[itvt] ITV Interview: David Dudas, Co-Founder and CTO, Eyespot

Earlier this fall, Eyespot--a company which offers an online video-editing service (both on its own Web site and as a white-label offering) and which has been tapped by a number of record labels, broadcasters and studios to power contests based on video mash-ups and user-generated video--secured $3.7 million in Series A funding. Eyespot co-founder and CTO, David Dudas, recently spoke to [itvt]'s Tracy Swedlow about the company's technology platform, business model, and future plans; about emerging trends in user-generated content; about the increasing willingness of entertainment and media companies to allow their content to be manipulated by consumers; and more.

[itvt]: Could you give us a little background on your company, please?

Dudas: We got started about a year-and-a-half ago--in the middle of '05. I co-founded the company with my friend, Jim Kaskade.

We got started because we had both been shooting a lot of video. I had gotten a new cell phone that shot video, and I was playing with that. I also had a digital camera and various other devices that shot video. So I tried to start doing some editing--putting various pieces of video together, so that I could share my stories with my friends and family. And I found out that it was really, really difficult to do. There were some video-editing software packages available to the mass market, but they were really complicated.

So we decided to start Eyespot, with the goal of providing some really easy-to-use video-editing software for the mass market. You might say that we strategically modeled the progression of the company after the photo-sharing sites: if you recall, before Shutterfly, Ofoto, Flickr and all those other photo sites, the only photo-editing option that was available for most people was Photoshop. Photoshop is great for professionals, but for average consumers like the rest of us, it's way too complex. So all these photo-sharing sites came along, and offered really easy-to-use basic functions--like red-eye reduction, cropping, rotating, and things like that.

We decided there needed to be something similar for video. Average consumers don't have time to figure out all those really complicated video-editing software packages. They just need to be able to take some clips--whether they're from their phones or their digital cameras or wherever--combine them all together, and maybe add some simple effects and transitions, and perhaps add some music to the soundtrack too, and then share them easily with their friends. So that's basically the 10,000-foot overview of what Eyespot is all about.

[itvt]: Presumably you were aware that there were other companies that looked at offering this kind of service in the late '90's…

Dudas: Yes. When we started our company, we did a lot of market research and did a lot of digging for patents. There were a couple of companies that we came across that had tried something similar in '99 or 2000. I believe Oddcast was one of them, but they're now focusing on avatars, as I recall.

[itvt]: How are you funded?

Dudas: We just closed our Series A funding round with Gabriel Ventures. We raised $3.7 million. You know, when we started the company back in the middle of '05, a lot of people were pretty skeptical about this space. I remember one very well known investor saying, "I don't think anyone will want to watch video on the Internet." Now, of course, there's a ton of interest in the space: we're getting tons of attention and tons of partnership inquiries. So we're really glad we stuck with it.

[itvt]: What is your business model? While you have a consumer- oriented site, Eyespot.com, I understand you also offer a B2B service, correct?

Dudas: Yes. Eyespot.com is essentially our laboratory. It's a site that's in perpetual beta: we're constantly rolling out new features and experimenting on Eyespot.com. But this consumer-facing site isn't designed to make money.

However, Eyespot.com sits on top of a technology platform that we provide to other companies under an ASP model. So our business model is, essentially, to provide our technology platform to video portals, social networking sites, broadcasters, film companies, record labels, wireless carriers and so forth. As I'm sure you're aware, all of the major players in all of these different industry segments are really excited about the user-generated content phenomenon. Everybody is eagerly looking at ways they can get into it.

Now, one of the key things that we're seeing happen as part of their embrace of user-generated content is that many content owners are interested in putting their content online and letting people make mash- ups out of it. Record companies, for example, want their fans to make music videos for them. So this is how we make our money: everything you see on Eyespot.com is available to our partners through a white-label program.

[itvt]: How many white-label clients do you have?

Dudas: We haven't announced our partnerships yet, because we are currently in the implementation phase. But we've closed four major deals that will launch over the course of the next few months, and we have a handful of others that are in the final stages of negotiations. These are all very big names.

[itvt]: What kinds of companies are you working with? Programmers? Brands? What?

