The FeedRoom announced this week that it will acquire privately held ClearStory systems with the intent of integrating ClearStory's digital asset management (DAM) solution into The FeedRoom's enterprise video platform. This is the latest in a string of recent acquisitions in the industry (Entriq/Dayport, Accenture/Origin Digital) with the intent of giving content owners more control over managing multiple forms of rich media assets.

On paper, this seems like a natural fit for the two companies since The FeedRoom does a lot of work in the enterprise market and to date, their content management solutions were very customized and focused almost exclusively on video assets. Adding a true digital asset management platform to the fold should only help The FeedRoom's customers deliver a lot of the other pieces of content that go along with video.

That being said, it seems kind of scary that as far along as we are in the market, we are only now starting to see some acquisitions with the intent of solving the work-flow and management issues associated with rich media content. Customers content management demands are only going to increase as more content on placed online and gets consumed.

Over the last 60 days, I have seen Akamai getting more aggressive with video delivery pricing and in some cases, appears to be doing a better job of trying to keep existing customers at the time of contract renewal. While that should come as no surprise considering current market conditions and Akamai's recent slowdown in the growth of their business, I think it's being done too late and on too small of a scale.

While Akamai's pitch to customers has always been that you should pay more if you want multiple services like content delivery, app acceleration and ecommerce services, for customers who need just video delivery, that sales pitch simply does not work. Yes, if you need content management or other services outside of pushing video bits, I think Akamai has a legitimate sales proposition. But for customers who need just video delivery, streaming or download and no additional services, Akamai has no justification as to why a customer should pay 3x the going rate. No one can debate with any reasoning that pushing video bits across a network is not already completely commoditized in today's market.

If Akamai was the only CDN who had the scale or performance to push even commoditized bits across the Internet, then the argument could be made that even if the service is commoditized, Akamai is the only major player in town so it costs more. But that is not the case. The fact that Limelight, Level 3 and CDNetworks combined will do more than $200 million dollars this year in CDN revenue proves that point.

While Akamai has been more aggressive on pricing for video delivery, many times, their pricing is not matching their sales proposition to customers. I am seeing many proposals where Akamai is pitching the customer on the value of their network for commoditized video delivery at 3x the going rate, yet when the customer balks at the pricing, Akamai proceeds to drop their pricing in half. That's a confusing message. If Akamai knows the customer needs basic delivery services, why try to pitch them on a higher level of service only to drop the pricing right away? In some cases, customers aren't even giving Akamai a second chance to bid on the business as Akamai's initial pricing is too high and does not make the initial cut. In cases where the customer does go back to Akamai saying the pricing is too high, I am also seeing Akamai cutting pricing by more than half, but only after three or four rounds of negotiations with the customer. Again, if this is commoditized business, why jerk the customer around? It should not take four rounds of negotiations to get a price that the customer is actually willing to consider. Give them a fair price for the service being offered and do your best to win or keep their business.

I know many Akamai investors are going to want to knock my reasoning by saying look how much cash Akamai has or look how big their revenue is. But no investor can argue that Akamai's business, while still growing, is showing some serious signs of slowdown and increased pressure from competitors. That being the reality, there are a few things Akamai should do to help increase their market share and increase the growth of their video CDN business.

For starters, Akamai should stop trying to charge more for streaming delivery than progressive download. I know some are going to say streaming costs more, but Akamai has long said that the value of their network is that it is so distributed and flexible that all their servers can delivery any type of content and do it at a cheaper cost. If that is the case, then there is no need to charge more for one type of protocol than another. And even if it is more expensive to Akamai, no other major CDN charges more for streaming. So like it or not, the market has dictated how customers are buying these services. Akamai can continue to think they can charge more or they can listen to the market and realize they are losing business to competitors due to their pricing strategy. If Akamai were to charge one price, they would win more business and get the opportunity to bid on more business. I can't even begin to count the number of times a customer has told me they are not going with Akamai due to Akamai's increased cost to stream content.

Second, Akamai should start offering two levels of content delivery pricing. If they are going to end up discounting their initial pricing by half, then just admit that some video delivery business is commoditized and come in with an aggressive price the first time. Do what you can to win this business outright. I know some will want to argue with me that Akamai does not want this business to begin with but then I ask, why is Akamai dropping their pricing in half? If they don't want the business, then stick to the high pricing they are giving out let the customer leave if you don't want them. You can't say you don't want the business to begin with, but then you drop your pricing in half to try and win the business. That's a conflicting message.

