Amazon's New Cloud Music Locker & Streaming Service -- Will the Music Labels Attack?

Amazon's new Cloud music storage and streaming service -- Cloud Drive and Cloud Player (described here by Amazon's CTO) -- beat both Google and Apple to the punch. But, will the music labels try to punch back and knock down Cloud Drive/Player in the first round?

Much has already been written about the fundamental legal/licensing questions surrounding Amazon's move -- namely, is Amazon required to secure music label licenses (at substantial cost) in order (1) to enable consumers who have purchased their music to store that purchased music in the Cloud, and (2) to enable them to stream that purchased music from the Cloud?. Here is a nice summary piece by MG Siegler of TechCrunch (click here) -- a second helpful overview by Greg Sandoval of CNET (click here) -- and a third thorough overview by 3. I won't repeat that background.

This record label licensing issue is particularly interesting to me, because I negotiated all major and indie label streaming licensing agreements during my time as President of Musicmatch. In fact, we at Musicmatch led the way in securing those industry-first licenses -- so, in effect, every single streaming negotiation was entirely new at the time. Those negotiations were frequently painful. Those negotiations also were much closer in time to the major label lawsuits against Michael Robertson's MP3.com -- the original music storage locker service that was crippled by litigation (MP3.com was hit by a $53 million judgment in the landmark digital media case UMG v. MP3.com, and eventually purchased by Vivendi (owner of UMG) which ultimately did nothing with that service).

But, MP3.com did something very different logistically -- MP3.com itself created a locker of music that it itself ripped from purchased CDs -- and then it gave consumers the ability to access those same bits from anywhere in the world if those consumers already owned that music (whether legitimately or not). Amazon's Cloud Drive/Player service does things differently -- Amazon does not create a locker of music bits on its own. Rather, it enables consumers who purchase their music via Amazon's music service to store that music (those bits) in Cloud Drive and to stream that purchased music. But, it also does enable consumers to upload and stream much of their music from their own music collections no matter how that consumer "has" that music (the service does not permit uploading all of the user's music collection -- some that is DRM protected cannot be uploaded).

And, that may be the central hook that that labels use if they choose to litigate against Amazon; and they are already rattling their sabres in that regard. The major labels already have a pending lawsuit against Michael Robertson again -- this time related to Robertson's second storage and streaming service MP3tunes.com, which enables consumers to upload their MP3 files to, and stream them from, the Cloud (again, no matter how those consumers "have" that music). Although Amazon's service is different from MP3tunes.com, it is not altogether different.

So, will the labels go after Amazon in a desperate attempt to cling on to the last remnants of their past business models and practices? Is it really worth the fight against Amazon -- a behemoth fully prepared to fight?

One thing is for certain -- both Apple and Google will be watching very closely, because they too will soon be launching their own Cloud-based storage and streaming services.

Netflix -- Will It KO HBO As It Seeks to Emulate It?

Just the other day I wrote about Netflix -- and the incredible challenges it faces with the major studios who are wary of it -- and want to hinder its incredible growth and current online dominance as THE movie/television streaming service of choice. The studios' weapon? Asking Netflix to open its wallet wide (very wide) and say "Ahhh" if Netflix wants to get rights to any of their premium content (or simply not even consider licensing their content to Netflix -- i.e., freezing them out). My conclusion? It was time to sell, sell, sell Netflix stock.

Well, at the risk of eating crow (this would not be the first time!), not so fast! Remember that somewhat odd Netflix development last week when the company announced its first major original series by the creative team David Fincher (one of the most respected Hollywood directors) and Kevin Spacey (one of the most respected Hollywood actors). If you missed it - click on this link. What does that development mean?

Yesterday, someone helped me see the obvious light! And, it was there before me all the time. Netflix's strategy to combat the studios' combativeness over licensing their content is summed up in the old adage "If you can't beat 'em, join 'em!" Netflix's strategy is deja vu all over again -- doing to the studios what HBO previously did to them. Netflix will drive future subscriptions by enticing consumers with premium content they can only get from them! Brilliant -- and an obvious and smart strategy -- and one that Netflix, I believe, has the potential to pull off.

