July 24, 2006
Volume 14, Issue 3
Online Spending Surges 14%
Excerpted from Online Media Daily Report by Wendy Davis
Online ad spending in the second quarter soared by 13.8 percent from the first three months of the year, according to a new study conducted by Deutsche Bank in conjunction with MediaPost. Pricing also increased, with the cost of premium inventory rising 6.6 percent, run of network inventory increasing 3.6 percent, and paid search edging up 1.3 percent quarter-over-quarter.
For the report, 39 media executives were questioned about their clients’ experiences with Internet advertising in the first quarter and expectations for this quarter. Collectively, respondents spent $152 million on Internet advertising last quarter.
About 78 percent of media executives who responded reported that their clients spent more on Internet advertising last quarter than in the first, with 15 percent seeing increases of more than 30 percent.
Almost half – 47 percent – of respondents said the cost-per-thousand (CPM) impressions for premium inventory were more last quarter than in the first three months of the year, with 36 percent reporting increases greater than 10 percent. Forty-seven percent of respondents also said that pricing for run-of-network inventory had increased, with about 9 percent reporting increases of more than 10 percent.
Ultramercial Viewers Linger
DCIA Member Ultramercial, the Internet advertising agency that offers a patents-pending "Attention-for-Content" model, announced its fourteenth straight quarter of metrics that exceed Internet norms.
Key statistics for the second quarter of 2006 revealed that asking for the viewer’s attention delivers added engagement extending a 35-second ad to 49 seconds. Key metrics also included average click-through rates of 7% and completion rates of 73%.
"Ultramercial’s opt-in model provides Internet users with a no-cost way to read The Economist, listen to music at Rhapsody, or earn free airtime at Virgin Mobile, by ‘paying’ with their attention instead of their credit card," said Rick Vandervoorn, Ultramercial’s East Coast VP of Sales.
"These viewers see the explicit value the ads provide, and they elect to watch and become engaged. Our average engagement time is 4 seconds longer than it was in Q1 06. Quarter after quarter, we’re proving to be a sound long-term investment for our advertising partners."
"In a world of blocked, skipped, or ignored ad units, it’s pretty amazing to see a format that viewers not only choose to watch, but also to stay engaged with almost twice as long as a TV :30," added Paul Grusche, Ultramercial’s SVP Sales & Marketing.
"These viewers weren’t forced to watch. Instead they saw the explicit value of their attention for premium content, and opted to engage with the sponsor over paying an access fee. It’s time we respect the viewer while remembering that it’s ultimately the advertiser who pays for all the free content online."
Report from CEO Marty Lafferty
 Please plan now to join us at Building Blocks 2006 in San Jose, CA from August 15th through 17th. In addition to our Next Generation P2P panel on Thursday, senior executives from several DCIA Member companies will be in attendance, and we will be pleased to help arrange one-on-one business development meetings for DCINFO readers wishing to meet with them personally.
INTENT MediaWorks’ Founder & CEO Les Ottolenghi will be present. INTENT is forging the way for profitable rights-managed digital media distribution. Its technology suite combines the easy access of peer-to-peer (P2P) file-trading networks, the power of search optimization, and the magnetic nature of online social networks.
Its solutions enable artists, publishers/indies, major studios, and advertisers alike to create, strengthen, and support a more powerful brand presence, to access more information for business decision-making, and to subsequently increase margins.
Through its development of the Palladia digital media packaging and distribution platform, the MyPeer P2P software application suite, and the delveDown digital media meta-search engine, INTENT has exemplified innovation and led the industry in the creation of revolutionary technologies and services.
INTENT MediaWorks is the recipient of the 2006 DCIA Innovator’s Award, presented annually to that company which epitomizes the overall advancement of distributed computing technologies for commercial purposes.
Shared Media Licensing’s President John Beezer will also attend. Shared Media Licensing (SML), founded by a group of musicians and software developers, created its Weed technology to facilitate a unique business model for file sharing on the Internet.
