As usual, the many "faces" of the Video Web continue to morph.

As regular readers of this column know, I have tended to emphasize streaming video over the more time-consuming process of downloading files. After all, streaming offers the kind of immediate gratification that most consumers seem to want. However, to my surprise, as Internet bandwidths continue to improve, the rapid growth in streaming video delivery is now also being complemented by a new resurgence in the popularity of downloading.

TWO MAJOR EXAMPLES
Most recently this trend has been illustrated by the LucasFilm/Apple alliance for the distribution of a new Star Wars movie trailer using QuickTime 3, as well as by an extremely popular new form of music distribution called MP3 (which is actually Layer 3 of the MPEG-1 standard identified by the ".mp3" file extension). The former is particularly interesting because it demonstrates the continuing viability of QuickTime delivery over the web despite the delayed delivery of its streaming capability (expected with the QuickTime 4 upgrade, perhaps before you read this). And MP3 is important to video producers because it illustrates the viability of entirely new business models for web-based video program distribution and promotion.

These significant, recent developments are also important because of how they illustrate the Web's unpredictability while also re-emphasizing the importance of image quality and user control of media files.

Don't forget that the Web is still like the "wild west." People are making up the rules as they go along. That keeps the door open for "who knows what?" Or, as Michael Robertson, the CEO of MP3.com, told me, "It's not a revolt. It's a revolution." (More on that below.)

WHY DOWNLOAD NOW?
In the case of the QuickTime/StarWars movie trailer, it's apparent that the decision to download (rather than to stream) was made in order to deliver more pristine quality. With a motion picture trailer that contains as much image detail as this one, this decision not only made sense, but produced great results.

In fact, it created a kind of phenomenon. Personally, I first heard about it from Videography editor Brian McKernan who told me that the trailer created a "commotion" in Videography's offices, especially among our younger staff members. In addition, a neighbor also told me that he had mentioned the availability of a new Star Wars trailer to his teenage son (apparently in an attempt to let his son know that "dad was up-to-date." However, as you might imagine, the response that he got ("I know, Dad. I've already seen it on the Internet.") clearly left the "screen-ager" in control of the media space.

QUICKTIME'S PHANTOM MENACE
The victory for QuickTime (beyond the prestigious association with perhaps the hottest media property of the year) is that in an apparently streaming-oriented online media space, it's format succeeded on the basis of its quality.

According to Apple, the STAR WARS: Episode I trailer was made available exclusively in the QuickTime 3 format and had 3.5 million downloads during its first week of availability. Of course, this figure does not include the myriad of mirror sites set up by Star Wars fans all over the world.

The letter-box formatted trailer was made available in four resolutions including a full motion, 24.7 MB, 480 x 216 pixel version with impressive stereo sound and a scaled down 5.3 MB, 240x116 pixel version which still played (a respectable by streaming standards) 12 frames per second.

Despite the download file sizes in the tens of megabytes, QuickTime proved its ability to deliver a viable viewing experience. It seems that if something is important enough, viewers are willing to by-pass the immediate gratification of on-demand streams and to take the extra time-consuming step of making a download. As I have written here before the user benefit is that in exchange for spending the dowload time, they receive a better quality piece of media (better image quality, better frame rate, larger frame size). And, the other advantage is that they have it on their hard drive and are free to distribute it and to replay it (without having to be connected to the Net). Once they are over the hump of the download, they essentially "own" a desired piece of media.

The bottom line is that media consumers like to get what they want, when they want it, and even, wherever they want it. This later factor being is being demonstrated even more dramatically by MP3 and its new portable players.

MP3'S PARADIGM SHIFT
I first caught wind of the MP3 phenomenon from a Wired magazine interview with best-selling rapper, Chuck D of Public Enemy, but the people who are really designing this new media distribution paradigm from a new media business point of view are behind the format's most famous web site, www.mp3.com. I spoke with Michael Robertson, MP3.com's CEO.

While many people are aware that MP3.com offers free MP3 music clips, I was surprised and -- from the point of view of the potential for new future revenue streams for video producers -- pleased to discover that MP3.com's business model also involves media sales.