And -- and this is the critical part -- Netflix can out-HBO in the process because, unlike HBO, Netflix is not beholden to the cable companies who have been responsible for HBO's incredible growth over the years. Think about it. Netflix will have the unfettered right and ability to exploit its original programming across the Internet. But, HBO doesn't. How would the cable companies react if HBO suddenly tries to distribute its own original programming across the Web? I'll tell you this -- they wouldn't be happy. HBO's Internet ambitions would be a direct shot across the bow to the cable companies and satellite operators and they, understandably, would retaliate by withholding overall marketing and visibility (and ultimately subscription retention and growth).

So, while HBO is between a rock and a hard place with respect to the brave new world of Internet distribution of its content, Netflix can savor the opportunity. Original programming may be Netflix's ultimate secret weapon. Netflix, ultimately, may supplant HBO in the brave new world as being THE premium subscription service of choice.

Now, ultimately, a lot has to happen for this to become reality. But, Netflix's first move with David Fincher and Kevin Spacey is a strong start. It is also a strong signal to the world that its original programming ambitions are audacious and real ... very real.

Last week, I was all "sell, sell, sell." But, upon further reflection, I am now not so sure ...

Why David Wins Against Goliath Every Time (In Our Hearts & Minds)

I run Sorenson Media -- a great company that stands apart (we believe) in a crowded space that includes some very big companies. We view ourselves as a David v. the establishment Goliaths. And, I have always liked being the David ... so much more rewarding (to read a great book about this, click on this link).

TechCrunch today writes a post about why it is so difficult for people to root for Davids. Virtually everyone likes the David. And, here's why -- click here. It is an interesting post to read with your Saturday morning coffee.

Netflix -- Now Reality Sets In ... and It Ain't Pretty (as Hollywood Hazes Netflix in Hell Week)

Netflix -- every investor's darling. What's not to love? High quality on demand video streaming -- all for one low "all you can eat" monthly price. Millions upon millions of subscribers continue to flock (I am one of them), and the service looks and works great (well, at least most of the time, with the exception of the other night when the entire service went down for several hours).

But, technology by itself -- no matter how good -- does not a business make. And, in the inimitable words of everyone who works in Hollywood, "content is still king." And, that means that those who own the content are the king-makers. And, those Hollywood owners of content are not willing to anoint Netflix with the crown that most investors believe awaits it.

Instead, this was Netflix's week to be hazed by Hollywood. This was Hell Week.

First, Netflix experienced its first service disruption in years -- the service simply didn't work for anyone for hours. That alone ain't good. But, that is a mere flesh wound as compared with the 1-2 sucker punch that was inflicted by Showtime and Starz this week. Not just on shoe dropped -- both shoes dropped -- and hard.

Earlier this week, Showtime announced that it will no longer make certain ongoing series available to Netflix -- in other words, it is reversing itself and taking back its original content. Why? Because Showtime wants Showtime customers who like those shows to come watch them on Showtime rather than Netflix because basic economics are significantly better. As if that weren't enough, now premium movie channel Starz -- from whom Netflix gets the rights to its most mainstream current movies -- has just announced that it will slow down the availability of those movies. Starz will give itself the first opportunity to make those movies available to the public -- and monetize them via its own service -- and now make them available to Netflix only after 90 or more days when consumers are less rabid about seeing those movies.

This is a powerful -- and disturbing -- 1-2 punch to Netflix. It also may presage a full on Hollywood body-blow to the company.

Much has been written about how Hollywood doesn't want history to repeat itself. Specifically, the media giants ceded the online music business opportunity, in effect, to Apple years ago because they were woo-d by the master "wooer" Steve Jobs. As a result of his charms, they understandably believe that they gave away too much -- waaaaaaaaaaay too much -- and built Apple's business (to the tune of tens of billions of dollars) on their backs. Well, they don't want THAT to happen again in the inevitable mainstreaming of Internet and mobile movie and television distribution (including Internet TV). And, right now, Netflix is the closest thing to the Hollywood bogeyman. A fast growing customer base of millions -- who are being taught the lesson that they can pay $7.99 per month to view unlimited premium video content.