Weed encourages file sharing and makes payments to musicians at the same time. It does this by rewarding file traders who respect artists’ rights. SML find this works a lot better than punishing fans who don’t.
1.5 million Weed files have been downloaded since SML debuted the Weedshare service in 2003. Weed files can be shared in countless ways including via P2P, blogs, and social networking sites such as TagWorld, MSN Spaces, and MySpace. The company was a finalist in the World Technology Network’s 2004 Entertainment Award competition.
Javien Digital Payment Solutions’ CEO Leslie Poole will also be there. On the forefront of the online payment industry, Javien now offers comprehensive, e-commerce solutions to content-rich websites and P2P software distributors.
Javien’s Software as a Service (SaaS) approach has become popular because of its ease-of-use and because it puts the responsibility of maintaining and supporting the software on the experts who developed it. Additionally, upgrades to the software are handled by Javien experts with minimal service interruption.
The staff provides personalized service to ensure that Javien customers get the solution that fits within their needs to provide a seamless online experience for their consumers.
Building the technology and refining it to meet the various, unique needs of its customers has given Javien an edge in the industry — a product that is built to be flexible.
Digital Containers’ CEO Chip Venters will also be present. Digital Containers (DC) owns patented solutions that support secure file and media delivery, tracking, authorization, certification, and communication of transactional data to trusted third parties across the Internet.
Whether a digital container is distributed by e-mail, by instant message, in a P2P network, by download from a website, or physically on a CD, the persistent copyright protection and status/activity tracking gives the file its own security and commerce system. These patented processes support secure super-distribution, one of the most powerful e-commerce models on the Internet.
DC’s software and intellectual property were originally developed by Deskgate Technologies, voted "Best New Company at Internet World 1998." Over $9.5 million has been invested in the technologies to date.
P2P Cash’s President Tom Meredith also plans to attend. P2P Cash is an emerging financial services firm specializing in online and electronic cash-equivalent payments.
P2P Cash’s network leverages the existing financial infrastructure of customers’ bank accounts, credit cards, and debit cards to create a highly secure, real-time payment solution with worldwide applications. The company delivers a product ideally suited for small businesses, online merchants, individuals, and others currently underserved by traditional payment mechanisms.
P2P Cash enables any customer - business or consumer – to send and receive online payments securely, conveniently, and cost-effectively via e-mail or a P2P Cash phone account. The company focuses on P2P payment needs. As the potential of P2P applications emerges - and as the technology behind more sophisticated and widespread peering usage develops, P2P Cash aims to become the online standard for P2P financial services.
KlikVU’s CEO Lowell Feuer will also be there. KlikVU makes improved Internet video streaming available to content owners, so more people can get more viewing choices, and more filmmakers and videographers can reach their audiences and earn greater revenue.
Online content revenue is growing fast, as mainstream media companies put legacy content on the web. But the potential for the Internet offers much more than merely repurposing the same old TV programs. KlikVU brings that potential to all manner of content providers so the public can access content they could not otherwise view.
Film or video program producers can realize excellent profit margins, thanks to KlikVU’s low costs. The company offers improved quality, reduced expenses, and simplified processes, so video content rights holders can take advantage of the Internet. KlikVU made the investment in quality video streaming, so independent producers don’t have to.
Finally, Bob Way and Clay Price of our newest DCIA Member (to be announced next week) will also be present at Building Blocks 2006.
Please call or e-mail DCIA Member Services leader Karen Kaplowitz at 888-890-4240 or karen@dcia.info or me at 410-476-7965 or marty@dcia.info if you would like to meet with one or more DCIA Members at the conference. Share wisely, and take care.
Javien & Clarynx Partner with Forbes
DCIA Member Javien Digital Payment Solutions and Clarynx Technologies have partnered to make Forbes Magazine content available in audio format online.
