Most might kill for an iPhone, but not director David Lynch. Appalled by the notion of viewing his movie on a cell phone, Lynch rants about the technology in one of the featurettes accompanying the special edition of Inland Empire. Of course, YouTube louts have crowdsourced this into an anti-iPhone spot.

Source:Valleywag

I’m as ready as anyone to declare Sony the victor in the epic high-definition disc battle. Its Blu-ray, now supported by Warner Bros., looks set to best Toshiba’s HD-DVD. In Hollywood, where they still care about the industrial process of shipping plastic discs by the millions to retail stores, this matters. In the Valley, we’ve long since moved on. Sony executives still dream of formats, hardware, and an empire of lock-in. To them, “software” means the creative content screened in theaters, dropped into CD players, or played on a videogame console. That’s why they’re doomed to lose the real war.

Here we know better. Software is the ingredient that turns content into quicksilver, shifting in time and place to the device we desire, at the moment we choose. Apple has mastered this alchemy, and others like Microsoft and Amazon.com are studying the fast; but to Sony it remains a dark art.

Online video remains immensely fragmented. Should you download a video on Xbox Live? Buy it on Amazon.com’s Unbox via your TiVo set-top? Rent it on iTunes, and broadcast it to your flat-screen display with an Apple TV? The choices seem endless, and endlessly confusing. But none of them, I’d note, market themselves based on a format. The format, if any, is broadband, and a set of standardized audio/video connectors. The rest is fungible.

There will no doubt be a shakeout among online-video stores. If nothing else kills off the weaker players, consumers will rapidly tire of purchasing the same movies again and again. A rack of DVDs on the shelf provides a reassuring sense of permanence. Perhaps physical media will make a comeback. Warren Lieberfarb, who helped invent the DVD at Warner Bros. and now consults for Toshiba on HD-DVD, predicts that flash-memory devices might be sold in stores preloaded with video.

Sony actually had that idea, I believe, with its MagicGate memory sticks. Another nonstandard format, tied to hardware, with buggy software. The same complaints are being made about Blu-ray, with its ever-shifting specification requiring firmware updates. Sony, drenched in blood, stands victorious in the optical-disc format battle. Too bad the war is now being waged in another theater.

Early Facebook investor and openly Objectivist Peter Thiel tells the Wall Street Journal that Silicon Valley VCs are too quick to fire startup founders. They also meddle too much in their companies. He blames a cultural divide.

Founders have to work hard; venture capitalists do not. VC “have these very cushy jobs; they get paid a lot,” Thiel told the Journal. He thinks VC needs to more accommodating by investing in smaller pieces and allowing founders to cash out some, much sooner.

Source:Valleywag

Online shoppers spent 19 percent more this holiday season than last year, according to ComScore. It’s a big number, but not as big as last year’s 26 percent jump. ComScore chairman and chief wonk Gian Fulgoni says you people did a pretty good job considering the “economic challenges facing consumers this year as a result of higher gas prices, lower home values and a jittery stock market.” I say suck it up and buy some more free stuff off eBay next year.

Source:Valleywag

As expected, Disney has signed a deal with Apple to provide digital movie rentals over iTunes. The terms are similar to last week’s deal with Fox. While this isn’t particularly surprising — Steve Jobs owns a huge chunk of Disney from when the company bought his Pixar animation studio — it is good news for Apple. Can you name any Fox movies off the top of your head? Neither can I. But I know a ton of Disney flicks that are worth watching. Among them, Pixar’s small but universally brilliant library of family movies, which will help iTunes appeal to moms and dads. OK, so that’s two studios down. What about the rest? Variety reports that Sony, Universal and Warner Bros. are unlikely to sign on for “various competitive reasons.”

Let’s spell those out: Sony hates Apple for turning the iPod into the Walkman of the 21st century. Universal is owned by NBC, which has had a big spat with Apple over TV shows. As for Warner Bros. — which is no longer affiliated with Warner Music, the record label which signed a music-download deal with Apple rival Amazon.com recently — it’s not clear what the competitive issue might be. But Warner did recently hire Thomas Gewecke, formerly an executive at the Sony BMG music group, to run digital distribution. He may not have fond memories of negotiating with Steve Jobs.

The Financial Times reports that Apple and News Corp.’s 20th Century Fox film studio have signed a deal for digital movie rentals. Consumers will be able to rent the latest Fox DVD releases from iTunes for a limited time. The deal, which will likely be announced at Macworld in January, would likely be matched with an upgrade for the woebegotten AppleTV which has been de facto dead on arrival since it was released. It is suspected that Disney, which has extremely close ties with Apple — Steve Jobs is its largest shareholder after Mickey bought his Pixar animation studio — will be on board at launch as well.

One analyst said “Fox and potentially other studios are coming around to the idea that there is nobody out there to challenge iTunes.” The rumor mill pegged Sony, Paramount and Warner Bros. as having talks with Apple about movie rentals, but this is the first concrete evidence of a deal. With Apple getting into millions of homes as a result of increased Mac sales and millions of video-savvy iPods and iPhones sold this holiday, the service could get off the ground much faster than competing services from Amazon or Netflix, which have foundered. We mentioned the possibility of Apple setting up a movie rental service back in November.

Blogs continue to sell — but blog valuations are staying modest. Discovery Communications, the cable-and-online media company, has bought enviro blog TreeHugger for a reported $10 million. With nearly 2 million unique visitors, that means Discovery paid a very modest $5 per “eyeball” — the unpleasant online-advertising slang for a reader. Contrast that to the bubbly hopes of GigaOm’s Om Malik back in 2005, when he wrote about the “return of monetized eyeballs” for Business 2.0. (Full disclosure: I helped him crunch the numbers for that story.)