Think about that. Unlimited viewing for $7.99! Of course we love that as consumers, especially when Hollywood built its incredibly lucrative video business on $19-$29 individual DVD sales and $5 one-time video rentals. Netflix's "all you can eat" $7.99/month business model is a very scary monster indeed as compared to the world that was.

So, if the studios can't get that old world back -- which they know they can't -- at least they can keep the new world opportunity away from others. And the #1 "Most Wanted" bad boy in this new world order is Netflix (okay, maybe #2 -- because the pirates always will be #1). So, no more Mr. Nice-Guy. The claws are out. The studios are fighting back.

And, this is just the beginning. This is just the first of many painful weeks to come to Netflix. (Trust me, I wish this weren't the case, because I AM a Netflix user and I WANT a compelling pool of content).

Right now, from everything I read (click on this link to read a particularly compelling financial analysis of Netflix), Netflix's stock price reflects a future reality in which the company must do everything right to meet those lofty expectations. The problem and new reality is this -- THE single most important thing that Netflix must do right in order to grow its subscriber base is to offer a compelling slate of content. But, that "thing" is completely out of its control and in the hands of others. And those "others" are the studios. And, let's face it, playing Mr. or Ms. Nice is not exactly in Hollywood's DNA.

As much as I still want to watch watch watch -- and even though investors continued to buy buy buy during this Hell Week -- I, for one, would sell sell sell ...

Secure Personal Video "Store & Share" -- Right Opportunity, Right Time for CE Companies, Operators, Service Providers

Consumer HD video capture is exploding, fueled by the growing ubiquity of mobile HD video capture devices -- first, the Flip cam that revolutionized easy-to-use high quality video; and, now iPhones and other smart phones that incorporate HD video capture as "just another feature" (i.e., all-in-one). I have written about this previously -- click here for my earlier related post.

Consumers no longer need to plan to shoot what I call "personal video" (of their families, friends) and dust off their old non-pocket sized camcorder; now, all of us have our "camcorders" with us at all times in a mobile form factor (like the iPhone). That means that planning is no longer needed -- we can shoot HD video anytime, anywhere -- either at a planned event (like my son Luca's Little League games) or simply "on the fly", serendipitously. THAT's the power of our new HD mobile video capture reality. This mobile "anytime, anywhere" video capture reality truly is transformative and revolutionary -- and that is why the sheer number of consumer personal videos is exploding.

That's the promise.

But, here's the reality. Yes, we can easily capture HD video anytime, anywhere. But, then what do we do those personal videos? How do we easily and immediately get them "off" our smart phones and into the Cloud without connecting them to our Macs/PCs? How can we privately and securely archive and manage our growing and confusing inventory of personal videos? And, how do we privately and securely share those personal videos with our friends and families? This last question is a critical one -- remember, these are our personal video memories -- we have no desire to share our kid's hoops video with the world on YouTube!

The simple answer is that right now -- perhaps shockingly -- there is no easy, seamless, end-to-end way to do any of that -- especially if the goal is to preserve that personal video's HD quality. Instead, there are "bits and pieces" approaches. As an example, the iPhone 4 (which enables HD video capture) offers the option to share a video via email or MMS. Sounds promising, right? Well, not so much. Both of those options significantly degrade and "dumb down" that video, thereby making it a distant cousin to its HD origins. MMS, for example, still only supports 3GPP video (176 x 144 at 10 frames/second). That means that the iPhone's HD promise is essentially thrown out the window. The iPhone 4 also gives no full seamless private and secure management, archiving and sharing solution a la still photo and video sharing leader Shutterfly.

Now, imagine instead if consumers were given -- out of the box -- a seamlessly integrated easy-to-use and secure Cloud-based private video archiving, management and sharing service (that includes direct wireless upload to the Cloud)? This is what I call the secure high quality personal video "Store & Share" opportunity. Take your average smart phone. Handset manufacturers and carriers -- yes, you are offering HD video capture and you see how critical it is fasts becoming to consumers (just like still photos before it). Why not offer your customers this kind of service out of the box yourselves? Why not own and control that customer experience to increase your NPS (net promoter scores)? Why not own and cement that customer relationship? (Remember, once consumers begin to invest in a service by building their video library, switching costs become significant and lock-in is achieved -- with all of its concomitant benefits). Why not monetize that opportunity yourself via possible new revenue streams?

