According to a filing made with the Securities and Exchange Commission (SEC) Monday, Affine Systems has sold about $4.99 million of a new $5.05 million round. The first stock sale in this funding round occurred on December 27, 2011, the filing indicates. This new round brings Affine Systems’ total outside funding to approximately $13.75 million, according to the company’s SEC filings dating back to 2007.

Affine Systems' object detection

Affine’s software uses computer vision technology that scans videos frame-by-frame and sorts each section of the footage into specific categories. Advertisers can then use that information to promote their products with the right online video content at the most appropriate times. This purportedly provides insight into and control over the online video market at a depth that has previously been available only through television content. My colleague Ryan Lawler has explained Affine Systems’ technology like this:

“Due to worries about the content of most online video, many brands and agencies stay away from a large percentage of that content, preferring to launch campaigns against professionally produced videos. But with Affine’s technology and repository of online videos, media buyers a much larger inventory to choose from. The company provides tools to enable advertisers to create custom video channels to target. And once their ads have been served, Affine provides full transparency into where those ads appeared.”

We’ve reached out to Affine Systems for comment on the funding; we will update this post with any feedback we receive.

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ABC News President Ben Sherwood and Yahoo EVP Ross Levinsohn discuss their new partnership.

Yahoo and ABC have struck a partnership that combines ABC News’ content and staff with the reach of Yahoo News for a total potential viewership of 100 million users. The alliance will include the debut of GoodMorningAmerica.com on Yahoo, new online video programming including a series of live interviews with George Stephanopoulos, and new channels for interaction before and after TV broadcasts.

The partnership will feature original, digital-first content, starting with Stephanopoulos’ interview with President Obama live on Monday. Yahoo’s Executive VP Ross Levinsohn said the alliance builds off an existing relationship with ABC News, which already distributes video and content through Yahoo, including recent coverage of the 9/11 anniversary and the royal wedding.

He said that while Yahoo already has 25 million users who visit Yahoo News daily, much of the content is aggregated from hundreds of sites with a thin layer of original programming. Levinsohn said the ABC News partnership will highlight Yahoo’s increasing move toward value-added content:

We’re focused on premium content. There is unlimited content around the world, there are millions of sites. We’ve set our focus on premium. We believe that the value that is created around premium content is something that can’t be replicated on any site anywhere in the world.

Levinsohn said he expects advertisers will respond favorably to the new ad spaces that will appear on the new content. He said Yahoo will look to ensure a smooth launch of the ABC News partnership first before replicating it across other verticals such as finance or sports.

Ben Sherwood, the president of ABC News, said the deal is a game changer that repositions the two organizations in the shifting landscape for news and information. He said the ABC News talent will collaborate on original content that leverages their interests.

“The whole purpose of this relationship is to create original content which is tailor made for where people are getting their online information, brought to you by the team of ABC News,” Sherwood said.

Diane Sawyer, the anchor for World News Tonight, said she was excited about the opportunities the deal provides to channel some of the reporting that doesn’t show up on ABC News. Christiane Amanpour talked of producing a series that taps into international events that concern viewers in the U.S. Yahoo staff will work alongside ABC News in New York, Washington, D.C., and California to produce the original content. The content will be designed primarily for desktop access, but it will be packaged for mobile using Yahoo’s Livestand platform.

It makes a lot of sense for the two teams to come together. ABC News has a great reputation, but it is finding it tough to ensure distribution of its content to a wide audience and be fast and flexible in the online real-time web. Yahoo is looking to boost its advertising efforts, and it understands that high-quality video is a key way to attract top advertisers. It also seems to suggest that we should expect more combinations to come as news organization look to pool their resources and audiences to best leverage their investments.

But announcing a partnership and actually producing a lot of quality online content are two different things. Despite the optimism in comments by Sawyer and other ABC talent, it’s hard to spend time on new efforts like this when your current responsibilities don’t go away. We’ll see what this eventually looks like, but it still seems like a pretty smart move by both organizations.

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In the first half of 2011, Internet ad revenues rose to a record $14.9 billion, according to new data from the Interactive Advertising Bureau and PwC. The rate of growth was 23.2 percent, more than doubling the 11.3 percent growth rate that online ad revenues had in the first half of 2010.

The data also shows that growth is continuing to pick up as 2011 rolls on. Ad revenues for the second quarter of 2011 increased 24.1 percent from the year-ago quarter to $7.7 billion. For comparison, the second quarter of 2010 saw 13.9 percent growth.