Dudas: We're talking to a lot of players in a lot of different spaces. I can't be much more specific. However, I can tell you that the companies we're talking to fall into the following categories: record labels, film studios, broadcasters, video portals, social networking sites, wireless carriers and ad agencies. We've got tremendous interest from key players in all those sectors. We're interested in working with any of those kinds of companies. We don't really have a preference. Our goal is simply to leverage our technology to bring in revenues, and to work with content that consumers really want to play with--so to make it a win/win situation all round.

[itvt]: Of course, in light of the whole recent history of conflict between the entertainment and technology sectors, it's quite a change that entertainment companies are now actively encouraging consumers to create mash-ups out of their copyrighted content…

Dudas: Exactly. A lot of us at Eyespot actually came out of MP3.com, and we were working at MP3.com at exactly the time when these big battles were going on between technology companies and media companies. We're definitely veterans of that era.

But today it's a lot different. We've all come a long way. Nowadays, the media companies really understand that there are appropriate places for DRM, and that there are places where you do not want or need DRM. Of course, if you're going to sell a song on iTunes, or you're going to sell a movie on Amazon, there's going to have to be DRM wrapped around it. But media companies today are increasingly interested in doing projects like the promotion we just did with Zomba Records, which is part of Sony BMG. The promotion was for one of their more popular bands, called Three Days Grace. They gave away a copy of the song on Eyespot.com, along with a bunch of short videoclips of the band, and they asked their fans to make music videos out of those materials. The promotion got a tremendous response, and we got some really great videos back from people. Some of them were good enough to be on MTV. So, that's a good example of a media company not being obsessively concerned with DRM: the label decided that it would be to its advantage to give away those media assets, so that people could play with them and share them with their friends.

[itvt]: What about other platforms in addition to the Web? Are you interested in offering your services on mobile phones and other devices?

Dudas: Funny that you should ask that: we are actually very interested in multiplatform. Part of our vision is that mash-up applications on the Web are really only part of the puzzle. The other piece of the puzzle, from our perspective, is making it easy for end-users to distribute their media, wherever they may want it to go.

As you know, there are numerous devices that play video. There are mobile phones that play video, there are iPods, PSP's, and all kinds of other devices. So, from day one, our goal with Eyespot has been not only to make it easy for people to edit their videos, but also to make it easy for them to get their videos to all those different devices. So if you go to Eyespot.com today, if you look underneath any video on the site, there's a share link that says, "Send." When you click that link, you can type in a phone number, and it will send the video straight to the mobile phone whose number you entered in.

We also have a mobile application that we just announced at DEMOfall and that will be released after the first of the year. It further extends the mobile sharing capability that I just mentioned. Essentially, the goal of the application is to make it very easy for people to send video from their phone to our service, receive video from our service on their phone, subscribe to their friends' video feeds, and things like that. In other words, to make it really easy for people to send and receive video--i.e. without having to wrestle with technology and jump through a bunch of hoops and figure out a whole set of really complicated solutions. We just want to make it easy. You can see a demo and signup for a pre-release beta version at http://eyespot.com/mobileshare.

[itvt]: You mentioned iPods and PSP's. Do you support those platforms?

Dudas: Yes, we have had support for these formats for quite some time. Every video on Eyespot can be downloaded in any DivX, Quicktime, Windows Media, iPod, and PSP format.

[itvt]: In what directions do you see the user-generated content phenomenon heading?

Dudas: I think it's ultimately about media creation, and about unearthing new talent. I think, in the future, we'll see things like very popular music videos that were created for very famous bands by their fans. We'll see things like people getting jobs on "Saturday Night Live" thanks to some creative short-form video they made--or even getting their own network show. But, in general, that type of crossover will be the exception, not the rule. Online video is a new medium. Entertainment created for the Web will be inherently different than entertainment created for TV or movie screens. So over the course of time we'll see this new medium evolve before our very eyes, and the creativity and rapidity of this evolution will be unparalleled, due to the instantaneous and collaborative nature of the Internet.

I know it's easy for those of us who work in this industry to get cynical about the whole user-generated content phenomenon. Frankly, even I think the term is overused and becoming somewhat tired. But if you take a step back, you have to concede that it's really a pretty massive movement that's been going on for a long time. In fact, it predates the popularity of the term, "user-generated content." Take "American Idol," for example. That's essentially all about user-generated content: look at how many albums Kelly Clarkson or Ruben Stoddard sold.

And what's happening now is that all these new Web 2.0 technologies are combining to create an environment in which more content is being created and more content is being discovered--and more artistic talent is being discovered. I see this as a phenomenon that could go on for years and years--or even indefinitely. I can't predict where it's going, but I'm convinced that what we're seeing today is just the beginning. It's going to get very interesting before it gets stale.

