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How can we save mom and pop Video Stores?

Sunday, March 15, 2009

The mom and pop video store has been a dying breed since blockbuster started dominating the space in the mid 1990's. Film aficionados, hipsters and activists alike tend to lament the benefits of salvaging these dinosaurs, but few of us can resist the lures of mail fulfillment services or on demand HD streaming.

I was very sad to discover that Insomniac video in San Luis Obispo shut down recently, replaced by various Blockbusters throughout town. The "Leather Tongue" on Valencia street in San Francisco recently shut down under similar circumstances. Also on Valencia, Lost Weekend Video faces a similar fate if business does not improve. My friend works at Lost Weekend and we were recently debating American Apparel's right to do business on the street. I pointed out that AA created a sought-after image, and has the right to sell its product wherever people are vain enough to buy it. There is no mom-and-pop boutique that sells their stuff. On the other hand, I told her I would oppose the introduction of a blockbuster, which is hollow as a brand and leverages the wall-mart-like capabilites of scale to dominate the market.

I've never been impressed with blockbuster. Movies are a merely a commodity, service an inconvenience.The bright lights and crowded aisles annoy me. I purposely start at "Z" instead of "A" in the new releases section, just to avoid being caught in the left-to-right cattle procession of prospective viewers. I can never remember what it was I wanted to watch in the first place and I find that I judge a movie by it's DVD jacket far too often. The blue and yellow glow is the only option in most cities, unfortunately. To make things worse, they added a fulfillment-by-mail service to compete with netflix and greencine.

If competing with blockbuster isn't enough, tack on on a flailing economy and also the botched introduction of yet another new medium: Blu-ray. There are some tough decisions for the small operation to make, such as how to strategically purchase new inventory and what to do with older titles that do not perform, including decaying VHS. How does one maintain enough new releases to keep a mainstream clientele, while also stocking the niche and cult films that are sought out by the more avante garde following of film buffs - the staunchest supporters of an independent supplier.

This has me thinking, how can I help save the mom and pop video store? Obviously I am inclined to think that the business model itself needs help, but I also think there are software solutions that can reinvigorate the consumer experience, and make it a lot more convenient. Netflix has made my movie browsing experience incredibly rich and relevant. It keeps track of a list of movies I've watched or rated and a cue of movies that I am waiting for. They offer over a hundred thousand titles - yet the on-dmand selstion is weak and I still enjoy the instant gratification of a video store on the way home from dinner. What if there were a way these services could compliment eachother? The mom and pop shares a common enemy with netflix, and that is blockbuster.

I depend heavily on the recomendation engine in Netflix and have rated over 600 films that I have watched. There are over 300 films in my cue. Most video stores keep a record of rental history. What if I could import/export my Netflix watched/rated/cued to my local video store account? What if they could export/import my rental history to netflix? Most video stores have a computer for customers to use. If I could walk into the video store and login to a terminal, with my netflix cue and a few dozen recomendations, I would have a much quicker and organized selection experience. The video store could devote more space to cofortable browsing terminals and get rid of the aisles of empty boxes, requiring much less square footage for the operation. The sleeves used to ship netflix videos are far more efficient for storage than even the smallest jewel box. Local stores should also adopt return envelopes to make it more convenient to return DVD's.

On the topic of software, I think there is a lot that can be done. Software is becoming one of the biggest disadvantages for the small business. There are several small companies providing database and POS packages for video stores. http://www.theultimatevideo.com/, http://www.rapidrental.com/, http://www.vmtsoft.com/, etc. I'm not sure what blockbuster is using these days, but up until a few years ago it was still a DOS-based, non-network-connected package, this has always amazed me. You couldn't use a membership or return movies from one blockbuster at another. I think this has changed, not sure. If the small software companies providing these solutions want to survive, they should also consider a change in business model from selling products to selling a service.

There needs to be a new software solution for the small video store. This might consist of some kind of generic service similar to netflix in features. There would be a hosted and shared database of all movies that any participating store can tap into and offer a subset of. There would also be a databse of secure user records that can be shared from one video store to the next under the user's terms, and a third and more secure databse of transaction records for each physical establishment using the system. This would create the basis for a loose and wide federation of member-only independent video stores. Each store using this software would provide the users with a consistent user interface, such that if a customer moves to a new city, they can quickly find a new independent shop to rent from, with the exact same experience.

