Stockpickr took an equity investment from TheStreet pursuant to the deal, although the size of the investment is not being disclosed. The deal also includes extensive advertising on the stockpickr site and featuring of the stockpickr service on the Street.com web properties. This partnership with TheStreet, one of the first web companies to essentially monetize blogging, is quite obviously a big deal for stockpickr. Anyone in this space who can somehow tie itself to the ubiquitous Jim Cramer (The Street’s largest stockholder) is bound to benefit.

The site bills itself as “the stock idea network” and the tag line is accurate. It does idea generation very well by offering the community portfolios from publicly available investing information of experts like Warren Buffett, George Soros and Mark Cuban, among others. Since there is enough data to suggest most of us can’t pick stocks, a one stop shop for tracking guys who can beat the market is pretty cool.

There are also a number of portfolios from the community and all the usual current community features are available to users. You can rate portfolios, be directed to similar portfolios and get recommendations of stocks within similar portfolios to help you assemble your own. There’s a cool voyeuristic element to the site, so it doesn’t take long to get lost on it and before long you’ve got a watch list of stocks. While you can’t trade or manage a real portfolio here, it does what it claims to do very well, and the service would fit well as another research tool on any brokerage site.

What makes the deal really interesting is there just hasn’t been much to write about in the financial services community with respect to web 2.0. Perhaps the crater was too deep, the wounds too great from the drop in the NASDAQ, but there’s been almost no noise out of this sector. Now, in the last few months, we’re had news from SeekingAlpha, Zecco, Motley Fool and now Stockpickr. We’ve heard rumblings about other startups and new products in the space as well. The big brokerages have far bigger war chests than does TheStreet. This space could get hot in a hurry.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Yesterday’s announcement by Zecco and their $0 commission trading platform generated a lot of buzz within the tech community. It’s an interesting play at an interesting time given the instability in the world, which isn’t typically market friendly, but I think it will be a long time before Zecco or any other upstart has an impact on the big brokerages. Here are several reasons why:

1. Most people don’t trade that much, thus commissions only matter to a small percentage of consumers. There are some who trade very actively and generate significant commissions for brokerages, but the average account trades only a few times per year. For that reason, it’ll take the kind of bull market you see once in a lifetime (which we saw in the 90s), which starts everyone trading, to make another Ameritrade or eTrade. When that happens and if Zecco is still humming along, then maybe I’ll be wrong. Doesn’t mean they won’t survive, even build a nice little business – but pose a threat to the big guys? Not without a raging bull market. I’m certainly no market prognosticator, but with $70 oil and the US engaged in hostilities across the globe, I don’t like the odds of that in the next few years.
2. Discount Brokerages expect commissions to go to 0. Schwab has dropped commissions from $30 to $10 in two years and restructured the company accordingly. They’re moving into advisory services, managed accounts, proprietary mutual funds, and banking/lending, because they know they can’t depend on trading commissions as a revenue stream forever. I don’t know the specific numbers, but I do know Schwab and Fidelity both make far more money from mutual fund and cash balances than they do from trading. Banking probably saved eTrade after the last crash and now they’re moving into the advisory business as well. Ameritrade acquired Waterhouse in part because of its advisory services. The $0 trade is the future, but I think these firms will have several more years to adjust their models to deal with it.
3. Just because it’s cheap, it doesn’t mean people want it. If cheap was all that mattered, Schwab should have killed Merrill years ago. They’ve certainly impacted them, but Merrill remains a force in the financial services world. They’ve survived in large part, because when it comes to money (even if it doesn’t help performance), relationships seem to matter. Case in point: how are Schwab and Fidelity now attacking Merrill, Smith Barney, etc? By selling relationships.

Now, all that said, if Zecco could build a killer active trading platform and attract the cream of the Active Trading crop from these guys, they’d have something, but I just don’t see that happening. The cream of the Active Trader crop is not a hyper price-sensitive 22 year old with no assets. They’re older, they’re established, they have significant assets, and they typically only trade with some of those assets. I don’t see them running to Zecco to save themselves a few grand per year. The big brokerages will create relationship offers that will satisfy a healthy percentage of these guys. Zecco is as likely to find itself brawling with companies like TradeStation, which has a great product, a loyal following, and is already pretty damn cheap.

