Inside Report #106 Articles from Back Issues of...
IR Logo Top Dec. 1, 1994

Surf's Up!

The industry is changing,
and we're changing with it.

We used this title on our first issue, back when this newsletter was called Desktop Publishing: Bove & Rhodes Inside Report. That was in 1986.

We use it again now, because we are leaving the Inside Report, Cheryl Rhodes and I, after more than nine years at the helm... But not before explaining why. For the reasons are as old as the oldest profession, and as new as a fresh wave lapping at the beach.

Excuse me, the second-oldest profession, journalism, has as one of its tenets the notion that a newspaper (or anything like it) should have no friends (Joseph Pulitzer). (The oldest may also have this as a tenet, I don't know. ) Indeed, the Inside Report has no friends among vendors, though it has their respect. But times have changed, and alliances are being formed right and left. Cheryl and I have decided to follow our muse into the content business, and as producers and publishers we have to have as many friends as possible.

IR 106 pullquote As we move forward into the CD-ROM entertainment business, it becomes less and less appropriate for us to continue to comment about industry practices for this publication. (It actually becomes more appropriate for us to continue to write how-to articles and to write about starting such a business, but that's another story.) So, we must bid you adieu, at least for a while, as we devote our full energies to this new business.

Which begs the question, why did we suddenly dive into the CD-ROM entertainment (or "edu-tainment") business? For the same reason that we dove into the newsletter business in 1986 with those fateful words. Because it is time to surf.

For many people, that means surfing the Internet. For sure, we're out there with our first, admittedly sparse, web page . Come on down.

For others, it means surfing the possibilities that multimedia has to offer. We're certainly doing that to the hilt, as we are producing our own titles with our own hands.

But for us, it means surfing the new wave of publishing and artistic expression with content that has much broader appeal. We may also use this opportunity to regain control of the production process of technical book/CD-ROM products.

So you see, the reason is as old as desktop publishing: we want to produce quality products on a budget while retaining control over the entire process. I think of the opportunity as a form of media liberation, and we yearn to be on the media liberation front along with many other pioneers of interactive media.

CDs in the Sky (with Diamonds)

The path from the software business to the content business is already well worn. I can't count on two hands the number of top software engineers that have migrated from the likes of Microsoft and Apple to small and large content publishers, Hollywood studios, and game companies. And, of course, how can we ignore the example of the bionic billionaire duo that founded Microsoft, Bill Gates and Paul Allen, both of whom own plenty of content and have grand intentions.

But let's not forget that one of the first people down this path was Marc Canter, founder of Macromedia. His product, The MediaBand CD, is now available on CD-ROM in its first edition, and it is quite unique and enjoyable as a product. He proved that it is possible for nerds to make entertainment products. So did Ty Roberts of ION, with his David Bowie title, Jump. So did countless others from the software business who are now out on their own or working for publishers, record companies, game companies, and so on.

It is inspiring to see this much diversity. The opportunity was too compelling to overlook. The content business offers a substantial increase in revenues, margins, and deal leverage. A good idea or a set of licenses can get you very far at this time.

There are not many typical examples except in children's titles and games. In these areas, companies have formed--usually by the developers of the technology or idea--to exploit a particular proprietary technology or game idea.

In our case, we have always had an affinity for the rock-music culture, and we know about a lot of different content pieces that could be fit together into interesting products. Taking our own advice for granted "Season of the Niche" in issue #95, June 7, 1994, we picked a niche market where we could truly add value. So, we have created a new company, Rockument, Inc.. It will produce and publish a CD-ROM for Mac and Windows, Haight-Ashbury in the Sixties, featuring music from the venerable San Francisco institution, the Grateful Dead. The title will be distributed by Compton's NewMedia. The key to the title's success will probably be the depth of its content, because it features works from over a hundred content owners.

We jumped on board to surf this wave now, because we think the wave may break soon and the opportunity may be temporary. Even nerds are threatened by larger, more powerful nerds (Paul Allen, for example, is capable of cornering the Jimi Hendrix market). Who knows how far this wave will carry?