And while the Internet is still a ways from attracting Super Bowl ad money, the biggest growth area for online ads is televisionlike content: online video. Digital video ad revenues brought in $891 million during the first half of 2011, representing a growth rate of a whopping 42.1 percent compared to the same period a year ago.

Now that big firms such as Nielsen have directed their full attention to monitoring how people spend time online, advertisers are finally getting comfortable investing more of their budgets in Internet ads. The current growth rates of online ad revenues are certainly impressive, but this could very well be just the beginning.

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Those scary trend lines have forced publishers to rethink their approach to doing business online, and that includes erecting subscription paywalls. But as I discuss in my latest report for GigaOM Pro (subscription required), simply trying to replicate the old print subscription model online by asking readers to pay a single price for unlimited access may not be the optimal approach to monetizing content online. Rather, publishers need more flexible paywalls that support multiple payment options and multiple content configurations.

In the print world, audiences tend to be demographically and behaviorally homogeneous, so it makes sense to treat all readers as being roughly equal when it comes to their economic value to the publisher. Research cited in the report, however, shows that online news audiences are highly differentiated: Readers exhibit widely varying behavior and widely varied levels of engagement with the publisher’s content.

The vast majority of the unique visitors to most online news sites, for instance, is composed of search-directed “flybys,” who typically have little investment in the publisher’s brand and generate only a fraction of total page views. Most page views tend to be generated by a small slice of highly dedicated readers.

Share of total monthly unique visitors by type of visitor, U.S.

Source: Scout Analytics

Share of total monthly page views by type of visitors, U.S.

Source: Scout Analytics

Those differences have significant economic implications for publishers. Extensive consumer research on related online content industries — music, video, gaming — cited in the report shows that engagement level correlates closely with willingness to pay for content and with the respective levels of price sensitivity among the different groups of users.

Willingness to pay is not a fixed quantity, however. Consumer research and the experiences of related industries show that users who may not be willing to pay full price for an all-access subscription may still be willing to pay for a select bundle of content if packaged and priced appropriately. Racing enthusiast publication Autosport, for instance, offers its subscription content on an à la carte basis online for $1 per article. The pay-per-use offer has led to a 75–80 percent increase in first-time paid users.

Even among those willing to pay, moreover, online content consumers can be highly sensitive to the purchase experience, suggesting publishers could have greater success at converting readers into paying customers by paying closer attention to the online checkout process.

Some of the techniques publishers are finding most effective for converting online content users into buyers, in fact, more closely resemble traditional retail merchandising and e-commerce than they do subscription sales.

By carefully researching the interests and behavior of its online readers, for instance, the Dallas Morning News was able to create a new paid-content revenue stream by packaging all of its high-school sports content into a stand-alone product and offering it separately from subscriptions to the rest of the site.

Finally, not all paywalls need to be consumer-facing. Putting content behind a paywall is a critical first step toward fostering robust business-to-business commerce between content originators and downstream aggregators that would allow all to share fairly in the online news ecosystem. While the platforms and tools to support that market-making function do not yet exist, there is a significant long-term opportunity for entrepreneurs to begin developing them.

For the full in-depth analysis and strategies for monetizing online content, please see the full report at GigaOM Pro (subscription required).

GigaOM Pro will host a webinar, “Building a better paywall,” on Wednesday, Sept. 14. All attendees will get a complimentary copy of the report. 

Image courtesy of flickr user Matt Callow

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Such a prediction is a complete turnaround from just a handful of years ago, when web-connected televisions were just a fuzzy vision and the video industry was filled with competing media formats. To be sure, various codecs and formats still exist, but broadcasters and content creators are now deciding on just a few methods, the top two being H.264 and Adobe Flash. Formats are only part of the story, however, and the industry hasn’t yet completely standardized on any one such format.

Broadband and consumer devices that can leverage a standard format, on the other hand, has moved consumers forward when it comes to online video. Fast Internet connections to the home and to wireless mobile computers have eroded the challenge of distribution. At the same time, wireless and graphics capabilities of devices have improved, allowing content place shifting. This combination is breaking the traditional chains of sitting in front of a television and opening content consumption “[I]n a myriad of ways over a plethora of devices,” says Keith Nissen, principal analyst at In-Stat.

A few other key data points from In-Stat’s research illustrate that broadband-enabled screens will bring far greater choice for where to watch online entertainment:

• The number of devices capable of supporting online video is expected to grow faster than the amount of available video content. That’s an incredible growth rate given how much consumer video is created each day: YouTube recently said users are uploading 35 hours of content per minute, for example.
• Shipments of web-capable televisions in the U.S. are increasing at a 94 percent annual growth rate.
• 45 percent of households with broadband want to use it for at least some online video services, and why not, when speeds are increasing even as prices are trending down?