So what will Zecco attract? If they build an absolutely killer Active Trading platform, they could make me eat my words. If their community has the strength from which fee-based advisory services or mutual funds could emerge, then there could be a fine business here. But if it’s just a me-too brokerage site with ads, they’ll get the young and the price sensitive with few assets. And what happens when the young become the middle-aged? Their assets will go to the big guys with a broader array of services.

It’s not hard to find some things to criticize about the site, particularly in the visual design arena. It still has a totally homegrown look, which can cause some reluctance to hand over a credit card. But since it generally doesn’t get in the way of the viewing experience, I’d rather focus on the business.

The site has three levels of service. You can stream films for free if you are willing to watch commercials. You can download a DVD quality film or video at prices ranging from $1.99 to $3.99 or you can have access to the entire library without commercials via stream for $7.99/month.

Memocast acquired most of its content to date from a company called Films By Jove who holds distribution rights to Souzmultfilm, which I’m told is a Russian equivalent of a major Hollywood studio. Films By Jove provides movies and television shows, and has recently been sending Soviet era propaganda films (a treat if you’ve never seen one) to Memocast.

By going after a largely ignored, but big demographic (millions of US residents hailing from elsewhere or speaking another language in the home), they are showing 70K streams per week (more than ½ to subscribers) and are averaging about 1000 downloads per month. Revenue is growing as more people discover the site and they say they are closing in on profitability, which is more affirmation of the core tenet of web commerce — reaching down the long tail can pay off. There is also an interesting advertising angle here. If you want to be assured of reaching a certain ethnic audience, there is no better way than to go to a site that caters to that audience.

I was surprised by how little direct competition I found thus far. I’m sure it’s there, but it’s probably provided by smaller operations. There are plenty of foreign language Netflix-like offers and they likely have the relationships to move to downloads in the future. Sivoo (www.sivoo.com) offers downloads for Chinese and Spanish language content, and I have no doubt there is something in the Bollywood space as well. And, of course, file sharing looms over the space just as it does Hollywood, but while there will always be those looking for free, there will also be those willing to pay.

Its continued growth will depend on its ability to secure distribution rights in other countries. I don’t envision it will be any easier to pry open the vaults of distributors outside the U.S. than it has been in Hollywood. I don’t know enough about the business environments in all countries, but I can foresee distribution rights granted first and perhaps exclusively to single-language / single-ethnicity sites, rather than a company aspiring to be a multi-language portal.

With all the buzz surrounding sites catering to Hollywood, it’s easy to miss a company like Memocast, but if it raises the money to rapidly grow the business, this is a company and a space that bears watching over the coming months.

Given we have plenty of readers who were not born in the States, I hope you’ll comment on the service and the overall space.

View-On-Demand (VOD), a 24 hour rental priced from $1.79 to $2.99 will drop to $.49 for catalog titles to $.99 for new titles. Download-To-Own (DTO) will go from a range of $9.99 to $19.99 to $4.99 for catalog titles and $9.99 for new releases.

Guba’s CEO Tom McInerney said Guba is making this decision to test the demand impact and build the brand: “I think what’s interesting here is actually trying to get at what prices for a digital download make sense for consumers. No one has done a reasonable test here. We’re losing money but the data will be very valuable to bring back to the studios. I’m quite curious myself.”

McInerney further indicated that demand has been higher for ownership than rental which is contrary to previous consumer research, so it will be interesting to see if these prices tilt the mix towards rental. $.49-$.99 is pretty darn cheap.

DRM still limits the number of devices and copies, the content still plays on a Windows Media Player on a 640 * 480 screen, so the overall offering has not changed save the price. But more titles continue to come online and MCInerney indicated it will reach 1,000 within 3 months, so at least there’s a broader selection than when first previewed here.

Was it a sign of desperation? “Things are selling well,” McInerney said. Whatever ‘well’ is, they could be higher. Obviously, you don’t drop prices if product is flying off the virtual shelves and it’s a lot harder to go back up. So it’s a gamble on Guba’s part that it will drive some serious demand and help goose the studios to lower their wholesale prices. At least, it’s further evidence that Guba has the trust of the studios, which will help its potential exit opportunities somewhere down the road.

Comments on the initial post here indicated TechCrunch readers were unimpressed with the initial offer for the price. Is it more attractive now?