[itvt]: Even though you are now primarily offering services on a white-label basis, do you have any plans to develop into a destination site for viewing broadband video?

Dudas: We don't really view ourselves as a destination for viewing broadband video. I think YouTube's got a great lock on that market, as do a lot of other really great sites, such as Metacafe and others. There are already some very good, very established destinations where you can watch video online, and we don't want to compete in that market.

However, even though we don't have any massive ambitions to be a site where people go to view broadband video, we do want to be the place where people go to create video online. So, even if you're a hobbyist who just wants to produce a video for fun, or you want to put together some video of your family picnic with your kids, or whatever, we want to be the place where you can go to create, to edit, and to mash-up.

I should also add that part of that is having a very deep library of stock footage available to people who use our service. So our goal is to eventually have the largest library of stock footage online. Here's why having such a library is important to a service such as ours: say you shot some footage of your family's July 4th picnic but--oh, crap!--you forgot to shoot the fireworks. How can you have a July 4th video without fireworks footage? Well, you just go to the Eyespot search engine and you type in "Fireworks." And you will find literally hundreds--if not thousands by now--of clips of fireworks that our community has uploaded. And you can, of course, incorporate that into your video.

So in answer to the question of where we want to go: we don't really see ourselves as an emerging social network, per se. But we do see ourselves emerging as--hopefully--the de facto place for consumers to not only create and edit, but also share clips. It really turns into somewhat of a marketplace for media, in regard to creation.

[itvt]: Now, if Eyespot.com were to become a major destination site for consumers, do you think that your white-label service would still be where you make your money, or would you attempt to directly monetize the traffic the site receives?

Dudas: If Eyespot becomes a major destination, we will certainly consider monetizing the traffic. However, the success of our business does not hinge on whether Eyespot succeeds as a destination. We can amass much more traffic by bringing our technology to where the eyeballs already are--i.e. a large number of well-established sites--as opposed to trying to bring an equivalent number of eyeballs to our single site. The white-label platform is where we will build a viable business.

[itvt]: How do you manage the question of the rights of content creators who use your service? You mentioned that you make available clips that people have uploaded. What if people don't want to share their footage?

Dudas: When you upload to Eyespot.com, you can choose to keep all of your media private--in which case, it's in your "locker," and nobody else can ever access it. It's not even available on our search engine--it's completely private to your account. However, if you don't want to go in that direction, our terms of service say that if you do not make your media private, then it's available to the Eyespot community under a Creative Commons attribution license. So, by you putting your video out there, any other users are allowed to use it. And the caveat is that the Creative Commons license that we use includes attributions language. So it requires that credit be given to the people whose media you borrow.

Now what we decided to do is to automate that attribution process: so if you go to Eyespot and make a video that incorporates some clips that were uploaded by John Doe and some other clips that were uploaded by Jane Roe, title frames will automatically be inserted at the end of your movie that will say, "Clips provided by John Doe," "Clips provided by Jane Roe," etc.

[itvt]: Now what happens if the end-user then wants to take their video that incorporates footage from John Doe and Jane Roe and sell it?

Dudas: First, I should add that we never claim any ownership of any of the media that are created using our service or that are uploaded to our service. So, as far as we're concerned, even if you upload all your videos to Eyespot, they're still yours. We don't claim any ownership of it. Though we do reserve the right to use it for promotional purposes and things like that--just as you might expect.

But to answer your question directly: if somebody wants to take some media from our site and make a mash-up and then sell it, they are fully allowed to do that. That's part of the Creative Commons license that we chose to use. You're allowed to make derivatives of materials on our site, and you're allowed to make commercial use of them. As long as you give people credit, then it's all good to go.

Now, as you probably know, there are six, seven or eight different types of Creative Commons licenses: commercial, non-commercial, no-derivs and so forth. If you look at a site like blip.tv, they honor all those licenses--which is great. But we chose to just keep it a little bit more straightforward and simple--at least at first. Now, going forward, we might offer support for all the various different types of Creative Commons licenses, as well. But at this point, we've decided to make it really black-and-white: either the uploaded video is available or it's not.

[itvt]: Do you have notification technology--so that if my clips are used in someone else's films, I'll be notified?

