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EJ
10-13-06, 03:50 PM
Google faces copyright fight over YouTube (http://media.guardian.co.uk/site/story/0,,1921423,00.html)
October 13, 2006 (Guadian Unlimited)

Time Warner upset over the use of its material, 100m videos under scrutiny for breaches

Dick Parsons, the chairman and chief executive of Time Warner, fired a shot across the bows of Google, saying his group would pursue its copyright complaints against the video sharing site YouTube.com.

Google paid $1.6bn for YouTube this week amid concerns that some of the fledgling website's 100m videos breached copyright rules. Time Warner, the media and entertainment group that owns the Warner Brothers movie studio, Time Inc magazines and the HBO TV channel, is one of several large media companies concerned about possibly illegal use of its material on YouTube.

Mr Parsons told the Guardian: "You can assume we're in negotiations with YouTube and that those negotiations will be kicked up to the Google level in the hope that we can get to some acceptable position."

AntiSpin: Following on yesterday's interview with IBD (http://www.investors.com/editorial/IBDArticles.asp?artsec=17&artnum=1&issue=20061011), it's apparent that media companies that intended to pursue YouTube for copyright infringement were going to wait until they had someone with deeper pockets than a few VCs' to sue. Now they have google, and have wasted no time in getting down to business. The question is, do current visitors go to YouTube for the free, high production quality media content, or the crappy little home-made videos?

I spent five years at a digital video hardware and software company called Media 100 in the mid 1990s. We grew from a dozen folks to a few hundred and went public. Great group of people. Many are still close friends. It was fun. But there was an essential flaw in the business model, and the flaw applies to YouTube.

The main idea behind Media 100 was that we allowed your average Joe to afford the post-production (video editing) tools needed to make the quality of videos that we see on television, that is, online video–right off a computer hard drive with easy-to-use editing software, without expensive, analog post-production facilities. The idea was that we were going to put Avid Technology–that sold a more complex, professional post-production system to professional editors–out of business. As I learned from demonstrating the product (what felt like 100 million times) is that editing video is hard, shooting video is hard, capturing and editing sound is hard, scripting is hard, acting is hard, directing is hard, generating graphics is hard–in fact, it's hard even to list all of the skills that are required to meet minimal requirements for creating a "good enough" finished video for a mass audience, the kind of audience that YouTube, now Google, needs to reach to make money.

It was tempting to say at the time in the early days of Media 100 that the industry evolution model we needed to follow was desktop publishing from the early 1990s. Desktop publishing did not put the professional book production people out of business, instead it enabled the flood of niche publications that hit the news stands in the 1990s, all of them at a level of production quality that surpassed, say, Time magazine a few years earlier. That new computer tools enabled market took six years or so to develop. Who made money on that market development? The distributors and retailers who carried the new publishers. It also allowed a few creative types to quit their boring day jobs and go into publishing.

The hope was that Media 100 would spawn 1,000 high production quality, quality niche video companies the way desktop publishing produced so many books and magazines. But it turned out that making videos is much harder than books. There is a finite number of humans that have the talent, and a limited market for the results of less than MTV production quality video content. The minimum bar is high. All that Avid had to do to kill Media 100 was create a cheap, simplified version of its systems for the small niche of low production quality video post-production.

If online video post-production tools like Media 100 and now your average Mac hasn't after ten years spawned an army of brilliant new writers, directors, editors, and so on, is that because these closet creative types lacked the distribution needed to make the business of producing their new content economical, and so stayed at their boring day jobs? Is google is the solution? Maybe.

The question is, if google has to pay for the copyrighted high production quality content that a mass audience wants to see, they better hope that distribution was the closet creatives' bottleneck, that there are enough niche content markets that are currently under-served, and that they can charge a lot for advertising each of these little companies, or google may never see a return on their $1.6B investment.

DemonD
10-13-06, 11:37 PM
Eric - I believe the business model they are using is that Google/Youtube will give companies a share of the advertising revenue, similar to what they are doing with myspace. (Contrary to what many opine, Google's deal with NewsCorps is a profit-sharing agreement, not a "Google is making a 900 million dollar payment" agreement, and the promised 900 million is only valid if myspace hits certain internet traffic numbers.)

Google's business is built upon market-share of online advertising with the idea that more money from "traditional" media will be going online, as it has, because more people are putting their eyeballs online with huge amounts of percentage growth every year. I only need to look 10 inches up on my screen to see this model in direct action.

