Devices, Content, ‘Free’ and Boxee

I recommend that you purchase the book ‘Free – the future of a radical price‘ to augment my post.  Plus it helps support my blog.

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Yesterday I met Avner Ronen, the CEO and Founder of Boxee.  We spoke for about 20 minutes before a lunch at the Paley Center for Media, where I am a member of the Media Council.

The Media Council is on first glance a rather conservative group, representing mostly large media companies and investment banks.  There are smatterings of smaller entrepreneurial companies in the membership, but largely it’s biggies like CBS, Nielsen, ABC, NYT and other organizations that can afford to (and need to) be members in these sorts of things.  But if you made the assumption that this group is interested in maintaining the status quo, you’d be wrong.  The appeal of the Media Council is best captured in this quote:

“In view of the past year’s seismic events, there has never been a greater need for such a diverse organization to collectively focus on staying ahead of the challenges and seizing the opportunities that lie before us.”
—Marc Graboff, Cochairman, NBC Entertainment and Universal Media Studios

So this is the group that invited in Avner to talk about Boxee, a threat at first glance, to the existing (and crumbling) order.  They are looking change in the face.

Boxee is a free service that runs on your computer (it is not a web-service, per se) that allows you to view and listen to media on your computer screen or connected to your TV for a ’10 foot experience’.  How is Boxee, something most people don’t know about (they have about 600k users of the alpha version according to Avner) a threat to CBS, Comcast and Hulu?  Well, it isn’t.  These companies are a threat to themselves (less so Hulu) because they are tethered to set top boxes and rabbit ears.  Boxee is a potential savior.

Boxee is essentially an interface that runs on your computer (whatever kind) and aggregates content that you choose to import, either through your own choices/preferences or those of your social net.  Like Facebook, there is a social graph.  You add friends and they share what they are watching.  You can choose to watch what they watch and you can rate it, like Hot or Not (thumbs up/down).  You can share what you are watching or listening to in Music, Internet, TV, RSS feeds, whatever.  If you are interested in learning more about Boxee, go here.  The deal with Boxee is that it is Free.  And that is the problem that the Cable and TV companies have with it.

With Boxee, it is possible for you to watch TV without owning a cable box and its attendant subscription costs.  Now, you don’t get a DVR on Boxee, and you can’t store content locally for time shifting, other than content that you have residing on your computer.   Never mind that.  Cloud-based media storage is around the corner and I am betting that by the time that the Boxee beta is complete, that will be solved.  OK, so now you see a threat to Comcast?  I don’t.  But I do see it as a threat to Nielsen.  But not to online Measurement companies, who clearly benefit from this move online.

The potential here for Boxee is in its ability for you to snack on many cable companies content on an ala carte basis.  Right now, you can’t get all the sports packages that you want, as an avid sports fan, on any one cable box.  With Boxee aggregating for you, that is a possibility.  And that means that Boxee could deliver revenue from non-set top box subscribers to cable/satellite companies where that would not have happened before.

I’ve just finished ‘Free – the future of a radical price‘ and having finished that book right before meeting Avner, I was really struck that his revenue-free startup, that provides a free service, has a real potential for driving tremendous revenues on the long-tail model to both Boxee (in the form of commissions for content sold through the platform, like sports of ppv) and the cable/sat/content companies (in the form of affiliate payments for channel subscriptions).

What makes Boxee so much different from many other ‘Free’ companies is that it is not advertising-supported.  When you review most free models on the internet, most of them are heavily subsidized by advertising and for that they provide a basic service.  If you want more than what the advertising model provides, then you move to the ‘Freemium’ model that requires an actual out-of-pocket payment.  Fred Wilson is credited with the ‘Freemium’ concept in Chris Anderson’s ‘Free’.  Here is a post on Fred’s blog about it.

After some hesitation, I’ve had an epiphany and gone to the side of ‘Free’ models.  However, ultimately there is a price and someone must pay for something somewhere.

As a Free (!) bonus, here is my latest Blog on MinOnline:  Death Race 2009:  Device Makers vs Content Providers.

Updated – Kindle DX – The vicarious review

Amazon.com had a big press conference a couple of days to herald the release of the big screen Kindle DX, the 9.7″ version of the Kindle 2.   I have not had a chance to hold, use or even look at anything but a picture and some specs on the Amazon site.

Immediately hordes of non-believers wielding torches and pitchforks set upon Jeff Bezos and the Amazon Crew, foretelling failure for the bigger Kindle.  They did this in between news snacking from their wirelessly equipped laptops.

Representing the middle ground is Dan Dubno, as written in the Huffington Post this morning.

TechCrunch weighed in on this today (5/10) making the case that piracy will come to the rescue of the Kindle, but that ultimately the device’s usability challenges will bring it down.

There are many who are far more skeptical of the Kindle DX and its potential.  But I think that they miss the point.  Amazon (read: Bezos) knows what it’s doing.  This is not a Segway.  Bezos was one of the biggest promoters of a ‘revolutionary transportation breakthrough’ that is now mostly used by Mall Cops and airport to chase donuts and teenagers.

The difference between the Kindle DX and the Segway is that the newspaper in its current paper form is in far more danger than our ability to perambulate.  The antiquated delivery mechanism of the newspaper, under seige from the always-on internet and the ongoing print advertising depression, is at real (and logical) risk of going the way of the dodo. The Segway was a solution to a non-existent problem.  Bezos has invested in both.  He will ultimately be as successful with the Kindle as Jobs has been with iTunes – and not just for books, but also for papers and periodicals.  The Kindle creates a market for the very high margin e-book downloads.  Again, see:  Apple iPod sales effect on iTunes. You can never sell another iPod but people will still buy music.

Bezos was single-minded and instrumental in getting people to buy things online, and his vision has come true.  I have no reason to doubt that he’ll be right about this.  It’s just going to take some time.

Steve Smith, in today’s MinOnline, opines that the latest Kindle DX, a version made for newspapers and textbooks as compared to books for the Kindle 2, is not enough of an improvement in technology terms to merit the marketing hype that Bezos put on to promote it.  Steve referred to it as an ‘iterative product’.

I disagree and will split hairs:  it’s an evolutionary product, and potentially opens up the market for many more innovations, especially in terms of monetization, but first the Kindle DX needs to do the following:

Measure its audience. When Kindle DX readers see and ad impression, it needs to register somewhere.  The audience info is valuable and will help keep advertisers in the news format.  You can’t monetize an anonymous audience.

Drive its audience to meta-content. Whether the ability to click through on ads, or hyper-link as in a blog, the navigation needs to open up and be effectively two-way.

Faciliate blogging and commenting.  If I can forward an article to a friend, or notate it for a blog, or comment on it, then this is a device that I can live with – it would be my commuting tool.

Access a web browser and email. This is a cloud-based netbook if it can do this.  I don’t do spreadsheets on the train.

I am excited about the Kindle DX.  If the Kindle DX 2 (or an unlocked Kindle DX) can do the things I just listed, then I will buy one and ditch the weekday paper.  But Keep that big honking Sunday NYT coming!