vongo, which would be $10/month, use the Windows Media codec/DRM, and support Windows portable media devices, as well as contain content beyond movies.  I'll review it shortly, but this is a minor blow for RealNetworks and a win for Microsoft. 

I recently tried out the Starz Ticket on Real Movies (yes, that's actually the name) downloadable movie service for the first time in a year since I wanted to see how it was coming along.  I still believe that this service is undermarketed and underappreciated, but it's true that it works best for a niche set of consumers since it's too hard to deploy on a TV.  However, I believe that the subscription aspects of "all you can eat" make it a vastly more compelling experience than an a la carte service and point to potential future mainstream services.

Starz Ticket is a $13/month downloadable movie service where the subscriber can access hundreds of movies, all of which are currently playing somewhere in the Starz movie channels.  One must have the Real Player, as well as an automatically downloaded security plug-in.  You can watch the movies as much as you want (no horrible experience of being required to finish the movie once you start it), store lots of them on the hard drive (they're about 700MB each), and be generally happy with the quality, probably between VHS tape and DVD.  New movies are added every week, and they have a pretty good catalog, from anime to art house to comedy, covering about 40% of the movies released the previous year - the Starz release window is roughly 1-5 years after theater release.  I had hoped that Real would have expanded the video catalog beyond just Starz content, but does not appear to have happened in the last year.

Since no one I can find has ever heard of this service, who should it appeal to?  Frequent travelers who have their laptop with them, students who use their PC as their primary media consumption device, and those geeky enough to hook it up to their TV, as I do.  For those segments, the subscription service opens up a wide world of movies that you can watch on your terms without worrying about which DVD's you have with you.  You choose a movie, wait the 30 minutes for it to download (although you can start watching during the download) and you're ready to go - it really changes how you think about renting movies.

The primary drawback is that Real's video codec/DRM has almost no hardware support that I can find, so that there is no way to easily deliver the movies to a TV through a digital media adapter or media extender, like an XBox 360.   Nor is there a way to download them to a portable video player, which would make it much more compelling, but that would require a codec switch to Windows Media. Instead you have to hook the laptop to the TV with an S Video cable and audio plug, which is a bit of a pain, and which lowers the quality, especially in sound.

So why is it interesting, especially since Real never releases any numbers for the service, which probably means it doesn't have a lot of subscribers?  Because it's another cable bypass effort, just like the XBox market place and similar to the TV shows now available on the video iPod.  It shows the high potential for these services to expand revenue and subscribers for video content owners (especially niche/"long tail content), but it also points out the challenges inherent in DRM and hardware support.  If you make the consumer buy/rent yet another box, then the business becomes quite difficult, as Akimbo is finding out, and which has been the bane of Tivo's existence.  At CES next week, I'm hoping to see a lot of progress in that area, tying together services and hardware, particularly if Intel's Viiv (another bizarre name) initiative works as promised in the consumer electronics arena.

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GIven that everyone and their mother is discussing the XBox 360 gameplay experience (which is good, but not mind bending), I'll focus on its utility as a media player since I think it's actually going to be a seminal device in the category.  The premium box comes with what appears to be 8G of video and other downloads pre-installed on the 20G hard drive, particularly a stunning 6 minute Warren Miller HD trailer, as well as some other HD video content such as a Secrets of the XBox and some Titanic thing which we immediately deleted.  You can currently download additional movie trailers (in both 480 and 720) such as Hong Kong and Aeon Flux, game demos, and other video content such as a music video from Audioslave from their .  If you haven't consumed music videos in HD with Dolby 5.1, you are missing something fierce - from my side, it beats HD sports.  How long until a music video service (with the obligatory preview ads) emerges on this system?   Again, I realize you can do all of this on your PC, but it's amazing how different it is when you can easiiy display it in full HD on your TV/home theater system, which is where most people wnat to be entertained.

The only issue we had was that it took almost 30 minutes to download the 6 minute, 300MB, HD music video, which points to some problems with the MS delivery system since our internal network has much more bandwidth than that (has anybody heard of Bit Torrent?  Or is this a potential Brightcove play as well?)  I have seen mixed signals on the XBox 360 forums about this issue, so I assume it's a regional or temporary issue.  But the main issue we had with the media download  (trailers, game demos, video, etc.) process was that it appears to be totally single threaded, meaning that you can't switch away from the download screen to do anything else while it downloads, even if it's taking 30 minutes while your LCD screen burns in...  It may be that I just missed the secret code to do this in my multiple attempts, but I'd be shocked if a multi-core, XNA-based, mini-supercomputer system can't actually multi-thread or multi-task enough to let you go do other things while media downloads take place in the background.  However, as I mentioned earlier, the long tail (had to mention it - go ) possibilities here are endless in the video realm if Microsoft opens it up.