Starting Up

You may be interested in what we have learned so far in this process of starting a CD-ROM publishing company on a shoestring at the fringes of the hugely lucrative entertainment world.

One thing we have learned is that deals are confidential. You can't trust the numbers you hear. There are "standard" deals that nobody signs, and there are real deals that are, and probably should be, kept secret.

Many readers know us personally, and also know that we shopped the Haight-Ashbury title around to several CD-ROM publishers before deciding to publish it ourselves, as an affiliate of a distributor, rather than using an existing publisher.

At first, our reason for going it alone was the absurd royalties offered, considering the royalties we'd have to pay out to license important music and content from the Sixties. Then we found out how truly dumb some of these publishers were with regard to the music business. I can remember one CD-ROM publisher and distributor, a leader in the game industry, asking if it could issue the audio tracks of Grateful Dead music to the record-buying public, even though the company has no channel to record companies and such a product would compete directly with Grateful Dead Records. The lack of perspective was startling.

So, using existing publishers was unattractive due to the lack of sufficient royalties, and an uneasy feeling about their interest in maintaining a relationship with the content owners. What if they used a rock group's image in advertising in a way that was not appropriate? The lack of control over the use of the content owner's material and image became an important issue for us.

The next reason should not surprise anyone who knows us personally. We were involved in a project in which subtle, complex interactive animations were without warning stepped on by huge, muddy feet. The publisher authorized the removal of important scripts without informing the programmer. Pieces of the CD-ROM were created by different teams, and stitching these pieces together became a nightmare for everyone involved. Disc performance suffered. And so on.

The problem was a lack of a true project director, who functions like the director of an independently-produced movie: faster than an idling corporation, more powerful than an indecisive bureaucrat, and able to spend tall budgets with a single bound. I was determined to play that role in my next project.

Production: Band on the Run

Make all the jokes you want about virtual corporations. We use a virtual production crew. It is the tried and true method of getting the job done: hire the gunslingers, or contract programmers, designers, and artists. It worked at the OK Corral in Tombstone.

If you can afford to employ programmers, more power to you. If you can't, use the best contract programmers you can find, but don't spend to reinvent anything. Use off-the-shelf tools whenever possible. We are using Macromedia Director for our first title, adding new technology (Director is extensible through its Lingo language and the use of "XObjects" and DLLs) to get exactly what we want. I hear that Lingo programmers are in much more demand these days than C programmers.

The playback technology keeps getting better. This moving target can be intimidating to developers whose titles need to be "at the cutting edge" of technology. While many CD-ROM titles still make fine use of the software-only Cinepak (CompactVideo) digital video codec (compression/decompression), Intel's Indeo is on the rise, and MPEG 1 (White Book VideoCD) is attractive for video-heavy titles. But games are still being done with software-only codecs because there are at least ten Pentium machines (capable of playing back a software algorithm with reasonable quality) sold for every MPEG 1 card.

I think it is nearly always a losing battle for a small developer to rely on the newest technology if extra hardware is required, or if the technology is not yet efficient. Some titles depend on being marketed along with the newest technology and are of course exempt from this judgment. But we intend to use the technology that offers the widest possible audience while maintaining the highest standard of quality. At the moment, that means we will use Cinepak for the short video segments of our CD-ROM (which consists mostly of still images and animation compressed as Director files). MPEG would not only require extra hardware for playback on many machines, but also would take up far more disc space than we can afford.

One of the largest hurdles with music-oriented productions is getting a good sound on a disc that works in both Macintosh and Windows machines. For one thing, the sound cards on Windows machines vary so greatly that it is impossible for any developer to test all conditions. For another, the frequencies for 8-bit playback on Macs and PCs differs, and fine-tuning is essential. Finally, playing music in a streaming fashion from disc can interfere with other types of disc access happening at the same time. Complex presentations with streaming music and video can get bogged down in hiccups.

