This afternoon, Wired.com published a story with the headline of "YouTube’s Bandwidth Bill Is Zero. Welcome to the New Net." I don't know how they think can publish a headline like that when, as the article explains, a new report by Arbor Networks, not Wired, estimates that Google "is simply trading traffic, with no payment involved, with the net’s largest ISPs." So why is Wired.com using a headline that is telling us, as a fact, that "YouTube’s Bandwidth Bill Is Zero," when they aren't even the one's saying it? Not to mention, no where in Arbor's actual report, from what I have been told, do they imply that YouTube's bandwidth bill is zero, and in fact, in the Wired article they are quoted as saying they think Google's "transit costs" are close to zero".

Transit costs are not the same as bandwidth costs and Wired should know that. They then go on to say that, "the lack of a monthly bill in the mailbox doesn’t mean Google’s internet connection is free — it’s just that it has purchased unused fiber optic cable known as “dark fiber” — and uses it to carry its traffic to other networks where it “peers” or trades traffic with other ISPs. Its costs for bandwidth are then amortized across the life of its fiber and routers." Well make up your mind. Is it free or not free? You're saying the "bandwidth" is free, but the transit has a cost?

Even if Arbor's argument is accurate in regards to Google's transit costs, that does not mean YouTube has no cost involved in delivering video. Not to mention, the Arbor report, which is not even being released until October 19th, is only referencing how large ISP's trade traffic with Google but makes no mention of smaller ISPs. The Wired article also implies that the YouTube website uses "streaming" to deliver their videos, which we all know is not accurate. And while distinguishing between protocols may seem like splitting hairs, it's not when you're talking about delivery costs since we know that it costs more to do true streaming as opposed to HTTP progressive download.

The Wired article goes on to say that, "…the real money is in the ads and services in the packets, not in moving the bits from computer to computer. The cost of bandwidth has fallen and so too have the profit margins for moving bits, even as traffic grows at an estimated 40 percent a year." Can Wired explain what they mean by "services in the packets", what is that? They say the cost of bandwidth has fallen, but don't say by how much and they say the profit margins have fallen as well, but don't say for whom. Not to mention, they say that traffic is growing "at an estimated 40 percent a year," but don't say who's traffic they are talking about.

I'm not a brilliant writer, my grammar can use a LOT of work, but I have no editor and am a one person blog. This article by Wired not only contains bad info, but has terrible grammar mistakes in it like "dump pipe", when I think they mean "dumb pipe", and has phrases like "you might even asking". I expect a lot more from a story by Wired when they are talking about technology, yet can't even get the basic terminology or facts accurate.

Earlier in the month, during Akamai's webcast about their HD network, Tim Siglin pointed out on his blog that Akamai's claim that they could deliver HD video to the iPhone wasn't accurate. Tim had a lot of back and forth emails with Akamai, which he documents on his blog here, and I questioned Akamai on the same topic with a post entitled "Does The iPhone Support HD Video? I Say No. Akamai Says Yes".

Earlier today, at the Streaming Media Europe show in London, Tim reported that Akamai has changed their stance on the subject and now acknowledges that they are not delivering HD video to the iPhone. From Tim's blog post a few hours ago:

[Akamai's Suzanne Johnson, who will be appearing on my panel at Streaming Media Europe 2009 later today, has confirmed that a more accurate version of Tom Leighton's "45 million iPhones capable of playing HD content" statement should have been stated as this:

She also stated that Akamai understand that "the iPhone does not display true HD by definition but can offer consumers an HD-like high quality video experience that complements what they get on TV."]

I think it is important Akamai has changed their stance on this as HD quality video is very important to the future of all companies involved in the online video space as well as how it is defined. We need to keep the standards that we think of with broadcast HD quality to be the same when talking about online video so there is no confusion as to what's HD, and what isn't.

While it's good to see Akamai acknowledge that they aren't delivering HD video to the iPhone, I'd like to see Akamai define what they consider to be "HD quality" when they are talking about delivering "HD quality" video across their network. I still can't find any definition of this by Akamai on their HD Network product page.

[Update. David Boyll from San Francisco was the winner of the Popcorn unit. Thanks to all those who entered.] The nice folks over at Syabas Technology sent me one of their new Popcorn Hour C-200 networked media streamer units for me to review, but with the Streaming Media West show next month, I won't have a chance to do a product review anytime soon. CNET UK and Engadget did reviews of the Popcorn unit already so check out their sites for some more details.

While the fact I won't have time to review it is bad news for me, it's good news for one of you. Syabas has given me permission to give the Popcorn unit it away for free to a reader of my blog. All you have to do is leave one comment on this post with your real name and a valid e-mail address. I'll pick one user at random on October 26th and I'll even cover the shipping cost to the winner.

Thanks again to Syabas for the gear and the giveaway!

Due to a few last minute cancellations and changes with speakers for the Streaming Media West show, I have a few speaking spots that have opened up. I am accepting speaking requests from everyone for these spots, including from vendors. They will go fast, so email me right away if interested.

Wednesday, November 18th, 2009, 11:45a.m. – 12:30 p.m.
Monetizing Long-Form Video (panelist)
Everyone has heard about ways that online video can be monetized, but has anyone ever
heard an actual case study depicting success in video monetization? For all the
talk of short-form videos from YouTube and other UGC sites, professionally
produced, long-from video content may have the best potential to create
sustainable online video monetization. With the rise of Hulu and major
syndication deals making long form video more prominent, if not prolific
online, what is working today for content owners and portals that want to
monetize this format? This session will show actual success stories with
actionable takeaways, as well as a discussion of what the future holds for the
success of long-form content.