Growing up as a child of the cable industry in the 1980s, I used to wonder what to watch out of the many channels available. Thanks to maturing devices and fast web connections, my children are more apt to ask where to watch the content, not what to watch.

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The market research firm company found that only 8 percent of U.S. households are thinking of abandoning their paid multichannel services.  Why is that good news?  Well it’s down from the previous year’s survey, which showed that 11 percent were considering “cutting the cord.”  Even better, according to Parks, only a very small amount, perhaps a half percent -– which translates into 350,000 homes — have actually followed through on their intent. You could practically hear the sigh of relief — cable is saved!

I have three problems with this giddy response: math, measurement and morbidity. Let’s get the math out of the way first. Parks surveyed 2,100 of what it calls “broadband households” -– those with access to high-speed networking at home -– to come up with its results. Modern statistical theory holds that a random group of that size can comfortably be extrapolated across an entire population, albeit with one caveat: Depending on the population surveyed, there’s what is known as a “confidence interval,” or what you and I would call a “fudge factor.”

Such padding extends up and down on either side of the actual number. In this case, the confidence interval is 2 percent, which translates into a 4 percent swing centered around the 8 percent number reported in the results. In practice, it means that based on the 2,100 people that the folks at Parks talked to, they are pretty darn sure that the actual population of people considering switching is no smaller than 6 percent of U.S. and Canadian homes with broadband, and no larger than 10 percent.

In last year’s survey, Parks talked to a few more people, but with the same confidence interval. Which means Parks is pretty darn sure that the actual population of people looking to cut the cord last year was between 9 and 13 percent.

Some of you have figured out where I’m going by now.  If this year, the number lies between 6 percent and 10 percent, and last year it lay between 9 percent and 13 percent, isn’t is possible that, perhaps, there’s been no actual change from year to year?  It could, in fact, have been 8 percent, and 8 percent year-over-year.  Or maybe it was 8 percent last year, and it’s up to 9 percent this year.  Or perhaps 13 percent were considering changing last year, and only 6 percent are mulling it over now.

Any of the preceding interpretations would be correct, based upon the statistical validity of the survey.  However, John Barrett, director of research at Parks Associates, insisted to me that there is a “significant difference, but not a substantive difference” between the two surveys.  Or, in layman’s terms, it’s a lot closer to a single household feeling better about cable than a million. Barrett added that in his opinion “the number hasn’t changed that much itself.”

Which brings me to measurement, as in measured audience. The question in this survey was only posed to broadband households that also subscribe to cable or satellite TV.  It ignored everyone who didn’t subscribe –- which was between 10 and 20 percent of the entire sample size.  And media habits, like other addictions, are hard to change. If you’ve got cable now, you’ll probably still have cable 10 years from now.

This is especially relevant when it comes to demographic currently getting out of school and setting up their first households –- the 18- to 24-year-olds, who haven’t had a chance to get addicted to multichannel TV services. And since if they don’t subscribe already they probably never will, they’ll likely never even show up on a “cutting the cord” survey. Indeed, Method VP John Gilles calls this cohort “Cable’s Lost Generation.” “For at least the past five years, the young male demographic has virtually dropped off the map of television,” he notes.

The issue isn’t existing customers dropping off; it’s existing customers dying off that should be of concern.  That’s because new customers just aren’t taking their place.

Which leads me to morbidity. This is exactly what happened to magazines over the last 20 years. Whether it’s Readers Digest, TV Guide or PC Magazine, each of these storied titles used to have viewers aged 16 to 60. Then it was 26 to 60.  And then 36 to 60.  In other words, the audience aged to the point where it just wasn’t economical to keep putting the product out.  I should know, because I was there during the salad days of PC Publishing, and darn near turned the lights off at PC Magazine in 2007.

And that’s the cliff that the multichannel industry is staring at today. Its best and brightest can wrap themselves in giddy surveys that show only (only!) 8 percent of their audience is considering leaving.  But the broader problem is that their customers are dying.  And no new ones are there to take their place.

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.

But let’s be honest, it’s done more displacing and destabilizing than it has created wealth. And with a few possible exceptions — say, Blip.tv and Brightcove — no company but YouTube has really been able to grow a ton of value. (YouTube, Google promises, will be profitable any day now!)