I hate being a Google apologist, because I have large confidence in their model and see what they are doing. How many companies get letters from the SEC that they may have to register as a mutual fund company because they have so much cash in the bank?

As I do in other places, I will not defend Google's stock market valuation at this time. But I think the Google naysayers have been proven wrong time and time again, and they will be proven wrong again on this issue. Is a Youtube comparison to Media 100 a good comparison? Or would it be better to compare Youtube to GE subsidiary NBC?

I'm not going to pretend to know how NBC and Google generate all of their profits, but I feel confident enough in Google to have put my money where my mouth is. Google is not kazaa or the old napster. They have had other people banging on their doors for copyright infringement for many years. That still hasn't stopped their earnings growth.

EJ
10-14-06, 01:22 AM
Eric - I believe the business model they are using is that Google/Youtube will give companies a share of the advertising revenue, similar to what they are doing with myspace. (Contrary to what many opine, Google's deal with NewsCorps is a profit-sharing agreement, not a "Google is making a 900 million dollar payment" agreement, and the promised 900 million is only valid if myspace hits certain internet traffic numbers.)

Google's business is built upon market-share of online advertising with the idea that more money from "traditional" media will be going online, as it has, because more people are putting their eyeballs online with huge amounts of percentage growth every year. I only need to look 10 inches up on my screen to see this model in direct action.

I hate being a Google apologist, because I have large confidence in their model and see what they are doing. How many companies get letters from the SEC that they may have to register as a mutual fund company because they have so much cash in the bank?

As I do in other places, I will not defend Google's stock market valuation at this time. But I think the Google naysayers have been proven wrong time and time again, and they will be proven wrong again on this issue. Is a Youtube comparison to Media 100 a good comparison? Or would it be better to compare Youtube to GE subsidiary NBC?

I'm not going to pretend to know how NBC and Google generate all of their profits, but I feel confident enough in Google to have put my money where my mouth is. Google is not kazaa or the old napster. They have had other people banging on their doors for copyright infringement for many years. That still hasn't stopped their earnings growth.
You make great points. I'm not actually comparing Google to Media 100... apples and oranges. I'm saying that video is a very complex medium, the price you can charge relates to not so obvious input cost variables that relate to production values, such as image and sound quality, and so on. "Good enough" video for a wide screen TV show is very expensive to produce–and seemingly insignificant image and audio quality will make or break it, which is why cinemas are suffering... they are on the wrong side of the quality/convenience curve in competition with your basic home entertainment center. To make money in video, all the elements in production, post-production, distribution and playback have to be matched in terms of cost, quality, speed, etc.

You'll notice that YouTube is mostly short form video clips. Most long form is talking heads, famous bands, or other content that doesn't require that you see detail (high res) to "get" it. That's because of the relatively low image and sound quality that the average user experiences. You're not going to watch the fall foliage on YouTube. YouTube is to video what Amazon Shorts is to books. They charge $0.50 per download (read on your screen or print out) vs > $5 for a whole book that gets shipped to you. Except that in both cases Amazon is selling one-to-many, that is, content developed for a relative wide audience. What's not obvious to me is how much you can charge for randomly tagged little video clips that don't tell a one-to-many story the way a long form video does. The clips that you see on MySpace are mostly of the "look at my friend falling off his bike" variety. Very interesting to the creator's friends, I'm sure. One-to-few versus one-to-many. That's the difference between a so-called "social networking" and "photo sharing" site. The former is one-to-few.friends+public, the latter one-to-few.friends+family.

Go to YouTube now and I find the following are the top five most viewed clips, that is, generate the most uniques and thus ad revenue:
1) Ad for Dexter; 3 min; 314,529 views; value: high production value content, gruesome/twisted new cable show
2) Depth charge detonation; 55 sec; 263,397 views; value: blowing things up–universal appeal to boys of all ages
3) Justin Timberlake - My Love music video; 6 min; 192,478 views; value: fan appeal, high production value content
4) Greetings from Chad and Steve, ad for gizmo.com, low grade Flash animation; 126,058 views; value: who knows
5) Guy saying "World of Warcraft (game) is evil, low grade head shot video; 4 sec; 116,288 views; value: controversial to h8ters and lovers of the game