Akamai has been around for ten years now and no question has been the leader in the content delivery market. But times are different now and all companies need to deal with reality of what is going on in the market. Companies must evolve with the times and that includes how you price, package and productize your services. Akamai seems to be doing a really good job with their other services outside of CDN and lining themselves up as a company for when things like app acceleration truly begins to grow. But in my eyes, they are doing all of this at the expense of the CDN product, which is the service that really helped them grow for many years.

Some will say my argument makes no sense because if Akamai takes on this business, at a reduced cost, it will only have a negative impact on their margins. My response to that is that this business is all about volume and the economics of scale. While overall margins for CDN would go down initially, they would go up over time, as the added impact of so much additional traffic on Akamai's network would reduce their overall cost. Again, this is what Akamai has pitched the industry on for years, their ability to scale their delivery services like no other company. If that were the case, then signing up enough customers for commoditized video delivery services would have a positive impact on margins over time. I'm not saying for Akamai to give the stuff away or to match some of the lowest pricing in the market. I'm saying Akamai should price it to win, within reason, based on what the customers needs are and the type of traffic it is.

If Akamai re-tooled their pricing, their sales pitch and their strategy for how to deal with customers who only need very high volume of commoditized video delivery, they would win a lot more business. It would also enable them to hopefully be able to up sell the customer on additional services down the road when the customer grows their business and needs some actual services that come with a premium. If Akamai does not want to be in the business of offering commoditized video delivery, fair enough. But then stop giving out quotes for that business and pass on responding to the RFP. They can't have it both ways.

Akamai is not dumb, in fact, I've always thought of them as being very smart folks. And I don't think this is a case of Akamai not knowing what is going on in the market. I think Akamai has been in a comfortable position for the past few years, with little in the way of pressure and competition and is still sticking to their old mentality of how they sell their services. It's time for Akamai to evolve their CDN business and re-tool it for the current market. But to do that, they have to throw out the legacy idea that they are the only game in town and the attitude that comes with that. Akamai has all the resources needed to make this transformation in the market and now is the time they need t
o do it.

If Akamai is going to make this change, deliver a new message and adapt their CDN business to the changing times, I'm even willing to go on record and say I will give them any outlet they want, be it at one of our shows, my blog or StreamingMedia.com for them to deliver that message to the industry. Akamai has always been seen as the market leader in the CDN space, and as a result, is expected to educate and lead the entire market with their vision. That needs to happen soon as before too long, it's not going to be such a clear-cut decision as to who the market leader for CDN services is anymore.

Reminder: I have never bought, sold or traded stocks in any public company ever, including Akamai.

Lately, I've been getting a bunch of questions asking for the latest news on the Akamai and Limelight Networks patent suit. While there is not much news to talk about, Akamai and Limelight were back in court last month and there is a good chance the judge will issue a ruling by the end of this year.

Even if a ruling comes down in the next few weeks, it is unlikely that the judge will reverse the original decision in Akamai's favor and such a ruling would then just result in Limelight filing an appeal. Since the appeal process tends to move a lot faster, we can expect for both sides to be back in court probably by the second quarter of next year. When that happens, details of Limelight's workaround for the Akamai 703 patent will then be detailed and we'll get a lot more information on what exactly Limelight has done to circumvent the patent in their eyes.

It will also be interesting to see if Akamai files an appeal to any of the rulings from the Markman hearing in regards to how the court ruled on some specific language and the definition of certain technology. Some folks I have spoken to have mentioned that it might make sense for Akamai to contest a few of the rulings based on the interpretation of the technology. Whether or not this will happen is hard to say as most of the records and rulings from the court are not available to the public.

No matter what happens, this suit won't be ending anytime soon but a ruling this month could be important for Limelight. While Limelight has been a frequent target of take out rumors, anyone looking to acquire Limelight is going to wait until after the ruling when things are clearer. Even if the ruling only results in Limelight filing an appeal, any company looking to acquire Limelight will then be able to review their workaround and decide if they think the appeal process will be successful or will have a better handle on what damages may cost. Keep in mind, with the money Limelight has in the bank, even having to pay damages to Akamai does very little to impact Limelight's bottom line.

Limelight is reducing pricing in the market while at the same time increasing their margins, something I didn't see many folks talk about on their last earnings call. Last quarter they finished cutting a lot of the smaller customers from their network that weren't growing and they now have over 120 customers for small object delivery, ecommerce and enterprise services. They are starting to get some traction outside of the video delivery market and still continue to close big deals.

