One of my first posts on this blog was about the revelation I had when talking with one of my friends who works at Microsoft. What he opened my eyes to was a brave new world of streaming media distribution that will become the wave of the future. I said back then that the first company to successfully develop a streaming media infrastructure where you actually retain ownership privileges for what you buy online, will be the leader in the new era of content distribution. I also said that there are only a handful of companies on the cusp of achieving this including Apple, Microsoft, Amazon, Netflix, and others.
CES 2009 has come and gone and having looked at all the players and their announcements for 2009, I believe that a clear winner has emerged. Keep in mind that the key to winning the digital content distribution crown is that when you purchase an item, be it a song or a movie, that item goes into your own personal media library with that company. From there you can play the media as often as you like, at any time you like, and from anywhere you like. Just like when you own a piece of physical media such as a CD or DVD.
Internet integrated televisions were everywhere at CES this year. Everything from YouTube streaming, the Flickr browsing, to sports, weather, and news streams. But only one company presented integration into a key technology. Panasonic announced it’s streaming media technology for plasma screen TVs called VieraCast. And the content provider of choice was Amazon Video on Demand. What separates Amazon’s Video on Demand service from all other stream media providers is that they are the only one to add your video purchase to a personal online media library from which you can play the video in all the ways I described above. When you consider other streaming media services what you get is a nickel-and-dime structure where you essentially rent the media for some amount of time with inherant restrictions. Amazon stands alone in their approach and as the combination of being first to market with this approach as well as providing non-content-protected music downloads.
Amazon’s service is not perfect out of the gate though. Right now they are still working with manufacturers to develop devices with access to their web-service. Current partners include TiVo, Sony Internet Video Link, an Internet-connected Windows or Apple PCs connected to your TV, and new VieraCast Panasonic plasma TVs. The only drawback of the current implementation of the service is that it is standard definition content only. Eventually HD content will be available, but there is no firm date for this. The bottom line though, is that Amazon is the first content provider to give you a personal online media library for your online media purchases. Before you continue to throw money at physical media, consider how streaming media through Amazon Video on Demand might make movie-watching a little easier.
This year Warren Buffett officially surpased Bill Gates to become the richest individual on the planet. It’s hard to imagine just how much money these two men have individually, but what’s even more amazing is the partnership that they have in their philanthropic efforts. In 2006, Mr. Buffett announced that he would be donating almost 83% of his fortune to the charitable efforts of the Bill & Melinda Gates Foundation. As such he also earned a place as a co-chair of the foundation. In 2008 he attended the annual meeting of the foundation and sat down with the other co-chairs for a Q&A session from the foundation’s employees. Below is a transcription of his responses to two questions asked of him. It’s rare that you get to see such insight into the mindset of a person as influential as Mr. Buffett. His responses are certainly not what you would expect, and it’s for that reason that I wanted to share them here.
Why did you make the decision to donate to the foundation?
“Since we have small, intimate, discrete group here I’ll make a confession that I normally wouldn’t … I don’t work very hard at my job. At Berkshire Hathaway we have 255,000 people out working and then we have about 19 of us that just fool around at the office and – I like it that way – all I really do is I allocate capital and I align myself with outstanding managers and organizations, that’s all I do at Berkshire Hathaway. I decided two years ago to do the same thing in philanthropy. I allocated the capital and I aligned myself with terrific managers that.. I don’t want to do what they do, but I want done what they do. And all I can say is two years later I feel a hell of a lot smarter than I felt then even.”
How do you feel about your investment in the foundation so far?
“I feel terrific about it. I’m used to evaluating often large projects. When the facts just hit me in the face I have no problem making the decision. This is done exactly what I expected, it will continue to, and in fact it will probably exceed my expectations and it’s a perfect answer of what to do with a lot of money to benefit the most people in the world. We’re two years into it now and I’m looking forward to observing it for a long time.
I have never given up one thing in this world that I wanted in order to make somebody else’s life better. Now, I given up surplus to do it, but so what? I have not denied myself anything in life and I’m not denying myself anything now. Somebody that goes to church on Sunday and puts $5 in the collection plate that otherwise would have meant a movie or an extra toy for their kid, or a different dinner they might order; to me that’s real charity. What I’m doing is just logical. My older sister was on C-SPAN on Sunday with Brian Lam and my sister, who’s 80, is spending 10 hours a day doing what I call retail philanthropy and she gets involved in people’s lives, she helps them, and she was describing all of this. She is giving up some significant things in her personal life in order to make other people’s lives better. I’m giving up a lot of surplus and I’m delighted to do it and society has treated me sensationally, but it’s not real charity, it’s really just sort of the logical disposition of money to a society that’s handed it to me in a crazy way.”
In part 1 of my article on digital materialism I gave a little background on what got me thinking about the subject. What digital materialism really is, is the transition from buying/owning/using physical (material) media to a single digital library containing all of an individual’s media. Where once people’s media collection consisted of material items, soon it will become entirely digital. Your personal library then in turn follows you anywhere via an internet –connected device and is available instantly through streaming technologies.