In other words, why not do this now yourselves before others -- like Google or Apple -- once again co-opt these opportunities from you (as they already have significantly done with VoIP and video calling -- read TechCrunch's recent excellent and insightful post on this subject by clicking on this link). History repeats itself for the unwary -- and, believe me, those and other 800 pound gorillas are all over this consumer personal video archiving, management and sharing opportunity (and recognize how massive it will be).

In other words, why not save face (i.e., empower your customers to easily archive, manage and securely share their personal videos via your own branded personal video "Store & Share" service)? Why not come to the rescue to consumers and solve this fast-growing pain point right now? Don't let Steve and Sergei be the white knights -- service providers, operators, and CE companies -- this is your chance!

"How do we do that?", you ask?

Here's an idea -- we at Sorenson Media can help. We already partner with Shutterfly to power their innovative industry-leading high quality and easy-to-use video service. We already have all the pieces to provide a similar white-labeled (i.e., your brand) service that comes as standard equipment (i.e., is seamlessly married) with your smart phones/hardware. And, this same logic applies to any and all consumer electronic devices that capture video -- all should absolutely offer a seamless private and secure video archiving, management and sharing service out of the box. The benefits are myriad as indicated above -- higher NPS/customer satisfaction and word-of-mouth; more use of -- and dependence on -- your hardware (which means more purchases and word-of-mouth); more customer lock-in (which means more ongoing customer engagement on all fronts, including marketing); and more revenues and monetization opportunities (including the ability to charge for a super-charged feature-enhanced subscription service, as well as impulse a la carte purchases).

And, remember this -- and this is absolutely key -- personal video "Store & Share" can be marketed more effectively than perhaps any other feature because it deals with fundamental human emotions -- i.e., your family, your friends -- and preserving and sharing those memories. Apple, among others, already focuses on the power of personal video to sell more product. Look at their iPhone 4 ads -- live video FaceTime is one of the central marketing messages. And, surprise surprise -- babies with moms are featured in those ads! That's the unique emotional power of personal video -- much more powerful in terms of marketing than premium movie and TV content.

So, we're here to help. That's what we do.

Just like I predicted years ago that live mobile video capture would be a massive opportunity, this secure personal video "Store and Share" opportunity will be big, big, big ... Nothing, I mean NOTHING, is as meaningful as archiving and sharing the memories and moments in time of your friends and loved ones.

Join Us at NAB -- Less Than 3 Weeks Away

NAB is less than three weeks away -- the massive National Association of Broadcasters convention in Las Vegas. For any company involved in the video eco-system -- both on the content and enabling/distribution side -- this is a "must attend" show.

And, our company, Sorenson Media, will be there in full force. We will have a physical presence on the convention floor, we will host events for our partners and customers, and we will be speaking on the emerging importance of -- and freedom generated by -- the Cloud (VP Video Solutions David Dudas will represent us on that panel).

If you are interested in scheduling a meeting -- or simply knowing more about us -- please send me a note at bizdev@sorensonmedia.com

Google Outshines Apple On the Jobs Front

Google and Apple -- THE two dominant tech titans (does anyone ever talk about Microsoft anymore?) -- fight over everything. They are embroiled in an epic battle waged on multiple fronts, including video distribution across the web and in the mobile world. One critical front is the battle for top talent. And, here, interestingly -- and perhaps a bit unexpectedly -- Google is winning the war for now.

According to a recent report quoted by The Wall Street Journal, an amazing 1 in 4 "young professionals" (defined as college grads with 1-8 years of work experience) wants to work for Google. Meanwhile, only about half that number -- roughly 13% -- consider Apple to be a top choice of employers. Disney comes in third with about 9 %. And, interestingly, the U.S. State Department comes in fourth -- ahead of Amazon and Microsoft, among others. To be clear, the survey doesn't come without its flaws -- only 150 companies were identified (with Facebook being one notable omission). Nevertheless, it is an interesting data point of overall mindshare.

