• TURNING UP THE HEAT: A MEDIA WILDFIRE

It’s getting hot out there. After many years of waiting for the concepts of digital media to ignite in the larger worlds of publishing and entertainment, almost every major publishing house has appointed a new director or vice president of “new media.” Cable companies are starting new businesses for CD-ROM products. Phone companies are working with TV and film studios. Vendors are criss-crossing the globe, wooing any and all who might be interested in publishing some kind of product on their platform.

Lately companies like Apple Computer and Sony, as well as artists like Todd Rundgren, are turning up the heat — and it’s hard to predict just exactly what will happen next. What’s most important now is for vendors, developers, rights holders and all else concerned with the success of new media to adopt the motto, “Nobody Wins Unless Everybody Wins.”

• LICENSING FOR THE NEW MEDIA

Bobbi Mark, a presenter at the Apple Publishers Forum, is a New York-based consultant with expertise in intellectual property rights negotiations. Her point of view? You have to be reasonable in your demands to allow new businesses to get off the ground. Think of the long-term benefits of being reasonable now, rather than short-term windfalls.

• MICROSOFT ‘ENCARTA’ SETS PRECEDENT

Electronic references, in particular “multimedia encyclopedias,” have been a big disappointment in the home and educational markets, mostly teaching consumers who have made the plunge that it is still easier, cheaper and smarter to buy the printed version. These titles fall more under the category of computer novelty item than essential desktop tool. One of the biggest complaints is that electronic references, which are so rich in potential, are produced mainly by software developers more interested in conquering the technological hurdles of interactive CD-ROMs than they are in creating a browsable, attractive, interactive, literate and even accurate reference work. By spending $5 million on its new, very impressive Microsoft Encarta, the company has likely broken the mold.

• I/O
If you’re an interactive producer who thinks you know retail, this enlightening piece by Joanna Tamer tells it like it really is — not the way you’ve always heard it should be.

• VIACOM GETS INTO INTERACTIVE CDS
Cable giant forms new media publishing group.

• WARNER LICENSES MUSIC TO TITLE DEVELOPERS
Major record label does digital.

• DIGITAL F/X GOES ON ACQUISITION SPREE
Company purchases three audio, video companies.

• MOTOROLA DOES LCDS WITH IN FOCUS
Companies ink deal to develop advanced LCD technology.

• RBOCS’ ROLE IN VIDEO SERVICES
RBOCs attend seminar to discuss their future in info services.

• BRIEFS
Kodak writable CDs for the desktop; FBI and digital telephony; SMPTE adopts digital image model; Phone and games on planes; EO gets into PDA development; IHS acquisitions; PacBell Gateway; Motorola’s new radio modem.

• EVENTS
134th SMPTE conference

>FOCUS

TURNING UP THE HEAT ON TITLES
New media spreads like wildfire in publishing, business, entertainment

It’s getting hot out there. After many years of waiting for the concepts of digital media to ignite in the larger worlds of publishing and entertainment, almost every major publishing house has appointed a new director or vice president of “new media.” Cable companies are starting new businesses for CD-ROM products. Phone companies are working with television and film studios. Computer and consumer electronics vendors are criss-crossing the globe, wooing any and all who might be interested in publishing some kind of product on their platform.

Wildfire often destroys what’s in its path, and that may be what happens with new media and traditional publishers. The chaotic nature of what’s happening in publishing and entertainment today will almost certainly leave behind some charred stumps, but nothing will stop the excitement and energy of today’s cutting-edge artists from thinking about and working toward the future. That kind of heat can germinate a whole new generation.

APPLE PUBLISHERS FORUM:AN EXCELLENT START

Everyone was surprised by the turnout at the Apple Publishers Forum in New York in mid-September. No one, not even Apple itself, expected more than 300 representatives from the nation’s top publishing houses to spend a day out of their offices learning about what Apple is calling “new media publishing,” but that’s what happened.

The agenda for the day segmented itself into a morning full of presentations and demonstrations of interactive books by publishers already involved in new media, as well as targeted presentations by chairman John Sculley and conference organizer/publishing community liaison Linda Stone Neumann.

They both calmly addressed all the scary questions that have kept publishers out of new media, the scariest of all being, “Will new media kill off the book market?” To quiet that particular terror, Sculley said the best analogy for electronic books was that growth in the film business has stayed fairly constant, but that the video industry has grown from nothing to $8 billion in a very short time — and its growth did not cut into the film industry at all.

In the same way, electronic delivery of text, he said, will not replace books. It’s simply a way to distribute a new kind of product. He also reminded those present that their industry was only eking out two percent annual growth — and that new media publishing might start those numbers going north again.

That said, the rest of the day was devoted to showing off new media products and telling publishers that Apple had no interest in owning or controlling their intellectual property. Apple’s primary concern, Sculley said, was for publishers to realize the potential of new media for their businesses — and, of course, it couldn’t hurt for them to know as much about Apple’s offerings as possible so that they might choose Apple as a development or distribution platform, or both.

Use what you’ve got. “Take baby steps, and learn how to produce low-cost products and leverage the intellectual property you’ve already got,” Sculley said.

Somewhat comforted, the audience next got a demonstration of how unique electronic books could be. Though old hat for people who’ve been around the multimedia world for a while, it was clear that the products on stage would not be confused with any books the rest of the audience ever published.

Among those demonstrated were children’s author Mark Brown’s fabulous upcoming Brøderbund title Arthur’s Teacher Trouble, the CD-ROM version of Douglas Adams’ book Last Chance to See, Rick Smolan’s pioneering From Alice to Ocean, which bundles an interactive CD-ROM with a coffee-table book of his Australian adventures, Random House’s first Modern Library Expanded Book release, Oscar Wilde’s A Picture of Dorian Gray, which includes a hilarious and moving audio note by the late Bennett Cerf about the founding of Random House, and Voyager’s brilliant Poetry in Motion.

The best emissary Apple had at the forum was Bob Stein, cofounder of Voyager. Although Stein has become one of the Usual Suspects at multimedia conferences, he was not preaching to the choir in this group and gave a deeply personal perspective on what it’s like to publish literature in a new artistic medium.

He encouraged publishers not to be intimidated by technology, because technology companies now needed the publishing industry as much as — or perhaps more than — publishing needed them. The handling of intellectual property “from author to marketplace” is what book publishers do best, he said. “Editorial expertise is more important than rights.”

Stein also exhorted publishers only to license digital rights to intellectual properties as a way to make short-term money to fund their own internal development. He told them to get some software developers on staff. And mostly, he stressed patience: “Everything will be different in five years. There will be no standards until there are better products. A new medium takes a long time to develop. Don’t look too carefully at what happens on a daily basis. The market could be decades away.”

Stein said he “desperately wants to compete” with book publishers. “I want to compete on ideas, not with Microsoft and Sony.” In the perfect world that Stein wishes to create, the publishing community’s first commitment would be to the art, not the commerce, of new media.

WATCH YOURSELF; THE EYES OF THE WORLD ARE UPON YOU

Of course, unless you’re independently wealthy or have a patron with deep pockets, that’s not the way the world works and book publishers know that better than anyone.

Thus, a couple of questions rise from the rosy scenario that Apple painted in New York, and they both have to do with the company’s true intentions.

At Digital World ‘92, John Sculley said clearly that Apple had its eye on becoming a publisher itself. Because new media publishing models are still so unclear, and because Sculley wouldn’t elaborate on the statement, we have no way of knowing exactly what form that might take.

But we have some ideas, and we’d like to warn Apple away from them now before they ruin the priceless trust and credibility they’ve worked so hard to establish in the publishing community.

The first temptation for Apple might be to start the outright acquisition of “properties” from publishing companies, or at least to acquire exclusive digital rights in perpetuity from either the naive, or from companies in need of cash to fund new media development.

AVOID THE ‘PARIAH’ LABEL

It would behoove Apple to remember what happened both to Interactive Home Systems and to Philips in similar circumstances. IHS, you’ll recall, is the “other” company that Bill Gates chairs (see Vol. 1, No. 2, p. 19). Interested primarily in putting together large databases of digital images, when the company was first formed, Gates cut a bloody swath through the museum community with heavy-handed proposals that demanded exclusive rights (see Vol. 1, No. 1, p. 19).

The company immediately engendered intense distrust and was immediately rejected by much of the art community, building a wall that IHS president Steve Arnold has had to work very hard to dismantle. Despite his repeated assurances to collection owners, the miasma of IHS’s former behavior lingers.

Similarly, if Apple assumes the predator mode, “publishers will go back into their shells like hermit crabs,” said one. This new genre of publishing is still unformed, and any company that owns and/or controls the intellectual property of artists — publishing houses, film or television studios, record labels — stands a good chance of being robbed. No vendor wants to be in the position of being accused of exploiting developers (see Bobbi Mark’s piece on licensing, p. 5.).

DO NOT REPEAT CD-I’S MISTAKES

Philips faced a similar problem with its approach to new CD-I developers. The publishing arm of Philips, even by the accounts of those who took its money and developed titles, “alienated everyone” with its die-hard position that Philips must either own titles outright or license all rights in perpetuity (see Vol. 1, No. 2, p. 3).

They couldn’t get away with such contractual clauses with well-known and highly visible companies like National Geographic, which would never let anyone control rights to their images. The small, passionate, starving developer of interactive products is who gave up the most. As many have said, “Philips was the only one signing checks,” thus this was often the only way that small developers could realize their products.

They faced two risks by signing away their titles. One was that CD-I would be a great success and they’d never see a dime of royalties from the company. The other, now being realized, is that CD-I would not take off and they’d have forfeited their ability to move their CD-I projects onto another, better selling platform.

To be fair to Philips, these developers matched its hunger by using large amounts of the company’s money to fund their own learning curve on interactive technologies. But some said they’d never sign a contract with Philips again; whether that’s to become axiomatic is probably not a lesson Apple — or any other vendor, no matter how big — wants to learn right now.

