Author: Jim Louderback

Anyone involved in the online video industry has to be chilled to the bone by the recent court ruling invalidating much of the FCC’s authority over broadband service providers.

The court essentially told the FCC that it couldn’t force Comcast to pass all bits equally through its cable modems, in essence allowing the ISP to once again shape packets and slow certain types of traffic with impunity. This is bad news for lots of different businesses on the web, but it’s most chilling to companies like YouTube, Metacafe, Netflix and mine, Revision3, which serve up independent video.

Why? Because Comcast could potentially slow down the delivery of our streaming video. Why would it do that? To protect its multichannel cable-TV oligopoly, and its owned and operated cable networks — including The Golf Channel, Style and G4 –- from web-based competition.

Comcast, along with Time Warner, AT&T, Verizon, Charter and other conglomerates have a lot at stake here. New multichannel services from Move Networks, Sezmi and others promise to use the broadband network to replace traditional cable services. Anecdotal evidence shows that many have already ditched cable for a combination of Netflix streaming, Amazon Video on Demand, iTunes and Internet originals, via devices from Roku, Boxee, Syabas and the new crop of web-connected TVs and Blu-ray players.

Streaming video is not like a simple file transfer, because all the bits have to arrive in order, and on time, in order to ensure a clean and rebuffer-free viewing experience. ISP routers already analyze every packet for source, destination and routing path, and it’s relatively easy to slow down, or shape, packets based on type or source. And if you can’t get a good streaming video signal because your ISP has slowed those services to a crawl, you’ll be forced right back to traditional multichannel video services for your television.

So the courts have handed cable TV operators, along with Verizon and AT&T, a huge tool to keep their customers from fleeing to Internet alternatives. As you would expect, though, Comcast and others are claiming that they “remain committed to the FCC’s existing open Internet principles.” They’re also asking the government to let them self-regulate.

But they can’t be trusted. Comcast lied about its packet-shaping in the past, and I don’t expect it to suddenly change its stripes now. Luckily the FCC isn’t standing still, but is considering a number of different alternatives to ensuring net neutrality, including getting Congress to expand its authority over broadband.

I think the best alternative, however, would be to reclassify ISPs to a Title II common carrier service from a Title I. This would put broadband into the same category as POTS and other telecommunications services. Self-regulation would be bad, and I’m leery about leaving the decision up to Congress in light of how long they can take to make a decision.

Free and clear access is important for consumers, for competition and for creativity. Because without it, we’ll be stuck in a “57 channels and nothing on” world, dictated and enforced by the cable monsters.

Image courtesy of Flickr user rstrawser

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.

I don’t trust Yelp any more. And that’s not a conscious decision. I’ve largely ignored the well-publicized allegations of how the ad side manipulated ratings and reviews to drive sales, instead continuing to turn to the site for recommendations on everything from restaurants to plumbers to airport parking. But they’ve nonetheless seeped into my subconscious and tarred my view of the service. Indeed, Yelp is learning that trust is a hard thing to win, but amazingly easy to lose. And that’s why it needs to be protected with the corporate equivalent of the Praetorian Guard.

Here’s what happened: The other day I was looking for a decent long-term lot at San Jose Airport; Yelp’s recommendation page was near the top of Google, so I clicked over to check it out. As usual, I scanned the top 3-4 results, then read through the reviews of the most likely suspects. Quick Park SJC, ranked No. 1, seemed to have everything I needed -– a rating of over 3, pretty decent reviews and a nearby location.

But then I started looking more closely at those reviews -– and noticed an interesting pattern: There were a few from the last month or so, then nothing for nearly a year. And the last of that group was complaining about how the lot had recently raised prices and had a bit of a surly shuttle driver problem.

So why the gap? I didn’t know, but suddenly I wasn’t so sure this was such a great place to park. So I clicked over to TripAdvisor to look for airport parking information there. Since I couldn’t find any — and I was admittedly in a hurry — I ended up selecting Quik Park SJC after all. But I was far less sanguine about my choice. Yelp, alas, was no longer in my inner circle of trust.

Which leads me to three key trust rules:

Got a Problem? Deal With It Quickly: I learned that the hard way during my early years running the test lab at PC Week in the 90s. We had a columnist, Will Zachman, who was an ardent proponent of an early Windows competitor from IBM called OS/2. Microsoft, in those days, advertised incessantly in tech magazines, and Zachman felt that his editor was shaping his OS/2 diatribes to please Microsoft. So he publicly declared independence from the magazine on July 4th, accusing members of the business side of leaping over the “wall” and smacking down the EIC until he censored Zachman’s opinions to appease their biggest advertiser. Zachman had been kvetching about his supposed “censoring” for some time leading up to his Independence Day action, but the editorial team just ignored him — until it was too late.