At number 9, views drop quickly down to 74,188 for a 4 min 24 sec. clip of an attractive young woman talking into her camera about clubbing. A majority of the popular YouTube clips fall into this category. This is amatuer quasi-porn/voyeur content. Go to one of the many YouTube wannabes and guess what kind of clips are most popular? No, not videos of the cat playing with a ball of string.

http://media.tinypic.com/topvideos

YouTube would have been a bust a few years ago. Not enough cheap bandwidth to the home. Not enough PCs with browsers that run java and Flash. And so on. There will be more cheap bandwidth over time, greater ubiquity in playback software and hardware. But do you see yourself in a few years choosing between CSI and searching for YouTube clips on our TV? Long term, where is this content heading? Will viewers get tired of random clips or will they demand stories that take talent and cost money to make?

Speaking of Amazon, I was quoted in 2000 saying I though Amazon was a dog and eBay and Google winners. Now I think of Amazon as a search company and one that has a better model than google's for making money off search.

Anyway, I meant what I said in the IBD piece. There is a new class of video/animation media that YouTube will enable. I look forward to seeing what it evolves into. In fact, you may have noticed YouTube videos on the iTulip home page. Eventually you will see iTulip videos. What will they be like? Stay tuned! As they say. (Hint: the broadcast site is lpvtv.com for Low Production Values Television and the production company is called toiletfish.com.)

BTW, at the top of the Internet bubble, many comanies were asked by the SEC to re-classify as mutual funds because the value of their stock portfolio was more than 50% of their market cap. The collapse of the bubble took care of that problem for most companies. Not sure what it means if it's a problem again for some.

Sophia von Wrangell
10-14-06, 02:10 AM
I remember many times having been astonished at how easily people spoke about making films. I thought, well, I must be slow, or something. After 5 years of the very demanding University of Theatrical and Cinematographic Arts “Ion Luca Caragiale” in Bucharest, possessing a cum laude Masters degree in Film and Television Direction, I was flabbergasted: I knew just enough to realize how much more I needed to learn if I wanted to make a movie. I had already made 6 short artistic classic films. I mean, a real movie, a Capo d’Opera, in the style of a Tarkovsky, a Fellini, a Bunuel.

A movie begins with an idea, about something you want to share with the whole world. You translate that idea into words in a special technique called visualization, almost oblivious to grammar (screenplay). Then, akin to how you create a puzzle, you have to cut-out (from the French “decoupage») a series of images that will carry each a piece of your message. Each piece of the puzzle has to be manufactured independently, taking into consideration elements like composition, psychology of color, technical limitations, casting and acting direction, to name just a few. Ah, and: “Don’t jump over the axis!”

Next Step: you piece the puzzle back together (editing) and create a complete illusion. In cinema, not even movement is real. All along the process, you have to figure out if your use of symbolism is consistent with your message, and if your use of the “sign” is consequent to the cultural code, making it possible for your viewer to decode and follow the “plot”. Oh, don’t forget Aristotle’s Poetics, the archetypes of the Greek culture in our entertainment, mainly, the hero.

For this process, anywhere from 2 to 5 years, you need the collaboration of a group of talented artists. After you have edited the film and added the sound track you’re ready to go.

Sounds easy?

Making a film is a very complex process, unlike buying a camera and proclaiming yourself a filmmaker. Like the difference between being a neurosurgeon and playing Dr with a plastic Fisher Price aesthetoscope.

What can Google do, though, to recover their investment?

Google could make a Film Academy and slowly transform it into a film studio. I have a dream I call “The A.T.A.C Project”. (Academy of Theater, Art and Cinematography), the blueprint for such an enterprise.
In ten years time, Google could be generating enormous amounts of revenue from all genres of audiovisual material.

Sophiavonwrangell@sunknight.com

BK
10-14-06, 07:46 AM
Why do people love the Yankees (why do the Yankees spend so much money on baseball players) - Why do people pay $9.50 for a movie with Jessica Simpson - why are Baseball players and Jessica Simpson paid a Ton of Money - because we tune in/ pay for movies/watch baseball game when there is a compeling person or amazing talent to watch.

YouTube will give a view unknowns their big shot in Video. But, will it seriously compete with big Media Companies. Any one who has TIVO or a Microsoft Media Center to daunting challenge of determining what to record and what to watch. My wife and I watch a lot of older television programs and video of our kid.
Video is about Personalities - the best video production people will get behind the Talented people that people will watch in droves. Follow the Money.