Wednesday, November 18th, 1:45 p.m. – 2:45 p.m.
Making Effective Online Video For Education (moderator)
The tools for making video are becoming increasingly accessible and easy to use. But when it comes to providing quality education, simply making video is not enough. To be truly useful, video must not detract from the content, and ideally should enhance it. In this panel experts in the field will discuss methods and tips for producing programs that make the most of online video's advantages in order to create a better learning experience.

Thursday, November 19th, 2:00 p.m. – 3:00 p.m.
How Old Media Is Embracing Online Video and New Media (moderator and panelist)
This session will discuss how converging media technologies are redefining traditional distribution methods; how interactive and on-demand services are changing; and how entertainment and news video is being consumed. Come hear from some of the leading publishers, broadcasters, and advertisers about the impact that video and new media is having upon their business models.

Tomorrow at 2pm ET I’ll be moderating another StreamingMedia.com webinar, where Microsoft and Level 3 will be presenting details on how to deliver HD video over HTTP.  Attendees will learn about Smooth Streaming technology and how, when combined with a CDN, it can deliver high-quality video, making true HD 1080p media experiences a reality. You’ll also learn:

• What Smooth Streaming is and why it is the future of online video delivery
• How Smooth Streaming delivers HDTV-quality experiences over HTTP
• How it has been successfully implemented for major live events and on-demand content
• The end-to-end steps for delivering your content with Smooth Streaming

There will also be an extensive Q&A session after the presentation so bring your questions and we’ll get to as many of them as possible. You can register to attend this free webinar here.

While many large ad small CDNs continue to try burn through a lot of cash, trying to turn a profit from delivering content on the web, content delivery network EdgeCast has been EBITA positive since Q2 and become profitable last quarter. The company, which has raised just $6M in one VC round, and a little over $10M in total, has grown their business very nicely in the past two years, with only a fraction of the money other CDNs have raised.

While EdgeCast won't talk about or disclose their revenue, I know they are slated to do between $15-$20M in total revenue for 2009. This is a far cry from the CDN revenue that Akamai, Limelight, Level 3 or CDNetworks is doing, but it does show that CDNs can in fact be profitable. While it is easier to turn a profit as a smaller provider, since you need less money, to date, even most smaller CDNs haven't even been able to survive. Panther Express raised over $20M during the course of their existance, wasn't profitable and ended up being sold for around $2.5M. (Originally I reported the number was $5M, but have since learned it was even less than that) CDN Vusion burned through $11M in VC money in 24 months and went under earlier in the year. EdgeCast has spent half the money Panther did, and has almost the same revenue to show for it, as a profitable company.

Over the next few months, EdgeCast is going to have to decide how big they want to grow to and what they want to become. While they can still grow their revenue, if they want to take their business to the next level  and say double their revenue, they'd have to go out and raise more money. Doing so would put them under a lot more pressure to grow faster and try and maintain profitability at the same time. But if they want to remain profitable, stay small and nimble and work towards being acquired by one of the telcos, they can just keep doing what they are doing now, with no additional funding.

For their part, I hope they stay small, stay focused and don't raise a lot more capital. Multiple telcos have said how much they like working with EdgeCast and a few of them have even publicly predicted that before long, one of the telcos will have to acquire someone like EdgeCast when the telcos are forced to stop re-selling CDN services and bring them in-house.

Yesterday, TiVo and Blockbuster announced that consumers who have a Series 2 or Series 3 TiVo unit can now rent movies from Blockbuster. The service, which was originally announced in March, went live yesterday with movies costing between $2.99 and $3.99 a piece. While the release says that "subscribers can now rent hot new release movies", I couldn't find any movies to rent that I would call "hot new releases". The "new releases" section contained movies like "Shrink", "The Last Resort", "Dance Flick" and "Battle For Terra". As of this morning, there were 658 movies available to browse and Blockbuster said that "in the coming weeks," it will expand the number of movies available and provide a "select" number of HD titles.

Frankly, I don't understand Blockbuster's strategy with TiVo. While it makes perfect sense to bring their content to the device, why launch with a service that's only half baked? One of the biggest arguments made by Blockbuster on why they have an advantage over Netflix is that they have rights to first-run movies, something Netflix does not have. But then they launch the service with no first-run movies and don't even offer anything in HD quality.

While it's good to see Blockbuster working to get content on more devices, TiVo alone won't do much for the company since according to TiVo, as of last quarter, the company had 1.6 million standalone TiVo subscribers. While TiVo doesn’t break out how many Series 1, 2 or 3 units have been sold individually, if we assume that one million of these subscribers have a Series 2 or 3 unit, Blockbuster is realistically reaching a million or less consumers. And based on adoption numbers we have seen with Netflix's streaming on the Xbox 360, about 10% of Xbox 360 owners use the Netflix service. Keep in mind, Netflix streaming is free so the adoption numbers will be higher than those who have to pay to stream a movie with Blockbuster. That puts the number of consumers who are realistically going to use the Blockbuster service on TiVo probably at around 50,000 or less. That's not a big number.

Anything Blockbuster can do to bring content to more devices will help the company and this is the first step of many. But without having "hot new releases", HD quality and a large enough consumer base, Blockbuster is still going to have trouble getting their digital media strategy to pay off.