Imagine that you live in Seattle, but you are traveling abroad in London. You carry with you a single touch-screen smart phone (yes, like an iPhone you Apple zombie). You arrive at London Heathrow and decide some music is in order while you wait for your luggage. You turn on your phone and associate to the wireless network. You then access, through secure web login, your personal digital library and instantly you see every song and movie you own. You pull up a favorite playlist and the music plays. You get on the train and decide you’d rather watch a movie to pass the time. So again you pull up your library and out of the 200 movies you own you choose your favorite and begin to watch. You’ve listened to what you want to listen to, watched what you want to watch, and you’ve never been nagged to purchase anything because it’s your library. You’ve used your media just as you would at home if you had loaded the discs into your DVD player – except you’re nowhere near home. Also, you’ve never had to worry about your device’s storage capacity or synchronizing your device with your computer because everything is streamed to you.
My family asks me technology questions all the time. Sometimes it’s about how their computer isn’t working right and other times they’re more general questions like, “What do you think will be the big tech trend this year”. A couple years ago I was asked the later and I remember saying that without a doubt, it would be the continuing development of convergence devices. Portable devices that served multiple functions. I was specifically talking about cell phones and in the time since, what used to be just a phone is now so much more. Cell phones are now capable of running almost any type of media; voice, images, video, internet connectivity, e-mail, and more. When I talk about digital materialism, I’m talking about the next step. The further evolution of these devices.
But there will eventually be a revolution, and I believe the revolution will be in the creation of personal digital libraries. So what would enable every person in world to have their own digital library? IPv6. IPv6 is the successor to the current internet protocol IPv4. As people and businesses continue to purchase internet addresses the pool of available IPv4 addresses in shrinking fast and will eventually run out. The IPv6 internet protocol however would allow for trillions of addresses to be given to each of the 6.5 billion people on Earth today. An internet infrastructure capable of supporting the traffic of the world’s population will be a revolution and a building block of personal internet media libraries.
There are certainly major obstacles to this scenario and I don’t think it’s going to happen in even the next two to three years – but it’s coming. Some of the biggest obstacles to personal internet media libraries will be in the form of security and licensing. If you read the news at all you know about the ongoing war between media houses and recording associations vs. P2P file-sharing over licensing issues. The key to personal internet media libraries is that you are recognized as an owner of the music/movies in your library, just as you are recognized as an owner of any CD or DVD in your collection. It’s yours and you can use it as much or as little as you want. Delving deeper into that would be an entire article itself and there are even entire websites devoted to the topic, so I won’t go into it here. The bottom line is, if security and licensing concerns can be adequately addressed and resolved, personal internet media libraries and digital materialism will be in our very near future.
Almost a year ago now, I was having a conversation with a good friend of mine whom I went to college with at the University of Miami. Purely by circumstance we both moved out to Seattle from Miami, (at separate times) where he currently works as a video game designer. My wife and I had recently moved into a new condo and one of the side effects of moving is that it forces you to confront just how much shit you’ve accumulated. A particular pain point for us was the five moving boxes full of DVD and CD jewel cases that made up our media collection. And while packing them into a box is easy, finding a place to store them all in an aesthetically pleasing way (milk crates is not a way to decorate your home) was proving challenging. In describing our search for some sort of bookshelf or media tower my friend said, “You need to stop buying physical media.” He went on to describe his own method of managing his media library which consisted of hosting all of his media in digital form on his desktop pc’s hard drives and streaming the media to his Xbox 360 which was in turn connected to his TV and sound system. He had all but given up buying any physical media and instead was relying on BitTorrent and P2P sharing to obtain new movies, TV shows, and music. In the end both he and I accomplish the same thing, we both watch videos and listen to music on our home theater setups. The difference is that he had eliminated the step of putting in a disc or plugging in an mp3 player. The idea of streaming one’s media in the home is nothing new. People have been doing it for years now and with more integrated home entertainment devices it’s only become easier. What struck me about what he said was not what he was doing, but rather his philosophy towards it and how adamant he was against physical media.
My first reaction, like most people to change, was of resistance. I said, “I know it works, I’m just not ready to give up owning a tangible piece of media. When you purchase a disc and store it properly you can enjoy it for a long time with very little risk of losing it. Computer crashes happen all the time. Data is destroyed. Data is corrupted. If a hard drive contains my entire media collection and something goes wrong I could lose everything in one fell swoop.” Obviously there are ways to duplicate your data. RAID hard drive arrays or just plain backup to external disk are the two most common, but I was trying to win the argument. He of course laughed at my nativity and said that the system isn’t perfect now, but it’s coming. Physical media is dead. At the time I didn’t want to think about it, but after looking a little closer at the state of the music and film industries my eyes are open.
There’s a new model of media ownership coming very very soon. I call it digital materialism and the first company to create a truly seamless system of digital media ownership for people is going to reap huge benefits. I guarantee it. Here’s what the new business model will look like.
Instead of the measure of your media collection being how many LPs, DVD’s, photo albums, etc you own, soon your entire media collection will instead exist in digital form as a single virtual entity. Furthermore, you entire media library will follow you anywhere in world over a high-speed internet connected device capable of streaming your media to you instantly. In part two, I’ll elaborate on exactly how this would work.