Today, on the eve of Veoh declaring bankruptcy (first reported by MediaMemo), we can look back and see an awful lot of venture dollars invested — many of them that have since gone down the drain.

Veoh was actually the first online video company I ever covered, back in the summer of 2005, and if you know anything about me it kicked off a long fascination with the topic, aka our spinoff site NewTeeVee, which I founded three years ago and edited until very recently. Let’s just say I had higher hopes that the startups we covered would go on to become the new giants. Not so much.

Here’s a chart I made a couple years ago (back when many of these companies had already been walking dead, at least in terms of innovation, for a long while). Not a ton has changed since then.

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Improvement to the video price/performance ratio means $99.99 can now buy an HD video camera roughly the size of three fingers, a pen that shoots video or a digital photo frame with video playback. Such a “squanderable abundance” of video capability is leading to video ubiquity, which will in turn mean the consumption of more bandwidth than ever before transforming networking, and require more processing and storage than ever, transforming IT, including cloud computing.

Video Ubiquity

That’s because lower-cost CMOS and CCD image sensors don’t just mean lower-cost video cameras; they mean ubiquitous video embedded everywhere. By analogy, consider computers, which used to be multimillion-dollar monuments encased in glass house data centers. Moore’s Law didn’t mean (just) cheaper data centers, but that compute power is now found in everything from thermometers to toasters to toys. Today’s car buyers often focus less on style and performance than on information technologies such as navigation systems, accident alerting, and on-board entertainment systems.

In other words, when things are cheap enough, it makes good business sense to leverage that so-called squanderable abundance in order to differentiate products or enhance customer relationships. Greeting cards today cost $4.95 whether they are just paper and glitter or can record and play back a voice message. They’ll still be $4.95 tomorrow, but be capable of recording and playing back a video greeting. At some point it will make sense for manufacturers to build a two-way live customer service videoconferencing capability into each dryer or copier or refrigerator, even if it’s only used once a year — or never used at all. Moreover, why wait for the customer to place that video call when cameras mounted inside the dryer can easily report that the drum belt is fraying?

Transformational Impact

The impact of more video devices in more places is the consumption of more bandwidth than ever before, which will transform networking. And more processing and storage will be required than ever before, which will transform IT, including cloud computing.

Today’s HDTV streams need somewhere between 4 and 7 megabits per second. 4K or, in a few years, Ultra-HDTV video streams will need tens of megabits per second, just for one channel. Increase that further for 60 frames per second, finer gradations of color, 3-D, and multiple screens, and network capacity will need to increase ten- or twenty-fold, or more.

Consumer networks are already mostly carrying rapidly growing amounts of user-generated video content, IPTV and peer-to-peer traffic, and Cisco forecasts that video will account for 90 percent of network traffic by 2013. Sure, there’s text and images and spreadsheets and slideshows traversing networks too, but it takes a lot of 140-character tweets to equal one full-length motion picture. Enterprises are increasingly adopting mobile, desktop, and immersive telepresence solutions. Meeting all this demand will require increased investment in wireless and wired networks.

IT will also be transformed. After all, how effective will databases that were designed for alphanumeric data be when a majority of future IT expenditures will be for acquiring, managing and maintaining enormous repositories of unstructured video for security/surveillance, merchandising optimization, field service, collaboration, depositions, entertainment, or applications we haven’t imagined yet?

The cloud will change, as it increasingly moves from just using multicore CPUs to also using GPUs, due to cost-effectiveness as well as the affinity that GPUs have for parallel compute-intensive tasks such as scene analysis, ray-tracing and compositing. Also, cloud-based video functions such as bridging, transcoding, transrating, and rate adaptation will become more important as they allow multiple users and devices using different technologies to interconnect.

So while the game may be over in a few hours, we are just now kicking off a new era in video.

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When I read about all the planned changes at the company earlier today, the first thought that crossed my mind was: Stick a fork in it; Joost is done. After all, this whole white-label video strategy is like a leaky lifeboat in the middle of the Pacific Ocean. The NewTeeVee crew sums up the situation very succinctly: “Becoming a white-label video provider was what a business did when all other strategies failed.”

As someone who has followed Joost from its very inception, when it was known as The Venice Project, I’m amazed at how badly it’s stumbled. It shouldn’t have.