Here’s a rundown:

TurnHere

TurnHere was founded by Brad Inman who founded HomeGain. Staying within the community arena but moving to the world of travel, TurnHere creates and distributes travel and “local experience” films. They employ 2000 independent filmmakers around the world, with 250 trained in the 90 second “Turn Here” style, which includes a local as narrator to capture the right flavor of a place. The firm experimented with different lengths, but is gravitating towards 90 second to 2 minute features in our short attention span world. The business model is centered on local advertising and advert films in the profiled regions. I watched several films in both genres and they were great. I am really impressed by the site and the films. The food makes you salivate, the sites make you want to hop in your car.

RallyPoint

Started by Jeff Allen, Managing Partner of Rocket Systems, who is taking a break to be CEO, RallyPoint aims to bring the Internet (and interactivity) to your TV. Inspired by a desire to talk smack to friends while watching sporting events, it will offer an array of products like chat, voting, game show participation, pop up alerts, auction watch through applets overlaid on broadcasts. They will create their own device and hope to be integrated with other devices as well. Another device in the living room scares me, but the company is in its very early stages, so they’ll presumably be testing the concept. They plan to offer their service through subscription, targeting the market of people getting score updates on their SMS phones. Sounds like Wink and some other startups from another era, maybe the time is now.

Mediazone

Funded by Naspers, a large South African media company, but based in the Silicon Valley, Mediazone is a secure P2P video delivery platform that supports media portals and live premier events. They recently did live coverage of 300 matches on 9 courts for Wimbledon. There’s a rugby channel and, in the past, they’ve covered things like the Maverick Surf Contest. I’m trying hard not to utter the words long tail, but I really have no choice. That’s what a service like theirs enables. Streaming through their P2P network allows them to deliver multiple channels without the bandwidth costs of other streamers, which makes it sound like they are playing in the RedSwoosh neighborhood. They are working on an interactive television platform, perhaps similar to Rallypoint, which they only mentioned in passing.

Magnify

Magnify is led by Steve Rosenbaum, who created MTV’s “Unfiltered”, so he’s a serious veteran of the user generated movement. Magnify is a scalable human powered review system for user generated video. With 70K Youtube uploads per day, they want to help narrow the relevancy of search. Volunteers become reviewers and they start to organize and tag the better material to form communities to share like content. Lo and behold, as we watched a venture video channel, they showed a video of our friend Mike Arrington. Certainly, it did seem to provide relevant content. Whether or not, human editors will ultimately be necessary to create these communities, I don’t know, but they are certainly trying to fill a glaring need in the online content space.

NBOR

The three minutes allotted to Danny Yeager from NBOR (No Boundaries Or Rules) was not sufficient. I’m not really sure what they do. What I did glean is that it will either be the most significant product of my life, will disappear from the face of the earth or fall somewhere in between. They make both software and hardware and have about 70 patents. The software is called Blackspace and is intended to replace the UI of Windows and works across multiple devices and gives a totally open, cross boundary UI that has, well… No Boundaries Or Rules. They’ve also created some tactile devices that turn flat panel devices into blank screens that can be reused for different applications (though I’m not clear how). You’re probably realizing you have no idea what they do. Well, join the club. I can not provide a serviceable summary or review of something that claims to be this big and gets three minutes of my time. This will be a TechCrunch follow up, because there could be a really interesting story here.

Other companies featured (that I missed) who might be worth a follow up: Clip Syndicate, who syndicates video clips to verticals across the Internet; FrameFree, who provides technologies to create motion graphics for the web and mobile devices; Postroller, a video ad network; Mspot, an aggregator and distributes premium video content for the web; Wideorbit, an advertising infrastructure software for content distribution networks; and Teamdating, a dating site geared towards group social interactions, that wasn’t featured in our previous post on online dating sites.

There appears to be no sponsor other than Bix so they won’t be testing it as a direct marketing channel yet, which is too bad. However, they are about to test the validity of two theories in the overall model (although it’s being tested with an enormous prize which could skew results):

1) Can they get entrants with talent?

2) Can they get viewers?

I expect the answer will be yes to both, but I’m quite curious what viewer participation will be like. The length of an American Idol broadcast serves as a natural filter for viewers. Without that, how will viewers interact with the site? If you are just coming to vote for your friend, will you bother to watch other entries? If you are coming to explore, how many entries will you get through before enough is enough? Will visitors be drawn to “most popular” filters thereby relegating some good, but undiscovered entries to the bottom of the list? I guess we’ll find out.

Since I last wrote about them, they’ve made improvements to the UI and added some community features, like a really simple upload to “My Space”. All of this increases the chances that this could really explode.