Hysteria is defined in Wikipedia as "a diagnostic label applied to a state of mind, one of unmanageable fear or emotional excesses" and later goes on to say that "is often associated with movements like the Salem Witch Trials..."  On the other hand, Dictionary.com defines the term Hysterical as "Extremely Funny". 

I felt like I had encountered both definitions after reading today's Forbes (would directly link, but Forbes doesn't seem link to cover stories - update:  link here) magazine cover story entitled "Attack of the Blogs" - thus my facetious More Dangerous than Bird Flu Pandemic? title.  But it really reminded me of a similar "mass hysteria" quote (Click Quick Time file: MassHysteria.wav or web link) from the comedy Ghostbusters....

This staggeringly one-sided Fox News-like article paints blogging as "the prized platform of an online lynch mob spouting liberty, but spewing lies, libel and invective." - it's simply mind boggling.  It's as if one couldn't use email, web pages, spam, viruses, P2P technology or other web techniques to cause as much mayhem as blogs do.  Yes, there is no doubt that there are a variety of bloggers who are attacking companies and people out of pure malice or greed, as is exhaustively detailed in the article and quoted by those with a vested interest in this mayhem, but to tar the entire industry in that vein is ludicrous. 

There is no attempt to point to the larger Fortune 500 companies such as GM (Bob Lutz or Microsoft who have made a point of encouraging their employees to blog, or to point to the new companies being created by this new medium, outside of a brief reference to the Weblogs purchase by AOL.   Nor is there a reference to the short but at least even-handed blogging article in Forbes this Summer - it's basically a 6 page cover story beat down on the sector.  However, the article does point out that blog providers or search engines aren't obligated to take down erroneous posts since they usually fall under common carrier status, and that may be hypocritical since a search engine like Google has a code of conduct for its Ad Sense program and deals mercilessly with any site that interferes with its search algorithm.

Now I don't think blogs are the salvation of mankind or a replacement for traditional marketing - the medium is a result of the Internet growth and many of the advances in collaborative tools people have made over the past few years, and much of this amateur journalism should advance the cause of democracy and capitalism, both core tenents of Forbes - but just as you could use a printing press after 1450 to more efficiently libel an opponent than with prior manual technologies, you can use a blog today to do the same more efficiently than in prior years.   I'd advise Forbes to focus on more important issues such as global trade disagreements and to leave the cover story hysteria to the good pilgrims of Salem Mass...

Due to my previous job at Listen.com, we listen to music exclusively through Rhapsody rather than on CDs, but it's piped through a variety of Digital Media Adapters (Linksys, SMC and Omnifi) into the stereo and home theater systems.  The issue I have run into over the past two years is that there is so much interference over Wifi that the music will pause or totally drop every hour or two - sometimes the DMA restarts itself and other times you have to go do it yourself.  This is a big issue for digital entertainment (and for VOIP) since minor packet dropping does not matter so much for email, but for any type of synchronous application such as media, it just kills the experience. 

I played with the antenna, tried different digital media adapters and wireless routers, and switched our wireless phones out of the 2.4Ghz range to reduce interference, but the problem became such a problem that I finally drilled new holes in the rooms to bring Ethernet to those areas, which solved the problem.  Interestingly, the biggest problem is when the microwave is being used - in a house filled with small children, we use the microwave a lot to heat up things, and that was what finally made the decision for me since it kills the WiFi signal within about a 15 ft range - it was either don't listen to music during dinnertime or switch to a wired alternative.  My question is why someone can't build a simple shielded microwave to eliminate this problem, which appears to be a big one based on what I'm seeing on the bulletin boards.

Going forward, homes will commonly receive both audio and video entertainment over IP.  We need to come up with alternatives to Ethernet (Home Plug, better Wifi) or it will limit the growth of this market segment since most adults want to consume entertainment content on their TV or through their stereo system, and they don't always have a wired Ethernet jack near by.  And a better microwave might help too...