It had everything going for it, including:

• Successful, Celebrity Founders: Niklas Zennstrom and Janus Friis started the company in 2006 after palming off Skype to eBay for billions of dollars.
• Proven Technology: Joltid formed the basis for music- and file-sharing service Kazaa and later Skype.
• Substantial Funding: It raised $45 million in funding from the who’s who of the tech world: Sequoia Capital, Index Ventures, Viacom, CBS and Chinese tycoon Li Ka-shing.
• Incredible Buzz: The company had incredible pre-launch buzz that helped it to convince thousands of users to download its P2P video client — something that doesn’t happen all that often on today’s web.
• Big, Famous Partners: It managed to gain early traction with content providers such as Viacom and CBS, which were also investors in the company.

So what went wrong? Quite a few things, actually. Other startups should learn from the mistakes of Joost and avoid repeating them, such as:

• Too Big, Too Fast: Joost hired too many people, too quickly. It never behaved like a startup but instead always felt like a grown-up company with too many bureaucratic layers.
• Too Geographically Spread Out: The company was based in multiple geographic locations — New York, London and The Netherlands — and as a result, each location became somewhat of a silo.
• Not Enough Focus: Remember what your mom used to say when you took too big of a bite? If you’re not careful, you’re going to choke. Startups are just like that. Unless you focus, you’re going to choke. Joost couldn’t focus on one single market — and startups need to focus on one market at a time in order to win.
• Too Much Hype Too Soon: Like many, we were one of the early fans of this startup. Its founder pedigree generated a lot of pre-release interest. Nearly 250,000 folks signed up for the beta version of the software. But when technology problems hit, the pre-release buzz turned into buzzkill.
• Slow to Fix Its Technology Problems : Joost’s P2P network had technical problems early on that resulted in user defection. The company didn’t move to address those concerns fast enough. These technology problems have continued to nag the company throughout its life, even when it switched to a browser-based focus.
• Client vs. Browser: The company took too long to realize that the client-based strategy was going to lose out to browser-based video services. Its legacy of building clients became its Achilles’ heel.
• Didn’t Press Its Early-Mover Advantage: Joost had correctly identified that it needed the blessing of the content owners, but it failed to move aggressively enough to convince them to work with its platform. The client and technology problems didn’t help matters, either.
• Big Media Dis-Connect: Its big media investors were never willing to give Joost a content edge over the competition, prompting users to tune it out in favor of other services.
• Too Many Internal Problems: The company had some serious management problems, some of which led to the firing of its CTO in January 2008.
• Hulu: It started with a simple, easy-to-use interface for its browser-based video service, offered higher-quality video and used content from its backers, NBC and Fox, to become a household name, which in turn allowed Hulu to convince other content owners to sign up for its platform. Now it owns 10 percent of online video traffic.
• Chasing Its Own Tail: Joost also made some basic mistakes, such as not having a good SEO strategy. It never quite figured out a social media strategy in order to garner viral growth, either. It was like a tech company from the 1990s — out of sync with today’s web environment.

The dark cloud of doom started to settle over the company last year, as the team at NewTeeVee noticed time and again. NewTeeVee writer Janko Roettgers offered a recipe to fix Joost last fall, but apparently it was too little, too late, even then. The company consistently failed to gain any traction, even after unveiling new APIs and a browser-based offering. In the end, however, it all boiled down to a lack of content.

Photo credit of Mike Volpi pic: Eirikso via Flickr.

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Cisco, which stands to profit by selling its communications gear to ISPs and businesses trying to handle the growth in bandwidth, notes that most of the increase in traffic will be related to video — in fact, by 2013, 90 percent of web traffic will be video, it forecast, from services like Hulu to video-on-demand via the local cable provider.

Video comprises a large amount of the total traffic because video files are many times larger than text files and web pages, and because video is slowly moving from being delivered via RF (cable TV) and over the air (broadcast) to being delivered as an IPTV service. People are also carrying around more video-capable devices, such as mobile phones that can capture video and personal camcorders such as the Flip, whose parent company was recently purchased by Cisco. Once that video is captured, people are inclined to share it via the web.

For the most part, the big trends that Cisco first explored in its survey last year are the same, notably video, the continued growth of Internet use in developing countries and the rise of mobile data. However, Cisco also explored how the web is becoming the primary pipeline for information that moves back and forth between business and homes.

Cisco has divided the IP world into active networking, which includes surfing web sites, having VoIP conversations and streaming video, and passive networking, which can include DVR recording while watching other programming, backing up online while web surfing and recording ambient video such as that from online security cameras. Cisco looked at all of this activity and concluded that, thanks to multitasking, by 2013 active networking will add six “network hours” to a day, and passive networking will add another six network hours to each day. (Currently there are 36 hours in a “network day,” according to Cisco; by 2013 there will be 48 hours.)