EJ
10-14-06, 09:52 AM
I remember many times having been astonished at how easily people spoke about making films. I thought, well, I must be slow, or something. After 5 years of the very demanding University of Theatrical and Cinematographic Arts “Ion Luca Caragiale” in Bucharest, possessing a cum laude Masters degree in Film and Television Direction, I was flabbergasted: I knew just enough to realize how much more I needed to learn if I wanted to make a movie. I had already made 6 short artistic classic films. I mean, a real movie, a Capo d’Opera, in the style of a Tarkovsky, a Fellini, a Bunuel.

A movie begins with an idea, about something you want to share with the whole world. You translate that idea into words in a special technique called visualization, almost oblivious to grammar (screenplay). Then, akin to how you create a puzzle, you have to cut-out (from the French “decoupage») a series of images that will carry each a piece of your message. Each piece of the puzzle has to be manufactured independently, taking into consideration elements like composition, psychology of color, technical limitations, casting and acting direction, to name just a few. Ah, and: “Don’t jump over the axis!”

Next Step: you piece the puzzle back together (editing) and create a complete illusion. In cinema, not even movement is real. All along the process, you have to figure out if your use of symbolism is consistent with your message, and if your use of the “sign” is consequent to the cultural code, making it possible for your viewer to decode and follow the “plot”. Oh, don’t forget Aristotle’s Poetics, the archetypes of the Greek culture in our entertainment, mainly, the hero.

For this process, anywhere from 2 to 5 years, you need the collaboration of a group of talented artists. After you have edited the film and added the sound track you’re ready to go.

Sounds easy?

Making a film is a very complex process, unlike buying a camera and proclaiming yourself a filmmaker. Like the difference between being a neurosurgeon and playing Dr with a plastic Fisher Price aesthetoscope.

What can Google do, though, to recover their investment?

Google could make a Film Academy and slowly transform it into a film studio. I have a dream I call “The A.T.A.C Project”. (Academy of Theater, Art and Cinematography), the blueprint for such an enterprise.
In ten years time, Google could be generating enormous amounts of revenue from all genres of audiovisual material.

Sophiavonwrangell@sunknight.com
While I was at Media 100 I spent time on dozens of movie sets. Met Brad Pitt, Merrill Streep, Steve Martin, etc. Went to a few shows, too. Met Jerry Seinfeld (have an autographed script now worth about $2K, according to the last one sold at auction... read: For Sale.) Until I watched the process, I had no idea even of what goes into production, never mind all the thought that goes into all the mundane details of set design, color, on top of everything you mention. all of it the tip of the iceburg. I got training in editing from a pro editor in LA. My biggest surprise: 80% of what a person perceives as "quality" in a movie is in the sound, not the images.

The other surprising thing I learned is that a production company is often a corporation that is created for the purpose of creating one product, one movie. When the product is done, so is the production company. The people that formed it move on and re-form a new one either with each other or with a new group of people. It's like a high tech start-up that churns out one massive piece of software, publishes it and then everyone leaves, except the accountants. This is, of course, the exact opposite of a software company that creates one digital image and has a very low cost of re-production and distribution. Most of the cost is in branding. In between movies and software companies there is the ultimate hellish business, restaurants–I have several friends who run those–where the product needs to come out perfectly each time, one plate at a time, yet with a nearly infinite number of input variables: suppliers, equipment, labor, etc. Impossible business. Without a liquor license, you're screwed.

Anyway, can YouTube provide the missing distribution piece that independent movie markers need, or will it wind up like the Internet/idie rock scene on iTunes Internet radio, with some very popular bands created that are Internet broadcast only but make nothing because the distributors can't charge their audience enough? Rock bands and their distribution companies still make the bulk of the big $$$ on big arena shows, mining brand, which is why you see these geezers taking up stage space. The Internet may serve as a means for casting a wider net, but it will still come down to a finite number of bands that "make it," that is, that get the $$$ behind them to build a brand, a process that takes many years and costs a fortune.

YouTube and others are going to need good, original content. I have friends in VC that have been buying up content like crazy for years for this reason. Maybe a west coast VC will fund a YouTube AFI and sell it to google...

DemonD
10-14-06, 05:00 PM
Better follow up arguments all. Monetizing content is the biggest challenge for Google. This is a problem that is similar to trying to monetize social networks. Can Google do it? Well, if anyone can, Google can, and it can do it better than anyone else out there right now. That's not saying this will be a great return on investment.