"The partnership between Javien and Clarynx has allowed each to expand its offerings and offer greater value to companies selling audio versions of articles, books, and publications online," said Leslie Poole, Javien CEO.
With consumers embracing mobile technology and demanding up-to-the-minute, accurate information, it has become increasingly important that publishers rethink how they deliver content. Providing content online in convenient formats can help stem readership attrition, increase subscriber loyalty, and build new revenue streams through advertising and sponsorships.
"We’re excited to offer consumers the option of listening to select Forbes Magazine articles on their iPods or other portable players or computers," said Michael Smith, VP & GM, Forbes.com.
Javien and Clarynx have partnered to offer a complete solution for content providers. Clarynx converts to digital audio and hosts the content, and Javien powers the e-commerce solution that accepts and aggregates the small payments.
Pando Networks Teams with Musicrypt
DCIA Member Pando Networks has selected Musicrypt as a media distribution design partner. Musicrypt’s patented Digital Media Distribution System (DMDS) is being combined with Pando’s revolutionary P2P technology to give users the ability to deliver large media files, including music videos and television commercials, quickly, securely, and inexpensively to destinations worldwide using the Internet.
"We are excited about this new technology collaboration and partnership with Musicrypt. DMDS will provide media industry users with more security, faster file delivery, and better quality, which are important when porting large files of this type," said Robert Levitan, CEO of Pando Networks.
"Musicrypt’s leadership in digital media distribution will provide the media industry with an advanced delivery system that’s more effective, secure, and user friendly than present alternatives."
Featuring a highly intuitive, drag, drop, and send interface, Pando combines the best aspects of P2P technology with the send-and-forget paradigm of e-mail. Using Pando Networks’ expanded BitTorrent technology, Pando bypasses the e-mail server to transport "Pando Packages," a combination of files and/or folders, which are then downloaded directly from the Pando network to the recipient’s computer. This technology is scalable and capable of delivering the HD quality files required by broadcast networks.
BlueMaze Creates Tanqueray Virtual CD
Spirits maker Tanqueray has unveiled an online, "virtual CD" sampler, a collaborative effort involving branded music marketing company BlueMaze Entertainment, a DCIA Member.
The move, which also involves advertising agency Grey Worldwide, is designed to generate cool factor around the Tanqueray brand, while also triggering increased viral marketing and increased customer retention.
According to Mitch Towbin, Director of Marketing at BlueMaze Entertainment, the effort is designed to "build relevant buzz and association with Tanqueray at the street level," while energizing the "target demographic."
The virtual CD simulates actions like flipping-the-cover, and includes an embedded player. Users can sample and download tracks from artists Dujeous, Slick & Rose, Doujah Raze, and Martin Luther, all within the branded play.
For Tanqueray, the "volume 1.5" sampler follows a similar effort over the holidays, and is being woven into a larger advertising theme. Meanwhile, other brands are spinning similar initiatives, and increasingly incorporating digital marketing initiatives into larger advertising strategies. That saves costs, while also tapping an increasingly digitized consumer.
PlayFirst Releases Subway Scramble
Excerpted from MacNN Report
DCIA Member PlayFirst has released "Subway Scramble," an action puzzle simulation that takes players on a rapid transit romp through the epic subway systems of New York, London, Paris, Moscow, and Seoul.
It’s a worldwide hodge-podge of snarled subways and misplaced passengers. Players compete to return each subway system to normal, and ensure that all the passengers arrive at their proper destinations.
Stations begin to overflow with eager passengers when players take too long, and clearing an entire station in one delivery results in a three-car bonus. Earning enough tokens unlocks further international locations, and players must consider safety first or lose their safety token.
Subway Scramble is available for $20 and requires Mac OS X 10.3.9 or later.
Skype Adds AutoAttendant
Sandhills Software announces the release of SkypeAttendant for users of the highly popular Internet calling software distributed by DCIA Member Skype. SkypeAttendant is a virtual attendant to automatically answer SkypeIn or Skype-to-Skype calls.