As I said in my previous post, as a marketer, I believe this is a marketing concept with real potential. Now, we’re about to have data instead of opinions. I’ll look forward to reporting on the results in a future post.

The topics discussed included:

1. What is Web 2.0?
2. Are we in a bubble?
3. What are the business models that will work on the web today?
4. What is the role of publishers in a user generated world?
5. How important and how big is the early adopter crowd?

The resulting video, kindly hosted by Photobucket, is below:

While many of the changes are upgrades to its video product suite (including a new video codec) and user interface (which is already good), SightSpeed makes several introductions in this launch. Among them, it’s adding new PSTN out and in-calling features to extend SightSpeed functionality to mobile and regular phones. And it’s leveraging its video expertise to add a new “place-shifted” TV service, which gives users a “Slingbox-like” experience without the hardware. A small remote control icon lets you flip through channels being served up via your TV at home.

With an already highly regarded video product that touts video at 30 fps and ultra low latency, the move to add TV is a natural extension of its technology. Additionally, it could prove to be a savvy competitive move, with Novac’s Skype-based TV product being one of what will be many entrants in the place-shifted space.

In a highly competitive space with a slew of well-funded competitors like Skype – product quality matters. SightSpeed really delivers. Their affordable video conferencing service is stunning. We aren’t alone in our enthusiasm. Read, for example, Davis D. Janowski’s breathless account of SightSpeed’s new feature set at PCMag.

While there is no shortage of video creation and editing in the world right now with desktop software, Jumpcut’s tool has its advantages to marketers who’d rather keep users on their sites to edit video. Whether or not users would prefer this, I don’t know. But if the browser based technology is good enough and, as discussed in last week’s Bix post, when the prizes are enticing enough, participation is bound to follow. And with participation begins a virtuous cycle for a company, in which users beget deals which beget more users which beget more deals…

Two deals hardly makes JumpCut’s success a given, but seeing any site in the online video space generate some revenue is newsworthy. JumpCut’s different twist in this crowded space certainly gives it a leg up in the race to sustainability.

When I first played around with the Beta site, I couldn’t stop thinking it was just another entry in the online karaoke space. With a healthy dose of skepticism, I then spoke with CEO Mike Speiser. By the end, because of their business model, my perspective had changed.

Bix is trying to address a real business problem: diminishing effectiveness of brand advertising. In the US alone, advertising accounted for $143B in 2005, with most of that dedicated to print and TV , which is why the old adage holds: “Half my advertising dollars are wasted – I just don’t know which half.”

Speiser believes that controlled sponsorship of a legally sanctioned online contest, be it karaoke, short films, photo essays… all of which the Bix engine supports, is a powerful brand advertising concept. As someone who has faced the very problem Bix is trying to address, I think he’s right. Online contests present not just a branding opportunity, but open a new direct channel for the marketer, allowing multiple opportunities to deliver coupons and offers.

But will people use it if they see it as nothing more than a marketing vehicle? If the corporate sponsors offer good enough prizes, they’ll find performers. And if the performers offer enough of the good and even more of the bad, people will watch.

The site is certainly easy enough for the mass consumer to use. I spared the world my singing, but I watched Speiser create a contest and karaoke video. Setting up a contest is quick, as is creating and uploading a video with a webcam. Also, viewing content, voting and sharing are all simple enough tasks.

Still, there is a lot of work ahead of them. The user interface needs an upgrade to attract serious corporate advertising dollars; Bix needs to optimize for mobile users (mobile was a huge factor in American Idol voting); and it will have to soon go international, before someone else does, to tap what’s likely an even better market.

And certainly, if successful, competition looms. Sites like Youtube and MySpace have already proven they can make stars. And Fox, with MySpace and Ksolo in the same portfolio, will find the market tantalizing if Bix takes off.

The site is still in invite-only Beta but will launch broadly in the coming weeks. It will be free to all comers for a few months as they roll it out, but the company believes advertisers will soon realize contest sponsorship is a service worth paying for. Then we’ll see if Speiser and his investors are right and the ROI keeps them coming back for more.

One of the more interesting aspects to the deal is the fact that it’s Sony. It’s a toe in the water; not a dramatic move, but at least it’s something. With hardware and gaming and limited internet success to date, will this deal be one of many that signal a change in Sony’s digital and internet strategy?

I will steer clear of yahoo, google, youtube… all the sites that have been covered extensively on this site. Instead, I want to highlight a few of the less covered services.

