Business, Commentary, Media

Viacom destroys a $1B opportunity

02.04.07 | Permalink | 2 Comments

In the latest “Google bought YouTube, now it’s worthwhile to sue them” sweepstakes, Viacom demands that YouTube delete 100,000 videos from its site. This happened Friday and isn’t news. However, the real story that has been missed by everyone, starting with the Viacom executive team, is that Viacom has just destroyed a $1B business opportunity. No doubt Viacom legal team advised this on two fronts: hold up GooTube for the maximum amount of money and for leverage in any future content deals. OK, that’s their right.

But, what if, instead of taking this approach the Viacom execs showed some creativity and embraced the phenomena that is user posted video? I mean, let’s be real here, due to the video posting rules, the average video size a user posts is 6 minutes. It’s not like they’re ripping off an entire 44 minute CSI episode here…..What they’re doing is providing FREE PROMOTION of the content being pushed by Viacom. After all, didn’t someone like it enough to go to the trouble of posting it? Isn’t it in Viacom’s interest to have a broader audience than is available on broadcast mediums alone? Isn’t it great to have a single place to engage this audience?

There are all kinds of fancy things that could have been done. But what about this dirt simple approach: GooTube, you keep the content up if you like, but we want you to add a live link back to Viacom on which we will do what we like to further promote and monetize the traffic. It could be done in an afternoon. What if Viacom had said “let’s create a Viacom community on GooTube” where our content can be showcased, shared, and discussed with multiple means of monetizing starting with advertising?

Let’s do some math: 100,000 videos. Each video averages 1,000 views over a year (I’ve posted one video 40 days ago that has had 404 views – it’s nothing special 3 star rated.) That brings us very quickly to 100 million viewing opportunities. Aside from the normal advertising stuff, let’s say we use contextual advertising where the video lead-in to the ads is relevant both to the content of the video and the profile of the viewer. That boosts the value of the ad tremendously. If we can average $1/view, we get $100M dollars. $10/view, we get $1B dollars in a year. $10/view will be very tough. $1 per view is possible (and to be explicit, I’m not talking about charging the viewer $1, that would be the fastest way to shrink this audience) if the ads are highly targeted and highly context sensitive.

But let’s not take the 1 year view, since Viacom has now demonstrated that they “get it” the number of videos grows to 200,000, then to 500,000 – audiences grow on the other transmission mediums, rates for traditional advertising increase. The linkage between broadcast and network blurs as people share and engage around their favorite content as Viacom springs into the lead by making the content freely viewable and promotes participation in the audience. Even at $1 per view, Viacom can reach $1B without requiring much in the way of imagination. Argue that $1 per view is tough, fine, it’s still greater than $0 per view.

Now I don’t know what Viacom’s lawyers think they can extort from GooTube through traditional means… But I do know this: the amount is less than $1B, this approach damages Viacom’s reputation in the audience as it’s clear Viacom doesn’t “get it,” and it damages a ready-made $1B business opportunity irrevocably. After all, do you really for a moment think those videos don’t exist elsewhere on the net? Puh-leaze! Instead of having a known audience in a single place, they’ve just dispersed the asset to other places where it’s not likely that copyright laws will reach (China anyone?)

If you’re a Viacom shareholder, you deserve and should demand more than simple extortion at the hands of broken copyright laws. You should demand that the leadership start engaging the audience on the network and harvesting cash from them in creative ways that grow the community. I’m not arguing about Viacom’s content rights, I’m arguing their ham-handed and ineffective way of using them in this instance. Why not harvest the energy of the tide rather than engage in a futile and stupid attempt to hold it back? If you’re a shareholder (and I’m not) I think you should be asking some pointed questions at the next annual meeting…you deserve better and more creative leadership. What they’re doing now amounts to passing $1B on the sidewalk simply because they can’t recognize it’s exists. Viacom trades at 24 times earnings today, adding a billion dollars to current earnings moves the share price from $41 to $76 per stub.

Investment advice: Short Viacom as a long-term issue. They’ll be a fully owned Microsoft subsidiary in 10 years time after being purchased for pennies on the dollar of current market value.

Update: Check Jim Moore’s blog out for an actual story of someone caught up in the sweep. If you check the video, it’s obvious Viacom has no ownership yet Jim was forced to remove it anyway. Talk about alienating an audience!