These, and many more pitfalls and land mines, await those who are dumb enough to blunder into this field without experience, or intrepid enough to boldly go where no one has gone before.

Don't Let That Deal Go Down

A friend who has worked in Hollywood for years licensing music called recently to ask why it is so difficult for software developers and CD-ROM publishers, and especially game developers, to understand that the music they create themselves is not good, and that much better music is available at reasonable prices.

I reminded him that only recently has Hollywood opened its doors; it took me two years to license the music for my first title, and some record companies still haven't returned my calls.

Licensing and rights negotiations are often cited as roadblocks on the information highway. There is, of course, a half-full half-empty dichotomy of views about this. I believe that a clearinghouse for non-exclusive multimedia rights would help the industry grow with diversity and great content. At the same time, I recognize the value of having exclusive deals with very important content owners. A proper balance is necessary; otherwise, very important content may be forever locked away from the general public as public libraries lose their funding and cease to exist. What kind of history lessons will be taught to the next generation if music can't be played, and video can't be seen?

But I am optimistic about diversity in the CD-ROM and interactive world. It doesn't matter that the big-name, highly successful titles are not always the most interesting ones. The largest content owners of the world do not necessarily own the most interesting content for CD-ROM titles.

We chose a licensing route that seemed absurd to publishers--signing up more than 100 owners. We bucked the trend toward signing up all "electronic" or "interactive" rights (whatever they mean) and intimidating exclusives when they're not necessary, and instead, wrote up simple and equitable licensing agreements for the actual products we are creating. As a result, we have excellent relationships with content owners, to make it easier to go back for more when we need it. What a thought! Our legal bills were low, too.

Change is Now

The multimedia tools industry has changed very little over the last few years. The tools for these people haven't changed all that much. Most still use C or authoring tools like Director. Changes are occurring mostly in digital video playback with the new PowerPC and Pentium processors.

The computer industry has changed a bit faster but not very dramatically. Home computers are now powerful enough to run multimedia CD-ROMs. Laptops are gaining multimedia capability. A laptop demonstration of access to World Wide Web pages is all you need to convince some people to wade through the technical minefield to obtain Internet access. Soon, all shipping machines will have built-in Mosaic-like access to the World Wide Web, either through use of client software in Windows 95 or the Mac. All these changes are evolutionary and predictable.

What has changed dramatically is the content business, which remains unpredictable. Those developers creating CD-ROM games are making money, while those who created game cartridges for Nintendo and Sega are retooling for the next wave of game machines. Small companies like ours are nibbling at the frontiers of this business, following the footsteps of the game developers into territories such as Mac and Windows CD-ROM, and possibly 3DO and Sony PlayStation.

With the computer and multimedia tools industries following predictable courses, it is no surprise that the action in this industry seems to be taking place mostly in the content arena, in meetings dominated by entertainment lawyers, over deals covered in different ways by a multimedia-industry on-line daily, and by Hollywood's Daily Variety, with Newsweek and others adding weekly coverage. Not only do newsletters have to specialize, but magazines devoted to multimedia coverage will have to shift gears to cover the tools industry.

Soon, coverage of interactive entertainment products will ooze into mainstream publications, while education products will be siphoned off to educational journals, games to game magazines, and music titles to Rolling Stone and Guitar Player. The medium of CD-ROM will join the mainstream and, from there, be sucked into various lucrative niche markets.

The key to making successful products will be in reaching the audience for those products directly, answering their questions, and providing them with more product. Rather than trying to find the widest possible audience for one product, it may make more sense in the on-line world to exploit a well-defined niche market with several products. Building name recognition is important, and future business will be based on long-term relationships, especially when Internet commerce gets started and people are confused by everything.

So, we are off to try our hand at CD-ROM publishing. Good luck with your endeavors. When you get the chance, surf your way over to our web page at You can write to me at --TB

Copyright © 1994 12/10/94 by HyperMedia Comm. Inc.
Written by Tony Bove (TB) and/or Cheryl Rhodes (CR)