Here is where it starts to get interesting. If your software is running as a service and tapping into a shared databse, not only would members be able to transfer preference data from store to store, but stores could actually share inventory data in partnership and provide certain kinds of fulfillment services to eachother. If for example I rent a movie from my cue at the local store tonight, they should be able to automatically check for the availability of my next film and obtain it from across town if necessary so I can pick it up tomorrow night.

This is the point at which the idea becomes more complex, and netflix again begins to re-enter the equation. There has got to be some way that a company like netflix can cooperate with the local video store - combining forces to compete against blockbuster. There is no way in hell that netflix or greencine is going to get into the brick-and-mortar business, but if they could some-how act as a compliment to the local video store's offerings and keep them alive, then maybe we'd have something. I think that if netflix were to offer a hosted catalog, user accounts, billing and alternate fulfiment service to video store owners that they might be able to slow down blockbuster's growth and keep the mom and pop open a few years longer. The rental history data collected from users and stores could be mined to help local stores predict which titles to purchase. Out-of-stock items could be outsourced to netflix and shipped. Depending on who fulfils what, the store and netflix split the customer's monthly dues or per-movie fees, depending on how the user chooses to pay.

Ideally, I'd like to see this as an independent and open source service - which could tap into greencine or any other fulfilment outfit but I also think it is something netflix could do as a gesture to the small business owner and the film community in general - while becoming even more competitive at its core business. Perhaps flixster would be the ideal candiate for hosting user data.

My questions to the video store owner:
* What software do you use?
* What format is your movie database in? Can it be exported?
* What is the unique ID for each movie, is it something like an ISBN for books?
* How do you store customer data such as rental history?
* How many computers physically exist in your store?
* What is a typical monthly operating cost?
* How much waste is attributed to buying the wrong movies?
* Where do you buy from?
* How many movies can you physically fit per square foot on average?
* Do you think people would browse movies at terminals (like a jukebox)? Would this kill the "essence" of a video store?

The deal is done: AOL, you've got Bebo!

Monday, May 19, 2008

As of this morning, the AOL/Bebo acquisition deal is a thing of the past. I am proud to announce that after almost two years of working for Bebo, I have survived the merger process and am now an employee of AOL. The real surprise is that I am actually very excited about working for AOL.

AOL and I go way back. I became a customer around 1992, after having tried compuserve and prodigy and having spent several years connecting with a 1200, 2400 and then 9600 baud modem to several local and toll free bbs systems. AOL emerged as the best contender for a geek like me to connect to the early internet. I can remember using AOL to connect to FTP servers to gain access to free software, and then using AOL mail as a mechanism for sending large files (long before napster) to friends - upload once, send forever. I still retain my original aol screen name "jozecuervo", which has followed me ever since on every service and is now my domain name as well.

I stopped using AOL as an ISP sometime in the late 1990's when the ISP business started to commoditize and other services emerged to compete. I worked for an ISP when I was 17, so no I had no need for AOL. I had grown tired with the proprietary software and content experience and switched my email over to hotmail. I had begun using Trillian as an IM client. The one thing I kept using from AOL was the AIM protocol, though I never had a good reason to go back to the native client. This certainly seemed to spell the beginning of the end for AOL, especially as an ISP. The one thing that I believe kept them alive was the fact that computer illiterate America does not like change and people didn't want to change their email addresses. It was slightly more inconvenient to leave than it would have been to stay, at least for a little while.

So here we are in 2008. If you told me 3 years ago that I would end up working for a major media company and enduring a near billion dollar merger, I would have laughed and told you I was more of an indie startup guy. After all, I studied media theory at Santa Cruz and spent most of my time writing papers about how media ownership consolidation was bad for free speech. Furthermore, of all the mega-internet-media companies I would never have guessed TWX/AOL, maybe a Google or Yahoo or at least Microsoft, Newscorp or a Viacom.

AOL's affair with TWX never materialized in a meaningful way. The ISP business has now been forgotten. There are 4 or 5 major IM networks and major webmail providers. Google owns 5% of AOL which has in turn been acquiring company after company and now AOL grabs Bebo... so I have to ask myself why? Is this a good fit? Where is AOL going and why should I care? Is AOL a sinking ship or a rising star?