ENDING PLATFORM WARS IS THE NEXT BIG STEP

The second most important problem facing potential publishers is that of Warring Multimedia Platforms. If the interactive media industry is to move forward, vendors must begin to have some small consideration for the few brave, slightly mad yet endearing multimedia consumers — a handful of enthusiasts who have actually thrown caution to the winds and bought some player or computer or another in the midst of this chaos.

No matter how fabulous are some of the developments in the world of electronic media and publishing, the industry is digging itself deeper and deeper into a series of confusing, unconnected trenches that are already delaying public acceptance.

At least Kaleida, the multimedia joint venture of Apple and IBM, is developing a way to allow all interactive CDs to work in all players by using its special ScriptX language, independent of operating systems. So far the only other “consenting adult” is Toshiba. Of course, the big “if” is whether companies like Microsoft and Sony will embrace ScriptX, and whether developers will find enough value to use it.

Why is compatibility so important? Many major publishers won’t waste time developing for a platform with an installed base of even 50,000 — a hallucinatory figure for a multimedia platform today. This brings to mind Jonathan Seybold’s old rule of thumb for tracking the potential success of a new computer platform. In order to create a viable mass market for shrink-wrapped software, he says that developers have to at least believe in the prospect of an installed base of 250,000 computers. If that rule doesn’t apply to players today, it will: today’s title developers will not go on forever losing money on a fractious market.

ATTENTION, VENDORS: PUBLISHERS ARE WAITING

Although it’s hard to believe that anyone could actually resist the charms of interactive technology, vendors need to wise up — and fast — to the fact that big publishers, with big projects on the drawing boards, are also waiting to see what happens in the platform war before they commit to new media.

Who can blame them? Who in their right minds would want to dive into the middle of this muddy pond? There are CD-I, CDTV, CD-ROM for Mac, DOS, Unix and Windows; CD-ROM XA for Mac, DOS, Unix and Windows. There’s Sony’s new MMCD player, which is CD-ROM XA for DOS, but in order to play it in a DOS PC, there has to be a new screen driver included on the disc. There’s Tandy’s VIS system, which uses Windows as a development tool and operating system, but today’s MPC discs have to be retrofitted to work with VIS. There’s Sony’s Sega CD system, and a similar CD-based Nintendo. Then there are the warring data formats for everything from digital video to digital audio, text, still images, you name it.

Since it’s safe to say that no one is going to come up with either a killer multimedia player or application in the next couple of years that will become a de facto standard, the only thing that makes sense is to settle on a foundation technology.

SONY’S MMCD GETS REAL CLOSE

Sony announced its portable CD-ROM player, the MMCD, in mid-September to a crowd of trade press, analysts and business reporters. Sony executives were a little miffed when we told the Associated Press we thought the company had to be crazy to think people would pay $1,000 for a portable multimedia CD player that couldn’t play anyone else’s multimedia discs. Despite protestations to the contrary, this is an important issue if for no other reason than people who buy products think it’s an important issue.

But Sony has done some things very right with the MMCD player. First of all, it is a CD-ROM XA player, which means that audio, text and graphical data can be pulled off the disc as part of a single data stream, unlike CD-ROM, which requires that each file be loaded into memory, then displayed.

Takashi Sugiyama, the product manager for the MMCD player, says Sony engineers in Tokyo invented the XA format in 1987 specifically for a future portable CD-ROM player. By eliminating the need to load files into memory, they also eliminated the need for expensive memory chips.

Other benefits are that XA is much faster than standard CD-ROM, and its audio quality is much higher. As a result, XA is being embraced by most CD-ROM developers.

The problem, still, is that XA discs are not universally compatible because of differences in operating systems and because most developers of CD products for computers load hulking megabytes of data onto hard disks that the VIS or MMCD, for example, don’t have. The MMCD discs can be played back using a DOS computer as long as the DOS machine has an XA-compatible drive and the title developer has included a screen driver for a PC monitor on the disc.

But MMCD compatibility with Macintosh discs, for example, would require a chip in the MMCD player that contained the Macintosh operating system. This is technically a no-brainer, but it requires cooperation by both Apple and Sony. How much would a chip like that cost, if Apple would even agree to such a thing? Excellent two-part question.

Then would it be worth it for Sony to stick one inside — along with chips for MPC and Unix and maybe even CD-I compatibility — and still bring the cost of the whole thing down below $500 to get the market moving? Of course we would think so, having seen the consumer electronics industry make even more radical moves than that in the past, but it doesn’t seem likely in the short term.

LOOKS GOOD, FEELS GOOD

Moving away from the sticky compatibility issue, the MMCD is a well-designed product that feels good, looks good and is intuitive to use — the antithesis of the ill-conceived DataDiscman that Sony is still trying to sell in the U.S. (and that does not conform to the XA format).

And somewhat surprisingly — since the display is not color, not backlit, nor is it particularly high resolution — graphics and text look pretty darn good on it, and rudimentary animation is okay too. It’s not a suitable medium for either digital video or a Voyager Expanded Book, for example, since the resolution is too low (and not color), but the basic types of titles that have been designed for it look just fine.

Most of them are designed for business users, which is another plus on Sony’s tally sheet. What most people in the multimedia world forget today is an axiom we first heard spoken at the first Digital World in 1990 by David Liddle (then of Metaphor and now of Interval Research) who claims that so far there’s been no consumer technology that was not first proven in the business market. (Television, and arguably radio, don’t fit this pattern.)

Two of the examples he cites are cars and 35mm cameras, both of which moved slowly out of the professional world into consumer products. It takes business users, he says, who actually need the productivity gains that certain products provide, to hammer out the bumps and help set the standards that allow a professional tool to move into the mass market.

They’re willing to put up with some of the more irritating inconsistencies to get the product’s benefit, and they do complain — thus helping vendors streamline products into useful configurations, which then move more gracefully into the consumer world. This sentiment was echoed by Andy Grove of Intel at Digital World this year.

To help get MMCD into businesses, Sony says it will be working with resellers and corporations such as Northern Telecom, tool makers such as Mammoth Micro Productions, and service bureaus to develop custom business applications.

And in tacit acknowledgment of the importance of the business market, Sony for the first time in its history is selling the MMCD player into three channels at once: consumer electronics, business and professional, and computer dealer sales channels.

THE ARTISTS WILL MAKE IT HAPPEN

It’s easy to pick apart why so much has gone wrong with interactive media to date. Even though some very clever, creative minds have delivered the technology, it always takes the artists to make something happen.

What’s exciting now is that artists and authors are starting to come out of the woodwork saying they have been waiting for technology to catch up with their vision.

One is Garry Hare of Fathom Pictures in Sausalito, CA, who’s been involved in interactive entertainment, especially film, for more than a decade. Another is Allee Willis, a Grammy-winning songwriter whose presentations at Digital World in June sparked a firestorm of support that has kept her working 20-hour days ever since (and no, she won’t tell us exactly what she’s doing).

In the publishing world, there’s author Eric Kraft, who has garnered a cult following for his books Herb ‘n’ Lorna, Reservations Recommended and most recently, Little Follies: The Personal History, Adventures, Experiences & Observations of Peter Leroy (so far), eight novellas published by Crown that were originally issued beginning in 1982. The fictional Peter Leroy is a character that has been plaguing Kraft in various ways since he was a sophomore at Harvard in 1962.

At the Apple Publishers Forum, Kraft admitted that Voyager’s Expanded Books Toolkit was what he’d been waiting for to make Peter Leroy’s stories work the way he’d always wanted them to.

He’d always written and published Peter’s story in pieces, and he and his readers think it seems to work best that way. “It’s a work in many parts. It’s a work with many parts,” he says. “The parts are distinct but they all work together.”

In 1975, he wrote a manifesto for this kind of “interconnected fiction,” as he calls it, titled “Large and Unsolicited Fiction.” If a reader of Little Follies wants to know how a character became fond of onion sandwiches, the answer is in Herb ‘n’ Lorna, and of course can be reached by clicking on it. He also plans a “front door” and a “back door” to the work, possibly with a kind of navigational map by a third (fictional, perhaps) person for the front door, and an annotated “hyperindex.”

Kraft started programming computers in 1987, first with an Apple II, then with a Macintosh and HyperCard. That’s when he discovered that tools existed to create the world he’d imagined for Peter Leroy.

He’s written a rather lengthy explanation of the project, called “What I’m Up To,” and is obviously quite delighted that he can finally manifest what’s been in his head all these years.

Similarly, Todd Rundgren — a highly regarded rock musician, songwriter, producer and digital video producer — recently announced plans to release the first “interactive album,” where listeners will actually be able to create their own music from pieces he’s provided them. They can also listen to “Todd’s Mix” just like a linear recording, but they can also pick, choose, recombine and listen to the same thing over and over again.

Millions of possibilities. “Everything I do now goes into a musical database,” he says. “Music is recorded and formatted in a particular way to make it assemble-able into extemporaneous versions of the record. There are millions of possible compositions.”

The rules for creating the database, he says, are to be aware of places where music is “glued together” and help that process along — especially in lyrics and singing. In addition, lyrics cannot be interdependent. You can’t tell a long elaborate story, or at least not in the same way.

“It’s more like interactive books where it says, ‘If you think this should happen, go to page 22; if it’s this, page 187′,” he says. “A story for that book form has to be written in a certain way, the same way that music has to be recorded in a certain way.”

Rundgren chose CD-I as the first platform for the interactive album because “there’s not another platform that has a standard for near-CD quality sound,” he says, though that’s certain to change.

Rundgren says he definitely plans to do more interactive albums. A long-time producer and nurturer of other talents — he’s been key to the careers of many excellent artists over the years — Rundgren says he’s talking to others who might be interested in trying the new genre as well.

Though CD-I players hook up to a TV set, Rundgren says there are no visuals connected with the interactive album except for on-screen menus — an interesting approach in the MTV age. “One of the things I’ve done is eliminated graphics from the equation,” he says. “It’s interactive music, not interactive graphics. All of the space and bandwidth will be used up with music.”

WHAT WILL HAPPEN WHILE IT’S ALL HAPPENING?

One of the most exciting things about the work that both Kraft and Rundgren are doing is that they have obviously considered that people will want to use their works over and over again.