Just came out of our fundraising period, so there is finally a small amount of time to blog again.  I did not attend the Web 2.0 conference this week, but I spent tonight at a great VC dinner and later at the big Web 2.0 unofficial corporate party asking attendees about their impressions from what appears to be a very successful event.  The common theme at the party was debating whether the vibe of this event was more similar to 1998 or 1999 from the infamous Internet bubble era, but the good news was that confidence was high and there was a feeling that many of these companies were going to change the world.

What was interesting was how many cool companies had presented or announced themselves this week (Pluck, Flock, Ning, Platial, Shadows, etc.), but also how many conference attendees could barely remember any specific features from any of those companies - each answer was some type of "blogging meets tagging meets social networking meets video meets new user interface", which I guess is what defines Web 2.0, but it's unclear to me at this point as to what these companies usually mean for consumers. 

This doesn't mean that these companies won't succeed at some level just because almost no one can remember what they all do, but it means that I'm probably not smart enough to figure out how they succeed at some mainstream level beyond the "wife test" of many high tech executives, including myself.  Simply put, how does this service or application make my life easier or faster? - if companies can't clearly establish that within some reasonable timeframe, then it's back to the geek pool, but it doesn't seem to have affected anyone's valuation in recent fundraising rounds and it's certainly not making the hiring environment in SF any better since everyone is hiring.

Everyone is throwing around buzz words such as Web 2.0 and CCC (Consumer Created Content) these days to reflect this recent trend of mixing and matching web technologies and user content to create a whole new set of services.  Normally, CCC reminds me of the Americas Funniest Home Video of the cat flying around the ceiling fan because much of user generated content is either staggeringly derivative, boring or just bad.

However, what recently struck a cord with me was the realization that multimedia search engine GoFish had cleverly used Wikipedia content to replace what was traditionally licensed content from Muze or AMG - click any GoFish artist listing and you'll see the content.  So rather than have paid editors spending their days writing artist biographies, GoFish uses the Wikipedia user-generated artist reviews (and I'm assuming at some point, wikipedia could add album reviews, etc) in place of paid content from others.  Not so good for AMG or Muze, but it's showing a path to using the collective intellect of the Internet to create content formerly done in a more top-down manner.  Yes, not all of it is incredibly good right now, and there is not necessarily a consistent editorial voice, but it will be compelling for a range of companies, especially as it inevitably improves.

I Googled myself last night and discovered to my surprise that AOL Music has apparently bought my name as a key word, in addition to buying other digital music business names such as Dave Goldberg from Yahoo Music and Evan Harrison from Clear Channel.   I originally assumed there must be an artist named Sean Ryan on AOL Music, but there is nothing there except a link out to an artist on Shanachie Music through AOL's Singing Fish property - hardly enough to justify buying the key word.  So I typed in Dave and Evan's names, and there is literally nothing in AOL Music, including any outside links.  Then I assumed that they had just purchased every possible name, like eBay does sometimes.  But when I typed in a whole host of other names such as Kevin Ryan (my brother) or JP Lester (our CTO), there was no AOL Music link.  Not sure how I feel about it and there is clearly nothing wrong with doing it, so I hope it's working for them - I've been wildly clicking on it all day...:)

True Story - A friend came by this evening to discuss some new business concepts, and my initial response was that I was excited to hear what he was thinking about, as long as it did not involve a new business around inserting audio ads into podcasts.  Imagine my surprise when he, of course, indicated that it was exactly what he was proposing.  JUST STOP IT

This literally marks the 5th conversation I have had within the past 4 weeks with either an investor or an entrepreneur about entering this amazing zero billion dollar business.  Outside of the obvious hype around the overall podcast sector (or blogcast as they amusingly call it at Microsoft), let's discuss the issues involved:

