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.
Toby Schremmer, 
David and 2 others are discussing. 
Dan Entin 7:29 pm on May 8, 2009 Permalink |
I rarely read books so the Kindle has limited appeal for me. I read the NY Times religiously but I love their mobile site and that’s all I need. I have an iPod Touch and downloaded the Kindle app and bought one book. I never finished the book but not sure if that was the author’s fault or the app’s. Bottom line is launching the DX really doesn’t change the value proposition of the Kindle for me at all.
Joshua Tretakoff 10:38 pm on May 8, 2009 Permalink |
The DX is an opportunity that has been flubbed. The appeal of the original Kindle is clear, and has had a powerful financial effect on Amazon. Living with a Kindle addict, I can see the effects: he book consumption has shot through the roof, and it is now 100% Amazon spent, rather than spread across retailers.
The DX was a chance to redefine the business model on some many levels. Imagine, instead of this large-format Kindle being available for $500, it was $99, BUT it required a two-year subscription to a newspaper. Would McClatchey spend $250 to guarantee a subscriber for 2 years, plus get the ad revenue Dave points out here? Amazon would not have been able to keep them in stock, and the newspapers would get the best demos.
I know, they could still do it. but the moment has passed. The time to announce it was at the unveiling, not a vague mumble of tests in the future; that won’t jolt anyone. No, they fumbled this one, and the device will suffer as a result of poor pricing, a lack of a revolutionary business model, and an incomplete targeting strategy.
David 11:34 pm on May 8, 2009 Permalink |
Sure, I want one (still a little pricey for me.) Basically, there’s no reason for it not to do everything that an iphone does. But having said that, I’m never going to read a novel on an iphone, or sitting at my computer for that matter. So I think that a device that allows relaxed reading will create a market for more indepth (but maybe less interactive) content.
Dave Hendricks 11:34 pm on May 8, 2009 Permalink |
I gotta agree with you. This was an opportunity to introduce a real game-changer and I think that Amazon hit a single, when a triple or home run was within reach…but without the four elements I outline, I don’t think the product is any thing more than a double hit into the gap.
Toby Schremmer 2:23 pm on June 2, 2009 Permalink |
I haven’t held a Kindle yet either but as a big reader I’m just waiting for this to work. I viewed first Kindle as the experiment and was hoping this DX would be the proverbial home run. At that price point, it has little chance. I’m waiting for Apple’s supposed upcoming “tweener” (between iPhone and MacBook) device. As a long time iTunes user, I’d love to keep my books in the same ecosystem as my music, podcasts etc already are. Without even a product out yet, this is Apple’s market to win or lose.