Dudas: Yes. When you look at the clips in your Eyespot account, you have links to all the videos that contain those clips as components.

Going forward, we'll provide even more community features to really allow creators to interact with one another. The goal is to provide an ecosystem in which creatives can easily collaborate, share ideas, find inspiration, and so on.

[itvt]: Do you plan to achieve this by building your own community platform, by merging with or acquiring a company that offers such a platform, or by using some white-label offering?

Dudas: We haven't decided yet. So that's really on the table for discussion.

[itvt]: Now one thing that's notable about Eyespot.com is that you seem to have partnerships with a number of content providers who use your service and the creativity of its users for various promotions…

Dudas: Correct. Whenever you're starting a business, the go-to-market strategy is arguably the most important piece. If you build a great technology but nobody knows about it, you're just a bunch of unemployed guys with a great technology. So early on, we decided that our go-to-market strategy would be, essentially, working with indie content owners--specifically indie record labels--to kickstart this promotional aspect of Eyespot that you see today. As a result, we've done promotions with a number of high-profile performers, bands and other creatives--so, for example, Sergio Mendez, The Black Eyed Peas, Three Days Grace and DJ Shadow. We did a campaign with Lionsgate Films to promote their "Employee of the Month" movie. And this week we're launching promotions with Chuck D from Public Enemy and a mash-up contest for the new dance remix version of Queen's "Another One Bites the Dust."

Now, the great thing about these kinds of promotions is that they mean that our partners do our marketing for us. A good example is when we hooked up with Sony BMG/Zomba for this Three Days Grace contest: not only did they give us a song and some videoclips, but they went out and told all their fans, "Hey, go to Eyespot and make a music video for us." And they have literally hundreds of thousands of fans on MySpace alone.

So the fact that we're partnering with all these different content owners provides free marketing for us, in that the content owners want to drive people to the promotion they're using our site to organize. So these promotions effectively drive new users our way, at no cost to us. And they're great for the content owners too. The winning videos in the Three Days Grace contest have received millions of streams. The success is just phenomenal.

When we started out, there was a lot of footwork for us to do: we were constantly calling labels and saying, "Hey. We've got this new thing. Do you want to do a promotion with us?" But now that we've started to establish traction, we're actually not making the calls any more: we're fielding the calls. Now all these labels--indie labels and major labels--are calling us. As are film studios and ad agencies. We literally don't have enough people to put up the content promotions that we have in our funnel.

[itvt]: Do you derive revenues from these kinds of promotional partnerships, or is their primary purpose promotional?

Dudas: These are strictly for user acquisition and brand building.

[itvt]: How many subscribers do you have?

Dudas: We're up to about 25,000.

[itvt]: Those are people who are actively using your tools, or just using the site in a more casual way?

Dudas: Those are actual creators--people who are actively uploading and editing video, and creating mash-ups. Of course, we also have casual visitors who just stop by to watch video.

[itvt]: Now, the content providers who give you video for your users to mash up as part of a promotion--to what extent do they attempt to maintain control over the content they provide and over the content that your users create out of their video?

Dudas: We have been approached by some that say, "We want to do a mash-up contest, but we want to put all these restrictions on it. We want to disallow this and we want to disallow that." And we just tell them, "No. Sorry. We don't want to do that."

We've been through the era of rights holders trying to impose draconian restrictions, and it simply doesn't work. Well, it works in some cases, but this is a different content landscape now. We're now in an environment where content owners are freely distributing their content for promotional and marketing purposes. And those campaigns are proving very successful, too. So when somebody comes to us and says, "We want to do a campaign, but we want to put all kinds of locks and chains on it," we just say, "You know, guys, that's not really the way things are done these days. So thanks, but no thanks. We don't really want to do it."

[itvt]: So you won't even allow them to specify, for example, that a particular clip be kept at its original length?

Dudas: No. We actually have a tool we call "the trimmer," which allows you to cut up a videoclip into as many pieces as you want. You can cut it into hundreds of pieces if you want. It's absolutely up to the end-user. It's a complete free-for-all.

[itvt]: Is there an advertising component to Eyespot's offering?

Dudas: Yes, there is. We have an ad-serving engine. So, for example, when we were doing a promotion with Lionsgate Entertainment for "Employee of the Month," we ran our house ads: we did post-rolls on some of our videos that said something along the lines of, "We're running this contest. Click here to join."