I think the answer is yes - this is a good fit. And here's why:

1. This is the first chance to holistically merge an IM network with a Social Network.
AOL has AIM, which is huge in the US but has been unable to successfully transform into a real social network via AIM pages. Bebo lacks an IM network or functionality, but has a large audience in the UK, NZ, Ireland. There is enough overlap in each to spawn some serious growth in both networks. Win-win. Not to mention, how cool it will be to have AIM tightly integrated in Bebo.

2. Bebo needs good content.
AOL has good content on its own, via TWX, and via partnerships with the other large media companies. Win-Win.

3. The 3 tier reorganization makes sense.
AOL has stated that it intends to focus on 3 areas: Platform-A, People Networks and Publishing. Notice the word "ISP" is not in there? Finally. People networks is not just the division Bebo will be a part of, but it is an entire third of the business that Bebo can actually drive. AOL has placed Joanna Shields (from Bebo) at the top of this organization and is really demonstrating that it wants to learn from bebo as opposed to simply absorbing bebo. I think the right people with the right ideas are in the right positions to make the right kind of changes.

Today is day one - and I've barely checked my email. This is just the beginning and I know that the bigger the ship, the harder it is to turn - that the world does not change overnight. However, the world just did change overnight. The small startup of 12 or so people in a garage that I joined 2 years ago no longer exists as an entity (only as a family). I work for AOL now, who woulda thunk? The dust is still setting but I am already looking for direction, seeking out new friends, forging allies and rallying to the cause. I never thought I would say this in a million years, but I am totally stoked to be working for AOL. Now to read up on the TOS - and update my profile for the first time since 1996!

Web 2. Session: Comparing Social Platforms 4/23/08 8:30-9:20

Wednesday, April 23, 2008

Innovations on the profile.
Facebook: Vague as always

Bebo: We've always been focussed on engagement. App charts via ratings. Shying away from emphasis on installs. Tangible Metrics. Encourage time spent and retention. Not throttling or sanctioning.

MySpace: Innovating on Home (private) and profile (public). News, Auctions. Early stages. IRC channel for dev community. Taking it slow. Makin data available to developers, Movie and Music data access. Making on site data stores more convenient to use.

Data Portability
Facebook: Intent is to enable user to take data with you wherever you go - both user and developer. Intentionally restrict access to contact information for spam purposes. As industry "our responsibility to work together".

Sixapart: Evolution of mashups into apps, opensocial. Next evolution, not one website inside of another, but two working together.

Google: OpenSocial is intended to be useful on the web in general, not just social network. Extensible, (hi-5). SN can expose additional services and api's. HI-5: Photos and presence.

Google: Facebook creating a new area. Standards can be beneficial because they can establish a market for everybody.

Deals before and after the launch of FB Platform.

MySpace: Open social extensions enable them to choose whenever they need to play along with standards or go their own route.

MySpace: Arrogant to think they can do better than the developers. As we expand music venture, going to make music data available to both internal and external vendors.

SixApart: Too much variation in API's for OpenSocial, photos in Flickr vs. MySpace photos.

Google: Api's for Apps on a platform!

Facebook: There are amazing Verticals that have not ben tapped yet. Sports, Productivity, etc.

SixApart: Our app competes with our own beacon notification.

FaceBook: Distribution is the big mess. Lots of rules to figure out.

Bebo: Building a marketplace. Looking into other verticals. How can apps help us and how can we help them? Partnerships cannot be to narrowly focussed, such as with a single video game company.

Facebook: Reputation system for Apps. User experience. Different types of distro opps depending on how users perceive the apps. Help users understand how to give feedback. Algorithmic as possible as opposed to taking an editorial role.

How are you going to change the mentality o developers to cooperation?

Bebo: Ensuring that viral channels work. Developers will try to game those channels. Promote and reward the most engaging apps. Focus on building a compelling product as opposed to trying to spam users.

MySpace: Lineage of people trying to game the system. App that sends external email to users. Mail spam is not like social spam. Apps getting chatty...

FaceBook: I think that in any system there's arbitrage. Same behavior in any market place or system. Our job to be in service of the user. Some apps do need to send a whole bunch of emails. EX: Causes is doing a positive thing and FB wants to encourage that. Some apps have a low threshold, others need to send a lot of notifications. How do we set rules and create incentives for the developers while maintaining a good user experience?

Google: Open social has a wide set of viral channels available. Each network chooses which channels to utilize. Google likes to se the word "organic" instead of "viral". Channels: Activity Stream and Messages

Facebook: Apps that focus on viral growth grow fast and die fast.

