The Not So Bright Cove..

As someone who has created three leading companies in the online video serving space, including taking the first internet TV platform company public in the US seven years ago,  I think I'm well qualified to comment on Brightcove's IPO.

The company first came to my notice shortly before the IPO of my company Narrowstep (NRWS). It was formed by a very able guy who had created a number of successful software companies. So, Jeremy Allaire's new company was always going to have a head start.

But, the reality from then to now is disappointing beyond belief.

The company had revenues of $68m and losses of $18m last year. It's a company that has now raised $155m and this revenue is loose change for a successful startup these days. The company goes public with a balance sheet that might have been reasonable for a startup, but for a seven year old company, still making losses on this scale just proves that the numpties who bought into the IPO will, eventually, lose everything.

Meanwhile, VidZapper, a direct competitor started by me some three years ago, is profitable (not just profitable, we have gross margins of over 50%) and charges much cheaper rates for the same service. Our turnover is, however, surprisingly lower, but it's fun pointing out in competitive pitches that customers are comparing companies who have to raise money to survive against profitable and sustainable suppliers.

But, hey ho, that's the public market for you - the stock has clearly got heavy front running going on, but expect it all to fall away six months from now and become a dog as soon as the stock support is pulled.

Brightcove has already had to diversify into app creation since the core video management market it dominates is incapable of generating profits. I'm not privy to the story it sold to the markets in order to get its IPO away. All I only know that the chances of VidZapper being around ten year from now are ten times higher than Brightcove being in existence. Caveat emptor, or to mix my languages, tele-vision caveat emptor.

The Payment Revolution

Perhaps the most ignored aspect of running online services is payment. We all take for granted the smug Visa/Mastercard duopoly, with Paypal having a dominance of online payment.

Down the years I've worked with, or tried to work with, pretty much every payment providing service and system out there, and it's been a huge frustration that something so simple is made so complex.

In Africa people have been using mobile phones to do their banking for nearly a decade, and finally Barclays have launched a similar service in the UK called Pingit. Paypal, of course, have had a mobile app for some time.

Meanwhile, in the us, Stripe has been working on simplifying the whole process of integrating payment into a website, where Paypal again has a clear lead. And they seem to have struck on a good formula, although their product is aimed at developers not WordPress users.

Now, launching a solution to protects trademarked content is something that many have tried and largely failed.

Apart, of course, for Apple, who are profiting handsomely from thinking through the payment problem for copyrighted products better than anyone else.

Balance of Power

Powerful new tech always creates ethical and legal challenges - the emergence of nuclear power being a good example. The worldwide web in its broadband configuration combined with the shift to digital is probably even more significant and offers great freedom to the users but on the other hand an unbelievable level of power to the State to monitor and control its citizens. See George Orwell's 1984.

One reason the debate around control of IP Piracy is so fierce is possibly that there is a lurking suspicion (particularly among the unfortunately tagged "freetards") that the State will use this as a back door excuse to ramp up even further the monitoring of its citizens for other purposes - defence of the realm, protection of duckhouses, collecting parking tickets and other sums the State feel are due. The explosion of CCTV surveillance and use of RIPA powers in the UK by public authorities (at least 500,000 examples) without judicial sign off add weight to this argument. See Tom Bingham's The Rule of Law.

IP rights must be protected but the process needs to be fair, transparent and under the control of the legal system not the State. All our data shows that there is no need to "go after" ordinary people in order to manage IP Piracy effectively.

A lot of sting could be removed from the discussions if there was more clarity around Article 8 (the right to a private and family life) providing some reassurance that just because the banks blew up the economy suddenly any public official can listen to your phone calls, look at your emails and open your post.

I am miles away from being a bleeding heart liberal but the alarm bells do start ringing when Governments start to undermine human rights arguments on the basis of economic good (see Adolf Hitler) and to mislead / PR the public on human rights issues - evidence obtained under torture cannot be used even when from a suspected terrorist.

Nick Clegg has pushed forward the Protection of Freedoms Bill but it still remains unclear where the lines are drawn.

Essentially a pre-requisite to resolving the legal structure around IP Piracy is to first clarify the right to privacy under Article 8.