It’s hard to draw a line between the sites I just mentioned and those I’ll discuss below, as they share many features (and many use Flash as the underlying technology). One difference is the sites above don’t make programming decisions for users. The sites below do offer some form of programming – there are decisions made by someone about what to present on these sites and when to present it. There’s room for both approaches online and while most eyes and venture dollars are flowing to video portals right now, I believe we’ll eventually see a similar interest from the startup community in programming.

I’m Too Old For This!!!

Not surprisingly, much online programming, like MTV Overdrive, caters to an under-25 crowd, but there’s a selection of good stuff for the rest of us: BloombergTV and MLB.tv, for example, offer relevant content and strong channel-like experiences online.

In the youth market, the influence of MTV is unmistakable. ManiaTV, Fuse.tv, MusicplusTV, and CurrentTV, while each certainly different in its own right, believe that some combination of music, reality, edginess, and/or political and social awareness, are the keys to success.

ManiaTv

So this is what happened to Tom Green? Maybe I’m not too old for this, because I like ManiaTv. Check out Freak Show! There’s enough good stuff to watch on here that I’m actually surprised it doesn’t have a bigger audience, particularly given the explosion in video sites in the last 6 months. I think there’s room for this kind of programming and while the Alexa numbers don’t suggest a flop, it’s certainly not booming. Whether or not their audience is sufficient for profitability, I don’t know. At least they don’t have to worry about huge production costs.

CurrentTV

Best known as the Al Gore vehicle, Current is for those a bit more politically minded and socially active. There’s a good lineup of original programming, there appears to be pretty strong community participation, and I find it to be a nice usable site, but it hasn’t taken off. Perhaps the Al Gore movie will provide it a shot in the arm, but as of yet it’s showing no signs of relinquishing its bear hug on its negligible traffic rankings. Will it heat up during the next presidential election? Who knows? I’d have already bet it would have had its day with the many significant polarizing issues in American politics. Perhaps its greatest problem is its more intellectual leanings. It’s not hard to get your friends to watch a horny donkey video, but try getting the same group to watch a video on teaching abstinence in schools.

iBlueTV

Another interesting programming concept with a bit of a different twist is iBlue. IBlue streams several different channels from their site. It seems to range from motorcross to sci-fi to independent filmmaking. There’s some decent time-killing content here. At the very least, I can see it finding an audience with the same college students that like laser shows.

I’m NOT Too Old For This!!!

Classic television programming and old movies (which have been non-primetime TV fodder for years) have also found a home on the web. Recent deals, like Guba’s with Warner, will give added life to the retro movement. Today, AOL leads the pack with In2TV. You can watch 42 “classic” programs from Batman cartoons to Eight Is Enough (it was enough then). Programs can be either streamed in relatively low quality or you can have content pushed to you in a higher resolution format (Hi-Q), which allows a full screen view. With some of the older shows’ bad lighting, the Hi-Q format is necessary. I watched an episode of “Spencer For Hire” through the regular stream and couldn’t tell Spencer from the bad guys when night fell.

Along the same lines, if you have a soft spot for guerillas, you might want to check out Retrovision.tv and AmericafreeTV (and there are others), which offer old television programs and movies. Remember, you get what you get here – hobbyist sites that rely on advertising dollars – so don’t expect perfection.

Aggregators

There are also sites aggregating content and are starting to resemble traditional cable channels. While there are many free sites like MeeVee that direct you to free streams, sites like MobiTV, VDC (Windows only) or JumpTv are offer a hub through which to view many channels through subscription:

VDC

VDC basically takes the cable model and moves it to the internet (and combines it with the worst logo ever). The sound and picture quality are pretty good and it’s easy-to-use. But at 11.95/month, the channel lineup isn’t there yet. Its 20 or so channels are mostly a mix of news and shopping, although they did recently add TLC, Discover, and Animal Planet (all for mobile only right now). They make note of their interest in improving the lineup on the site, so I’m sure more is in the works. While that will increase their chance of success, I believe the bigger issue with VDC is in the model of porting cable to the web. I’ll ask you: Is there any real advantage to a second cable TV subscription, when there are options like Slingbox and Orb that can give you your home cable lineup on your computer or mobile phone? I’d love cheaper cable and I don’t mind getting it over the web, but without an equivalent lineup to my TV, I’m not adding or switching.