I’ll forgive Cisco’s awkward creation of a “network day,” and focus on the fact that under its scenario, broadband has become a resource rather than a product. As we use more broadband, consumers and businesses will be less willing to accept arbitrary divisions between broadband product offerings, such as buying a VoIP package and an IM package. Considering Cisco’s examples, we’re likely to see further blurring of the product lines for delivery of professional video content and personal video, such as a day care feed.

If ISPs succeed in implementing tiered pricing schemes, some of that passive networking, especially of the ambient video, will be far more expensive. And if upload speeds don’t improve, video feeds from a home camera and even online backups will be laughably slow. I’m not sure if Cisco is ignoring the potential chilling affect of tiered pricing or sluggish upload speeds, or if it assumes that unlimited broadband is here to stay and that symmetrical connections will proliferate around the world. I’m hoping for the latter.

Here are some other quick bullet points from the latest survey. By 2013:

• Annual global IP traffic will reach two-thirds of a zettabyte (or 667 exabytes). (A zettabyte is a trillion gigabytes.)
• IP traffic in North America will reach 13 exabytes a month, slightly ahead of Western Europe, which will reach 12.5 exabytes per month, and behind Asia Pacific (AsiaPac), where IP traffic will reach 21 exabytes per month.
• Middle East and Africa will grow the fastest, with a compound annual growth rate of 51 percent, reaching 1 exabyte a month.
• Mobile data traffic will roughly double each year from 2008 levels, to increase a total of 66 times.
• Almost 64 percent of the world’s mobile data traffic will be video.

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I first met Boxee CEO and co-founder Avner Ronen at a NewTeeVee meetup in New York roughly a year ago. At the time, I was contemplating buying an Apple TV. He politely shook his head and said I shouldn’t bother, that his company had something better in the works.

Indeed, Boxee launched its alpha last June, it has since gone on to aggregate some big-name content, allowing users to watch Hulu, ABC, Joost and even stream Netflix video through its clean interface. Boxee now has more than 240,000 users checking out its alpha, and, oh yeah, it raised $4 million in October, helping ensure that its 12-person staff will have jobs through 2009.

With all it has going for it, it’s no wonder everyone is jumping on the Boxee bandwagon. I asked Ronen why people love his company so — he credits the diligence with which Boxee listens to its audience. Twitter plays a big part in what Boxee does; Ronen himself maintains the @Boxee account on the micro-blogging service answering questions, delivering news and taking advice from users. The company also continuously combs through its forums and changes up its product road map based on what its community is saying.

The approach reminds me of Hulu CEO Jason Kilar’s talk at NewTeeVee Live, in which he described his staff’s near-constant vigil with the Hulu community, solving and responding to even minor technical issues at all hours of the night.

That’s not to say Boxee’s success is guaranteed. The more tech-savvy may not mind downloading and configuring an app and plugging a computer into TV screen, but that solution isn’t for everyone. And while Boxee is building a sizable following right now, it still needs to show that it can make money at some point. But Ronen and his Boxee crew are aware of the issues before them and are realistic about tackling them. For now they can bask in the moment, and prepare for the next version of the alpha, due out March 5.

So what lessons can be learned from Boxee?

• Pay attention to your audience and use all the tools available to communicate with them. Ronen & Co. are always on Twitter and use it as a two-way street.
• Be willing to take in good ideas that come from outside the company. Boxee adjusts its product road map as it receives input from the community.
• Be efficient. Boxee was built using open-source tools, and the company has only 12 employees with no plans to get any bigger anytime soon.

But the real reason I like Boxee? It, like so many other successful companies, seems to be a direct extension of its leader. Ronen’s a genuine, soft-spoken guy with just the right amount of overconfidence; he sincerely wants to build a great business, and isn’t looking for a quick cash-out. Because he is sincere, Boxee, by extension, is, and audiences pick up on that and want to be a part of it.

http://blip.tv/play/AerzYIX+KQ

Pasted above is a quick video I shot of Ronen talking about how Boxee uses Twitter and forums to stay connected with fans, how they’re going to move into the mainstream, and how the company would implement a Facebook integration.

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eMarketer, which has been putting out good research on online video recently, back in August chopped its estimate for 2008 U.S. video ad revenue by more than half, to $505 million from $1.3 billion. That’s a pretty significant downgrade more than halfway into the year, though eMarketer warned it was “more a change of methodology than of perspective.” But even with the methodology revision, eMarketer is forecasting growth to start declining after 2012.