1. The overwhelming leader in 3rd party Internet ad insertion, Doubleclick, just sold for approximately $500M in total enterprise value, much of which was the non-DART related division.  Who can name any other player in the sector?  So unless we assume that the podcasting ad business will be much larger than the overall Internet ad sector, or that Doubleclick was sorely undervalued, that would appear to place a ceiling on the concept, especially for any player besides the leader.  (Note - my brother Kevin was the CEO of Doubleclick until its recent sale)
2. Podcasting would appear to be subset of the Internet-connected PC business, meaning that you must have a device to connect to a PC to get a podcast.  The closest analogue in the Internet -connected PC business is Internet radio since podcasting is essentially time and space-shifted Internet radio, which according to the Edison Research/Arbitron report Internet and Multimedia 12, has a monthly audience 8x as large as satellite radio, but which has an almost ad market associated with it, almost 10 years after the sector started.  So, if it's at all related to Internet radio, or more likely, a subset of it, it's going to really small.
3. It gets worse - podcasting is not going to be legal for most mainstream music in the near term since it's clearly not covered under any statutory rates, so the overall market is limited to non-music podcasts.  As one label executive candidly put it, "we regard podcasting as file sharing in sheeps clothing".
4. Unlike advertising key words or banner ads, any podcasting ads will not have any easy way to click through or provide even basic feedback on whether they were heard or not because you listen to them offline.  Yes, one can eventually implement some type of WM10 Janus-style system where the exact listening pattern is tracked on the device and then reported back next time it syncs, but there is still the non-click through issue, and the Janus technology doesn't work all that well, and is not present in most devices at this time.  You can argue that normal radio advertising doesn't have direct feedback, but advertisers often hold Internet advertising to a higher standard because they can do so.
5. The most likely podcast advertisers are current radio advertisers, and the vast majority (85%) of that market is so being able to aggregrate enough 94114 area code (for example) podcast listeners to be able to effectively market the local car dealership to them is going to take a long time.
6. There are obvious players in the category already - Audible has announced its intentions to monetize this space, Google & Yahoo would logically extend their RSS and key word expertise to the category as might Apple as the true category leader, and there are multiple start ups which already which have indicated they want to be in the sector.

I am not anti-podcasts, as some friends of mine have indicated.  It just seems that the hype over the viability of ad insertion businesses has quickly grown excessive, even by Silicon Valley standards, so that converstions are now reaching what I used to call the Long Tail pitch - it's not a venture or entrepreneur conversation unless we all mention the Long Tail (or podcasting ad insertion) at least once - there are simply too many obvious barriers to this being a meaningful business for a start up.

Because my family is away for most of the Summer, I've been looking for ways to stay in touch, especially with my young children, for whom using a phone is a little difficult and too hard to visualize who is on the other end.  I had used about 9 months ago, but found that it was not ready for prime time, especially from an interface and set-up perspective.  Since Skype video is not available yet and the other dedicated video packages all seem too expensive, I tried Sightspeed again, and I have to say that it's been worth the effort. 

Sightspeed is a Peer to Peer Video over IP service, meaning the costs to provide it are quite low, allowing it to offer very reasonable pricing.  For the free package, you get 15 minutes of video calling per day, and 10 video mails per month, with the subscription packages giving you a greater feature set - you, of course, need video cameras on both ends - we use two Logitech Quickcam for Notebooks Pro, and they seem to work well, including decent microphones.   The video mails are good if you want to leave a message if no one is home, and 15 mins per day is a perfect amount to allow you to say hi.   The quality varies, especially if you have Wi-Fi on both ends, and it took a little bit of tweaking to figure out which settings to use, but the functionality is more than adequate for a casual system.  The children love the concept and although the quality is not nearly high enough for a business situation, it's been a big win from a family perspective.  You can just imagine what it will be like in a few years as all of the underlying technology improves.  Has anyone else used other video systems?

Since Donnerwood is going to be a consumer-facing enterprise, we need to have a billing system.  Luckily, one of our employees built the entire billing system used by Listen.com/Rhapsody, so we know how to do it, but we really want to have him do more value-added work since there is no more gain in having your own billing system than there is in building your own ad serving system.  Doubleclick and others addressed this issue by creating ad serving & tracking systems, but I have to say that there is a serious lack of similar players in the billing sector.

Billing in the consumer sector is deceptively easy at first.  You just want to take credit cards, so you write a simple interface for Cybersource and call it a day.  But then the world starts to get more complicated... you want to allow for subscriptions and micropayments, and integrate PayPal, and give refunds, and tie into your customer service system, and offer coupons, and offer alternative currencies, and tie into your financial systems, etc - get the picture?  Pretty soon you have a small team working on a system which is crucial for your business, but which has practically identical functionality as 100 other systems.

So not wanting to build it ourselves and not being happy with the open source alternatives, I asked more than 25 comparable companies what they were using - these were all consumer-facing internet firms, with sales from $1M to $50M+.  Every single one had built their own system and no one thought it was a competitive advantage!  It's simply mind-boggling.   We kept searching and finally found a provider to help us - we're still under NDA, so we can't talk about it until launch, but it looks like they will fit the bill, outside of requiring an Oracle database (must work with MySQL in future) and not yet being integrated with Paypal (hopefully coming soon).