North County San Diego's Dirty Little Secret -- Held Hostage By AT&T

First, let me preface this post with a disclaimer -- I understand that the frustrations expressed in this post are insignificant in the scheme of life; and in the scheme of very real basic life issues that many face (and are now facing)). So, please bear with me as I write this -- because I understand this -- yet want to express some surprising realities relating to basic communications in this day and age.

My family and I live in a nice little community in North County San Diego (the area north of La Jolla). Peaceful, bucolic ... and completely at the mercy of AT&T for broadband. In this area, there are no cable companies; there is no competition period. The only way to get home broadband and wired telephone service is AT&T. There are no other options. Period. (For TV service, a satellite provider is the only option.)

To be clear, this post is not about AT&T's mobile service -- which is spotty at best around these parts. But, spotty is amazing compared with what our community is facing from AT&T in terms of basic Internet connectivity and wired phone service.

Which is -- namely -- NO SERVICE on an ongoing basis. Literally no service. Literally phone lines being dead. Literally no Internet service/DSL signal for days (and even when "working," our community's Internet service cannot be called "broadband" in any sense of the word -- it is slow slow slow DSL; but, that's all we got).

Let's take wired phone service first because that impacts basic safety. We have had recent periods of more than two weeks (yes, sad but true) where our phone lines have simply been out -- dead -- no dial tone whatsoever. What does that mean? No 911 among other things. And, what has been AT&T's response and constant refrain been to these disturbing realities? "We will get a service technician out there as soon as we can." A few months back, they conceded that it would take 2 weeks to even get anyone out to look at the phone line because they had experienced significant outages throughout the state. Think about that? No 911 and other basic phone services for a period of over two weeks! Now, I understand outages -- but 2 weeks? And continuing rolling outages since that period of time? We have had "technicians" out time and time again, but this has been cold comfort -- quick fixes that don't fix anything in the long-term. And, to add insult to injury (I am trying not to be overly dramatic here), AT&T continues to bill us throughout this period for having the privilege of being a customer with NO service whatsoever.

Now let's take AT&T's DSL service in our community. As I indicate above, it works at a snail's pace at best -- and there are no options to upgrade to faster Internet (trust me, I have tried and would be willing to pay!). This means that essentially we have no options in this community to use Netflix or other OTT media services. But, more than that, it means constant frustration and a frequent inability to be productive for basic Internet services -- and that's when it "works"!

Which it frequently doesn't. I am enduring yet another extended period of NO internet access whatsoever right now -- and have been for several days. Forget productivity; forget any kind of connectivity. There simply is no signal coming to our modem. Of course I immediately called AT&T customer support (again) upon the latest incident. But, do you know what they tell me? They can't write a "trouble ticket" to fix our DSL until a separate AT&T department first fixes the fixed phone line (which has been dead)! In other words, AT&T won't even consider the DSL service to be down -- and write a trouble ticket -- until the fixed phone line group resolves its own separate trouble ticket. Talk about a morass -- it doesn't get more customer UN-friendly than that. And, once again, the coup de gras -- AT&T continues to bill me at my full DSL rates (and expects me to pay) even though I have no service.

So, what's a person to do under these circumstances (hey, I run a technology company and can't really stomach no Internet connectivity at home)? Run ... not walk ... to the Verizon store, that's what. Run to Verizon for their safety net -- i.e., a wireless broadband card (which is what I am using now to write this post). And, finally, I get Internet service that finally works -- just works -- which is all I and others want.

Speaking of others. My family and I thought we were alone with our frustrations and experiences with AT&T DSL and wired phone service. But, yesterday, I learned that we are not. Others are facing the precise same issues -- periods of absolutely dead phone service; and dead Internet connectivity. There is no rhyme or reason to these outages -- they just happen, over and over again. And, no one from AT&T has been able to fix them (that is, when a technician finally does respond and attempt to make those fixes). So, basic communications -- or the lack thereof -- is one of North County San Diego's dirty little secrets. Amazingly, while I have heard much frustration, I have seen little real attention focused on the issue. People, I believe, are simply too tired and have thrown up their hands (and have likely purchased their own Verizon wireless broadband cards).

This post is a small attempt to change that -- and bring real visibility to the issue.

Thanks for putting up with my rant ...

