Video’s Impending Tsunami in Education

I have a few investments in the web video space. Specifically, Tubemogul and Edufire . I am off to Tubemogul’s Board Meeting today and am always excited to dive into the quarterly data. I will post an update from the Company tomorrow. Today, I asked Jon Bischke, The CEO and Founder of Edufire, to update the landscape from his daily battles in the educational video space…..Thanks Jon:

I’ve had several conversations recently with people around the subject of online video in education (specifically higher education). I’ve received many interesting reactions ranging from “No one in higher education cares about video” to “Video will change everything about education”. So which is it? Admittedly, I’m biased but I’m going with the latter. And here’s why…

Does it make any sense for 5,000 teachers around the country to teach the same college algebra or macroeconomics course every semester? Of course not. Obviously, if you could take a class from Greg Mankiw or Tyler Cowen why would you resort to taking a class from some mid-level hack (assuming prices were similar)? The only reason 5,000 teachers are regurgitating the same subject in 5,000 separate classrooms around the country is because as little as a few years ago we didn’t have the technology for thousands of students around the country to learn from the same professor.

Enter UStream Justin.tv LiveStream etc etc etc

So why is higher ed largely pretending like these technologies don’t exist (OK, there are some pioneers out there but precious few on a relative basis)? I think it’s the classic case of The Innovator’s Dilemma. If you’re making money doing something the way you’ve always done it you’ll largely continuing doing it the way you’ve always done it. And that’s fine and dandy until a disruptive innovation comes along.

That disruptive innovation could quite possibly be online video. Why?

Scale.

When you have scale in education you have crazy stories like Megastudy and celebrity teachers like this guy in Hong Kong. Teachers making millions because they are able to scale their ability to thousands of students. It’s like Kobe Bryant playing at Staples Center or Jagger at Wembley. These guys make millions and are celebs because what they do scales.

Scale breeds competition. Millions of boys growing up wanting to be Kobe or Mick. Girls who want to be Michelle Wie or Taylor Swift. How many kids grow up wanting to be a famous teacher? That’s about to change. Sites like AcademicEarth and TeacherTube are putting teachers in the spotlight in a bigger way than has ever been seen. Companies like Brightstorm and Educator.com are creating new uber-platforms for the best and brightest of the teaching corps.

And this = all good. Because one of the ways this is going to help is that it’s going to lower costs for education while increasing quality. The winners (ultimately) will be students and teachers. The losers? Those that are maintaining the status quo. Want to know what the most profitable segment of education is? Freshman lecture mega-classes. Do the math. Stick 500 students in an auditorium, charge them the full tuition and then subtract out the cost of one professor and some lowly TAs and you have a recipe for ridiculous margins (Kevin Carey does a fantastic job describing this phenomenon in this article) and subsidization of most of the other (money-losing) parts of the university. Don’t think video will change the landscape for those classes? Yeah, and I have some newspaper companies to sell you who didn’t think craigslist would affect their mighty empires either.

Last week we announced online CLEP classes at eduFire (full announcement here). Through those live video courses and the accompanying exams you can gain college credits for about 80% cheaper than a place like The University of Phoenix. We’re only a small blip on the radar and like a lot of the other disruptive start-ups in the space, likely to remain tiny for a while. But over time many of these blips are going to grow larger. And as Christensen points out in industry after industry, yesterday’s disruptor becomes tomorrow’s disruptee.

Video, most notably YouTube, has changed the landscape for a lot of industries. The web is a fundamentally different and richer place than it was just a few years ago. And pretty soon, the highly disruptive force that is video is about to sweep through the education landscape. The effects of the video tsunami on education will indeed be very interesting to watch.

Some Rules of Web Video We Still Must Heed

1. First of all, I agree with Ashkan – it’s the content stupid .

2. Because of Rule 1, you can’t force advertisers. Google’s buy of YouTube created this panic and rush to monetize and put stupid buyout and valuation numbers in the heads of video start-ups. Eventually, whether YouTube clones or even earlier adopters and content makers agree or not, we need like three steps back. The networks need to take those steps too. In the meantime, watch your freaking costs and don’t lie to yourself.

3. The networks need to start thinking of web video as a farm system. NBC is showing sighns of getting this as Alley Insioder reports with Jimmy Fallon’s new web experiment .

4. The networks (old and NEW would be wise to cull the talent in much better way than their typical stable of agents and other TV shows. They need to embrace the web as a deep broad talent pool (farm system) and utilize the tools available like Tubemogul (I am an investor) to discover talent. The faster they do this, the faster the $8 billion dished out in totum for online video gets put to better use.