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Humor

Yale, a big party school?

02.03.07 | Permalink | Comments Off on Yale, a big party school?

If this report of the antics in the shower at Calhoun College is any indication, then yes. In what you’d expect to hear about from those Deltas at Faber College, the showers are being occupied, shall we say, by merry makers. Guess those Ivy League campuses aren’t as squeaky clean as one might think.

Well, I say good. Even nerds need to get their groove on.


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Energy

Combined heat and power units

02.02.07 | Permalink | Comments Off on Combined heat and power units

Distributed, private, co-generation is almost certainly part of the solution as we move toward energy independence and reduced emissions. As reported by News.com, Climate Energy, a small Massachusetts company has put a micro-sized combined heat and power unit for homes on the market.

Combined heat and power units are nothing new, they’ve been in use for many years in manufacturing and large, multi-building developments. What makes this entry different is that it is a straight replacement for furnances and supplements the installation with power production of 1.2 kilowatts, or potentially up to 720 kilowatt hours per month (while heat is in use.) To make this personal, in our household we used just over 800 kilowatt hours in January – that would nearly eliminate our power bill taking some $150 in charges out of the equation.

However, this is still a fossil fuel unit powered by natural gas and the $13,500 cost takes around 90 months of heating to break even at our consumption level. It’s a step in the right direction, but there is clearly more room for improvement. Thanks Scott for passing this along.


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Commentary, Media

Football is still happening?

02.02.07 | Permalink | 1 Comment

I guess there’s this game this weekend and it’s something of a big deal…ok enough tongue in cheek stuff. Since the Debacle in the Desert, I haven’t paid too much attention to football. But this weekend is the Superbowl where Indianapolis and Chicago square-off to decide who’s going to get big rings and bragging rights. To say that this game is over exposed and overhyped would be a vast understatement.

I’ve gotten many requests to extend the prior ad analysis of the Rose Bowl and NFL Playoff game to the Superbowl. The reality is, I just don’t know if I’ve got it in me to do that – it takes a minimum 6 hour commitment and my eyes feel like they’ve been rubbed with sand paper after and my mind feels completely and utterly numb. We’ll see. Perhaps I’ll Tivo it to preserve the option. Heck, maybe it will even be a good game. Nah, that’s too much to hope for.

Ah, the game. I don’t have a strong attachment to either team, so there’s little in the way of emotional interference in making a pick. Indy’s strength is their offense, though their defense has risen to the challenge throughout the playoffs. Chicago’s strength is in their defense and special teams, though their offense has risen to the challenge throughout the playoffs. The pundits are pretty unanimously picking Indy as the AFC was far tougher this year than the NFC. I’m kind of neutral in picking a winner, I can find reasons that either team will win or lose.

When in that position, experience tells me, always pick defense and special teams. Therefore, Bears, you’re my official pick. In what I believe will be a somewhat sloppy and boring performance, I’ll predict a Bear’s triumph in a 27-13 snooze fest. Here’s to hoping I’m wrong about the snooze fest part…enjoy the game or the ads or whatever it is you tune in to see. Unfortunately, I doubt we’ll see any wardrobe malfunctions.


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Energy

How many politicians does it take to change a lightbulb?

02.01.07 | Permalink | Comments Off on How many politicians does it take to change a lightbulb?

In California, the answer is 1.

Garden variety compact fluorescent light bulb


Yesterday it was widely reported in local media that Assemblyman Lloyd Levine has proposed a bill to outlaw the sale of incandescent lightbulbs in California after 2012. Instead of the traditional incandescent bulb invented by Edison and improved thereafter; compact fluorescent and led bulbs would take their place. These newer technologies provide up to 75% energy savings for equivalent lumens.

The downside is that each bulb costs more upfront than incandescent counterparts, but the upside is that over the lifespan of the bulbs the energy savings coupled with their longevity will provide payback many times over. An additional criticism of the new technologies is that the emitted light is “harsher” than incandescent bulbs. When electric bulbs were introduced 130 years ago, arc-lights were harsh, incandescent bulbs to “soft”, and gas lights were stinky, dangerous, and dim. Technological progress has a way of dealing with each challenge over time.

While I hate to see government intrude in our lives with legislation over how we choose to light our homes and businesses, natural market forces are taking too long to force this change. This is probably a good thing for both eco-s, ecology and economics.


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