In a market in which CPMs (cost per thousand impressions) for very similar ad formats can range from $10 to $100 depending on where they’re shown, it’s worth trying to pin down the factors affecting video advertising pricing. Everybody agrees that prices for video formats such as in-stream ads and overlays will stay at a premium vs. banner ads, but it’s not yet clear where rates will settle.

Jason Glickman, CEO of video ad network Tremor Media, attributes the major fluctuations in CPM prices for in-stream (mostly pre-roll) ads over the last two years to a combination of a few key factors. Initially, he says, there wasn’t much inventory, so CPMs were “north of $20 to $25 on a constant basis.” Then inventory started to increase, causing prices to drop to a range of $12-$20 about a year ago. They’ve managed to stay stable since then as budgets have started to migrate from television. Today, the most pressing factors affecting CPM prices are better accountability measures (a plus) and pullbacks on budgets (not a plus), according to Troy Young, chief marketing officer at competitor VideoEgg.

Video accounts for a tiny part of the $70-$80 billion spent on TV in the U.S. each year, and that’s barely starting to change. TV networks like CBS say they have always been able charge higher CPMs for the same shows online vs. TV, but that their digital revenues are not yet significant enough for that difference to be meaningful. Even by 2013, when eMarketer thinks advertisers will spend $5.8 billion on online video ads in the U.S., that will amount to just 7.6 percent of total TV ad spend and 9.8 percent of total Internet ad spend.

So going forward, what else might depress video advertising CPMs? First, online audiences in a post-TiVo world don’t much like ads, and in the “lean forward” online video-watching environment, they are more likely to reach for the mute button, employ ad-blocking software, or switch to another window. Second, the aforementioned demand for better tracking and accountability drives forward less lucrative performance-based ads. Third, while more intensive kinds of advertising like sponsorship and product integration are becoming increasingly popular, they’re even harder to measure. Fourth, the amount of inventory will only continue to rise, with more and better video being released and syndicated further out across the web.

“We recently brought down the average CPM again, to between $15 and $35, because of the development of video widgets,” said Brett Garfinkel, SVP of the original online content site maniaTV. “We can now reach more eyeballs for the same cost and afford to cut costs to advertisers and remain competitive.”

A big question for further growth is when advertisers will start to be comfortable with user-generated content. At this point brands are still extremely cautious about being associated with new content producers, perhaps unreasonably so, given that many of the big viral hits come out of nowhere. However, advertisers are becoming comfortable with a new kind of inventory — made-for-the-web content with high production values — and also with so-called professional content that is made for a lower budget so as to fit in better online.

But should advertisers accept UGC, it would open the floodgates for online inventory, which would surely come at a lower price. This is especially relevant for YouTube, which dominates the U.S. audience but only sells ads when it has a revenue-sharing relationship with the video’s creator, partly as a safeguard against profiting from unauthorized uploads. That means YouTube only makes money on an estimated 4 percent of its total videos. The site has recently been trying to milk that segment for more money by offering content owners the option to monetize copies of their shows and movies caught in YouTube’s copyright filter, and automatically playing post-roll video ads after partner videos end.

On the whole, video ads are still looking like a good market. But just like everybody else, online content providers would be well-advised to keep an eye on their balance sheets.

This article also appeared on Businessweek.com.

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According to founder and CEO Fabio Lima, the idea behind MovieMobz is to eliminate the traditional notion of theatrical windows for movies while opening up independent and art house movies to communities that might not otherwise get them — all while driving additional revenue. And it’s an idea that may be coming soon to a theater near you.

At first, the idea of cinema on demand seems completely impractical. Theaters are physical spaces with screen and seat limitations that only play so many movies in a given day. How could programming them be left to the masses?

It starts with Lima’s other company, Rain Network. A digital distribution system for theaters in Brazil, Rain essentially acts like a virtual private network (VPN), connecting art house theaters in 18 different cities. Currently some 62 theater complexes with 160 screens are on the system.

Those Rain theaters are connected to a central server running proprietary software that houses the movies and distributes them along with trailers and ads. Feature-length digital movies are upwards of around 300 GB, so Rain uses a private BitTorrent system on its network to speed up film delivery to the theaters and put them in front of movie watchers.

But first, MovieMobz organizes those movie watchers. It currently has 400 independent Brazilian and international films in its library. So let’s say a user wants to see “Film X” at a Rain-networked theater. That user “mobilizes” the film by sending a message to the MovieMobz community online, saying, “I want to see ‘Film X’ at this theater!” People from the community who also want to see “Film X” vote for it as well, and once enough people have voted, the screening is booked.