This, to date, doesn’t seem to have been a big priority for consumer multimedia products. In fact, field reports reveal something quite scary — that these enthusiasts, these mad and endearing pioneers upon which vendors are relying to drive interactivity into the mainstream — are actually returning titles to retailers, saying they aren’t good enough to warrant the cost.

“Consumers know the ‘I’ word means you’re supposed to be able to use it more than once,” says Fathom’s Garry Hare. Apparently reusability is not a feature that many CD-based titles other than reference works (and sometimes, not even these) can boast. Perhaps the truism that “software drives the market,” which has been bandied about since multimedia titles were first agleam in a developer’s eye, is a bit disingenuous in the present state of the industry.

So suffice it to say that at this point, interactive media is equal parts promise and ignorance on the part of nearly all concerned — a perfect recipe for the chaos we’re seeing throughout the industry to date.

There is a way to make chaos work. As students of metaphysics know, confusion is one of the highest forms of consciousness — it is a mental petri dish in which solutions and ideas can grow.

To best channel today’s confusion, companies interested in new media must focus their efforts toward providing a safe place for confusion to live. They must have standards of behavior and parameters that allow the largest number of people — artists, vendors, publishers, rights holders, developers — to profit, both literally and figuratively, from the future as it presents itself.

Denise Caruso

LICENSING FOR NEW MEDIA

Bobbi Mark, a presenter at the Apple Publishers Forum, is a New York-based consultant with expertise in intellectual property rights negotiations. Her expertise has typically been that of a seller, not a buyer, of rights. This is a summation of her presentation.

The first thing to keep in mind when licensing new technologies is to be reasonable in your demands, to allow new businesses to get off the ground. Think of the long-term benefits of being reasonable now, rather than short-term windfalls.

Specifics of negotiating

1. Think about the best interests of all parties.

That includes buyer, seller, author/illustrator and consumer.

2. Negotiate an appropriate timeframe for the license.

If the buyer cannot afford a high advance — even for a property for which the publisher paid an extraordinary sum — determine a reasonable advance he or she can afford, and tailor the terms of the license to match it. Prenegotiate renewal terms (specifically, the length of renewal and the advance against royalties) where appropriate.

3. Don’t exploit the innocence of new developers.

Don’t take advantage of a licensee’s ignorance of traditional contractual terms, since the licensee will invariably know more about new technologies than you do — and your one-upsmanship could come back to haunt you. Always try to build working partnerships, not adversarial relationships.

4. Be sure to define clearly the technologies at hand.

In terms of contractual language, be as specific as possible in this quickly growing and changing field and limit licenses to as few applications as possible. Give the developer room for economies of scale, but if the particular application or platform isn’t exploited within a predetermined “reasonable time frame,” the contract should state clearly that the license for the particular application reverts to the proprietor.

5. Be flexible about payment.

Money isn’t everything, and there are good alternatives to monetary compensation. There’s free advertising on product packaging or in the catalog; free art work, e.g., art from the electronic packaging may be usable on the paperback reprint’s cover; and free product — an author/illustrator may prefer to have 100 discs with a retail price of $19.95 than 50 percent of a $1,000 advance.

6. Royalties are very important.

The royalty rate, more than an advance, sets an industry precedent. If you are a seller, go for a higher royalty rather than a higher advance; if the buyer is having cash flow problems he or she will also prefer this. For unit royalties, determine which makes more sense in the marketplace: a percentage of net receipts or retail price, or a fixed dollar amount (if the software will mainly be bundled with hardware).

7. Agents, or co-ownership of rights.

First be sure the author/illustrator contract is clear as to who has the rights to license specific electronic publishing rights. Is it the publisher, or the author/agent? Then determine whether a particular deal is covered under the information storage and retrieval clause, the electronic publishing clause, or the commercial rights clause.

If ownership isn’t clear, determine an equitable way to split proceeds so that both agent and publisher get a cut. If a split is not predetermined, determine something that’s equitable.

Finally, to avoid unnecessary aggravation, overlap, misunderstanding and phone tag, only one person — the rights director or agent, whoever had the initial contact with the licensee — should negotiate on behalf of the author/illustrator.

Bobbi Mark

SETTING A NEW PRECEDENT
Microsoft spends $5 million to make new encyclopedia designed ‘for the computer’

Electronic references, in particular “multimedia encyclopedias,” have been a big disappointment in the home and educational markets, mostly teaching consumers who have made the plunge that it is still easier, cheaper and smarter to buy the printed version.

To date, these titles fall more under the category of computer novelty item than essential desktop tool. One of the biggest complaints is that electronic references, which are so rich in potential, are produced mainly by software developers more interested in conquering the technological hurdles of interactive CD-ROMs than they are in creating a browsable, attractive, interactive, literate and even accurate reference work.

In fact, it was Microsoft Corp. that got a bad rap early on for its blunders in Microsoft Bookshelf, as the reference was outdated and listed dead people as current heads of state. But the company is trying to do things right this time, and by nearly all accounts, it has succeeded.

FOUR YEARS’ RESEARCH, 18 MONTHS’ DEVELOPMENT TIME

Under the direction of Tom Corddry, the Multimedia Publishing unit of Microsoft’s Consumer Division has spent the past four years researching — and 18 months developing — a new interactive encyclopedia.

The product, named Microsoft Encarta, is an electronic encyclopedia that is “designed and built for the computer,” according to Craig Bartholomew, product group general manager on the Encarta project. It will initially be published on CD-ROM for Multimedia PCs running under Windows 3.1, although Bartholomew says he’d like to see the product on the Macintosh as well. The disc, priced at $395 (about $300 dollars less than Compton’s Multimedia Encyclopedia), is expected to ship in December.

Encarta is stuffed with nifty features, including a 28-volume A–Z encyclopedia as well as a 93-volume thematic encyclopedia, so all the articles on a subject such as “Plants” can be explored quickly. It offers more than 21,000 articles in 93 categories; 100 animations on topics such as physics, biology, human anatomy, history and physical science; 10,150 illustrations, graphs and images; more than seven hours of sound, including world music, foreign languages, and historical speeches and readings; 800 colored maps with voice pronunciation of places and several zoom levels to view details from a global to subnational perspective. The product also includes the Concise Edition of Webster’s Electronic Dictionary and 40,000 entries from Webster’s College Thesaurus.

A linked timeline of history. Encarta also provides an impressive, browsable 20-foot (if you printed the entire thing out, which you can do) historical illustrated timeline from 15 million BC to the present. By clicking on a date or historic event, the user can explore that particular topic area. The timeline itself includes more than 200 original articles.

And if that isn’t enough to keep you coming back for more, the reference, which was written for ages 10 and up, contains an adventure game called Mind Maze, which has four different skill levels and deals with topic areas found within the encyclopedia.

Beyond point and click. Perhaps the most important facet of this reference is that it really provides interactivity beyond the standard point and click of most electronic reference works. You can create customized charts and graphics based on information presented in illustrations used in the reference.

For example, you can create a population growth chart that compares the number of residents in South Carolina during 1990 versus the number of people living in North Carolina at the time. You can then chart the male-to-female ratio in each of the states as well and print it out in a variety of pie or bar graphs.

BEING GOOD ISN’T EASY: THE TITLE THAT ATE REDMOND

The development of Encarta marks a significant change in Microsoft’s title production strategy — the most obvious distinction being the intense amount of human and monetary capital that went into producing it.

According to Bartholomew, Encarta cost “in the ballpark of $5 million,” making it one of the most expensive multimedia titles ever made. (Bob Abel’s Columbus: Encounter, Discovery and Beyond, developed for IBM’s Ultimedia systems, cost $5 million and currently holds that trophy.)

Much of Encarta’s price tag includes expenses for research and development — user interface research and the development of a very sophisticated SQL server database built to track all the media included in Encarta. According to Bartholomew, title development at Microsoft will probably never cost this much again since the R&D completed for Encarta will be used as a foundation for creating future products.

More like a film project. Besides throwing loads of money at Encarta, Microsoft made a fundamental shift in how it produces an interactive CD-ROM title, treating it more like a film project than a computer software program. Ninety-five of the 100 people who worked on the project were creative types, including professional image editors, audio editors, researchers, graphic designers, illustrators and writers. Many of them have since been brought on staff at Microsoft to help with future titles.

Five people were hired solely to handle rights acquisitions for the product, which is chock full of copyrighted images, audio and text. “There is very little public domain photography or audio in Encarta,” says Bartholomew. “We paid top dollar to get the best, and will continue to do so.”

WHAT A CONCEPT: EDUCATE THE CUSTOMER

After acquiring all this different media for the product, the big question became how to protect it from being copied illegally. Microsoft took an interesting approach to the copyright issue, opting to allow consumers the ability to copy all the pieces published in the encyclopedia, with the expectation that each individual user is responsible to abide by the U.S. copyright laws.

To help jog the memories of those foggy on intellectual property issues, Microsoft provides with the product a manual called Research Techniques and Copyright Responsibilities. In addition, the company actually superimposes a portion of the credit line over the bottom of some of the images when they are copied.

How do you skip a generation? In a not-so-modest move, Microsoft has labeled Encarta as a “fifth-generation interface” design for electronic encyclopedias, saying that it skipped right over the fourth generation in development.

“In each of the first three generations [DOS Grolier's, DOS Compton's and Windows Compton's, respectively] text predominates on the screen,” says Bartholomew. “We assumed that [in] the fourth generation text would still predominate, but photos would be embedded in the text, which would enlarge to show larger photos. We found that users wanted more visuals on the screen, and the concept of a book had to be blown apart completely to create a truly ‘multimedia’ encyclopedia. The result of this is the Encarta interface.” (The interface was developed on a Macintosh.)

A REFERENCE WORK THAT BEGS TO BE USED AND RE-USED

Microsoft’s greatest challenge on the Encarta project is still to come. Can the company sell an electronic encyclopedia into the consumer and education markets? Certainly at $395 a pop, it is priced competitively with quality encyclopedia sets in print. In addition, the company is promising yearly upgrades for only $75 to registered users; the first one will even be free.

