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A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
August 26th, 2005


By Brent Holliday
Greenstone Venture Partners

 

Being Digital - Ten Years Later

 

“So go do what you like,
Make sure you do it wise…

You can't go forcing something
If it's just not right” – Green Day, When I Come Around

In his well-read book in 1995, called Being Digital, Nicholas Negeroponte of MIT’s Media Lab predicted that the evolution of the Internet would dramatically transform the world of content (print, entertainment and work related.  Sometimes referred to back then and now as “Negeropompous”, he nevertheless helped the non-technical reader see the power of digitizing and delivering content back and forth to one another.  Like most pundits who condescendingly tell the world that their view is gospel, he got it mostly right AND he predicted it quite a few years before it became mainstream.

If you had bet on some of the themes of digital content in the late 90’s, you might have missed the meat of the market and likely died trying to make a business work.  VoIP was working in labs and demonstrations in the early 90’s, but it did not become mainstream until 2003 or so.  Digitized music was helped by certain formats like MP3, a standard developed in the mid-90’s, but it wasn’t until the peer-to-peer networks emerged in 2001 that the format took off.  Digital photos were an anomaly in 1997, when I bought my first camera that stored photos on a 3.5” floppy disc, but it wasn’t until five years later that digital cameras were outselling film cameras. 

Everyone gets caught up in the promise of dramatic change.  Those of us that make a living investing in early stage technology have bought into the hype sometimes and invested too early.  In March of 2000, we invested in a company in San Francisco called Eveo.  The premise at the time was that the evolution of digital media (images and video in this case) would mean that the world would be flooded with new consumer or user-generated content.  This flood of content needed to be organized, edited and presented to the world through the web so that the amateur videographer had a portal to display their work.  Imagine, as we did, the world of advertising being changed by user-generated content around a brand.  Imagine, again as we did, the utility of live or near-live journalistic content from people with digital cameras on all corners of the earth.

Well, uh, Eveo was a little early.  User-generated content did not explode in 2000/2001.  Luckily for us and our investors, Eveo re-focused and is a profitable multi-million dollar company using its skills in formatting and re-purposing content for the pharmaceutical industry, which needs to get training and marketing information to the thousands of professionals in its sales and marketing networks every day.

Being early to market is fraught with risk, but Eveo’s original premise would have had great promise today.  I’ll get back to the user-generated content idea and its explosion in a minute.

Many of you geeks like me have already had this “A-Ha” moment when it comes to music, but for those that haven’t yet, why do you need a CD player?  Portable?  IPod.  Home stereo, kitchen, bedroom? Airport Express, Squeezebox (the network connected devices that stream your music from your computer to your stereo through wi-fi). Car? Connect your iPod to your car stereo directly or through FM modulation.  Or get XM satellite radio and have digital music anywhere in North America. So, what are you doing burning CDs still?  If you can have 1,000 songs in your pocket or 300 channels of music in your car… what is the CD for?

Music has been a very interesting beach head in our (the consumer) understanding of Negerponte’s world.  We are now at the point where we are getting the full understanding of the utility of digital content, portable storage and interconnected networks.  And we did this with someone else’s copyrighted content, the artists of the music world.

What about our own stuff?

Your Dad has a basement somewhere full of carousel film slides, betamax tapes and vinyl records.  Tons of content that is completely analog and impossible to view unless his slide projector and turntable still work.  It will take a lot of work to get that content digital.  But stop for a second and look around your digital life.  We all have digital cameras.  We all have camcorders that record digitally, while some of us have those that record directly to digital media, not tape (You won’t buy a tape-based camcorder next time out).  We buy wireless phones that have digital cameras or digital music players in them.  We create tons of our own content.  We also get tons more from web sites with funny videos and pictures that we save to our devices.

Your basement today is your hard drive, fast filling up with un-organized content.  To share it, we all send this digital content around the Internet in its most bandwidth clogging and inefficient manner – attached to a text-based e-mail.  This means that you have gobs of content buried in a set of esoteric folders in your Windows XP that you will never find and wrapped up in a compressed monster file on your hard drive called outlook.pst.  Attaching digital content to e-mail (pictures, music, video) is like using a turntable… it’s so, like, 1997.

The explosion that is coming in 2005 and 2006 is how we share and use our own content.  Finally.  Because we now “get it” thanks to digital music.  We understand how it can be used in our own house and when we travel to other places.  We get how peer-to-peer makes attaching to an e-mail hilariously useless.  We understand on-line storage and how to keep our content up on the web 24/7.  Have you got the new Google Sidebar?  All of a sudden images on your hard drive are in a tiny slideshow on your desk in full view (um, not to worry guys, those photos from Cowboys in Calgary are not visible now that I moved the folder…).  It’s like finding the carousel projector in your Dad’s basement.  With instant messaging clients and dedicated sharing services, these photos I forgot about can be available, tagged appropriately and shared with a group of friends I can control (or deleted, ahem). Easily.  Add that to the VoIP function at Skype or Yahoo and you can talk and share in real time as opposed to “I’ll send you the images on e-mail later”.

Wireless images are improving dramatically as 3 Megapixel camera phones come to market and videophones are not far behind.  The knuckleheads at the wireless phone companies have not allowed the different networks to share images yet, but that is soon to end and the power of real time user content sharing will be unleashed.  Think of the London bombing photos last month for impactful user images.  Entrepreneurs are now dreaming up and implementing software and services to make good use of that content.

Then there is video.  Bandwidth clogging video.  Hollywood studios are bound and determined to not let us share their content the way we did with music.  Movies and TV shows are different than music because of the time and attention commitment involved.  Getting copyrighted material for free is an issue, but the portable storage and bandwidth in the networks is not yet at the point where it can support easy sharing of big video.  Small video, user generated clips, is absolutely ready.  From 5 second MPEG clips on your phone or digital still camera to edited chunks of creative content made by your camcorder, the sharing of video becomes as easy as the sharing of digital images.  How2Share in Victoria has a brilliant little app for this functionality.  Right now, you still burn DVDs of video material for distribution around your home (to the TV) or to your mother (by mail).  But the newer PVRs and wireless streaming appliances are ready for video so that soon, the burning of a DVD becomes as useless as the burning of an audio CD today.

From the business side, it is clear from the success of Internet content companies like Yahoo and Google that the ad-supported model is evolving and growing.  Clever ad-supported business models around user generated content communities are starting to emerge.  Eveo’s old idea of bringing advertisers brand-focused user content would be in vogue today.  Leave the distribution of copyrighted material to the big boys like Apple and look for ways to monetize the avalanche of user content now that we are all making, organizing, storing and sharing it efficiently.  It’s a digital world out there now.  I’m sure Negeropompous is taking some credit for predicting it, although the digital, flexible, wireless newspaper is still another decade away… and that is where he bet his money.  Oops.

What Do You Think? Talk Back To Brent Holliday

 



Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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