So we do have a post-roll and pre-roll ad engine. But we haven't been doing any advertising on Eyespot.com: we want to keep the site nice and clean and ad-free. But for our white-label partners, the ad engine is definitely part of our offering. It provides a way for those partners to monetize user-generated content: they set up their mash-up sites, and then do some pre-rolls and post-rolls, in order to create new revenue streams.

[itvt]: How has your life changed since founding this company?

Dudas: Oh, dramatically! My background is as a software developer: I taught myself to write software when I was 12, so I've been in programming most of my life. Professionally, I've worked in a lot of different places and industries, but I really got into the online space back in 1999 with MP3.com, when it was just a small start-up in San Diego that nobody had ever heard of yet. Obviously, that company was a really big hit, and my experience there was really transformative for me, in that it was an environment that was very entrepreneurial and innovative and collaborative. And, of course, there was so much money in the space.

When I was working there was when I decided, "This is great, but eventually I really need to do my own thing." I've always been an idea guy--I'm pretty creative--and I just always knew that I'd eventually want to strike out on my own. But the right opportunity never came along until the beginning of 2005. That's when the light bulb went on in my head, and I realized, "Okay. This is that opportunity I've been looking for. This is going to be really huge." I really believed in it.

So, how founding the company affected me was that I've now got to take on all the risks. It also meant that, for a really long time, I worked for free--as did Jim. We bootstrapped the company. We didn't have any paychecks--which of course is hard on one's marriage and hard on one's family life. Not to mention the fact that we're working around the clock--nights, days, weekends and holidays.

But it's actually been great. It's very exciting. I get to meet all kinds of fascinating people. In fact, it's been the best experience of my life, but it's certainly not without its costs. It really entails a lot of hard work. You're constantly worrying about hiring the right staff, about talking to investors and raising money, and all kinds of other things. And you don't get to see your family as much as you would like to. But at the same time, I wouldn't trade it for anything, because I just love it.

Perhaps the best thing about an enterprise like ours is that it is going to help change the world. Of course, at the end of the day, this is just a Web site and a small business. We're not feeding starving kids in Africa, putting clothes on people's backs or anything like that. So you have to keep it in perspective. But I do think that a service like ours--which, after all, allows average people to more easily and effectively communicate through video (video, don't forget, is a means of communication)--is part of a bigger phenomenon: the ongoing evolution of storytelling. Storytelling started with cave paintings; later there was the printing press, and so on. I truly believe that what we're doing should be viewed as a contribution to the next phase of that evolution, in that we're making it easy for people to tell stories through video.

[itvt]: You've probably seen as many mash-ups as anybody. What kinds of trends--if any--are you noticing in mash-ups? Anything that people might find surprising?

Dudas: Lots of kids doing skateboard tricks. Lots of homemade music videos. There is one thing I've seen a lot that I could have never predicted: a lot of kids are creating videos that I guess you would call friendship tributes. They upload a bunch of video and photos of themselves and their friends, mash them up with their favorite songs, and send it to their friends to convey appreciation and affection. These are like homemade video greeting cards.

[itvt]: Your biggest competitor, from what I understand, is Jumpcut. How is your service differentiated from theirs? Don't they have a major advantage over Eyespot in that they have the resources of Yahoo! behind them?

Dudas: I think small start-ups usually have the advantage over big media companies. In my experience, small nimble teams can innovate and execute much more quickly than their larger counterparts.

In regard to differentiators, there are a lot of differences between Eyespot and Jumpcut. The first is that you can send videos from Eyespot to any mobile phone in the US that supports video. You just click the "send" link and type in the phone number, and we take care of the rest. No other company is doing this yet and we've had it since the second quarter of 2006. In the first quarter of 2007, we will expand this to include Asia and Europe. So we have a huge lead on everyone else, and the release of Eyespot Mobile Share in the first quarter will increase our lead even more.

Another differentiator is that you actually get a real file when you create a video on Eyespot. This means our users can download their videos and watch them on their iPods, their PSP's, and their PC's in DivX, Quicktime, or Windows Media formats. They can burn to CD or DVD. They can upload their videos from Eyespot to other video-sharing sites. We're not creating a walled garden, we're giving users the creative tools they need, and then letting them do whatever they choose with their media. That's the real key to all of this: just give people what they want.

URL: Eyespot

Originally Published: December 14, 2006  in [itvt] Issue 7.10

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