Not a one-time gig. The company has done its retail marketing homework as well, planning to distribute the product in more than 1,000 stores in America. In addition, the Microsoft team has spent a lot of time showing the product to influential educators and reference librarians, assuring them that this is not a one-time gig, that the company is in the electronic reference business for the long run and wants to hear what these people need in future versions.

Perhaps most importantly, the product itself appears to offer individuals enough reasons to come back to it again and again — just like a real, printed reference work. If this continues to be true as the product moves out of beta, it will be an amazing and noteworthy accomplishment.

THE MARKET IS THE PROBLEM BECAUSE THERE ISN’T ONE

So the problem is not the product, but the market. The problem has always been the market, because there isn’t one. Until computers become as important to consumers — and as inexpensive — as their VCRs, microwaves and television sets, they aren’t going to run out and buy one.

And even if they find Encarta captivating enough to invest in a PC, will they really want to install or even hear about a minimum configuration of a 386SX 16-MHz PC with a sound card, speakers, a CD-ROM drive, a VGA or better video card, and at least 2 megabytes of RAM?

Won’t cede a sale. Having to deal with platforms and cards and system configurations isn’t Microsoft’s fault. It’s the central problem in a cutthroat industry that doesn’t want to cede one single sale by working with its competitors to forge common standards for multimedia computers, players and/or portable devices.

The result is substandard hardware across the board — it’s either too expensive, too hard to use and configure, or it doesn’t do enough. Consumers are obviously having a hard time talking themselves into buying anything that remotely resembles a multimedia “thing.”

Maybe a little consumer research. Perhaps, instead of spending $5 million on a single interactive software title, Microsoft could have teamed up with IBM — or Apple, or Philips, or Sony, or someone — for some serious consumer research before so many millions of dollars were wasted on ill-conceived titles that obviously, to date, no one wants to buy.

Those multimillions might have been better invested in some real, honest-to-god market research to discover what would compel someone to pony up nearly $1,000 for a home computer or new, interactive “consumer device.” At this point, everyone in Multimedia Publishing at Microsoft is probably hoping that reference works á la Encarta — which combines images, sounds, animation and text with a new interface that anyone can use — will do the trick.

Janice Maloney

>NEWS

IF ANYBODY CAN, IT’S VIACOM
Cable giant goes for new media

Last week, Viacom Entertainment Group announced the formation of Viacom New Media, a new interactive media publishing group that reports directly to Neil Braun, chairman and CEO.

Headed by Michele Di Lorenzo, former vice president of business development for MTV Music Television, the goal of the group is not to jump headlong into interactive television projects, as one might suspect, but instead to produce entertainment products for new media platforms.

“You would certainly expect to see us producing for CD-ROM-based devices as well as newer classes of multimedia devices coming out in the next 18 to 24 months,” says Di Lorenzo. “It could be other experimental things, too — possibly virtual reality or PDAs [personal digital assistants] as well.”

NOT A LABEL, BUT A FRANCHISE

Viacom is certainly the best equipped company to enter the consumer interactive media market to date. Companies such as Warner New Media and Sony, with vast entertainment holdings, have been disappointing as producers in the new media world.

“There’s a fundamental difference [with companies such as Time Warner],” says Di Lorenzo. “Warner’s got labels, but we’ve got consumer franchises.”

A perfect match. Indeed the mind boggles at how perfect the match might be between Viacom New Media and the multimedia business. Viacom’s cable networks include TV programming that’s entered the cultural lexicon — MTV Music Television, as well as Nickelodeon, Nick at Nite, the VH-1 video hits network and the Showtime movie channel.

“That’s what it’s all about — creating experiences that consumers want,” she says. “We are dealing with some of the strongest brand names and franchises in the industry.”

In other words, if there’s anyone who knows what today’s TV-watching consumers want, Viacom is a very good bet. And Di Lorenzo is likely to be a good person to lead them there. Among her many jobs since she left IBM (she was a systems engineer), she was heavily involved in expanding MTV Networks’ core businesses.

“Because we’re so trademark oriented, we really were looking at how you could have extensions of the trademark that made sense,” Di Lorenzo said. Thus was launched MTV Asia, the Nickelodeon Studios in Orlando, FL, and MTV Japan, which is launching this year. In addition, she worked to get MTV Networks into pay-per-view and was instrumental in the formation of three genre-based music channels that will be tested next year.

Making a difference. Di Lorenzo says Viacom’s been interested in multimedia for a while. “We’ve been exploring it and doing our homework for about 18 months,” she says. “Once we’d done that and figured out what we could do that would make a difference and make sense to us, they told us to go ahead and do it and create a structure to make it happen.”

Though the company is certainly supporting its new division, Di Lorenzo says there won’t be much expansion of staff. “What we believe will make the difference in this media is not about hiring hundreds of technologists and have them go to work,” she says. “The breakthroughs will come when talented people at Nickelodeon will be able to start exercising their vision of what new media is.”

AT LAST, PUTTING THE CREATIVES FIRST

Viacom New Media will primarily serve a support function for “creatives” at the various divisions, each of which has a project manager whose full-time job is to think about what new media will mean to MTV or Nickelodeon, for example.

“We have hundreds of wonderful writers, producers, directors, who already invented new media. They made TV look different,” says Di Lorenzo. “So while we’re hiring a few people, they’ll mostly be providing assistance to people who are already in place so we can help them realize their visions.”

And in fact, that is the key reason Viacom decided to enter the new media market. “A lot of efforts in this field to date have excluded the creatives,” she says. “They need not only to be included, they need to be in charge. We’re going to put creative visionaries in charge of projects. And we’ll look for technical people to work with them.”

But aside from the rosy wonders of throwing oodles of creative people at the new media paradigm, Viacom has some work cut out for it — and one of the biggest problems is what platform to develop for. Should it be CD-I? CD-ROM XA? Tandy’s VIS system? Apple’s upcoming Sweet Pea? Sony’s MMCD player? It’s an unenviable task.

“Right now, product managers are thinking through what types of products they’d like to make, so we’re keeping the platform discussion on a pure level in terms of what kinds of functionality we want,” says Di Lorenzo. “Then we’ll back into what platforms make sense for those particular products. From the consumer standpoint, everyone would love to see the prices come down, and to make it clearer to the consumer what the choices are and what they can buy. We expect that this could happen at an escalated rate.”

Airwaves by Viacom. But the platform debates are only part of the challenge, she says. “A lot needs to happen to make this truly a consumer market,” she says. “One, we need to create an audience for the art form, so we need to work to educate the consumer about what [interactive media] is. And our airwaves are the best way to meet those people.”

No matter how you feel about its particular programming — not everyone wants their MTV, after all — Viacom is certainly a master at focusing on the consumer, and Di Lorenzo says this is the company’s greatest strength.

VIACOM’S INTERACTIVE CUSTOMERS

“We know already that our audiences love to interact with us. They respond to contests, send unsolicited letters, call us,” she says. “We’ve created a feeling for all our networks that they’re owned by the viewer. Part of taking ownership is having a point of view, and having what they do affect what’s on the air. Our consumer research shows these people understand interactivity, they’re excited by it, and they want to do more. We believe our consumers are best suited to this, and will be early adopters.”

No Castro Valley yet. And of course, exploiting Viacom’s upcoming fiber-optic-wired site in Castro Valley, CA, is on the list of future possibilities. But in the short term, the focus is on standalone multimedia products.

Viacom New Media will be expecting idea pitches as well as working with third parties on distribution strategies. They may consider publishing other people’s titles as well as doing their own — “it’s all case-by-case,” says Di Lorenzo.

MTV has already come up with a prototype CD-ROM product based on the network’s election coverage, the “Choose or Lose” campaign. Di Lorenzo says an MTV news producer started working with some of the technical team from Viacom New Media to try to create a product that has the look and feel of MTV.

“They came up with something that’s unique,” says Di Lorenzo. “The ‘Choose or Lose’ campaign is aimed at the first-time voter, and not just at the 1992 election, but how to empower them to become active participants in the democratic process in the U.S. The product was designed to do the same thing, using the ‘92 election as a backdrop to see how the process worked.”

CREATIVES LEAD, TECHNOLOGY FOLLOWS

Although she is clearly biased, Di Lorenzo says the prototype made the election “as interesting and hot as everything else MTV does — and it’s really because it was led by an MTV producer.”

It’s far too early to predict whether Viacom can make this new venture a success, whether it’s on the right track. Unlike many companies that are trying to prevail in this new arena, Viacom already has the hearts and minds of a gigantic market that’s primed for new thrills. Entertainment producers like Viacom, where the creatives make or break a project’s success, have an excellent shot at finally moving interactive products out of the dog-and-pony phase and into a viable, tractable consumer market.

If Viacom and those who follow its lead succeed, it will be because they’re doing what they do best — supported, but not driven, by technology. This will hold true not only for entertainment producers, but all the many genres where interactive media holds promise.

Denise Caruso

WARNER LICENSES MASTERS FOR MULTIMEDIA
Snippets of support for title developers

Warner Special Products, the licensing agency for the Time Warner Music Group, broke ground both in the music industry and in the multimedia world with its announcement that it would make available the master recordings of more than 50 music artists under the Time Warner label.

Music from artists such as Joni Mitchell, Ice-T, Graham Nash and David Crosby, Ted Nugent, Linda Ronstadt, Jesus & Mary Chain, and James Taylor is now available to multimedia developers looking to add some legal, quality sound to their next title.

Operators standing by. For $300, the company will license up to 30 seconds of music (only) to CD-I and CD-ROM title developers. To do so, you call Warner Special Products at (818) 569-0500 (don’t say we never gave you anything) and talk to a service rep who walks you through the procedure. Signing the contract obligates you to send the company a final product that it can clock against the sample you’ve chosen.

And while 30 seconds of R.E.M., for example, won’t get you too far if you plan to make an interactive CD about the group itself, a half-minute of the band’s early hit Orange Crush — which vocalist Michael Stipes says is about the use of Agent Orange — might make for very powerful background or introductory music for an interactive CD about the Vietnam War.