5. Don’t be scared by the headlines proclaiming the end of web video because $8 (EIGHT) billion has been spent . In fact, do the opposite and just follow the rules above. Just Think about the following numbers for a moment before you call this a bubble:

Merrill Lynch wrote off $9 billion in bad mortgages in the first quarter of 2008 alone (and $29 billion since the meltdown began.)

F@#ck the bankers and f@#k the idiots telling you web video won’t be gigantic.

FaceBook and YouTube Dilemma’s…Not Revenue, but Valuation

The people at Craigslist got it right. They answer to pretty much no one. They have an awesome business and they hook guys up with naughty chicks.

Facebook and Youtube…not so much. Another day, another drama unfolding about the revenue problems for both.

Mark KookyZoookerberg is holed up like Yassir Arafat eating plums and sipping wine coolers while his salesforce trots around the globe trying to meet numbers met by the yutz’s at Microsoft and the VC’s that keep pumping money for servers and wine.

I could go buy a bazillion impressions on Facebook for 3 cents a piece. I won’t, because even that’s overvalued based on what I would get back. Guaranteed the brands are figuring out how to go direct and the agency model is screwed once the brands get wise and focus on engagement and not impressions.

That said, Facebook and YouTube (actually could be someone different, but same industries) WILL solve the revenue problem so the quarterly noise surrounding met and unmet revenue issues is just that, noise. Actually – Ashkan as usual gives you an example of how small the problem really is .

It’s just sad that the defections from both companies will be massive and I guarantee you the internal hate must run deep for PookyZooky from his lieutenants.

YouTube has no problems other than the price Google paid for it. Facebook has only three problems KookyZooky Baby Jesus, Microsoft’s breath on it’s neck and the valuation.

Not the end of the world, just more opportunity for the little guy’s like you and me.

Days like today remind ME why I am LONG social networking and web video (at $3 billion, I will also buy some facebook stock if anyone is selling).

TubeMogul: What Counts As a “View?” Depends On Who You Ask

First off, thanks to Howard for adding TubeMogul as a guest author this summer to write about online video, particularly about trends we see in the massive amount of video viewership data we compile. Our goal is to let the data speak for itself, and we appreciate Howard giving us another forum to do that.

Speaking of data, yesterday we released research clarifying what counts as a “view” across video sharing sites. This study was initially published last June to great fanfare, so we re-executed it under current conditions, this time testing 14 sites to see if views are counted for refreshes, watching more than half a video, watching a video to completion and watching embedded videos.

The results? To our surprise, all but three video sites we tested logged “views” once the player starts, no matter how much of a video is viewed. YouTube and Yahoo!, which formerly had stricter, IP address-based constraints, lessened their standards since last June, now counting everything once a video starts playing. Blip and MetaCafe are lone holdouts to a stricter standard.

The study was picked up by the Los Angeles Times, Silicon Alley Insider, NewTeeVee and others.

Web Video…More All-Time Highs Ahead and Welcome TubeMogul to The Blog

First of all, thanks so much to all the commenters and emails and new readers that keep flowing in…your comments are always read and appreciated and it’s fun to mix it up and goof off a little.

I am headed to Toronto for the Summer with the family and will be working from KBC’s Toronto headquarters which are SWEET.

It’s tough coordinating a Phoenix shutdown for a few months and so while I will continue to post very frequently I think the blog will take a more idea generating tone and be less focused on conversation, but maybe I am wrong. I will be reading less and surfing less so price and the bigger trends are all I will be focused on…as well as helping out portfolio companies and managing my hedge fund.

The good kharma continues to flow and after stupidly losing my Mac Air at my fave local hangout by walking out yesterday without it and not realizing until this morning, it was generously turned in by someone and now held by the owner, a buddy. That’s just lucky. I have been nasty agitated of late and the best way to get it out of my system is to share more and bang out positive ideas and trends for us to ride.

Obviously, I continue to believe Web Video is a grand daddy of trends and so I am happy to have TubeMogul’s David Burch aboard as a summer guest columnist on web video trends. TubeMogul’s data is being smartly organized into regular posts over at AlleyInsider as well.

Over here, David won’t be writing opinion posts, but serving up real data about real online video trends. The data they are collecting is just too wide and deep for me to cover and link, but I think you will appreciate the content and ideas that can be generated from what you will read here. At worst you will see the hottest, most viral videos on the web right here and frequently.

Here is a great post from Michael today at Alley Insider entitled ‘The New Lords of YouTube ‘ using TubeMogul’s data. Some new classics.

It’s hard to ignore this trend and a lot easier for American entrepreneurs than starting complex alternative energy companies or digging mines and building plants. Sure, the smartasses will say that there is no honor in it and it’s a snapshot of America’s bigger problem (like we have just one), but I say embrace it, lead it and the less friction the better.