This is a very interesting time for Limelight as they are showing signs of added growth at a time when the market stinks and their market cap is down to $185 million. I still think Limelight gets acquired by a major telco next year but with the market being what it is, anyone not offering close to $8 a share and I think Limelight passes and holds out until the market improves. They have the cash to wait and don't need to be in any hurry to sell out. While there was some speculation three quarters ago that Limelight's CEO might be replaced if things did not improve by year's end, Limelight has had a couple of good quarters in a row and last week renegotiated CEO Jeff Lunsford's compensation package.

Whether or not Limelight can do anything to improve their stock price remains to be seen, but the company does seem to be building a lot of momentum for the New Year and is expected to drive a lot of marketing and product focus away from video and into small object delivery in 2009. That's probably not good news for other CDNs who have always been able to win business that required both video and small object delivery since Limelight has typically focused on mostly video related content.

Disclaimer: I have never bought, sold or traded stocks in any public company ever, including Limelight and Akamai.

I hate to add yet another post in the blogsphere about YouTube's live event from this past weekend, but I really have to ask, does anyone really care about it? It's not a big deal. Over the past ten years there have been a lot of live broadcasts on the web with music and entertainment acts. YouTube has no business model and can't figure out how to make money, even with all of their traffic, yet people are excited that YouTube did a live webcast as if this is some new, cutting-edge trend.

And why is there so much talk about how the webcast was delivered? I see all these posts talking about how YouTube worked with Akamai as if that is some sort of big news and people seem all surprised. Of course YouTube did not stream the event themselves and used a CDN. Who did they think was going to do this? Even TechCrunch says, "We’d heard rumors that Google had partnered with one of the big three live streaming services – Mogulus, Ustream or Justin.TV", "But instead of working with them, or building their own streaming media CDN, they chose to work with Akamai." Who does TechCrunch think Mogulus, Ustream and Justin.TV uses when they do large-scale live events? They aren't CDNs either. So even if one of them was "used", the event would have gone through Akamai, Limelight or another third party anyway. Why is anyone surprised by any of this? How is this a story?

But of course, that does not stop folks like TechCrunch trying to add drama by saying, "All this expensive CDN infrastructure really isn’t necessary to handle live video streams effectively. P2P software can handle it effectively and far cheaper since the users are serving most of the video to others." Really? Of all the P2P based services on the web, almost none of them support live streaming. Some say they do, but try getting a real demo of a live P2P stream. Octoshape works (used by CNN.com), but most others aren't doing live at all. So how is P2P going to solve the problem? It won't, but it's easy to simply make a blanket statement that says CDN is crap, just solve the problem with P2P.

I think too many people were expecting YouTube to roll out their own webcasting service, which makes no sense. If YouTube were to do that, they would not do it via their own network and would have to use a content delivery network. But the bigger question is does YouTube really need a live service? Absolutely not. If they can't make money with on-demand video, they won't make it with live content either.

I also read posts from a few folks who said the live event probably broke records and that it was the largest event ever online. First, that's not true. It is not possible for anyone to know what live broadcast has had the most simultaneous users because no one shares the raw data. Anyone can say anything they want since no one is checking it. I've done enough webcasts to know what the real numbers were, only to then see the client put out a press release the next day with numbers three times as large.

I don't get all the fuss about YouTube. It has no business model, no clear ad strategy, is slow to adopt technology, has poor video quality and has absolutely no focus at all. I'm reading articles now about how YouTube is starting to offer some videos in HD. You mean the same HD quality that ABC and others started offering a year and a half ago? Welcome to the game YouTube, late as always.

I think it is a shame YouTube gets so much attention in the press. I'm not surprised it happens, but in a time when we should be looking for those companies who truly have innovative products, instead, too much of our time is reading stories about companies like YouTube. I apologize for adding another yet post about them to your RSS reader.

For all the talk by the major mobile carriers and content owners of how "successful" their mobile video offerings are, none of them that I speak to are willing to give out any usage data that we can use to truly judge their "success". Last week, I asked Sprint for any data pertaining to the full-length NFL games they have started broadcasting to handsets but was told they didn't have any data to share, primarily because they don't want to tip off the competition.