The opportunity to license these master recordings also gets title developers out of the rut of having to either to create their own music at costs that are often prohibitive, or use canned audio from a clip media company. Or, of course, steal it.

COME ON IN, THE WATER’S FINE

Perhaps the most important aspect of this announcement, though, is not in its details but in the deed itself. By agreeing to waive the high licensing fees that are normally a part of doing business with the music industry, as well as agreeing to circumvent the legal negotiations that often tie up licensing deals for months, Time Warner is sending out a clear message to other publishers: Come on in, the water’s fine.

“This is an effort to show the world that we are willing to make an effort for multimedia to succeed and not stand in the way,” says Mickey Kapp, president and founder of Warner Special Products. “Your people [title developers] are saying they can’t have access to copyrighted material, and now we are saying, ‘Okay, the road block is gone. What can you do with it?’”

At this point in the game, Kapp says, there’s no real benefit to this arrangement for Warner Special Products. “This is no deal. It is an effort,” he explains. “It’s $300 — it doesn’t even pay for the contract.” Of that $300, half goes to the Warner Special Products division and the other half to the artist.

We first heard about this deal months ago, but Time Warner refused to acknowledge its existence publicly. Why was the deal so hushed? “I am not trying to hype and promote multimedia. We are not trying to beat doors down and get people to use it,” Kapp says. “We have made it very friendly and inexpensive for creators to use this material and now it’s up to them to do something with it.”

Although it seems like an awful lot of trouble to go through — especially for more effort than deal, as Kapp says — he claims there’s no other motive than to see what multimedia producers will do when the handicap of audio rights is lifted by one heavy-hitting music publisher.

However, if lots of individual multimedia producers show interest in this type of licensing and it is perceived as successful, Kapp says he will let other artists under the Warner labels know that the experiment was well received and encourage greater participation. One can only assume that at that time, the teeny $300 price tag will bulk up a bit.

Although we had lots more interesting questions for him, Kapp wouldn’t comment further on the cost of developing the project to the contractual stage, nor the future of the project, nor would he discuss other artists who might be involved at a later date or the contents of the contracts that were signed by participating artists. We hope he’ll talk more later about a project with such great potential to change the way today’s largest rights holders do business.

Janice Maloney

EXPERTISE THROUGH ACQUISITIONS
Digital F/X purchases audio, video firms

Digital F/X, long known for its expertise in the broadcast and desktop digital video editing markets, recently went on a buying spree, acquiring two companies specializing in digital audio and a third company that specializes in digital 3D video effects.

While the purchase price for each company remains under wraps, it is interesting to note that the privately held, six-year-old Mountain View, CA-based company found it more cost effective to buy the three established companies than try to develop the technology in house. “It made much more sense,” says Barbara Koalkin, VP of marketing for Digital F/X, “to buy the companies outright since, in addition to acquiring the expert development teams, we also gained three loyal customer bases and established channels in both the United States and abroad.”

ROUNDING OUT ‘ONE-STOP SHOPPING’

The technologies from Hybrid Arts and WaveFrame, both of Los Angeles, and Microtime, of Bloomfield, CT, will be used to round out Digital F/X’s current product line, which includes the PC-based Composium digital post-production suite, Paint F/X, the company’s PC-based graphics compositing workstation, and the Macintosh-based Video F/X desktop video production system.

Digital F/X’s goal, according to chairman and CFO Steve Mayer, is to become a “one-stop shopping” company for video producers. “What we would like to do,” says Mayer, “is tie our expertise into other people’s expertise, and offer the customer one solution. For us to get good in audio, for instance, we needed to be in the audio business.”

Leveraging audio technology. To that effect, Digital F/X opened the Digital F/X audio division based in Los Angeles. The goal of the newly created division, says Koalkin, is to develop midrange digital audio editing systems, priced from $5,000 up to $100,000, for broadcast production, video and film post-production, record production and musical instrument applications. The division’s first product, Digital Master EX, is a four-channel, 16-track digital recording and editing system based on technology from Hybrid Arts, which made low-end, Atari-based audio sequencers and audio editing suites. The $4,995 system began being shipped in September.

According to Koalkin, Hybrid’s own product line, including the ADAP II hardware editing system and SMPTE Track Gold audio sequencer, will be discontinued in light of the acquisition. But the company “plans to leverage the technology in a variety of ways,” she says, and will continue to develop audio products such as the Digital Master EX for the Atari platform.

A stellar user group. Digital F/X’s second purchase, WaveFrame, is a highly regarded digital audio recording and editing systems manufacturer. It has established installations at Sony Pictures and Warner Bros. as well as in the studios of musicians Peter Gabriel, Herbie Hancock and Stevie Wonder. The company makes digital audio workstations that operate under Windows 3.1.

Digital F/X will continue to develop and support the WaveFrame products, which marry nicely to the company’s Composium online editing suite that was developed for the PC in 1989.

A world bigger than PCs. Digital F/X envisions and is planning for a time in the future when all products — Digital F/X and otherwise — will be fully compatible on all platforms. “Our strategy as a company,” says chairman Mayer, “is get the products going and then have the products talk to each other. The next step in this industry is different products on different platforms talking to each other.”

To that end, Digital F/X is currently considering becoming a member of the Open Media Framework consortium, which was founded by Avid Technology of Burlington, MA, this year to provide a standard development platform for the import and export of digital media types from the myriad of workstations and specialized peripherals that are at work in the video editing business (see Vol. 2, No. 1, p. 21).

‘Generally inclined’ toward compatibility. Though the company has no plans to publish its proprietary technology as an open specification, Koalkin says Digital F/X is “generally . . . inclined toward compatibility, and if we keep all our products compatible across product lines, we can still join the consortium. They are not mutually exclusive.”

MICROTIME DELIVERS VERY SPIFFY 3D EFFECTS

To aid the company in its development of video production tools Digital F/X acquired Microtime, makers of the PC-based Impact series of 3D digital video effects systems. Priced from $25,000 to $110,000, the Impact products enable users to create and manipulate — including the ability to control the point of view — 3D objects in real time. In addition, users can quickly and easily map, or overlay, video from three different live sources onto the surface of a 3D object. Much of the TV signage for the Winter Olympics, for example, was created using Impact technology.

According to Mayer, Digital F/X will see the benefits from these acquisitions right away. For instance, Microtime, which now exists under Digital F/X’s broadcast division, has a very good distribution channel established in both the U.S. and Europe, which Digital F/X now can utilize for its product line as well.

A WIN-WIN SITUATION IN EXPERTISE

And, of course, the company now has a well-regarded audio product line, an essential (and underrated) ingredient in the multimedia market, particularly in the professional and industrial segments of the market, where Digital F/X already has a strong foothold. For many video producers, in fact, integrated audio production tools that are simple to use are the next technological hurdle in the digital video production market.

One can also assume that all these technologies will become part of the suite of products available at Digital F/X’s service bureaus, thus making high-quality, low-cost video production even more affordable for those who can’t purchase their own equipment (see Vol. 1, No. 4, p. 13).

Finally, each of the companies will benefit from Digital F/X’s manufacturing expertise. Mayer said there will be some consolidation of manufacturing but that most of the employees from the three companies will become part of the Digital F/X staff.

Janice Maloney

MOTOROLA TEAMS WITH IN FOCUS
LCD technology to be developed

Motorola has inked an agreement with In Focus Systems, Inc. to develop advanced passive-matrix, liquid crystal display (LCD) technology for use in its future portable computers and communication devices. As part of the agreement, Motorola has purchased $22 million, or 20 percent, of In Focus stock.

The venture, not yet named, will begin by developing small, flat-panel screens, 6½ inches or smaller, for portable computing and communication devices and will incorporate In Focus’s proprietary technology, called Active Addressing.

GOING COMMERCIAL AND MANUFACTURING

Eventually, the venture will branch out into other areas. “The joint venture has two charters: to manufacture LCDs and to commercialize Active Addressing technology,” says Paul Gulick, VP of technology and co-founder of In Focus. The company is in the business today of manufacturing both active and passive matrix products for the color LCD projection market, and claims $50 million in sales for 1991.

Active matrix LCDs are so named because every pixel on the screen is driven by its own individual transistor. Instead of using individual transistors, a passive matrix display lights up its pixels by sending electrical charges through a crosshatch of horizontal and vertical wires to the correct location on the screen. The screens are often slow and lack definition.

Overcoming limitations. Active matrix panels are admittedly superior to passive matrix in contrast, resolution and reaction time. However, manufacturing costs for the screens are prohibitively high because to date they still have a very low yield rate — only about 50 percent work well enough to make it off the assembly line.

In addition, the U.S. Department of Commerce decided last year that selling active matrix displays below manufacturing cost (a common practice for Japanese companies that are trying to build a market) constitutes “dumping,” and imposed a 62.67 percent tariff. The immediate result was to shift manufacturing of notebook computers and other devices that use active matrix displays out of the U.S. So much for using trade policy to protect domestic jobs!

Active Addressing is based on a single, custom-designed display chip that acts as a booster to passive matrix, speeding its performance to nearly that of active matrix by mimicking active matrix circuitry.

As a result, the company says, Active Addressing overcomes many of passive matrix’s inherent shortcomings.

QUALITY AT A FRACTION OF THE COST

“The advantage to passive matrix is that it’s much cheaper, substantially easier to manufacture and has a high yield rate,” says Sharon VanSickle, spokesperson for the joint venture. “With Active Addressing, you get full color, video rates, high contrast and [high] resolution.”

Indeed, the cost of an Active Addressing chip in a passive matrix screen may only add 25 percent to the screen’s cost — cost that’s directly attributable to the custom electronics required. Even that barrier might not last long. Gulick anticipates future generations of Active Addressing may be done in software.

Active Addressing does not achieve the quality of active matrix technology, however. “Minor artifacts from passive matrix manufacturing technology remain,” says Gulick. “For instance, there’s the lack of uniformity from one edge of the screen to another — Active Addressing doesn’t fix these problems. These are manufacturing problems.”