Sorenson 360 -- Our OVP -- Now Significantly Enhanced!

Yet another major product announcement for us at Sorenson Media -- today we unleash our significant enhanced version of Sorenson 360, our online video platform. You can read all the details by clicking this link. And, here is ReelSEO's take on our launch -- click here.

To be clear, we are video solutions company, as I recently wrote (click here for that post). We don't consider ourselves to be an online video platform (OVP) company alone. Rather, Sorenson 360 is another component of our overall video solutions -- a critical one, but not just one of many. Yes, Sorenson 360 is an excellent stand-alone online video platform for those customers who need it and nothing more. But, Sorenson 360 also is a fundamental part of significant enterprise deployments -- one of which is Shutterfly (to power their consumer-focused video "store and share" service).

It's been a very busy 2011 for us already -- first, we launched Squeeze 7 (our award-winning desktop encoding application); then, we launched Squeeze Live (our live event transcoding solution); then, we launched Squeeze Server On Premise and our overall Hybrid transcoding services; and now we launch our significantly enhanced version of Sorenson 360.

Expect several other significant announcements coming soon ...

The Passion That Is Paul Yorke

I have previously written about the power of passion being a central ingredient of entrepreneurial success -- if not THE central reason.

Well, meet Paul Yorke of Sorenson Media -- he's got passion in spades and he embodies that spirit. Paul is a talented developer on our team in San Diego -- a guy with great proactive ideas (like his "weather ball" that visually shows us each moment how we are doing in terms of our overall online sales) -- a guy with endless dedication. He will do whatever it takes. And, he is a great guy. You couldn't ask for anything more on your team.

Here's the latest example of his passion -- Paul is the first person to have lined up at the Apple store in Carlsbad, California to be the first to get his mitts on the new iPad2. Click here to see what that's all about and a news interview of him (his passion being so deep that he is sporting a coveted Sorenson Media hoodie!). Paul is now a local -- and now very tired -- celebrity. Why wait in line for so long?

For anyone who is passionate about anything, why ask why?

And To Think They Didn't Believe in the Power of Video ...

As some of you know, prior to Sorenson Media, I ran video chat/communications company SightSpeed. We were acquired by Logitech in the fall of 2008 and the service is now Logitech "Vid." I am pleased that virtually the entire SightSpeed team is still with Logitech after nearly 2.5 years (that is a rare thing after an acquisition, and demonstrates it was a successful one).

Throughout my 3 years at SightSpeed, the chorus of non-believers in the power and promise of live video chat/communications drowned out the believers by a significant margin. "No, it will never take off -- people have been trying to make video chat a business since the 1964 World's Fair!" (you know, that kind of stuff).

Well, I never believed that obviously (after all, I chose to run the company). I always believed that live video -- if done right (high quality, easy to use) -- would transform communications. And, I believed this across the board -- including on the mobile side (i.e., mobile two-way video chat and one-way live "see what I'm seeing"). The non-believers particularly scoffed on the mobile side.

Well, scoff no more.

Skype just released an updated S-1 filing in support of its upcoming IPO and, in that document, notes that video calls account for a full 42% of all Skype-to-Skype calling minutes. Think about that -- 42%! (and Skype was late to the video chat game). And, of course, Skype recently acquired mobile video startup Qik for a cool $121 million cash -- that's some real belief that mobile live video matters. Other data points? Well, how many FaceTime commercials have you seen for the iPhone in the past year? Steve Jobs and friends certainly believe. And, live video is going everywhere fast -- and also transforming the enterprise (we continuously use Skype for videoconferencing between our two offices in San Diego and Salt Lake City).

Where are the naysayers now?

Sorenson Sparks Set-Top Boxes -- Licenses to Comtrend

I am pleased to announce that Sorenson Media has announced yet another significant partnership related to our Sorenson Spark video codec. Specifically, Comtrend Corporation, the major global provider of advanced network products, will integrate the Sorenson Spark decoder in its new line of set-top boxes for Swiss Telecom. Click here to read the full details from today's official press release.