JumpTV

JumpTV aggregates hundreds of channels from around the globe. At 9.95/month per channel, it could get expensive, so Jump offers packages, like an Arab language package of 20 channels for 22.95/month. I suspect this particular niche will prove profitable for Jump in the long-term. Thought it’s not the sexiest television offer over the web, it clearly fills a need for consumers, with so many people living outside their birth country these days. While currently ranking around 13,000 in Alexa’s traffic rankings, its steady traffic uptrend suggests some demand is there. The World Cup will probably further increase it’s reach.

MobiTV

MobiTV may eventually have the most compelling offering in the space. They offer 50 channel, cable-like television subscriptions for mobile cellular devices and, more recently, for any device accessing AT&T Wi-Fi Hot Spots. If and when their service can be accessed over the web from any ISP, the need to continue a traditional cable or satellite television subscription comes seriously into question.

Summary

The great content revolution the Internet has wrought is seen in exactly the kind of sites I said I wasn’t going to talk about earlier, like Youtube. Anyone can now inexpensively upload, share and potentially alter content in minutes. As a result, we amateurs are producing and watching video content on a scale we’d never imagined a few years ago. At least 100,000 videos are uploaded daily on sites like YouTube, and this is increasing at a rapid rate.

But this does not mean that television programming as we know it is about to disappear. In fact, I’d argue that the overall quality of programming is higher now than it was a few years ago, perhaps because of the competition for mind share from the web. And some television producers are reaping enough benefits from the web between broadcasts (e.g. Lost) that I believe the next phase will mean altered programmed content, as TV continues its migration from passive to some level of interactivity. It’s already commonplace in TV advertising, so how long before it’s commonplace in programming? Check out “In Men We Trust”. If it will work as advertised, then we’ll watch the show while watching a show within it, and we’ll determine the arc of the story. That’s programmed content adapting to its medium. Interactivity and social networking – two things the web does well — will drive it.

Guba will offer two services to users. View-On-Demand (VOD) is priced from $1.79 to $2.99 and affords the user a 24 hour rental. Download-To-Own (DTO) will range from $9.99 to $19.99 for newer titles and allows unlimited viewing on 2 computers and 1 portable device, while allowing a single DVD burn for backup. The service will play content through Windows Media Player on a 640X480 screen. Downloads are progressive and will run up to 1.3MB/second.

The deal sounds similar to the Warner/BitTorrent deal, but Guba is out to consumers first, so kudos to them. To be honest, my money was on Apple to get there first since the Pixar/Disney merger. But Apple’s power probably worked against them here. Having a broader online distribution network in place will give the studios more leverage in negotiations.

As to Guba being one of the chosen few, CEO Tom McInerney offered: “We treated the studios with respect, we listened and were responsive to their needs. Our proprietary technology gave the studios confidence that we could protect their copyrighted material and that our user-generated content could exist side by side with their premium content.”

I can’t think of any negatives for Guba in this deal. I don’t know how long it will last, but a lead is a lead and any differentiation in this space is a plus. Good buzz, extra traffic, and the goodwill of at least one major Hollywood studio, which might help them soon add another, will be a nice shot in the arm.

On the studio side, I like the concomitant release through web and DVD. It shows Warner is starting to get it. But what I don’t like in the deal is the pricing. While the VOD pricing seems reasonable when compared to a video rental, DTO is too high. Equivalent pricing through the two channels will hurt web uptake. These are savvy consumers. Distribution costs through the web are lower and, while I haven’t reviewed the experience yet, I doubt the experience will be equivalent to a DVD. Yes, I know lower web pricing could raise the ire of Warner retail distributors. Still, since the move online is a test, now is the time to understand the effectiveness of lower pricing in the web channel. And, of course, a lower price point is also the best way to combat the studio’s biggest fear online — piracy.

In related news, see Paul La Monica’s analysis of the DVD v. download war. He thinks DVDs will be king for another five years or so. The end is almost certainly much closer than that.

File trading networks, such as bittorent, are also extremely popular (if sometimes illegal) choices for consumers wanting access to time-shifted television content.

While DVRs are great, content producers and distributors are less than thrilled by the loss in revenue from all those skipped commercials. Also, DVR’d shows cannot be easily transferred to mobile devices or otherwise viewed away from their home television. Some consumers want more flexibility and options.

Enter downloadable television, spearheaded by iTunes.