Interest and commitment. Still, since In Focus showed its first prototype circuit board of the system at a symposium in Boston last February, “interest has been very high” from third-party vendors wanting to invest in the technology, says Gulick. Motorola showed the most commitment, he said, and “shared our vision in what this technology could do,” says Gulick. Equally attractive was the company’s strength in the business of embedded chips.

Screen size will not remain an issue. The company will focus on the small screens for the first year, but are starting with the smaller screens because “this is what Motorola wanted to do.”

A staff of several hundred employees will open up shop in Portland, near In Focus’s headquarters in Tualatin, OR, before the end of 1992. For the first year, the staff’s mission will be to design and develop the Active Addressing custom chip.

In Focus says the new chip will be on the market by 1993. A manufacturing facility is also slated to come on line in 1994 with an ambitious production schedule of 50,000 panels in its first year.

BOTH WANT THE HANDHELD MARKET

The investment by Motorola is yet another signal that the company is determined to own more than one piece of the handheld device market. Though the company cannot compete with its archrival Intel as a provider of core microprocessors for personal computers and workstations — Intel’s x86 line clearly has the corner on that market — Motorola is a growing and great success in the market for the manufacture of embedded and/or special purpose microprocessors.

In addition, Motorola is already a partner with the Apple spinoff General Magic, widely known to be producing a personal communications device; it’s also IBM’s partner in the Ardis wireless data network; it’s the world leader in wireless radio modems; and it’s also a world leader in general-purpose digital signal processing chips.

Clearly the company believes personal communications devices, such as handheld or palmtop computers, are a vast potential market, and is making investments to gain access to as much of that market as possible.

Perfect timing for In Focus. This is also an exciting new venture for In Focus, which could increase its business exponentially if Active Addressing screens catch on. LCD projection devices are a very small market compared to the potential of mass-market personal communicators or so-called “personal digital assistants.”

The development effort comes at an excellent time. LCD panels and projectors alone are expected to reap annual sales of $1.25 billion by 1995, according to a recent market study by Rochester, NY-based Hope Reports. But Gulick believes the potential market is much larger than projections.

He says applications for flat panel displays will mushroom to include notebook and handheld computers, communication devices, automotive applications, small handheld TVs and picture phones. Gulick believes the worldwide market for LCDs will reach $14 billion by 1996.

Amy Johns, Denise Caruso

INFO SERVICES ARE POPPING
The industry starts talking infrastructure

A recent private seminar on future information services for consumers at the Palo Alto, CA-based Institute for the Future reached consensus that the provision of video services by the regional Bell Operating Companies (RBOCs) would require about $400 per subscriber in infrastructure improvements.

The seminar, directed primarily toward an audience of RBOCs, also revealed that the RBOCs aren’t sure there will be sufficient demand for such services. But they say they’ll continue to press forward with some major projects since they feel there is a business demand for information services.

SERVICE UPGRADES ARE COMING

Ameritech, for example, has announced that it will be upgrading service to 2.5 million subscribers in five years. A $1 billion investment will upgrade Ameritech’s network to include optical loop carrier gear, the electronics that reside between the central office and the home (from DSC Corp. of Plano, TX), as well as fiber-optic cabling and equipment from Raynet Corp. of Menlo Park, CA, which will link the phone network’s fiber backbone to the subscriber’s curb. (These two investments are the source of the “$400 per subscriber” figure.)

Fiber to the curb. Ameritech was one of Raynet’s first big contracts. The company, a subsidiary of Raychem Corp., has spent hundreds of millions of dollars developing its “fiber to the curb” technology. Whether the company will ever get that money back was openly discussed at the recent Telecommunications Association conference in San Diego.

At TCA, it was generally accepted that the cable TV industry could provide even more interactive video capacity than a fiber-wired phone company at less than $100 per subscriber. The expectation is that the cable industry will certainly upgrade because of franchise requirements and the need to obtain additional subscriber revenues.

CABLE’S STRUGGLE WITH INTERACTIVE

RBOC participants at the Institute for the Future seminar felt that the cable industry would probably continue to be heavily leveraged, and will not be able to handle interactivity (i.e., the one-to-one switched line capability at which the phone companies excel) very well.

However there was an opportunity, they felt, for the RBOCs to pick up cable systems cheap in the future if restrictions against such purchases are relaxed. This would be particularly useful since the provision of video dial tone to the RBOCs.

Waiting for the local. Though regulations still forbid cross-fertilization between cable and phone companies, common wisdom is that these restrictions will be lifted when there is full competition for local telephone service; most believe that will occur within three years.

However, non-RBOC participants at the Institute felt that sentiment was overly optimistic. The broad vision for Sony and Matsushita, for example, seems to include hardware (both wireless and wired), fiber connectivity (cable TV and RBOC), advanced databases (with intelligent agents), and visual materials in one company’s package.

It was remarked several times that this type of system seemed the aim of Sony and Matsushita too. Closer to home, industry watchers are convinced that companies such as Bill Gates’ Interactive Home Systems will go much further than the acquisition of digital image rights. Gates and the Japanese companies certainly do not intend to leave the field as easy pickings for the RBOCs.

Tom Hargadon

>BRIEFS

KODAK’S WRITABLE CDS MOVE TO THE DESKTOP

At last month’s Seybold San Francisco conference, Eastman Kodak introduced a writable compact disc publishing system that, if we all play our cards right, could be the first desktop multimedia production system on the market that almost-normal people can afford.

The PCD Writer 200 writes and reads data to and from a $25 write-once optical disc. The drive itself is fully CD-ROM XA compatible, which means that it is physically capable of both multisession recording and reading and writing interleaved data. But Kodak says it doesn’t yet have the hardware to support any of the whizzier, multimedia-style applications.

Larry Zimmer, manager of business development for the Writable CD System, says the first software available for the system is for DOS computers and is only capable of writing in ISO 9660 format, which is best suited for archiving text and numbers. In the works are Macintosh and Unix software.

Multisession next. However, he says the company plans to support multisession recording by the first half of 1993. (Standard CD-ROMs lay data on the disc with all the indexing at the very beginning, so multisession recording is a rather heroic feat of technical sleight-of-hand.)

He won’t, however, commit to when the company will rev the software so that it can support the interleaving of sound with still images, and he won’t even get near the subject of motion video.

“That’s not really our core business, so video’s not in the plan yet,” says Zimmer. However, he added somewhat enticingly, everything’s already in the XA hardware, and Kodak is actively “procuring software from third parties to fill customer needs. We’re only doing our own development where it makes sense.”

That statement is the sound of a fabulous opportunity knocking for some ambitious software developer who wants to figure out how to use the Kodak system to press from one to 100 interactive multimedia discs that contain fully interleaved video, sound, stills and text without leaving home or office.

The desktop system today costs $5,995 for the hardware and $2,495 for the ISO 9660 software.

INDUSTRY BALKS AT FBI WIRETAP POWER

IBM, Microsoft, AT&T, Digital Equipment Corp., Lotus, the American Civil Liberties Union, and the Electronic Frontier Foundation, among others, have formed a coalition to block a proposed congressional bill that would allow the U.S. Federal Bureau of Investigation to increase its wiretap power as well as set technical standards for the computer and communications industry.

As reported in Digital Media (see Vol. 1, No. 11, p. 7), the FBI is concerned that advances in digital telephony technology will leave them out of the loop. It has proposed legislation that will enable the agency to “determine the technological interception needs of the government,” and, from that vantage point, let it determine what is acceptable product design and what is not in the realm of digital communications.

Needless to say, this news did not go over so big with some of the most powerful companies within the computer industry nor with trade associations, computer users, and privacy and consumer protection agencies. And as in times of war, these disparate groups have united against a common enemy. Together, they have formed a coalition and, under the aegis of the Electronic Frontier Foundation, drafted a white paper, “Analysis of the FBI Proposal Regarding Digital Telephony,” opposing the proposed legislation.

For a copy of the white paper call the EEF at (202) 544-6906.

In other news, the FBI is being sued by the Computer Professionals for Social Responsibility group. The suit was filed after the FBI failed to make public the information on the proposed digital telephony legislation. According to CPSR Washington Office director Marc Rotenberg, “A full disclosure of the reasons for this proposal is necessary. The FBI simply cannot put forward such a sweeping recommendation, keep important documents secret, and expect the public to sign off.”

SMPTE ADOPTS DIGITAL IMAGE MODEL

In a move that could lead to a single system for the handling of digital images — scalable from the big screen to the computer screen or even smaller — the SMPTE Standards Committee has adopted a report from the Task Force on Digital Image Architecture that endorses an open, interoperable image standard.

The task force, formed in early 1991 and originally headed by David Trzcinski of PictureTel, then by Dr. Will Stackhouse of the Jet Propulsion Laboratory, was composed of members from the television, motion picture, computer, medical imaging, telecommunications and multimedia communities. In addition, the group that presented the report proposed a model, which is now under consideration, that met many of its criteria for such a system.

Scalable video. The system was designed to imbue a single stream of data with sufficient intelligence that it could display its images on any kind of monitor or screen, in whatever format was required (i.e., NTSC or RGB) without modification. This is what’s called “scalable video,” and many believe its arrival will signal the beginning of truly useful digital media applications, since developers will be released from having to repackage titles for separate platforms. (This is a problem today with the Sony MMCD and Tandy VIS players; see p. 6.)

The SMPTE group believes several criteria are essential for scalable video:

• Selection of a family of image acquisition rates and display refresh rates for computer screens that consider the frame rates of film and TV;
• Use of a square sampling grid (as opposed to the ovals used in TV);
• Use of headers/descriptors to identify the form and content of the data stream;
• Coherent sampling of the image and the use of progressive scanning techniques where feasible;
• Establishment of appropriate levels of compatibility with current motion picture and TV standards.

The task force has also agreed to put the fruits of its labor in the public domain, so that developers wanting to use the modules and interfaces forming the architecture can implement them without paying licensing fees.

FDDI WIRES BOEING FOR PHONE AND GAMES

Boeing Aircraft Co., the largest U.S. aircraft manufacturer, is installing high-speed, fiber-optic networks in its aircraft for inflight multimedia services to passengers and crew. The network, based on National Semiconductor’s Fiber Distributed Data Interface (FDDI) chip set, will come standard on all Boeing 777s beginning in 1995.