Comtrend Corporation joins a veritable "who's who" of licensees of our Sorenson Spark video decoder. Overall distribution of our company's decoder continues to accelerate across set-top boxes, mobile phones, and a multitude of consumer electronics devices in order to optimize playback of well over 1 billion video files that have been encoded in Sorenson Spark (including on YouTube).

We welcome Comtrend to our fast growing list of world class partners.

The WebM v. H.264 Debate -- A Simple Explanation About Why It Matters

[This is a Guest Post by David Dudas, VP Video Solutions of Sorenson Media. This post originally appeared in Business Insider a couple weeks back. I am re-printing it here for those of you who missed it, because it is worthy of a read. David is a frequent speaker at industry events. Expect more thought pieces by David and the Sorenson Media team in the weeks ahead.]

Google dropped a bomb on the online video world a few weeks back with the declaration that they will drop H.264 support from their popular Chrome Web browser. This triggered an unsurprising firestorm of debate in the tech community about open vs. proprietary standards -- but for the less technically inclined, it elicited the question: what exactly does this mean?

In this post, we'll demystify the arcane complexities of HTML5, WebM, H.264, and how they're all tied together. The intended audience is the business person who knows that online video trends will affect his or her business, but doesn't understand (nor has any desire to understand) acronym-laden technical discussions of codecs and formats.

The battlefield for the emerging H.264 vs. WebM war is the rapidly growing assemblage of Internet-connected devices that can be used to view online video: tablets, smart phones, smart TVs, PCs, laptops, and so on. All of these devices use Web browsers such as Chrome, Firefox, Safari, and Internet Explorer as a conduit when accessing online video. The end-user of such devices may or may not actually see the Web browser while watching online video. But make no mistake about it: the Web browser is there, and it's an essential component of the software on the device.

When Web browsers were invented in the early 1990s they were only capable of displaying text. Although the ability to display images was added shortly thereafter, no one expected Web browsers to be used for the display of dynamic multimedia content such as digital video any time in the near future. So, simply put, the software developers who built the early Web browsers did not optimize the software to support video playback. To this day, Web browsers are still not optimized to support video playback.

Luckily, software developers had the foresight to enable 3rd parties to extend native functionality of Web browsers via a plugin architecture. This is a fancy way of saying that 3rd party developers can write custom software that "plugs in" to a Web browser, thereby enabling the Web browser to do something it could not otherwise do. An example of this is the Adobe Flash Plugin which provides all major Web browsers the ability to play video. The Flash Plugin is so ubiquitous that most people think the Web browser itself can display Flash video (if they think about it at all), but the fact is that Web browsers can only display video because of the presence of 3rd party plugins. This esoteric distinction may seem trivial, but in fact it is quite significant.

In 2004, the standards bodies who guide the evolution of Web browsers and the software developers who build them began working on a new standard that would add native video playback support to modern Web browsers. In other words: build Web browsers that can display video without the assistance of 3rd party plugins. Everyone has agreed this is a fantastic idea (save, perhaps, the 3rd party plugin developers), and this fantastic idea is generally referred to as "HTML5".

The problem with the proposed HTML5 standard is that it specifies the what (i.e. modern Web browsers should play video natively without the assistance of 3rd party plugins) but not the how (i.e. which specific video format should be supported by Web browsers). The how is an open question that is yet to be definitively answered.

You can understand the how question by way of analogy. In the very distant past, consumers who wanted to enjoy the latest home video technology were given the choice of two competing analog formats: VHS and Betamax. In either case, watching video on a tape deck hooked up to the family television was the what while the specific type of physical media was the how. Fast forward to the 21st century: the what is watching online video on a device with a HTML5-compliant Web browser and the how is the specific format of digital media: H.264 or WebM.

To help answer the how question, a number of selfless corporations have thrown their hats into the ring as advocates for their preferred format: H.264 (Apple and Microsoft) or WebM (Google and Firefox). There's a lot at stake: specifically, vested interest in the format that will ultimately be used by all those Internet connected tablets, smart phones, smart TVs, PCs, laptops, and so on.