SkypeAttendant automatically answers calls and, when callers simply say the name of the person they are calling, SkypeAttendant automatically transfers the Skype call to that person listed in a Skype contacts list.
SkypeAttendant uses text-to-speech technology, which means users can quickly customize all voice prompts using a simple text editor. Please visit www.skypetransfer.com for details.
Sandhills Software develops applications for Skype business users. Its software products include SkypeTransfer and SkypeAttendant. These tools are designed to provide enhanced Skype call management for business.
IBM & Digital River Backup PCs
Excerpted from The Register Report by Chris Williams
IBM’s deal with DCIA Member Digital River, which runs e-commerce for the likes of the Staples office superstore chain, means IBM’s Tivoli Continuous Data Protection for Files will be hawked at online stores.
The software does pretty much what it says on the tin, continually copying and encrypting files to a remote location like a USB drive, rather than periodic snapshots.
"Data loss threats caused by viruses and outages aren’t just a big-business concern," Tivoli Storage & Security VP Hershel Harris explained.
Digital River SVP Don Peterson said, "By offering IBM Tivoli Continuous Data Protection for Files through mainstream online retail sites in Digital River’s oneNetwork, consumers and small business users have access to an enterprise-class data recovery solution." It’ll cost $35 per PC.
MSFT Confirms iPod Rival
Excerpted from Digital Media Wire Report
Microsoft on Friday confirmed reports that the company is developing a portable music player and corresponding service, for release later this year, that will compete with market leader Apple’s iPod and iTunes Store.
"Today we confirmed a new music and entertainment project called Zune," Chris Stephenson, Microsoft’s GM of Marketing, told Billboard. "Under the Zune brand, we will deliver a family of hardware and software products, the first of which will be available this year. We see a great opportunity to bring together technology and community to allow consumers to explore and discover music together."
In addition to the music player – which Microsoft confirmed will feature a hard drive and Wi-Fi connectivity – a Zune-branded portable video player and handheld video game device are slated to follow. The company told Billboard it is looking at wireless features such as allowing Zune owners to view one another’s song playlists, access songs stored in online lockers, and download music directly to the device.
YouTube Serves 100 Million Videos Daily
Excerpted from Reuters Report
YouTube, the leader in Internet video search, said viewers are now watching more than 100 million videos per day on its site, marking the surge in demand for its "snack-sized" video fare.
Since springing from out of nowhere late last year, YouTube has come to hold the leading position in online video with 29 percent of the US multimedia entertainment market, according to the latest weekly data from Web measurement site Hitwise.
YouTube videos account for 60 percent of all videos watched online, the company said. Videos are delivered free on YouTube and the company is still working on developing advertising and other means of generating revenue to support the business.
The site specializes in short – typically 2-minute – homemade, comic videos created by users. YouTube serves as a quick entertainment break for viewers with broadband computer connections at work or home.
News Corp.’s MySpace, the social networking site popular with teens, has a nearly 19 percent share of the market according to Hitwise.
Yahoo, Microsoft’s MSN, Google, and AOL each have 3 percent to 5 percent of the video search market. Collectively, these four major Web portals have a smaller share than either YouTube or MySpace.
In June, 2.5 billion videos were watched on YouTube. More than 65,000 videos are now uploaded daily to YouTube, up from around 50,000 in May, the company said.
YouTube boasts nearly 20 million unique users per month, according to Nielsen//NetRatings, another Internet audience measurement firm.
World’s First P2P Webathon
P2P MEDIA SUMMIT participant RawFlow, a leading provider of live P2P streaming technology, has started working with NEXUSLive, an Internet broadcast specialist, by supporting NEXUSLive’s webcast on Wednesday to promote up-and-coming Edinburgh act Amplifico. The event was the world’s first-ever live web broadcast album fundraiser.