If anything, TreeHugger’s sale marks a steady downward trend from the frothy days of 2004 and 2005, when the $519 million deal Dow Jones struck to acquire MarketWatch and the $25 million sale of Jason Calacanis’s Weblogs Inc. to AOL sparked hopes of pricier blog buyouts to come. But they didn’t materialize.

Instead, today, blogs like TreeHugger are evaluated more like conventional media properties, based on audience size, advertising, and growth rates, not eyeballs alone. And, of course, strategic fit matters. Discovery’s TV viewers are naturally drawn to green blogs. Better for Discovery to own those blogs than let its cable audience drift away to them.

Source:Valleywag

When Brian Alvey, the cofounder of Weblogs Inc. and a former AOL executive, suggested that AOL change its name to TMZ, the popular gossip blog it owns a stake in, I took it as the throwaway joke it was. But now, some idiot named Bill Hartzer on InternetFinancialNews.com appears to be taking Alvey seriously. For anyone else equally lacking in both sense of humor and sense, let me ’splain something to you. Alvey’s idea is, of course, brilliant. But it’s not going to happen.

For one thing, AOL doesn’t really own TMZ. It’s a joint venture between AOL and a unit of Warner Bros. While the venture itself is a rare example of co-operation between warring branches of the Time Warner media conglomerate, it’s unlikely that Warner Bros. would ever let go of the brand. Time Warner lore has it that when the cable division first proposed using Warner’s Road Runner character as the name for its high-speed Internet product, Warner asked for a billion-dollar license fee.

And TMZ, while popular and growing, unlike most of AOL’s services, is too narrow a brand, ultimately, to cover AOL’s full range of services. (TMZ refers to Hollywood’s “thirty-mile zone” enshrined in studio contracts.)

And finally, Warner is launching a “TMZ” television series this fall. It’s running on News Corp.-owned Fox stations, and it’s hard to imagine News Corp. CEO Rupert Murdoch tolerating his TV broadcasts promoting services which compete with MySpace.

No, what Alvey didn’t mention — but would make more sense — would be to free TMZ from its warring parents, and all their conflicts. With 9.4 million unique visitors a month, TMZ could easily stand on its own. Forget an AOL spinoff. Bring on the TMZ spinoff.

SEPTEMBER 8, 2006

INFO TECH

YouTube Inc. is the Internet company to beat these days. Wowed by its meteoric rise — the 19-month-old site dishes up 100 million daily videos — startups and giants alike are crowding into the video-sharing market. Microsoft Corp. (MSFT ) is developing its own service. And this fall, the founders of the Skype (EBAY ) and Kazaa services will unleash the Venice Project, a wannabe YouTube killer built on file-sharing technology.

With all the excitement, it’s easy to forget that the video-sharing pioneer’s business so far amounts to a whole lot of expenses, not much revenue, and no profits. YouTube took on the job of creating the business model for a new medium where anyone can post any video. While it’s starting to develop new ad offerings, its popularity is driving up costs that established Web giants, such as Google Inc. (GOOG ) and Yahoo! Inc. (YHOO ), are able to spread out. YouTube spends a tidy, and growing, sum to stream its short clips. Current estimates range from $900,000 to $1.5 million per month. Much of that goes for computer servers and transmission bandwidth. But because the company is charting a delicate course in how it handles pirated videos, its legal costs could balloon if lawsuits start piling up.

Even more important, though, is the tricky question of how YouTube can make money off its phenomenal growth while maintaining the promise behind that popularity. YouTube could easily alienate its users by overwhelming them with ads. And the startup has to figure out how to attract a broader group of marketers by filtering more for copyrighted or offensive videos and by creating more channels of similar content.

Aware of the risks, YouTube co-founders Chad Hurley and Steve Chen are moving slowly to ramp up advertising. They have been wary of asking viewers to sit through a 30-second ad before a two- to three-minute clip. Instead, YouTube is developing new formats, like ones rolled out in August that let marketers build their own video channels or pay to place a video on YouTube’s popular front page.

Creating channels is a logical way to carve out space for ads, but what kinds of channels work in such a wild and woolly environment? Warner Bros. (TWX ) launched YouTube’s first brand channel to promote Paris Hilton’s new CD. But for companies that don’t have content, such as a consumer-goods packager, another approach would be to create managed channels along themes — soccer, say, or anime. Or YouTube could use targeting technology to dish up ads based on a visitor’s viewing habits. Still, marketers say they want another level of filtering. “If I buy advertising to be near humor videos, it can be risqué and edgy, but I have to be comfortable with just how risqué that is,” says Jeff Lanctot, general manager of online ad agency Avenue A/Razorfish.

IN SEARCH OF “NIRVANA”
Another problem is that YouTube isn’t helping advertisers reach the best videos created by just folks, such as a five-minute spoof of Darth Vader as a grocery store manager. These videos are a big part of YouTube’s charm, but since they appear out of nowhere, it’s hard to sort them efficiently. YouTube could create separate channels of the more professional videos, says Allen Weiner, an analyst at Gartner Inc. (IT ). But that means picking over the videos individually or developing technology to pinpoint content that’s not pirated or from someone who is consistently good. “Until they can figure out the consumer-generated content, they miss nirvana,” Weiner says.

For now, YouTube’s execs are resisting turning to ad pros for solutions. The company seems determined to rely on its visitors to filter out pirated and vulgar works. And it’s challenging marketers to find creative ways to tap into its community, such as running film festivals or sponsoring videos posted by studios.

YouTube has a huge head start. Still, it may not have much time to turn a gusher of videos into gold before being overrun by a new generation of mainstream sites and upstarts. Online, as in life, evolution rules.

By Heather Green