Posted by: Peter Burrows on October 16, 2007
Google’s announcement yesterday of a new content recognition system for spotting pirated video clips on YouTube was one more sign that this technology is coming of age—for venture capitalists, anyway. While not scorching hot, “it’s a very warm area,” says Dennis Miller, a general partner at Spark Capital.
That's a big change. For more than a decade, VCs have largely stayed away as various companies broke their picks trying to crack the difficult technical problem of identifying video that may have been compressed, degraded, slightly altered or sampled. In this game, good isn't nearly good enough; near perfection is required. And only now does that seem even remotely possible.
But the technical risk is just one of the problems. Even as Internet video has taken off in recent years, it wasn't clear who was going to pay for such systems; studios would say its the video sites' job, and video sites would say the studios should pay to protect their own assets.
Now, technical progress and the sheer enormity of the opportunity are starting to overcome these barriers. In a recent post, Lightspeed Ventures' Jeremy Lieu links to a post from Brightroll CEO Tod Sacerdoti that claims that the number of video searches will surpass those of text searches within three months. I'd take that argument with a grain of salt, since Brightroll is a video ad network. But how big a grain, I don't know.
Indeed, as this technology inches towards prime time, it's being recast into something far more strategic than just a tool that Hollywood lawyers can use to find people to sue. "This stuff used to be known as copyright protection technology, but that never turned into a big business," says Miller. "The studios all talked a big game, but never cut any big checks." Now, however, these systems are being defined as content recognition technology--a layer of intelligence that will let content owners know where and how their stuff is being viewed, thereby giving them a slew of options for what to do about it (including demanding payment, or ad-sharing deals). "Copyright protection was defensive in nature, but content recognition enables an offensive strategy" for bringing in new revenues. "And since playing defense is not working [for content owners], they're looking to go on offense,” says Miller.
I personally don't know of any new investments in any of the 20 or so companies now focused on video fingerprinting, but Vobile Inc.--a company I've covered closely--is clearing gaining attention from VCs and possibly strategic investors. In fact, former YouTube chief financial Gideon Yu, now CFO of Facebook, joined Vobile's board on Oct. 10. Besides showing confidence in Vobile, it seems to me this may also say something about YouTube's new fingerprinting scheme--since he surely would have known something about that effort while at YouTube.