Sunday, June 22, 2008

David Caruso, Forward Thinker, Starts On-Line Company

David Caruso wants to be more than just Horatio Caine from CSI Miami. He’s started a new company called “Lexicon Digital Communications” which will provide instant access to videos and live feeds on demand. Lexicon was conceived and put together by Nils Lahr, co-founder of iBEAM and Vxtreme, Frank Nein, a former consultant for Bell Atlantic/Verizon and for various webcasting events, and Caruso. The idea is to make more content - and new kinds of content - readily available to consumers on a global scale.

Hard to believe? Well, read for yourself. Here’s the article from Streaming Media, which explains the whole concept and provides some insight from Caruso himself.

P.S. Sunglasses not included.

A Whole New Lexicon: David Caruso Launches Online Video Company

CSI: Miami actor David Caruso has joined forces with two streaming industry veterans, Nils Lahr—one of the original architects of Windows Media—and Frank Nein, to launch a new online video initiative, Lexicon Digital.
by Eric Schumacher-Rasmussen

The history of streaming media—indeed, the history of technology since the industrial revolution—is littered with innovators who never found the right business model for their technologies and skilled publicity manipulators who didn’t have the goods to deliver on their promises. So when a new company shows up on the scene promising to change not only online video but the entire entertainment industry as we know it, a healthy dose of skepticism is in order, especially when its founders say unabashedly that they’re hoping to achieve not just television-sized audience numbers but CSI-sized audience numbers.

Then again, when those founders include not only an original member of the Windows Media team but the lead actor from CSI: Miami and a 15-year veteran of both the streaming and telco industries, well, you also have to figure they just might be able to pull it off.

Meet Lexicon Digital Communications, a startup put together by Nils Lahr, co-founder of iBEAM and VXtreme (whose original codec specs would later become part of the MPEG-4 standard) and one of the architects of Microsoft’s Windows Media platform; David Caruso, who plays Horatio Caine on CSI: Miami and formerly starred in NYPD Blue; and Frank Nein, whose resume includes a long-term consulting stint with Bell Atlantic/Verizon and webcasting events with everyone from Titanic director James Cameron to Arnold Schwarzenegger, back when he was still best-known as a bodybuilder.

Caruso is no mere figurehead or celebrity spokesperson for the company; he’s the founder, chairman, and CEO, while Lahr is co-founder and CTO and Nein is SVP of business development and marketing communications for the trio, which Caruso calls “the Dreamworks of digital media.”

And if you think that’s hubris, brace yourself. “David said to me, ‘MySpace has 230 million members. If CSI: Miami had only 230 million viewers over the course of a year, I’d be out of a job,’” says Lahr. “Our goal is a billion people per week in a truly new medium. Anything short of that is going to end up as a YouTube wannabe.”

If that statement came from Nein or Caruso—marketer and actor, respectively—it’d be easy to dismiss. But when it comes from Lahr, whose achievements are as impressive as he is soft-spoken, it’s worth paying attention.

“My gut instinct has been incredibly accurate,” says Lahr, who was senior engineer at CNNfn, one of the first broadcast organizations to deliver its content online on a regular basis. He is also the co-founder of Synergy Sports Technology, which offers a solution that quickly captures, edits, and logs video for several NBA teams. “I do have some trouble articulating the consumer perspective, though, and David is that mouthpiece. He’s not speculating; he knows his fan base. I’ve met a lot of high-powered Hollywood people who don’t really know why they’re popular and are just happy to collect their checks. But David knows, and he can articulate it.”

“When we walked into NAB [the National Association of Broadcasters show in Las Vegas] this year, Nils turned to me and said, ‘Streaming is back,’” says Nein. But Lexicon Digital hopes to use streaming to enable levels of interactivity unseen in online video’s current form.

Interactivity as the Foundation
With all the emphasis on computers in the CSI shows—creator and executive producer Anthony Zuiker makes regular visits to Microsoft and in turn gets to show off gadgets long before they come to the consumer market—it might seem like a natural for one of its biggest stars to take an interest in technology. But it’s not the technology itself that interests Caruso; it’s the desire to reach more people, which of course hopefully translates into more revenue.

Caruso said he was doing some promotional work in Japan and realized that people there were watching season 3, while the show was gearing up for its 7th season in the U.S. People in Pakistan might be watching season 2, while people in Australia might be watching season 4, he said, so why not look at ways to bridge the gaps among those different markets? “If we could organize the world of content and shrink it, imagine the monetization on all the different variations of content that we could pursue,” he says. He began to think of ways to break up individual pieces of the CSI franchise, all the way down to the level of individual shots, and to give viewers across the globe access to that material to not just watch but interact with.

“The coming generation isn’t interested in traditional entertainment,” Caruso says. “I’ve been pretty clear about that and shared my thoughts with CSI creators and CBS that in order to begin the preparation for the coming generation, interactivity has to be the basis and the foundation.” Examples of what he has in mind include adding live webcasts of rehearsals and scene shootings (with that footage later available on demand for viewers to mash up as they desire), allowing the audience to cast guest stars, and—most radically—giving viewers access to the entirety of CSI, broken up into individual shots, soundtrack elements, and images, and allowing users to create what is essentially their own version of the show. For instance, one might create an entire season of 24 shot only from the point of view of Kiefer Sutherland’s character, and with an emphasis on action rather than exposition.

“If viewers were able to do that, would they not then be more likely to show up on a Monday evening in a way that they wouldn’t now be interested in?” Caruso says. And, from a monetization standpoint, he sees value in each of those individual elements. “A signature Horatio Caine shot has a different monetary value than a more pedestrian shot, a more mundane shot.”

Caruso acknowledges that viewers are already creating mashups and radical re-edits of TV shows and movies, but he sees value in established entertainment brands providing viewers with many more options than they have now in exchange for a subscription fee.