Has anyone else found billing systems which work for them?  If not, tell your local investor to go start funding some...

UPDATE:  our previously secret billing provider is - (they acquired another provider called Sandlot) -  they have been in the billing business for years and they appear to have the best solution for what we and many other similar services need.   We have yet to fully deploy them, but outside of the tweaks I mentioned above, they look like a winner at this point.

How do you know when a market sector is hitting a frothy note?  When a private investor sitting next to me at the Casual Games conference says that he historically invests in Oil and Gas, but that he thinks that Casual Games will be the next big thing.  Someone please sell him a company :)

Just came back from the First ever Casual Game Conference in Bellevue.   The event was well attended, with over 400 people, and the mood was generally quite optimistic, with seemingly every company in hiring mode.  The market is currently in a rare early stage where all parts of the value chain are making money - the developers, the publishers and the distributors.   Depending on who you believe, the casual game market will be about $300M this year, which is around the same size as the mobile game market in the US.

People know that I believe very heavily in the growth potential for this game sector, but it's also clear that the market is about to shift, causing a lot of pain in the existing players.   What are the primary trends?

1. Increasing Development Costs - games used to cost $50-100K - now higher end games are crossing the $200K threshold.  There is no sign that the trend will slow down since certain higher end players will push it to differentiate their products.
2. Content Over-Supply - due to the low barriers to entry and current wide spread profitability, there are increasing numbers of market entrants in the developer/publisher sector, and the existing players such as PopCap and Gamehouse, all appear to be increasing their production.
3. Lack of Innovation - most developers admitted that they would continue to develop the same types of games that had worked in the past - there are only a few themes, and it seemed as if every possible variant on them (how many DinerDash clones can there be?) was in development.
4. Inevitable Reduction in # of Content Suppliers to the Big Distributors - the big 4 (RealArcade, Shockwave, Yahoo, and AOL) are going to begin to limit how many people they deal with, especially as the game supply increases from the large suppliers.  Greg Mills from AOL was willing to admit it - they want 4-5 large suppliers with large sets of quality content - the days will soon come to an end where small developers can do deals with the major players, just like what occurs in every market, including my former business, digital music, where smaller labels are now pushed into aggregator relationships such as with .  No one wants to have 200+ contracts to manage.
5. Prices will Generally Decrease - this is the more controversial opinion, but most players will privately admit that games are now mostly in the $15 range vs $20 retail.  There may be exceptions for higher quality or branded content, as the CEO from iWin discussed with their Family Feud product.  However, the fact remains that a large supply of relatively undifferentiated content tends to lead to price decreases, especially as the off-shore development options kick in - one attendee thought he could produce competitive games for $10,000 in Eastern Europe and he's willing to accept much lower prices to break into the market place since he has a lower cost structure.

So with all of these trends, why do I believe so strongly in this sector?  Stay tuned for the next entry

Just found out there is a firmware update for my relatively new Verizon Treo 650.  Well, after almost 45 minutes, and a lot of agony, I've been able to upgrade it.  They simply have to make it easier to do this - no consumer who doesn't work in the tech business will ever update their firmware unless it's as easy as Apple makes it with iTunes/iPod updater - will any manufacturer honestly admit what percentage of their purchasers actually takes advantage of these updates?  How many of us know it will be one of our tasks whever we visit our parents, along with cleaning off the spyware and adware from their PC's?

When we set up Donnerwood earlier this year, we bought a Dell 1600N network printer.   Since we're an all-Dell shop (plus a Mac or two), it was an easier option than mixing and matching suppliers, and we generally like Dell's prices and service.   But this printer is simply not ready for prime time - is a pain to set up and needs constant sys admin help to clear almost incomprehnsible errors which block everyone's print jobs - might be fine for a larger company, but not for us.  We needed a color printer for our upcoming launch presentations, so we bought a Samsung based on the reviews, and have been really happy with it so far

Am late to the party, but finally thought I'd try this whole blogging thing, particularly when it comes to digital media.   I can't yet comment on what we're doing at Donnerwood, but we're working hard and hope to have a service launch this Fall.   Sean Ryan, CEO Donnerwood Media.