Amplifico has been heavily featured in blogs and forums online. The band was also featured on BBC 1 Scotland. RawFlow’s three-hour webcast included sets from three top Scottish bands, followed by a promotional set from Amplifico, and was broadcast live from NexusLIVE’s site: www.nexuslive.com simultaneously. The webathon featured live donations feeds showing how much money was raised over the course of the event.
RawFlow’s P2P streaming technology allows the Internet to become a viable infrastructure for delivery of rich media content, as it eliminates the success penalty that is normally associated with the scalability of Internet broadcasting.
Video-Sharing Firm Closes Round
Blip.tv, an Internet media company offering the tools and platform for publishing original video shows on the Web, announced the closing of its series A financing. The round was over-subscribed and funded exclusively by private investors.
Blip.tv hosts tens of thousands of videoblogs from around the world. The company empowers users to create shows and allows them the freedom to build their own brand and audience while giving them a stake in their own success. Blip.tv gives show producers the opportunity to opt-in to video advertising and splits advertising revenues with them.
With the most advanced video distribution platform available today, blip.tv also gives users the tools to distribute videos to their own blogs, additional websites, video aggregators, and search engines, iTunes, del.icio.us, Flickr, and more. Blip.tv lets show creators maintain complete ownership of their content and supports Creative Commons licensing.
"Blip.tv is creating the tools that will empower the next generation of TV stars and producers to work for themselves," said Mike Hudack, CEO of blip.tv. "With this round of funding complete, we will now focus on giving our users more opportunities to make money from their hard work. We will soon offer additional advertising options and introduce pay-per-download and subscription services. We are also launching into new areas of development, expanding our services and growing our distribution network to connect our users to the world through all possible media channels."
The Future of Television
Excerpted from Inside Digital Media Report
Ultimately the Internet shall be the dominant form of electronic media and not merely an alternate one.
The implications are many and profound. Once the TV is hooked to the Internet it will be the primary household window into the World Wide Web. It shall be our electronic hearth – a family hub for communications, news, and entertainment. Click here to check-out a visual presentation about the evolution of television.
Since the TV screen is large and suitable for video, Internet content shall become increasingly video-centric. Consumers will use the power of digital media to select the programs they want to view. The notion of merely viewing them with a channel selector at the times they are broadcast will become obsolete.
TiVo has already conditioned users to watching programs at the times that are convenient to them as opposed to when broadcast. But an Internet-connected television takes the concept to a new level because it will also contain a browser. Such a television might offer a start-up menu with a search function enabling the owner to crawl the vastness of the Internet to find the video suitable to his present mood.
As the television screen makes Internet video more routinely available, the user interface is likely to evolve. Just as the command-string of MS-DOS yielded to the icon-based interface of Windows, the video-centric future Internet will likely induce a new metaphor. Apple’s Front Row is merely a prototype. A future start-up menu will probably integrate multimedia elements, icons, and, most importantly, RSS feeds. It will also permit users to spontaneously form affinity or work groups to share information with.
As a result, there will be a huge battle for the privilege of becoming the consumer’s start-up page. Those providing the best capabilities may well become the new leaders. Contenders will include ABC, NBC, CBS, Fox, Comcast, Time-Warner, AT&T, Verizon, TiVo, Netflix, Amazon, Google, Microsoft, Apple, and Yahoo, among many others. In short, Silicon Valley and the dot-com industry will battle the media and communications carrier incumbents for control of the future television user’s initial viewing experience.
While some will compete on the merits of their services, others will seek regulatory advantages. One way the telcos and cable companies can gain such an edge is by discouraging network neutrality. They may not be satisfied with merely collecting monthly subscriber fees. They might also want the authority to selectively charge destination websites on a metered basis for the traffic the sites generate in delivering content to subscribers. This, despite the fact that the ISPs are essentially charging the subscriber a metered rate anyway, based upon the speed of his connection; dial-up, residential broadband, business broadband, etc.
That way the communications incumbents can legally price the services of independent destination sites at a disadvantage. Thus, Google and Yahoo might have to pay more to deliver video to the consumer than would the corresponding business units of AT&T and Comcast.