Caruso and Lahr say that CBS, and particularly CEO Les Moonves, has been supportive of the move toward interactivity but that changes aren’t going to happen overnight. “It’s one thing to say ‘interactivity is important,’ but they’re still making millions off of the old format,” Caruso says. “So we have to take things very slowly before they’re going to change anything. We’re not scaring everyone by saying we’re going to have the Google Earth version of the show next Monday night.”

Caruso met Nein via a mutual acquaintance, and the two started talking about the future. “Within 15 minutes I couldn’t see him as a television star,” Nein says. “I could only see him as an entrepeneur. I asked him how much control he wanted, and he said was interested in controlling a company and talked about patents and trademarks. I said he had to have a top engineer as a CTO, and that’s what brought us to Nils.”

Breaking the Rules
So what, exactly, is Lexicon Digital’s value proposition? If you look at the company description on its website (, you’re not likely to come away with any clear answer, as it’s a litany of technologies and media, from IPTV to mobile media to teleconferencing, from object-oriented streaming media to “real-time postproduction, layering, redirection, and editing.”

Because the company is still in stealth mode, Lahr can only get slightly more specific. “We don’t believe that any amount of technology surrounding linear content on the internet will be competitive,” Lahr says. “As soon as you say ‘frames per second,’ you’ve boxed your world; you’re living in a bubble that says all you can do is frames per second. And those frames themselves live in their own world, and don’t interact with anything else.”

Lexicon is working closely with Tom Honeybone and the rest of the Silverlight business development team at Microsoft; it’s already a licensed Silverlight vendor. “Silverlight is one of the first times I’ve been reinvigorated with what they’ve been doing since I left there 8 years ago,” he says. “No other company is better positioned to take advantage of where the market is going than Microsoft.”

But he also says that too much emphasis has been put on formats, which he describes as a way to “monopolize the next generation. All formats do is let them hold the keys, and right now the only companies that hold the streaming keys are Microsoft, Apple, and Adobe. They’re wrongly using the format and the monopoly and holding back the experience.”

Clearly, one of Lexicon’s primary goals is to make the postproduction process more streamlined and economical. He says it takes about $4 million to create an episode of CSI, and that includes an immense amount of video that never actually makes it into the TV show. “If you were to create another two or three or eight mini-episodes using that footage, you’d incur another $2 to $3 million in production costs,” Lahr says, claiming that Lexicon has created a digital workflow that allows for that to be done for 10% of the current costs. Pressed for more specifics, he says that part of the solution involves the ability to perform two-way digital editing of high-definition footage over a 1MB connection. “If you take postproduction and match it with Lexicon’s technology, you put postproduction after distribution.”

As a small example of what Lexicon is capable of, Lahr created for Microsoft (and demonstrated for Streamng Media) what he calls a real-time, software-only “YouTube Slingbox” that allows a user to access YouTube video on nearly any mobile phone or device regardless of whether it supports Flash. The solution allows for instant access of any video on demand or live feed from any video source on the internet and rebroadcasts via a personalized channel. “The result is the first ever streaming social experience allowing a group of friends to all tune into a single live internet broadcast, device and OS-independent, and sling video from any source into the live feed allowing everyone turned in to view and experience the same video at the exact same time together,” says Lahr.

The ability to watch select YouTube clips is one of the iPhone’s most appealing features, as YouTube’s standard Flash format is supported only on devices that have Flash, which must be licensed from Adobe. “No other solution can convert YouTube videos in real time so there is instant gratification,” Lahr says. “Lexicon's transcoding solution empowers the consumer by breaking down the corporate walls created by a format war which only serves to cause consumers pain. At the moment nearly 93% of the cell phones in the world do not support Flash, while the iPhone itself does not support Windows Media. For phones that support streaming video, the Lexicon solution would enable Flash streaming on any phone and, amazingly, Windows Media streaming to the iPhone.”

Lexicon also promises to make content easier to find. Caruso emphasizes the need to both globalize and simplify access to content. “If I’m a Seinfeld fan, and I’m in Singapore, I just want to be able to watch the show,” he says. “I don’t want to think about different devices and connections. We want to create a solution that takes everything you need and delivers it to you.”

The Last Word
So what’s the endgame for Lexicon? Lahr comes back to Caruso’s emphasis on interactivity, but takes it one step further. “Media is not only about video, it’s about immersion,” he says, pointing to Second Life as a step in the direction he and the company are headed. He also says that, despite the degree of choice and randomization offered by the internet, truly successful media depends on people sharing the experiences. “You can’t lose the immediacy,” he says, referring to the communal aspect of watching an entertainment event like the final episode of The Sopranos, “but you have to increase the ‘access anytime, anywhere’ feeling. How can you stick a foot in both worlds?”

Lahr and Lexicon Digital Communications claim to have the answer. They began slowly unveiling the company publicly at this year’s Consumer Electronics Show, through interviews with CNET, G4 TV, and others, with Caruso and Lahr as the public faces and Nein, the self-described “mule” of the group, doing much of the legwork. They’ve also begun assembling an advisory board that includes Robert Raciti, senior VP of the media, communications, and entertainment division of GE Capital, who says that Lexicon can deliver “highly interactive niche content to individuals without the pain of searching and trying to find it.” He sees the pairing of Lahr and Caruso as a way to leverage an established brand to advance what he calls a “phenomenal technology.”

Which brings us back to where we started. Does Lexicon Digital Communications have all of the elements—technology, content, and business model—necessary to succeed where so many others have failed? “Sooner or later we’ll have to stand by our product,” Caruso says, although he won’t say when that product will come to market. “We’ll have to say what we have, and what it costs. And then we’ll have to deliver.”

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