While MP3.com does plan to sell individual songs via its web site in the near future, at the moment the free MP3 clips are strictly a promotional vehicle. Very much following the Internet model of the free introductory download, MP3 uses its free clips to expose new artists for whom it then sells CD's. In fact, Robertson told me that they use a robotic production system. He said. "We don't care if we produce 1,000 of the same title or 1,000 different titles. Because it's all automated, our cost is virtually the same." In other words, he has no inventory. The CD's that he sells are manufactured AFTER they are ordered. This is known as "Just in time" or "JIT" production, and it's the same type of business model that has been used successfully in the computer business by big players like Dell, Gateway, Apple and others.

What's most interesting is that this represents a new business model that potentially could turn the music business on its ear (pun intended). According to Robertson, the "old" music business model with A&R directors, record stores and so forth requires the sale of about 300,000 units of a given CD in order to break even. On the net, Robertson says that "an artist can make a middle class living by selling about 3% of that quantity or only 10,000 units. Here's the math: By selling MP3-promoted CD's on the web at $10 a piece, a title would deliver a total gross of $100,000. MP3.com splits these gross revenues 50/50 with the artist, for net return of $50,000 on the sale of 10,000 units. Robertson says that this represents "A whole new economic model for artists, and a whole new paradigm for the music business."

EMPOWERING ARTISTS
What's particularly motivating for new artists is that there are absolutely no out-of-pocket costs for a musician or a band to use this new distribution channel. Robertson says, "Any artist can sign up and get exposure and sell product, for zero investment, no monthly fees, and no upfront costs whatsoever. If they never sell anything, this distribution channel doesn't cost them a time."

You mean that any artist can get their product on the "shelves" of this virtual record store with a free demo clip available for downloading for free? Yes. And the promise for video "artists" is that this new avenue of exposure offers unprecedented freedom to experiment.

So with all of that new music available online, how does a user know what to try? Well, for openers, MP3.com lists the clips in each music category by popularity. Robertson asks, "Why should the record companies filter the bands? Let the Internet be the filter."

And just in case you're wondering if streaming is suddenly becoming obsolete, MP3.com also offers "Instant Play" previews on every page. These streams are low-quality versions of the higher quality MP3 clips that are available for downloading. Robertson says that he has "no undying allegance to MP3. We use what works. The good companies will find a way to offer both streaming and higher quality downloading."

REVOLUTIONARY BUSINESS
He says the popularity of MP3 isn't just "an uprising because CD's cost too much. It's a revolutionary movement. Our motto is 'It's not a revolt. It's a revolution.'" In fact, in a move that is also unheard of in the commercial music industry, MP3 does not own the artist's master recordings; and artists have "at will termination." Robertson says that the artists can get out of his contract at any time. "We're putting power back in the artists hands. This is an important and dramatic shift toward empowering the artists. It cuts to the core of the artists/record label relationship."

And the fact that hardware is following this phenomenon makes it even more real. Diamond Multimedia now makes an MP3 portable player that's about the size of a pack of cigarettes called the Rio. Creative Technologies Ltd. (of SoundBlaster fame) is coming out with an MP3 player called Nomad, and Samung Electronics and others are expected to follow. These players are essentially small portable hard disks with built-in codecs.

Can consumer digital video playback devices using personal hard drives be far away? Apparently not. There are already two consumer video network devices -- the TiVo Personal Television Service (http://www.tivo.com) and Replay Networks' ReplayTV -- which use hard drives in a consumer "receiver" (kind of a digital VCR) to provide viewers with the ability to digitally record, pause, rewind and slow-mo television broadcasts. For example, with one of these devices, you can "pause" a live sporting while you make a sandwich and then rejoin it without missing a play. All thanks to your own personal digital delay system. But that's another story.

Bottom line, given the furious action in the music industry surrounding the MP3 audio format, I believe that new video delivery possibilities and business models will also emerge in the near future. Count on the video Web to keep all of us on our toes. The only constant is change.

Stay tuned.

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