The Irish Problem

Some of the UK's biggest and most courted employers like Microsoft, Google, Dell and Facebook pay, effectively, little or no tax in the UK.

The only reason they are able to do this is that they - totally immorally by any measure - invoice from Ireland. But EU law allows for this. I personally have no idea why the UK is still in the quagmire that is the EU.

The UK is owed some £70bn by Ireland. Therefore Britain does not want a harmonised EU tax regime, they do not care if Google and their US software ilk pay the tax they should be paying through blatant tax avoidance schemes.  They just want to make sure that Ireland has enough money to pay the interest they owe the UK. Let's face it, Ireland is to the UK what Greece is to Germany.

In fact, I don't believe that the UK does not care about the EU or the Euro. The UK has a liability in Ireland that is greater than all its other liabilities mounted up and this is what makes up policy.

The good news is that the Irish are great creditors. They are adept at exporting their greatest asset - their brilliant people, and at exploiting their second greatest asset - not taxing corporations - for as long as they can get away from it.

As ever in history, Ireland is the UK's biggest problem. At least now it's down to economic bombs, not real ones, but the use of UK taxpayers' money to prop up Ireland is just wrong. Like Greece, Ireland needs to recalibrate to a realistic level, and the UK needs to take back the £7bn or so of lost taxes that are indulged to our celtic brethren every year. And, more than anything, corporate taxes across Euope need to be normalised if we are to pretend to have a single market.

SOCA close down music website and threaten criminal sanction

As we reported on Twitter the Serious Organised Crime Agency has closed down a leading file sharing site and  arrested the organisers. A further step has been taken which involves the threat of criminal prosecution against the users.

Without knowing the background to this it is difficult to draw too many conclusions but given that Parliament has been unable to produce a clear Digital Economy Act the average person can perhaps be forgiven for not understanding where online IP infringement begins and ends.

Perhaps it might be worth starting a dialog with the Search Engines, ISP's and advertisers who control the infrastructure and provide the funds. Tools are available to manage this problem effectively..........

VidStorer Offers Low Cost Streaming

One of the biggest frustrations that I come across with internet video is that smaller users have to pay through the nose for access to high quality hosting of their video and often end up using their own servers or YouTube for their hosting, which is neither scalable nor gives them the control they want over their video serving.

So, at TV Everywhere we've decided to do something about this and have just launched into beta a new service directly addressing this market.

The proposition is dead simple. We aggregate a lot of bandwidth on world class networks such as those of Alcatel Lucent, Amazon and Level3, and can therefore offer is at low cost to even low volume users. Indeed, at the time of writing the cost is around half of that offered by similar services such as Streamzilla and Bits on the Run.

The new service is, somewhat unoriginally, called VidStorer. So, if you know anyone who's paying for video bandwidth, either live or demand, please send them our way and let's see if we can help them save money!

The Media Downopoly

A reported £30 billion invested over 30 years - most of it quite literally in holes in the ground - and what is left of the UK cable industry, now called Virgin Media, finally turns in a profit.

Considering the write downs and mergers,it's surprising how long it has taken, especially since BSkyB has long generated massive profits.

Perhaps the biggest lesson is how difficult it is to make money from TV. The UK is a money pit to any new entrant, as Netflix will soon find.

It was my hope that the internet would break the oligopoly that is British TV, but I was so wrong, all that has happened is that the hegenomy has been reinforced with new American monsters like YouTube created.

So, Sky, BBC, YouTube. There you have it. Two US controlled corporations and a nationalised industry. That's what our television amounts to these days..

Jeremy Hunt is a highly intelligent guy who expends most of his energy destroying British media by offering unconditional love to companies like Google, who pay little tax in the UK and have no interest in our intrinsic institutions.

Idiotic ideas like a 'Silicon Roundabout' need to be replaced with serious thinking about why we generate the best media in the world,but fail to build world class media companies and why our telly is either a state controlled monster or US controlled. Imagine if UK companies owned the majority or TV in France, Germany or the US...

£1,100,000,000,000,000,000

Before offering avid readers an explanation for the random big number in the title (not Bob Diamond's bonus) it is good to see some stellar results from NewsCorp. Aside from the hacking issues it looks like cable income at Fox / FX plus some strong movies have pushed profits up and seems to validate a content led strategy.