However, before it becomes obvious that the Internet shall be the dominant form of electronic media, televisions need to be connected to the Internet. Today the trend is, at best, incipient. Ultimately, however, the isolated television will be as rare as an unconnected computer.
StreamCast District Court Challenge
Excerpted from Digital Music News Report by Joseph Clark
On June 27th, 2005, the Supreme Court issued its landmark MGM v. Grokster decision, which established the "inducement rule" as a test for secondary liability for copyright infringement. The court held that P2P networks may be secondarily liable if they market a technology "with the object of promoting its use to infringe copyright."
The Court’s opinion vacated the 9th Circuit’s earlier decision in favor of file-sharing networks, and returned the case to the lower courts. Now, over a year later, Grokster’s ramifications are beginning to be felt, at least by StreamCast Networks, an original defendant in the case and creator of the Morpheus P2P application.
On Monday, federal district court Judge Stephen Wilson indicated that he was prepared to rule against the P2P company and grant a Motion for Summary Judgment in favor of the entertainment industry. "In the court’s view, the evidence is overwhelming in favor of the moving parties," said Wilson.
In Grokster, the Supreme Court fundamentally altered the litmus test for infringement. Prior to the Grokster ruling, Judge Wilson actually granted summary judgment for the P2P companies. And the 9th affirmed that decision, writing that the file-sharing companies’ "current activities do not give rise" to contributory or vicarious liability, the only two theories of secondary liability then in existence.
Now, however, through "purposeful, culpable expression and conduct," a P2P file-sharing company can be held liable for "inducing" the infringing actions of individuals downloading copyrighted songs and movies. Much as the Sony Betamax decision before it, Grokster was crafted to preserve a careful balance between technology innovators and intellectual property owners.
For that reason, "mere knowledge" of actual or potential infringement is not enough to trigger liability. Accordingly, StreamCast argued in its brief to Judge Wilson that its actions should not be construed as inducing infringement. But internal memos and the marketing efforts of Streamcast may have proven damaging.
Now, with the specter of secondary liability hanging over StreamCast, the entertainment industry plaintiffs may have more leverage in possible settlement negotiations.
Coming Events of Interest
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An Evening with Al Smith and Friends – July 28th in New York, NY: 7:30 PM at Dillons (245 W. 54th St. between 8th & Broadway). DCIA Member Blacksmith will perform live in a show to be distributed via P2P. The event honors journalist and movie producer, Roger Friedman, for his production of "Only the Strong Survive."
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Building Blocks 2006 – August 15th–17th in San Jose, CA. The DCIA is pleased to participate in this premier event for transforming entertainment, communication technologies and the global communications network: TV, cable, telco, consumer electronics, mobile, broadband, search, e-mail, VoIP, RSS, blogs and websites: "Disruptive Thinking – Change Agents That Transform the World –Where Content is King and Technology Rules."
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2006 Word of Mouth Marketing Forum – September 21st–22nd in Arlington, VA. Learn the ins and outs of one of the most innovative and efficient marketing techniques. New tools and technology have made Word of Mouth Marketing one of the best strategic tools marketers can use to build brand awareness and customer loyalty.
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OMMA Awards– September 26th at the Marriot Marquis in New York, NY. The OMMA Awards honor the brand marketers, agencies and content providers who continue to push the potential of online advertising creative. The OMMA Awards celebrate the year's most innovative and brilliant creative work in 27 categories. Submission deadline is July 28th.
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6th Annual Future of Music Policy Summit – October 5th–7th at McGill University in Montreal, Canada. FMC sees hosting this Summit in Canada as an opportunity to expand its perspective on a range of issues – from copyright, to sampling, to digital royalties, to radio, to how various musical communities are managing change. The music marketplace has become truly global, and some of the biggest challenges are navigating the assortment of legal and licensing schemes that encourage and/or impede the promotion and sale of music.
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