Notably, I never saw any evidence supporting his accusations. Which leads me to my second tip:

Manage Not Just the Facts, But the Perception: Lack of evidence aside, just the merest whiff of perceived bias was enough to tar us with a wide brush. It took us a long time to cast off that perception. And that’s why, about a year later, I immediately fired a junior lab staffer who falsified test results, and not for money or influence, but because he was being run ragged by an overbearing manager. He was young. Impressionable. He probably only deserved a warning. But he violated a trust, one that, had it become public, would have been harmed us even more. I had to take quick action to preserve the trust that our readers had in our reviews.

Trust has to be carefully nurtured and ruthlessly defended. It’s why TechCrunch fired the intern who asked for a MacBook in exchange for covering a new company. It’s why IDG moved quickly to cut off any association with Randall Kennedy and why Facebook has such a big problem on its hands with the hacking allegations against CEO and Co-founder Mark Zuckerberg. It’s because:

If You Trade in Trust, Everything You Do or Say Is Relevant: At our live Diggnation show last weekend at SXSW in Austin, the wacky folks at URDB.Com convinced the crowd of 3,000-plus people to perpetrate a huge hoax — that Conan O’Brien was onstage and coming over to Revision3. Hundreds of partygoers tweeted out the “news,” and it quickly became the biggest Twitter hoax ever.

It was all fun and games, up to a point. Some pretty influential and trusted people tweeted and retweeted the hoax to their followers. Unfortunately, more than a few journalists saw tweets from people they had come to trust and were subsequently convinced that they had to be true. And once they discovered they’d been punk’d, they lashed out. In the end, more than one social media “expert” damaged their credibility by engaging in a little bit of pranksterism.

In Yelp’s case, that delicate tissue of trust has already been perforated — perhaps fatally. For even those of us that have willfully ignored the allegations against the site are ready to go elsewhere.

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.

The recent Comedy Central-Hulu announcement made me recall my New Year’s resolution, one that I wanted to share publicly, and encourage you to embrace as well. It is simple in its concept, but epic in scope.  It involves eliminating something from your routine, something unhealthy –- not for your body, however, but for your wallet, and the world at large. In short, I’m asking you to join me in giving up Walled Gardens.

What does that mean?  Well basically it means to eschew controlled environments, whatever the cost , and to embrace open platforms with all your heart. In practice, here’s what you’ll have to give up:

iPhone and iPad: This first stipulation is a doozy.  Resolve to give up your iPhone, and walk past the iPad display without ponying up.  Why do this?  Well despite Apple’s claims of embracing everyone, the iPhone and iPad are huge walled gardens.  You can’t just load any app -– no, you’re forced to load just those programs that some soulless corporate drone on Infinity Loop deems “appropriate.”

Yes, that means T&A from Sports Illustrated, but not from many other similarly legitimate sources.  Want your iPhone to quack like a duck?  Sorry.  Google Voice, Groovy Sharks — nope, can’t use ‘em, says Apple — and the list just goes on and on.

And the iPad looks to be even worse. Heck you can’t even watch Flash on the darned thing, which tends to obviate much of the most interesting content on the web.  Luckily, there are many other awesome alternatives, including the Motorola Backflip, Nexus One, and other great Android phones.  And expect everyone else’s pad — from the sexy U1 Hybrid from Lenovo to Dell’s new super-small slate — to deliver more functionality.

These pads will deliver an open, anything-goes platform, for less money, probably.  I know it’ll be hard, but this year, vow to embrace an open marketplace of apps, video, web sites and books, rather than a locked down, overpriced, shiny gewgaw.

Kindle: Speaking of books, are you thinking of a Kindle?  That’s also a walled garden. Want to buy a book?  You have to go through Amazon. Sure you can load your own stuff onto the Kindle, but only via a few formats, and you even have to pay for that privilege.  Many other types of e-books simply don’t convert well at all.  The Kindle lacks good support for tables and monospaced fonts, has lousy PDF rendering, and worst of all, doesn’t even support the open ePub format.

The lack of ePub means you can’t borrow e-books from your library and read them on the Kindle. It’s as if Jeff Bezos is declaring war on the local library! But even worse, the Kindle is the roach motel of e-books:  Books go in, but they never come out.

Luckily there are other options. f you must have an e-reader today, opt for Sony’s latest touch version.  But if you can wait, do. There were zillions of e-readers on display at CES, and by this fall we should see an explosion of low-cost E Ink-based alternatives that support open standards and a wide variety of off-the-shelf books.