United has already signed contracts for the multimedia jumbo jets. It plans to offer passengers an extensive line of services: seated passengers can access air-to-ground and ground-to-air phone, online and fax services, multiple video and CD audio channels, electronic games and books, and video displays of flight and travel information.

(There are, in fact, already developers working on applications for these new multimedia-equipped passenger jets.)

Flight crews, maintenance and ground support teams will use the network to communicate, improve safety and streamline operations. For example, flight crews will be able to communicate directly with ground personnel to request meals for the next flight or to place a service repair order. Also, video displays will be available to aid in navigation.

FDDI is a high-speed (100Mbit/second) fiber-optic networking chip set that has typically been too expensive for widespread commercial use. National claims to have improved chip performance while lowering its manufacturing costs.

National plans to sell its FDDI chip sets to other parties. Sony, Samsung, Performance Technologies and Team ASA are working on incorporating the technology into desktop computers.

“We see communications as a massive, growing area,” says Ray Farnham, president of National’s Communications and Computing Group. “In the next two to three years we expect this FDDI chip set to generate multiple ten of millions of dollars.”

EO’S TALKING PDAS, BUT NOT PRODUCT

Mountain View, CA-based EO, Inc., has joined the ranks of General Magic, Apple, Tandy, Sharp and IBM (and likely many others we don’t know about yet) in the race to supply mankind with the first personal digital assistant. In early October, the barely one-year-old start-up announced its partnership with AT&T, Matsushita and Marubeni — and its intention to show a wireless personal communication device by year’s end.

EO’s devices will be based on AT&T’s low-power, RISC-based Hobbit microprocessor and GO’s PenPoint operating system. Although EO is mum about what sort of functionality the first product will have, it claims future generations of its technology will incorporate fax machines, cellular phones, modems, pagers, electronic mail and pen computing.

Two models are currently envisioned: a home model priced at $150 and a cellular model priced at $250. It’s a little hard to judge how spectacular a price point this is, however, when the company won’t discuss what the two devices will do.

With the cost of cellular telephones still teetering at about $500, it’s hard to imagine that EO can achieve the economies of scale to pull off this price point, but we’ll give them the benefit of the doubt for now.

AT&T will furnish the network structure based on its digital signal processing (DSP), phone network and advanced messaging technologies. Matsushita will provide the miniaturization and mass manufacturing know-how, cellular technology, LCDs and battery or power supplies.

Software is currently being designed by third-party vendors, which EO’s CEO and president, Alain Rossman, declined to name.

Marubeni, an international trading company, will provide distribution support and a line of credit. Kleiner Perkins Caufield and Byers, a venture capital firm in Palo Alto, CA, is also a major investor in the company.

EO has its eyes on a vast worldwide market. To this end, it plans to add a European partner to the team by year’s end. By the year 2000, EO projects that more than 100 million personal communicators — whether EO’s or not — will be sold.

IHS GAINS RIGHTS TO IMAGE ARCHIVES

Interactive Home Systems, founded by Microsoft chairman Bill Gates, is still busy licensing and acquiring image rights. The Redmond, WA-based company, which has quietly been building a “digital information library” since 1989, recently acquired non-exclusive rights to four more important collections.

The company acquired non-exclusive rights to Europe’s largest photo archive, Hulton Deutsch Collection in London; selected photographs and illustrations from Dorling Kindersley, renowned London publisher; color slides from the Francis G. Mayer Collection, which include images of architecture, public monuments and decorative arts from around the world; and a portion of the private collection of distinguished English photographer Roger Wood.

In addition, IHS already has long-term relationships with The National Gallery of London and the Seattle Art Museum (see Vol. 1, No. 4, p. 18).

IHS was the target of strong criticism by the museum community when it was founded because of its aggressive stance toward acquiring exclusive digital rights. Since then, it has been mending both its ways and the fences it trampled in the early days; this latest announcement is a likely indicator of increased trust.

PACBELL NOW AN INFO PROVIDER

San Francisco-based Pacific Bell became one of the first telecommunication companies in the nation to delve into real-world information delivery services with a project called Knowledge Network Gateway.

The project is in a one-year test period in which it will offer access to educational databases and online services to students and teachers at two San Francisco Bay Area high schools.

Gateway connects students and teachers to the Internet at UC Davis and the National Science Foundation. The Internet accesses worldwide data networks for universities, institutions and commercial R&D databases. Teachers and students receive special training on how to use varying features of the system — from research to downloading software and electronic mail.

If all goes well on this project, Pacific Bell plans to expand network capabilities to include online textbook and curricula updates and access to commercial databases.

Gateway is a part of a grander scheme of things as well — PacBell’s Knowledge Network Vision program which outlines a plan for linking the entire California state educational system to a PacBell network. To this end, PacBell has partnered with AT&T, IBM and Northern Telecom and is providing video teleconferencing as well as distance learning programs to state educational institutions.

In July 1991, a federal judge ruled to allow telecommunication companies to provide information services (see Vol. 1, No. 3, p. 7). Telcos were long prohibited from providing information services on the basis that because they control the conduit, it would be an unfair monopolistic advantage for them to provide content over those same lines.

Currently, legislation is being considered which would once again restrict telcos from offering information services — an outcome Pacific Bell is surely waiting for with bated breath.

ANOTHER WEE RADIO MODEM

Motorola’s Paging and Wireless Data Group has announced a new member of its evolving line of wireless radio data communicators. The latest arrival is a dual-purpose radio packet modem called InfoTAC.

The 6.8-by-1.3-inch, 17-ounce device is a step above its predecessors, the RPM400i and the RPM405i, in multi-functionality. InfoTAC is a modem for portable devices. It connects to any laptop, notebook or pen-based computer via a standard RS-232 port connection. Two built-in software interfaces provide initial interfaces with communication software. Additionally, it’s designed to be power efficient.

InfoTAC is also a standalone two-way messaging unit. It’s capable of receiving and storing multiple messages and of sending customized messages as well. The unit also issues receipts of acknowledgment for each message, so senders know immediately whether or not their message was received.

InfoTAC will employ wireless data networks, such as Ardis in North America.

Ardis, a Motorola/IBM venture formed in 1990, is the largest wireless data network in the U.S. Its service area reaches more than 80 percent of the population and 90 percent of heavy business activity zones.

Ardis employs IBM’s CelluPlan technology, which allows data transmissions to be sent over existing cellular networks without disturbing voice calls or requiring additional bandwidth or capability (see Vol. 1, No. 12, p. 20).

The network was based upon Motorola’s MDC 4800 protocol. However, Motorola opened the protocols used in the network last spring to encourage other companies to make products compatible with the network.

>I/O
>READERS RESPOND
CD-ROM TITLES DISTRIBUTION
Why are we making the same mistakes?

Joanna Tamer is president of S.O.S., Inc. and specializes in building distribution channels for emerging technologies. She has her hands full with CD-ROM, as her commentary below will attest. Tamer recently completed consultations on distribution strategies for CD-ROM titles for a major platform manufacturer and for a special-interest titles distributor. She is based both in Los Angeles and Boston.

When I first addressed the audience at Digital World in 1991 on new media distribution strategies, I made a single, simple point: let’s not repeat the mistakes we made in distribution during the last 10 years in the software industry; let’s learn from our mistakes this time. Let’s think through the process of development, markets, end-user wish lists, reseller’s needs and distribution realities while we are in our early stages and save ourselves a lot of grief.

THE SAME OLD POWER STRUGGLES

No such luck. First, let me acknowledge my respect for the adventure of trying to gain dominant market share, of trying to become the de facto standard. My entrepreneuring, capitalist heart beats faster in the fight too.

However, the distribution strategies of multimedia CD-ROM titles reflect the same power struggles among platform vendors and titles developers that have plagued us for the last decade.

And let me point out that this time nearly everyone is at risk — except the channel.

Here’s why. Most current multimedia titles target the education, home or entertainment markets. CD-ROM in business is still primarily a storage and delivery medium for reference data and complex software.

However, platform vendors have significant development costs to recoup, and have priced their products too high at this point to drive a mass market. Despite that fact, platform vendors want titles developers to create titles as though the masses were waiting, and as though retailers were interested in helping them create that market.

No one will win. And to further confound progress, authors (developers) want their titles on multiple platforms to reach a broader market and to appeal to retailers, but there are no standards for development across platforms, few acceptable means available for “porting” across platforms and authors are often pressured by publishers to grant them exclusive publishing rights.

Publisher/distributors are pressured to balance the needs of their authors with the demands of the retailers who will accept or reject the products offered; this balancing act must be successful across many platforms and across many channels, and in an unusually tight timeframe for success. Given the above examples, no one is poised for a win.

There are some significant differences in the marketplace of 1992 that were not so in 1982, differences that will have a noticeable effect on the acceptance of new media products in the retail channel.

First, today’s market is slowing, not growing like the market in the 1980s. And in the ’80s, the business market proved the true user of technology, not the home market.

Next, the history of the software and video markets as they emerged showed channels begging for product, and accepting it as paid goods with minimal or no return privileges. In the software industry, the channels did not begin to gain any power until 1985 and later.

Emergence of earlier technologies followed a distribution lifecycle: from early adopters to a broader technology-buying base, to the mass market. With multimedia, we are jumping from early adopters (via mail order) directly to the mass-market channels and consumers. This jump pressures the multimedia industry to succeed in a very short time or risk being dismissed as a viable consumer category.

But at this point, the channels have the power to make, break, or simply delay not just a product, but an entire category of products. This can prevent a category from finding its market in a timeframe that allows a reasonable return on investment for its pioneers.

Players and power structure. At this time there are at least 15 major hardware and/or software vendors actively committed to the success of CD-ROM-based multimedia. Ten incompatible primary platform choices are available for title development, and the number will increase to 20. Many of them follow the computer industry model of upgrading to a new generation of CPU and/or system software every 18 to 20 months.