The number of votes it takes to secure a showing depends on the theater and the number of tickets usually sold there. For example, if a theater has 120 seats, and on any given Monday sells some 30 tickets, it will only take 40 MovieMobzters to secure a screening. And according to Lima, typically two people show up for every one MovieMobzter saying they’ll attend.

MovieMobz has been up and running for just eight weeks. In that time, 5,600 people have signed up for the service, what Lima called “very, very early adopters.” Two thousand mobilizations have been initiated and there have been 50 mobilized screenings — complete with highly targeted ads based on demographic and geographic data that MovieMobz has gathered about the viewers.

Will MovieMobz make it to the U.S.? “We want to go to the U.S. as soon as possible,” Lima said.

U.S. theaters are in the midst of a digital conversion that would open up such a possibility. There are 38,000 theater screens in the U.S., 5,000 of which have been converted to digital, according to the National Association of Theater Owners. Roughly 30,000 more screens will make the transition over the next 5-10 years.

According to Bud Mayo, CEO of Access Integrated Technologies, a company that helps convert theaters, digital cinemas open up new possibilities. “There’s opportunity to create incremental revenue, the opportunity to experiment,” said Mayo, who said that movie theater seats remain empty 85 to 90 percent of the time.

Going digital also means that people could revisit favorite older films on the big screen. “With film, because you have to spend a lot of money to maintain and ship the prints, showing catalog movies is not feasible,” said Mark Christiansen, executive vice president of operations for Paramount Pictures. “With digital you can move movies inexpensively, and they can be played at low cost, and you could make a profit.”

To our knowledge, MovieMobz is the first service of its kind. Amazon-owned Withoutabox offers a service called Critical Mass Ticketing that will let filmmakers and distributors book theaters, but the company declined to provide details for this article.

For the time being, DVDs and plasma screens will be the only way to watch the films you want. But maybe someday we’ll all be MovieMobzters.

This article also appeared on BusinessWeek.com.

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While this seems like a good idea, the guys at NewTeeVee who uncovered the story are being cautious, mostly because of the beta nature of PPVA. The other issue with this technology – it could make the video aggregators like YouTube crazy. Why? Because the first few seconds of the video are streamed from say YouTube and rest from the PPVA network. “This becomes an even bigger issue when advertisers start requesting more detailed statistics about online video usage,” NewTeeVee writes. Nevertheless, it could have some interesting implications for P2P CDN offerings.

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Many seem to have forgotten that YouTube used to allow long-form videos on its platform. Sure, most of it was not-so-legal, and consisted of the latest television shows and other copyrighted content. In early 2006, I wrote about being able to find everything from cricket matches to television shows on YouTube. They eventually pulled them down, but only to appease the content owners they wanted to sign up for the YouTube platform.

Of course we all know some of the largest content owners decided to back Hulu, hoping to make it the destination site for premium video content. Hulu’s fortunes are getting better, but YouTube has been no shrinking violet. The site has grown to 82 million unique viewers per month and is as dominant as its parent company Google is in the search business. YouTube is so big that it rivals Microsoft in the search business. What that means is that YouTube has a lot of eyeballs but has had a tough time monetizing the content on its constantly growing site. YouTube isn’t the only online video player having a tough time with monetization. Many people in the online video sales business say that even professional video on sites like Microsoft and Yahoo is proving hard to cash in on, with as much as 50 percent of the inventory going a-begging.

YouTube’s problems are more acute because many of the videos it hosts are really short, which makes the content less useful when it comes to embedding advertising into the videos on the site. So it makes perfect sense for the company to encourage long-form videos on its network. Given that none of the big networks are going to give them their content, YouTube is going after produced episodic content. The long-form video opens up more advertising opportunities for YouTube.

They indicated as much at a special event launching the YouTube Screening Room in Los Angeles today. NewTeeVee has a report. NewTeeVee notes that “YouTube’s been hitting the film festival circuit, talking with directors.”

The strategy is rather similar to the one used by Google’s to popularize AdSense. By partnering with smaller content developers, YouTube is betting that it can aggregate enough traffic to sell to Madison Avenue. At the same time, there is a good chance that some of these small players will grow to become large video players and partners of YouTube. They could easily become a hub for indie movies, smaller and niche television content, and even foreign content, making it tough for startups such as Filmaka and Jaman.

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