You can think of the H.264 and WebM video formats as modern day VHS and Betamax tapes, and think of the Web browsers on iOS and Android devices as the respective tape decks (left as an exercise for the reader to determine which is which). Imagine coming home from the video store with your favorite new move on VHS tape and trying to cram it into a Betamax deck. Wouldn't exactly work, would it? Well, that's the same experience consumers will have in the near future as they try to watch H.264 video on Chrome-powered devices, or WebM video on Safari-powered devices. The format wars are alive and well my friends.

So what does this mean to you, the business person who depends on online video as a core part of your business? Quite frankly, it means you're on the hook to ensure cross-device compatibility for all your video content. Otherwise, your customers will have a poor user experience and, unfortunately, blame you rather than the industry titans that created the incompatibility in the first place. Here's a real world example: Hulu, arguably the best online aggregator of popular television shows such as Saturday Night Live, Family Guy, Grey's Anatomy, and The Office, provides an excellent user experience when viewed from a standard issue PC or laptop. However, try to watch Hulu on an iPad and it just doesn't work. The reason for this incompatibility, be it licensing restrictions, technology decisions, or anything else under the sun, is irrelevant to the end user. The end user, rightly so, wants it to Just Work, and if it doesn't work the end user will become disenchanted with the service and go elsewhere.

By way of contrast, consider Netflix. It's becoming increasingly difficult to find a device on which Netflix does NOT work. This should be embraced as the model for every business that provides online video to its customers: the video plays everywhere, every time, no gymnastics required.

Of course, this begs the question: how the heck do I do that?!?!? If you were technical enough to know how to solve such an imposing problem, you wouldn't be reading this article (see paragraph #2 above). The answer, quite simply, is to outsource your video encoding needs to a qualified solutions provider who understands how to make it Just Work.

To be clear: making it Just Work is not easy. The complexities of device compatibility go far beyond the H.264 vs. WebM debate: each device supports different frame sizes, data rates, codec profiles, adaptive streaming protocols, digital rights management frameworks, and so on. The encoding phase of content production - and, to a lesser extent, the delivery - is where all of these things are either done right or done wrong. Doing it wrong means your encoded content may not play back, or - if it does play back - it may look absolutely terrible. We're not sure which is worse. On the other hand, doing it right means your customers will be delighted rather than frustrated, captive rather than fleeting, which translates to more time and money spent with your business.

Recent technology advances have made high-volume, high-quality video encoding solutions extremely cost effective and efficient. Gone are they days of purchasing expensive, specialized equipment every quarter and maintaining dedicated IT and development staff to keep pace with the latest acronym laden tech jargon that arrives in your news reader every morning. Instead, on-demand cloud encoding solutions are available to significantly lower your CAPEX and OPEX while shielding your business from the ongoing format wars. This will free you up to focus on your core mission: growing your business. That's what you want to be doing anyway, right?

Tablet Tidal Wave -- Winners & Losers -- Hmm, Let Me Take a Guess

Yesterday, of course, Steve Jobs took the stage and introduced the new iPad 2. And, since the dawning of the tablet -- which essentially took place last year with the original iPad itself -- the hoped-for contenders have peppered the marketplace with tablets of different shapes and sizes. In fact, today's Wall Street Journal reports that 102 -- yes, 102! -- tablets already have been introduced or announced. And, the Journal cites sources that forecast 43.6 million unit tablet sales this year.

But, which ones will survive? Certainly Apple will continue to lead the way -- the Journal's data forecasts Apple to retain 78% tablet market share this year. That means that all but a handful of the remaining 101 tablets will be roadkill.

This whole cycle smells a lot like what happened with respect to the personal digital music player market nearly 10 years ago when Apple introduced the iPod and revolutionized the marketplace. Apple immediately created a mass market -- and scores of copycats flooded that marketplace. Yet, only a small handful survived. And, to this day, Apple's overall market share in that digital music eco-system (together with iTunes) remains about 70-80%.

Does this past foreshadow the future tablet marketplace? Well, certainly some significant things have changed. Apple's iOS is a closed system, of course, whereas most of the contenders have gone the open Android route. But, let's face it -- Apple is Apple. In the immortal words of Pink's current hit song, "they are too school for cool." Consumers simply want to be part of that Apple world -- and it takes an awful lot to pull them in a different direction. That means that Apple's market share likely won't change that much anytime soon ...