Keynote speakers at CD-ROM conferences, in the forefront of this market since 1985, complain that every year brings more chaos and more options, and renders the industry a step further from any standards or even an emerging leadership by major players. “How long until anyone can make money?” they ask.

Anyone interested in the successful distribution of CD-ROM titles must master the confluence of the consumer electronics, computer and publishing worlds.

Interested parties will be buffeted by the forces of the computer and consumer electronics industries, the record and video industries, and the book industry. Authors must choose among publishers who tout their “Affiliated Labels” programs and manufacturers who woo them with financing to develop on their platforms. Publishers and distributors must assess the market potential of various manufacturers and watch which authors are the most savvy and productive.

DON’T GENERALIZE ABOUT RETAILERS

The retail outlets sought by the publishers and distributors span numerous categories such as software, books, audio, video, consumer electronics and general/mass merchandise. Examples of such retail outlets include:

• Computer software-only stores: Egghead, Electronic Boutique.
• Computer stores: CompUSA, Computer City.
• Consumer electronics stores: Silo, Circuit City, Highlands.
• Video stores: Blockbuster.
• Audio stores: Musicland, Tower Records, Sound Plus.
• Mass merchandisers: WalMart, Target, Sears.
• Office/Warehouse clubs: Price Club, Office Depot.

Each is serviced by representatives dedicated to its category, and each buys, sells and returns products according to its category’s traditions. It is interesting to consider the collision of these traditions on the distribution of CD-ROM titles, and the risk it poses to the publisher/distributors.

But don’t forget whose prevails. The publishers of CD-ROM titles approach the licensing of titles from their own tradition of either books, records or software. Some offer advances on royalties, similar to the book industry; others deal in margins for finished product like the software industry. But as they bring these products to the retailer, it is the distribution tradition of each kind of retailer that will prevail. And it is the retailer that takes the least risk of all.

HEIGHTENED RISK FOR ALL INVOLVED

The publisher/distributor typically has 15 to 20 margin points to work with, whether he or she is using a book, record or software model. There is not yet a standard model among publishers for licensing, distributing or pricing titles. This is not unusual for emerging technologies or markets, but it does heighten the risk for all involved.

CD-ROM players for computers cost between $199 and $699. Non-computer CD-ROM platforms (such as CD-I and CDTV) cost about $800. CD-ROM titles will range between $29 and $79 suggested retail list price, with some titles appearing as low as $19 and as high as $129.

Cheap software, expensive book. It is likely that the prices for many titles will quickly reduce to $29, which is inexpensive for software (an impulse purchase) but still high for a book.

But with CD-ROM titles, the publisher assumes a greater risk than the software, record or book publisher: the product is unproven as a consumer category in the marketplace, and there are four separate marketplaces plus each marketplace’s channels in which it must gain acceptance.

The channels are expected to embrace CD-ROM titles in this order: mail order (currently), computer and consumer electronics stores, audio/video stores, and finally, bookstores.

These channels all address mass markets, and the retailers expect 100 percent return privileges for all stock still unsold after 90 days. Sometimes this privilege is expected for a 12-month period.

The power is with the retailer. See where the power lies? It lies solely with the retailer. His or her concern is for return on linear feet of shelf space and for inventory turns of products that are in demand by customers. The retailer will not create the market. He or she may refuse to use shelf space for the titles because the inventory does not move, then charge for the square footage upon which the point of purchase display sits, when the P.O.P. display is the alternative to shelf space. If the product does not move within the first 90 days, it will be returned.

So the publisher/distributor is at significant risk to create market demand within a tight timeframe. Many are targeting Christmas 1992 for the emergence of this new market category, even though consumer buying indices are down, and titles and players are priced beyond an impulse purchase level.

But many believe that the first publishers in place will own the market. Since the retailer is so key to success, it may be true that primary relationships with those retailers must be built now, so that the strength of the relationship establishes the success of the market for next year’s (1993) Christmas season. This risk for primary position in an emerging industry underlies all the other risks that drive this market.

Shelf space imperatives. This pressure for shelf space gives rise to other mass merchandising imperatives. It is best for authors to create their titles on multiple platforms, and for publishers to publish those multiple-platform titles on a single disc whenever possible.

Publishers and platform vendors must also create easily identifiable logos and labeling to fit the front and sides of the disc’s packaging, so that the customer can instantly identify what he or she is seeking.

As the smaller and more ecologically sound “jewel box” is becoming the CD standard, this visibility becomes even more important. These strategies offer the most visibility for authors, publishers and platform vendors in minimal shelf space among the mass of merchandising.

The winners will be those who allow consumers the most flexibility for their dollars: those whose technologies (either platforms or utilities) can access all titles across platforms, giving buyers more choices — those who create a usable standard where there is none.

WHERE IS THE MARKET? WHEN WILL IT EMERGE?

Market data upon which to build a business plan is woefully lacking. Much of the CD-ROM player data is buried in numbers about optical disc readers, and not segmented to address the questions of this multimedia marketplace.

A PC Computing/Infocorp forecast predicts an installed base of 9.1 million drives by 1995, with CD-ROM player unit sales reaching 2.7 million.

No way to know. But there is no segmentation in this information among the many competing vendors of CD-ROM players. We don’t know the installed base of players for computers by platform, because several third-party vendors supply this market as well as the primary vendors. We don’t know the sales figures for CD-I or CDTV, for example, because Philips and Commodore aren’t talking numbers.

So no decisions or projections can be made about which platforms an author should develop for, or which titles (on which platforms) a publisher should seek out, or which titles a retailer should stock. I cannot find anyone out there who will say there are more than 500,000 CD-ROM multimedia players out there on any platform, or more than 300 titles that might be available by January 1993.

No figures guessed today will help us interpret the projections for 1995, or help us put together a business plan upon which to assess our risks for today.

Half a million’s not a market. A true mass marketer — in audio, video or books — driven by the market demands faced daily by the retailers, will not yet see a market in 500,000 players, all incompatible, with 300 titles. Retailers may offer some trial shelf space for it, this Christmas and next, to carry the cutting edge of new technology, but they will not risk a linear foot until the market demand is at the door.

And since the retailer can return the product, he or she incurs no risk, and so has no investment in the category’s success. Retailers can afford to wait until the market is ready.

So, although there is a market emerging, and pioneers are committed to establishing their presence in it now, it is difficult if not impossible to predict the timing of market acceptance, the price tolerance of the consumer, or the models of distribution that will drive most of the choices of all concerned. And all these factors lie in a context of an economy slow to rally.

Perhaps the risks we took 10 years ago to launch the desktop computing industry were as significant as this, but we took a longer, slower view of the market acceptance. In addition, hardware, software and channels were emerging and defining themselves at the same time, sharing the risk of market development simultaneously.

A tighter time frame. Now we are spending more in a tighter timeframe for success (this Christmas season and next). The channels are available and powerful, not emerging, not in need of product and not sharing the risk. We are selling expensive products into an educational- and home-based market in a slowing economy. This makes for a very different arena.

In the 1980s, when home computers and software moved from specialty stores to the mass market, the retailers owned that product and could not return it. When the home and educational user did not respond, price wars ensued and the category of “home computing” died for a time, re-emerging successfully later as low-cost game machines with limited functionality.

If we see this scenario again, the retailers will simply return the titles, not create a price war.

START SWEATING THE MUNDANE

We may yet see the steady emergence of multimedia as a market force that successfully merges what has been called “couch technology” and “desk technology.” But to do so will require careful planning, and the time frame is likely to be longer than anyone anticipates (as it was with desktop computing, video, audio CD and audio books).

To know the book industry’s distribution model is not to understand the models of software, consumer electronics, audio or video. To be a major player in the audio mass market does not prepare you for the attitudes of the computer industry about its “intellectual property.”

To be an author without knowledge of retail channels is to be powerless to negotiate a publishing deal that supports your future efforts and livelihood. These conflicts of style and culture across industries are not minor and can have a serious impact on the way deals are struck, margins are won or lost, and success in any particular channel is achieved.

The planning of our course — as author, publisher and distributor — must be informed by extensive knowledge of all targeted channels (software, consumer electronics, audio, video and books) and the current hard realities of mass market retailing.

To miss the details — what various kinds of retailers care about, the margins at which product is licensed vs. each retailer’s way of buying and returning it, the price sensitivity of the current consumer, the “so what?” attitude about new technology that lives in the mind of the mass market buyer — is to threaten the launch and viability of multimedia itself.

Joanna Tamer

>EVENTS
134th SMPTE Technical Conf. & Equipment Exhibit
Nov. 10–13, Toronto, Canada
Society for Motion Picture and Television Engineers
(914) 761-1100, fax (914) 761-3115

This annual event gathers more than 15,000 television, motion picture and related imaging-type folks from around the world.

The four-day technical program on film, television and multimedia includes the presentation of more than 115 technical papers from media and hardware suppliers, SMPTE committees, and academic and research institutions.

Session and paper topics include compression, digital TV, standards, multimedia and networks. Technical sessions will address film post-production and projection technologies, video crossroads, lab technology, design and development of broadcast centers, large-format film technology, film production and sound technologies, and TV recording technology.

Participants include NASA, California Institute of Technology, NHK CCETT (France), Bellcore, Mitsubishi, LucasArts and IBM.

Offsite will be technical sessions at three of Canada’s major television and motion picture institutions: Skydome, the world’s largest operating indoor television screen, Cinesphere-Ontario Place, a viewing area for the world’s largest film format, and Film House, one of North America’s largest post-production facilities for motion pictures and episodic television.

The exhibition center will showcase products from more than 200 international companies. A special room will be set aside for companies demonstrating new technologies. Representatives from professional consulting firms also will be on-hand.

Afternoon workshops will cover multimedia production, teletraining, distance learning and multimedia communications. NHK, The 1125/60 Group and Vision 1250 will present their latest work with HDTV programs. Experts in production will host “Creativity Clinics” on lighting techniques, audio effects and filming.

Two concurrent all-day tutorials will be presented on November 9. Multimedia World tackles the topic of multimedia. The Post Experience targets video editing disciplines with emphasis on electronic post-production processes.

Amy Johns

-30-