Hulu: And that leads me to Hulu.  Although web-based, Hulu is another walled garden, locking you into its platform.  Want to see it on Boxee?  Sorry.  Oh, well, maybe you can now, but probably not tomorrow.  What about other over the top services?  Not likely.  Hulu is designed for PC viewing only, even though any 15-year-old can easily figure out how to connect a PC to the big screen.  And now Hulu’s been out-gardened by Comedy Central, which is pulling its programs, among them “The Daily Show” and “The Colbert Report,” viewable only at  ComedyCentral.com –- another walled garden!

NBC’s Olympics coverage was yet another ridiculous approach to walling off viewership and screwing consumers.  And don’t even get me started on TV Everywhere, the misguided attempt to transmogrify the ultimate walled garden –- cable TV –- into a narrowly protected online universe.  It just isn’t going to work, guys.  Instead, embrace open video platforms like YouTube –- which you can embed and watch everywhere — along with Boxee, Roku, Popcorn Hour, Play On and other wide open services and providers (including Revision3, where I work).

Why?  Because these walled gardens are not only expensive, they lock you in to a never-ending merry-go-round of price hikes, poor customer service and reduced choice.  In the end they will turn the Internet into a monolithic series of silos, accessible only to those with the money, influence or power.  The promise of a democratic medium that lets you reach the entire world with your voice, your vision and your creativity will be gone forever, locked behind corporate palaces that will turn us all into nameless, faceless drones.

Well, maybe it won’t be that bad.  But still, I’m staying away from the iPhone, the iPad, the Kindle and Hulu this year.  And you should, too.

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.

On the text web, arbitrage has become the word of the day as whole ecosystems have sprung up to optimize and monetize the link economy.  But when it comes to online video, the arbitrage model is failing badly.

Whether it’s buying a keyword for a buck, and making $1.02 on each visit, or buying a shopping link for a quarter and making a product sale for a few pennies more of profit, whole online ecosystems have sprung up to optimize and monetize pay-per-click and the search engine- and display-based arbitrage models. Video, though, has yet to find a profitable niche based on arbitrage.

It’s not for lack of trying, though.  The online video landscape is littered with companies that tried to buy their way to big audiences, yet failed.

Take Veoh, for example.  I was assured by someone on the inside that the company routinely spent big bucks to drive viewers to its videos, yet couldn’t recoup the investment with advertising or product placement.  I’ve had the opportunity to look at the books of a few other failing companies in the space, and seen a similar story. Big quarterly marketing spends lead to big show views – right up until the money runs out.  Turn that spigot off, and the traffic disappears too.

The problem with using pay-per-click or display to drive viewership is that the economics are still out of whack. Take YouTube, for example.  YouTube has a form of pay-per click advertising that you can use to drive viewers to your videos.  Unfortunately, you have to spend at least a penny per click, which works out to ten dollars for every thousand views.  In practice, I’ve found that you need to spend more like five cents to get any meaningful action – and that means you’ll need to make at least a $50 CPM on any overlays or pre-rolls you might run.  That’s not likely to happen very often, given the CPM (cost per thousand impressions) pricing of most video advertising.

In fact, it looks like bottom-of-the-barrel CPC (cost-per-click) marketers have already flooded the platform anyway, driving the price of viewership campaigns through the roof.  For example, head over to YouTube and search on Olympic Skier “Julia Mancuso”. I just initiated a paid campaign there to try and drive views to our new Digg Dialogg interview with the sexy star.  I’m bidding .05 – or a $50 CPM, which is more than what I’ll bring in with any pre-rolls or overlays that I’m likely to serve.

Yet I’m consistently outbid for ad placement by Visa, a video featuring “The Hottest Girls of the Winter Games 2010”, and, inexplicably, a video helping you repair drywall as well as one hawking a gadget that’s guaranteed to cure bad breath.

We’ve tried a wide range of other arbitrage-style viewership promotions, from Facebook widgets to SEM, but none deliver profit.  And we’ve taken a pass on many, many more, priced at well over $100 per thousand views.

However, there’s a new, sneaky arbitrage model making the rounds, one that seems to deliver real results.  It involves buying up a wide range of super-cheap  300 x h250 display ads – typically for well under a dollar CPM – and then auto-playing pre-rolls and other video into that ad unit.  This actually seems to work, in many cases, because the auto-play video can be hard for users to find, and shut off, before enough of the pre-roll is served to constitute a view.

It’s annoying, but lucrative.  Video ad networks routinely deliver remnant pre-rolls for $5 CPMs, and even after ad serving costs, revshare and the inventory payout to the serving web site, you can generate enough real money to eke out a profit.