America is all about exporting culture for the forseeable future ( I was on this for you back in 2006 ). You can fight it and complain, but you should also embrace it.

Web Video…So Many Problems, So Few Solutions…For Now!

Mark Cuban is pretty hateful on web video. He has hated YouTube forever. Hate does not make you money.

His hate has been misplaced. He should have been hating on Jason Kidd so that he would not have blown the franchise.

He does makes some excellent points about the problems for the web video industry , but when you look at any industry in the top of the first inning, it’s easy to poke holes.

On the high end, maybe $1 billion has been spent on web video content and web video deals (not counting Google buying YouTube for paper). That’s like an afternoon of currency and mortgage trading losses for UBS .

I like the hate. Keeps all the really loose billionaires away so us small fry can build a stake for ourselves.

Tell me web video does not work in three years. In the meantime, hedge the bet by owning GoogTube.

Product placement will be much further evolved in three years…because it has too. If not, you own Google because they will be priniting money for buying YouTube as everyone else will be out of business.

Discovery, syndication (biased – investor in TubeMogul ), promotion/ community (biased – investor in vsocial.com ) and matchmaking for good video and ad dollars is embryonic.

While he hates and makes bad trades, there is opportunity.

YouTube as GOD?

So today YouTube is saying that everysite should be a YouTube. It is a smart, obvious chain of events in their pursuit of video dominance. The nerds are gaga. It’s what nerds do when API’s get released.

When Adam at Wallstrip explained to me Wallstrip everywhere and was blogging the stuff a few years ago, I bought in. Fred Wilson did too and away we went. I was no expert but it just made sense. The web is not TV. Fat pipe, shmat pipe.

Obviously having great content matters, but it’s harder and harder to make destinations profitable. There is just so much competion for the eyeballs and so many ways for users to organize the content they like in one spot. This is not new news to web application and service companies, but the nerds are now all gaga because YouTube is finally doing it. This bear market will do in sites like TheKnot.com and TheStreet.com unless they adapt to their content delivery…yet again. The poor web bastards can never sleep. The freaking game is changing by the hour, not decade. The TV guys have had it way too easy for 50 years.

Here are two good explanations of YouTube’s move and Everything/Everywhere – Fred and Dan Frommer (AlleyInsider.com, former Doubleclick founder).

I am biased, but I don’t buy into the fear of YouTube as dominant video God of all things because of this release or coming releases. You can’t be all things to all people. There will be fear and dislocation, but the move creates opportunity.

The Knot.com and millions of other businesses will not roll over to YouTube for video hosting because they can’t be hand held and because they won’t just give up all the data to Google quite yet.

It pays to stay up on the news and hype, but don’t just believe the headlines…at least if you want to make real money.

‘The Future is Web services Not web Sites – is OLD news – and YouTube has the luxury as leader of playing catch up, pound the chest and intimidate. Microsoft had the same advantage. It’s why I own Google right now (sorry Rachel and max), but why I am not running around scared for VSocial.com or TubeMogul.com (which I am an investor).

YouTube Dominance Continues…The Great DEFLATOR!

Asset inflation is rampant. I have few opinions but have been adamant about how we are being inflated to death. I have blogged about WINflation and I still believe it, but as a total pie argument, inflation is a killer and chips away at us all in some way . Fred had a good post on the dangers of inflation in the venture and private equity world . He is dead on and you must be careful.

I still believe we will have major winners if you understand the landscape I am describing and Fred does in his post. Let’s look at YouTube.

I am not amazed at the continued dominance of YouTube. Google stole the business and YouTube keeps on keeping on. I know the argument…YouTube built on theft and copyright.. and yada yada yada, as if the old media content companies are clean…please.

YouTube just had their big conference in New York . They unveiled some new analytic tools which are so important as the tidal wave of video surges. Darren was there and has some good insights .

It’s an unstoppable force. It’s cheap and people will just keep making it. For those worried about all the noise, it’s going to slowly be solved as discovery tools along with search get better.

Though they dominate, the remnant video sites will always be important. Those that syndicate, gather and analyze will always be in a strong spot and it’s why I invested in TubeMogul back a few months.

Web 2.0 is always talked about as a bubble, but what it really is and I said it first back in July 2006 is a DEFLATOR of 1.0 Companies. In it I used now on auction block Gety Images as the sad example . I said more GETY’s to come…

For example…New York Times, Microsoft, Yahoo (pre acquisition nonsense), Time Warner. Get used to it.

You need to position yourself and your portfolios accordingly to be invested in the DEFLATORS and WINflation leaders.