User Experience

Facebook: Apps often viral, but lacking social.

Monetization:

MySpace: Apps need a large install base. Focus on Self-Serve and hyper-targeting. Testing categories in hyper-targeting.

Bebo: Anyone trying to build a marketplace has to think about monetization. How can we ashare data that helps the developer monetize? Over the next year, a lot of cool new developments and innovations.

Facebook: 2008 a big year for monetization. FB working on social commerce. Commerce engine, payments. Fluff Friends, etc using virtual currencies.

Sixapart: MAKE IT EASY FOR THE DEVELOPER! Controlled extensibility. Far too difficult.

Google: BTW, We already have monetization, AdSense and Google Checkout.


Bebo: Downtime? Uh, downtime sucks.

Sixapart: We have FOAF and XFN woo hoo!

Facebook: What does it mean when a user wants to move data around? Should we be threatened? Trying to emphasize "privacy portability" as a way to make "data portability" sound risky.

Sixapart: FB doesn't care about portability, all talk. Not really - all talk about portability is just talk. True portability will come naturally.

NewTeeVee Live: Part 1

Wednesday, November 14, 2007

Today I'm sitting in on the NewTeeVee Live Conference. Here are my notes:

12:15 PM - Search and Discovery Face Off
Finding what you're looking for, or what you aren't
This session pulls together a panel of experts from various video sharing sites and search engines to discuss making video search and discovery more relevant.

Mary Hodder estimates that there are 300 million videos on the web and 350,000 uploaded per day. "Discovery is 80% of the problem".

Evolution: from downloading video files to hosting a player to syndicating a feed of players.

Garrett: "People don't always know what they want", hence the notion of flipping channels.

Mary Hodder: Users characterize and describe videos differently than publishers.

Tim: Search and metadata has improved vastly over the last few years.

Signal processing, OCR is not practical on hundreds of millions of videos on a daily basis.

Garrett: Looking onto the Nintendo wii as a set top ITV box.

Tim: API's are powerful, but no developers have yet used them to to bring the Truveo experience to a set-top box.

Hodder: Youtube has gone from 50% at 100,000,000 views to 25% at 300,000,000 views. Digg - the percentage of videos coming from youtube has gone from 90% to maybe 10%.

Cast.TV: Fragmentation / Syndication is a headache/issue? The lines between search, discovery, browse are blurred.

StumbleUpon is the winner of the faceoff at 33% - audience poll of most likely to use for discovery. Truveo is 2nd.

My Opinion: Metadata is key and the exchange thereof will evolve to become a commodity exchange. 2nd tier video sites have a chance if they can find their niche and become relevant on distribution networks such as Digg, StumbleUpon, Bebo, FB, etc. These publishers need to provide as much meta-data as possible to the distribution networks and secure the return of metadata from those sites whenever possible. In Bebo's case, a publisher such as crackle should bring as much relevance as possible to the actual Bebo community based on what other bebo users are watching on crackle. How this is facilitad is up to both sides to build out API's, to swap data and yet maintain user privacy standards at the same time. StumbleUpon is on the right path.

Voices That Matter: Andy Clarke

Monday, October 22, 2007

This afternoon I am sitting in a workshop with Andy Clarke, author of Transcending CSS.

Mentioned:
  • Ryan Carson, UK
  • Jeffery Zeldman, Happy Cog
  • Eric Meyer, Complex Spiral
  • Jason Santa Maria, Happy Cog
  • Dave Shea, Mezzoblue.com
  • Steven Champeon, hesketh.com
  • Nate Koechley, Yahoo
  • Microformats: Hcard
Intermission: had a cigarette with Andy, whose son apparently uses Bebo and not Facebook or MySpace.

Why would you use div[id="content_main"] instead of div#content_main?
To enable branching from older browsers to newer browsers. Exactly which browsers belong in which branch?

Getting into Specificity, apparently only a few of the designers in the room actually know what it is and how it works. This is an interview question that I use to test designers applying to Bebo.

Mentioned:
Specificity Wars

Using Attribute sub-string selectors to generate content:
  • E[foo~="bar"]
  • E[foo^="bar"]
  • E[foo$="bar"]
  • E[foo*="bar"]
Pseudo elements and classes:
  • li:last-child {}
  • p:first-line {}
and on...