MediaFLO, who's service is offered in a partnership with AT&T and Verizon, won't say how many users it has for the service. And Verizon, which in September added more full-length shows to their VCast offering, won't say how many users they have, how many hours of content has been viewed or even how many pieces of content have been consumed.

Of course that has not stopped any of the carriers from proclaiming their services as being, and I quote, "widely successful, "having tremendous growth" and giving out completely generic and useless data like "viewership increased by 100%". And while I have seen some research reports state the size of the mobile video market in the U.S. and what it is expected to grow to in the future, I can't seem to get research houses to say where those numbers come from. What is the data behind these projections? Is there any or is it a complete guess?

I am constantly being pitched by various carriers in the space who want the media to talk about how "successful" their mobile video offerings are, yet they give us no data at all to make their case. How are we suppose to talk about their video offerings in the market when we have no usage data, penetration rates, consumption numbers, and trending statistics? So why won't the mobile carriers release more data on mobile video usage? I can only guess it is because the numbers are so small they feel that releasing them will look like their offering is a failure. But we have to start somewhere, we need data to build off of. Has anyone seen any of the major carriers release any data like this to the industry? If so, I'd love to see where you found it.

Akamai said late today that it would cut 7% of their workforce, or about 110 employees, and will take a $4 million quarterly charge as a result. (8-K) Not good news for the CDN industry and this could be the first sign that the CDN market could see some effects from the poor economy, even with all the money that the content delivery networks have raised.

Will provide more details if I get them.  While Akamai is not saying how many layoffs happend in each group, they did confirm that the cuts are across all divisions of the company and that all 110 layoffs took place today. With 58 current job openings listed on their website, I would expect that will change over the next few days as well.

Updated: In regards to all of the open job postings on the Akamai website, Akamai says that they are still hiring for some specific roles, for instance within their Advertising Decision Solutions line. Exactly how many open jobs they still have is not known at this time.

Adobe got a big customer win this week when they announced that MLB.com would move from the Silverlight platform back to Flash for all their live and on-demand video. The two-year deal, which kicks off in 2009, will also see MLB providing a rich Internet application (RIA) built using Adobe AIR that will give viewers access for yet to be announced features outside of a browser. The new rich Internet application will not replace the current MLB TV Mosaic app and will be a completely new piece of software.

While there has been some speculation that Adobe may be providing MLB.com with some monetary incentive to switch back to Flash, I doubt that is the case. While similar in nature to the NFL deal, the NFL is a very different organization and has a history of feeling others should pay to be associated with their brand. Major League Baseball's Advanced Media (MLBAM) division is all about making the online video experience as easy as possible and making sure they can incorporate other forms of content outside of just video into the overall user experience.

That being said, there are quite a few interesting questions one has to ask based on this new deal, which unfortunately MLB won't answer at this time. For starters, since the majority of content delivery networks still charge more to deliver Flash streaming over Silverlight, is MLB's cost to deliver video now going up? And if it does, will it have any real impact on the cost of MLB TV? Looking at the MLB.com website, I can't find any pricing yet for the MLB TV service in 2009. Also, since the Flash Media Server can't scale as well as Windows Media in a live environment, I think a real possibility exists that MLB could move to a dual-vendor strategy for their video delivery. While Akamai has all of MLB.com's video business today, I would not be surprised if over time, some of MLB's traffic was split between Akamai and another provider.

I also wonder how moving back to Flash affects MLB's mobile based offering? Flash video does not work on many mobile devices like Blackberry's and the mobile market is one that is very important to MLB. And when it comes to DRM, Adobe has only just recently started providing a DRM solution in the market; hence folks like Netflix and others going with Silverlight, especially for Mac users. Does the new Flash DRM now restrict MLB.com in any way for videos that are purchased and downloaded to the desktop? I'm also interested in hearing if MLB.com will use On2 or H.264 for the encoding, or a combination of the two.

My initial thought is that since MLB.com has already worked with the Flash video platform in the past that a lot of this has already been worked out. But since it will have been almost a year and a half since they were offering MLB TV in Flash, quite a lot has changed with the platform. The one thing that I hope this has no impact on is the time is takes MLB.com to turn around highlights and video clips. For this past season, I was seeing Mets highlights from games in as quickly as ten minutes after they happened.

In my eyes, MLB.com has always been the leader when it comes to providing fans with a really good quality user experience actually worth paying for. I hope their switch to Flash video doesn't change any of that experience for all the various ways that fans are able to get video.

[Thanks to Beet.tv for the heads up when the news broke]