On October 12 2005, Apple introduced iTunes 6.0 which added support for purchasing and viewing of video content from the iTunes Music Store. iTunes initially offered a selection of several thousand music videos and five TV shows, including most notably ABC’s Lost and Desperate Housewives, as well as the collection from past seasons. New shows are available 24 hours after the initial broadcast. Since that time, the collection has expanded with NBC Universal, USA Network, Sci-Fi Channel shows, and Viacom, in addition to further Disney-owned networks’ shows. iTunes also gives the ability to view Apple’s large collection of movie trailers. Format for purchased Videos is 128 kbit/s Protected MPEG-4 video.

By January 2006, iTunes offered over 40 television shows for download, including, most recently, additions from Nickelodeon, Comedy Central and MTV with episodes of such shows as the Daily Show, Spongebob Squarepants, South Park, and Punk’d. Showtime added some content in February.

The networks, though, are hoping that iTunes will not be the only way people watch TV on their computers. CBS, Fox and ABC are all experimenting with their own direct downloads or streaming.

ABC

ABC is offering streaming versions of a number of its hit shows to viewers within the U.S. for no charge: Lost, Desperate Housewives, Alias, and Commander in Chief. The shows are viewable in 400×700 Flash format. On the plus side, ABC’s offering is browser and platform agnostic, and are free. On the minus side, and these are big ones, you must be online to view the show. You can’t take these with you on a laptop or other device and watch them while on a plane, or otherwise offline. Also, There are a number of short commercials that cannot be skipped. So in the end, ABC is offering a nice way for me to watch time-shifted shows on my PC-enabled living room television, but not much else. See Mike Davidson for more on this.

CBS

CBS is going with downloads, through their CBS On Demand project. Only a single show is currently offered – Survivor – and you must be in the U.S. to use the service. Quality is 640×480 pixels. Shows cost $.99 and must be watched within 24 hours of downloading (again, not a very good option for travelers). You must have a Windows PC to view the shows. They cannot be burned to dvd. Frankly, with all of these limitations I’m surprised they even let you watch the show, period. It’s like they’re begging to fail so that they can say “hey, see, we tried, people don’t want this.” Note that CBS is also experimenting with shows on Google Video.

NBC

NBC is offering a number of shows through iTunes, but has no direct to consumer offering. They offer thirteen shows on iTunes, including The Tonight Show, Late Night with Conan O’Brien, Saturday Night Live, The Apprentice, Law and Order, Scrubs and The Office, as well as a number of vintage shows.

FOX

Fox is shaking things up a bit. In April they announced a six year deal with their affiliates to allow them to show back catalog shows on the internet. They are also starting to roll out downloads of the show “24″ through their Myspace property, but I am unable to find much information on it yet.

SUMMARY

It’s going to be a while before the service models are compelling enough for the world to turn away en masse from today’s TV, but it’s clear we’re at the start of a major disruption that will shake content producers (the networks) and the distributors (cable) to the core.

Nothing is close to challenging iTunes yet for downloadable tv dominance (well, except bittorent and DVRs), and it’s unlikely a single network will be able to do much to overcome them. People want to be able to consume their content in one place, and iTunes does a very good job of allowing that. It’s simple, has some flexibility with regard to moving to a device and the shows do not “expire”. The real competition to iTunes is still to come: Yahoo, Microsoft, Google and Amazon, among others, will have product offering in this space sooner or later. (Note: AOL is already streaming a number of vintage television shows to users).

Business models need to change. Content producers cannot rely on network deals, 30 second advertising and, later, dvd sales, to pull in the revenue. Shows will have to stand on their own, and will probably need to be free for the first few episodes to pull in viewers who may eventually be willing to pay. Frankly, I look forward to the day that a show, ignored by the networks, first decides to launch itself on iTunes and go straight to consumers. The press around it would be overwhelming. The first to do it will have a big advantage.

There is a market for third party service providers, too. Services like Meevee are starting to bridge the gap between providing online television listing information and allowing people to actually view the content on their computers. Cozmo.tv and Brightcove are allowing people to control their Tivo’s through their browser. And how long will it be before MobiTV, which currently streams television to mobile devices, is able contractually to simply flip a switch and offer streaming television direct to a PC? They are already making moves in that direction, and Orb offers a similar, free service.

Note: This article was written with my friend Neil Kjeldsen, a new blogger but longtime writer, and someone who knows the television and film space well. Look for more posts by Neil here on TechCrunch.