-DemonD, and in the interest of disclosure, long Google (originally purchased shares 6/2005).

Sophia von Wrangell
10-16-06, 06:56 PM
Dear Administrator,

I concur with your estimate that Google needs to produce content.

Elisabeta Bostan told her class of 6 (the largest in the history of I.A.T.C.) on our first day of class early in the autumn of 1976: “If you have nothing to say, go and say it somewhere else”. As film directors we had to be proficient in all associated disciplines, “to know what to ask for - to know what is possible”. We had to write our own screenplays which, only after being approved, could we proceed to produce and direct.

That’s how I learnt Cinema. Form at the service of Content, not vice-versa. Content had to be relevant to our daily existence, to our search into humanity as human beings. Our heroes had to be everyday people. The film had to transmit a philosophical-existentialist message, no less. No special effects; for that you could explore surrealism.

In the early 80”s I was hunting for a screenplay to direct. A Dutch director of photography in Bogotá cried out to me: “Everybody knew that you didn’t need a screenplay to make a film!” “Says who?” I inquired. “Vim Venders.” European Cinemagraphers, and their South American peers had gone along with Vim, when he proclaimed his last film was made intuitively, thus proving the screenplay superfluous. Nobody wrote screenplays anymore. Nobody knew how to write a screenplay any more either.

The price for Western Cinematography has been staggering: South American Cinematography is becoming a myth; European Cinematography is on the verge of extinction. In 1990, Spain produced 1 film! Germany produced 150 in the same year, most of which didn’t reach the end of the production stage, let alone post-production! A lot of bad films. Millions of DM gone down the drain. There were no stories.

I needed screenplays to direct. If nobody knew how to write them, I could share what I knew. Anyhow, teaching is the way to go if you really want to know your subject, so in 1981 I went back to Romania and studied to expand my knowledge of Cinematic Narrative. After that I developed a curriculum and in 1990 founded my own film school in Madrid, then in Berlin, Bogotá, and Bucharest.

Hollywood survived thanks to the “formula” films, meant only to stimulate reptilian-brain responses. The repetitive character of these films can drive even the reptilian brain to ennui, not to speak of the physical exhaustion consequence of the constant adrenaline “shots”. The hero is a guy who confronts, all by himself, a whole army, and “wins”. How can we measure up to him? We can’t. Once we establish that heroism is beyond our reach, we can never again be the heroes in our own stories. Anyhow, since only he survives, the lonely killer, who wants to be like him? The spectator slowly wakes up to the realization that there is nothing there. It’s a mirage inside of an illusion. A bad deal for our money. The spectator knows that, with the new technologies available, there is no more limit to Form. But the CONTENT, ahh, the spectator yearns for the content. Content with which to identify. Content as mirror, content for growth.

We are at a stage of contesting known axioms and replacing them with new paradigms. The world is changing, and people, with more access to information, begin to see the advantages of incorporating the thinking process into their daily lives. In a world torn by wars, we long for the advantages of mediation. In a world of alienation, we are discovering the joy of relationships free of chauvinism. In a global economy, we see the added value of the product of inter-racial relationships at so many levels. In a dying planet, we need to change our ways and go for sustainability. This is the content film has to bring forward and question.

In 1996 I wrote “Zugvogel’ for Peter Lichtefeld. “Zugvogel” today a cult film, was awarded the German Silver Bear, The Price of the German critique, Best Cinematography and several other prices. What for me was most meaningful was the note in “Der Spiegel” that called my story “A Gem of the Old European Cinema”. I had learnt.

My next step has taken me to develop a technique of subconscious storytelling, the Moving Paintings, with very powerful content. The Moving Painting successfully bridges the “gap” between the left and the right brains or between analytical thinking, and language and the creative space. The effect this technique has on people is diametrically opposed to the effects of reptilian-emotional imprinting that is ultimately poisonous for our sense of self, and therefore corrodes our self-esteem.

Watching a Moving Painting you relax, you center, your blocks lift and you turn creative.
There are a lot of business applications to Moving Paintings, from the dentist’s chair where it helps you relax, to the airport or business lobby. Content is what sells.

Yes. Google needs a content bank, where currency is structure, character development and strong message, all wrapped in visual form. Then they will see revenue.

Sophia von Wrangell