But in the end it’s duplicitous and ineffective.  Web sites serving these auto-play video ads are delivering a terrible experience to their site visitors.  Advertisers paying for these impressions are being misled as well, as most of them are unasked for, and angrily terminated by the waylaid web surfer.  And now the IAB (Interactive Advertising Bureau) is getting involved to try to curtail – or at least pull the curtain back – on this shady practice.  Back in December the industry trade group issued an updated set of guidelines requiring web sites to disclose details on auto-play video when it happens.  And this is just the “first part of a broader auto-play initiative by the IAB’s Digital Video Committee”.

Maybe it’s wishful thinking, but I believe the IAB will move to outlaw, or seriously curtail autoplay video ads when they are viewed out of context.  Because even though I’m all for figuring out a successful video arbitrage scheme, it’s simply not right when built on underhanded, sneaky and deceitful tactics.

What do you think?  Have you figured out an honest video arbitrage system that works?  Do you believe in auto-play at all times?  Post your thoughts in the comments.

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.

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When you’re drowning, you grasp at straws to try to stay afloat.  Sometimes you actually convince yourself that you’re standing on dry land.  That seems to be the collective response of the traditional TV industry to a recent survey from Parks Associates.

The market research firm company found that only 8 percent of U.S. households are thinking of abandoning their paid multichannel services.  Why is that good news?  Well it’s down from the previous year’s survey, which showed that 11 percent were considering “cutting the cord.”  Even better, according to Parks, only a very small amount, perhaps a half percent -– which translates into 350,000 homes — have actually followed through on their intent. You could practically hear the sigh of relief — cable is saved!

I have three problems with this giddy response: math, measurement and morbidity. Let’s get the math out of the way first. Parks surveyed 2,100 of what it calls “broadband households” -– those with access to high-speed networking at home -– to come up with its results. Modern statistical theory holds that a random group of that size can comfortably be extrapolated across an entire population, albeit with one caveat: Depending on the population surveyed, there’s what is known as a “confidence interval,” or what you and I would call a “fudge factor.”

Such padding extends up and down on either side of the actual number. In this case, the confidence interval is 2 percent, which translates into a 4 percent swing centered around the 8 percent number reported in the results. In practice, it means that based on the 2,100 people that the folks at Parks talked to, they are pretty darn sure that the actual population of people considering switching is no smaller than 6 percent of U.S. and Canadian homes with broadband, and no larger than 10 percent.

In last year’s survey, Parks talked to a few more people, but with the same confidence interval. Which means Parks is pretty darn sure that the actual population of people looking to cut the cord last year was between 9 and 13 percent.

Some of you have figured out where I’m going by now.  If this year, the number lies between 6 percent and 10 percent, and last year it lay between 9 percent and 13 percent, isn’t is possible that, perhaps, there’s been no actual change from year to year?  It could, in fact, have been 8 percent, and 8 percent year-over-year.  Or maybe it was 8 percent last year, and it’s up to 9 percent this year.  Or perhaps 13 percent were considering changing last year, and only 6 percent are mulling it over now.

Any of the preceding interpretations would be correct, based upon the statistical validity of the survey.  However, John Barrett, director of research at Parks Associates, insisted to me that there is a “significant difference, but not a substantive difference” between the two surveys.  Or, in layman’s terms, it’s a lot closer to a single household feeling better about cable than a million. Barrett added that in his opinion “the number hasn’t changed that much itself.”

Which brings me to measurement, as in measured audience. The question in this survey was only posed to broadband households that also subscribe to cable or satellite TV.  It ignored everyone who didn’t subscribe –- which was between 10 and 20 percent of the entire sample size.  And media habits, like other addictions, are hard to change. If you’ve got cable now, you’ll probably still have cable 10 years from now.

This is especially relevant when it comes to demographic currently getting out of school and setting up their first households –- the 18- to 24-year-olds, who haven’t had a chance to get addicted to multichannel TV services. And since if they don’t subscribe already they probably never will, they’ll likely never even show up on a “cutting the cord” survey. Indeed, Method VP John Gilles calls this cohort “Cable’s Lost Generation.” “For at least the past five years, the young male demographic has virtually dropped off the map of television,” he notes.

The issue isn’t existing customers dropping off; it’s existing customers dying off that should be of concern.  That’s because new customers just aren’t taking their place.

Which leads me to morbidity. This is exactly what happened to magazines over the last 20 years. Whether it’s Readers Digest, TV Guide or PC Magazine, each of these storied titles used to have viewers aged 16 to 60. Then it was 26 to 60.  And then 36 to 60.  In other words, the audience aged to the point where it just wasn’t economical to keep putting the product out.  I should know, because I was there during the salad days of PC Publishing, and darn near turned the lights off at PC Magazine in 2007.

And that’s the cliff that the multichannel industry is staring at today. Its best and brightest can wrap themselves in giddy surveys that show only (only!) 8 percent of their audience is considering leaving.  But the broader problem is that their customers are dying.  And no new ones are there to take their place.

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.