Chairman and chief executive Rupert Murdoch said: "The significant growth we reported in the quarter in the cable network programming, television and filmed entertainment segments clearly validates our strategy to develop and distribute superior wide-ranging content."


That monster number represents £1.1 trillion (I think as I ran out of fingers) which is apparently the size of the UK public sector pension liabilities in 09/10 - they may be even larger now and about the same size as UK GDP !

Once the banker bashing has finished (and they have all left) the new gilded elite may well be those on public sector gold plated final salary pension schemes drifting into a relaxed late middle age after years of strenuous public service. We can be confident they are going nowhere (other than perhaps on a cruise).

A more complicated question is who will pay - perhaps like Stephen Hester they will simply accept a reduction in entitlement even though they have a contractual right..........answers on a postcard.

When we hear about the protection of "vital front line services" are we really hearing about the need to keep pumping cash into those pension pots ?

Superbowl gets Piracy under control / reaches record audiences

The US Department of Homeland Security, in typically robust fashion, seized 16 websites planning to illegaly stream the Superbowl LIVE online and arrested and charged Yonjo Quiroa (28) with criminal infringment of a copyright.

Sites such as Firstrowsports.com were siezed and it is alleged that the defendant made $13,000 from online merchants. It will be interesting to see which brands were supporting this activity.

The Superbowl also hit a record audience of 111.3 million - could these facts be in any way related ?

On The Face Of It..

The Facebook IPO is worrying on many levels.

First of all, you just know that it's a bubble - the only question is, will this be a bubble that will continue to rise to stratospheric proportions, or one that will burst sooner rather than later.

The second worrying factor is that this offering will create a (hopefully) benevolent dictatorship - a company where the founder will continue to control the company despite owning the minority of shares. Of course, this has happened before (NewsCrop has a similar share structure and Apple handed similar rights at the second coming of Jobs), but it does devalue other shareholder's capital - it basically says that the shares are actually worth so much that they do not carry any rights. Hardly a democratic or even capitalistic concept.

Then there is the value per user. Each 'active' Facebook user is valued at around $125. When do I get paid ? Or is this the most parasitical business model the world has ever seen ? In 2011 active users generated around $4.50 each in revenues for the firm - and nothing for themselves.

Finally, that valuation. 27x revenue and 100 x earnings if a $100bn market cap is achieved. If earnings double every year, that's the next three years' growth already factored into the price, in my opinion.

Zynga makes up 12% of Facebook's revenue, which is quite a dependency, but is probably a positive since it proves that the platform can grow sizable businesses within its ecosystem - a pre-requisite for any company this size after explosive growth.

So, to invest or not invest? Well, if you get in on the float, you can undoubtedly make a quick buck, but look out for six months in when insiders can sell, and an undisclosed date when the book running by the market makers and underwriters ends.

Google saw stellar early growth and appreciation for shareholders, but quickly hit the buffers. Facebook, I suspect, has a narrower timeframe still for shareholders to make any money, especially since the insiders are taking so much.

Pub trouble for FAPL

The reporting of the recent High Court judgement by Lord Justice Kitchen in FAPL v QC Leisure suggests that  the outcome was a partial victory for both sides. It might be that I should have gone to SpecSavers but from the transcript of the judgement it looks like the FAPL did not secure much.

To quote LJ Kitchen "I my judgement S.72(1)(c) means what it says (the Copyright, Designs & Patents Act 1988).   The showing or playing of a broadcast in a public house to members of the public who have not paid for admission does not infringe any copyright in any film included in the broadcast". This covered, for those not familiar with the case, the showing of FAPL matches in pubs using foreign decoder cards.

He went on to refuse to grant relevant injunctions and refer matters of detail to the Patent County Court.

It is difficult to see how these two outcomes were what the FAPL were after (maybe like the grim smile when another reindeer jumper comes your way at Xmas) .

There is doubtless an opportunity to take a different approach based on unauthorised use of trademarks and focus on the IP specifically owned by the FAPL but this was not really the basis of the action initially

Common sense requires that the law is changed here as clearly while this is legally correct it does not help protect IP owners and creators which has been a major thread in all the recent European Legislation. If the Digital Economy Act ever emerges properly this would be another area (on the long list) that needs careful consideration.