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August 8, 2006

Ten years in internet audio and video

It is not without a little bit of emotion that I note the acquisition today of Loudeye Technologies (LOUD) by Nokia (NOK). Hey, it made Engaget. When I started Loudeye the very idea of audio/video on a PC was a questionmark. The average connection speed to the internet was a 14.4 idal up modem. Sound cards and video cards were "upgrades" and only available on the most powerful PCs. The average harddisk size was 10GB. 1TB of RAID array disk space cost over $250,000. The MP3 audio format hadn't been launched yet (much less the first portable player). Real Networks had just launched Real Audio 3.0 (and changed it names from the left leaning Progressive Networks) and had no video playback capabilities. Microsoft had Netshow for audio/video and no stand alone player at all. Apple Quicktime was something for CD's only, no internet playback. My cell phone weighted about a pound, had a huge antenna and barely made phone calls.

Loudeye was the first company to enable audio and video on computers and the internet on a commercial scale. The company built the largest archive of music in the world from all major labels and independents - over 300TB of uncompressed full track songs - complete with all disk art and metadata. More importantly the company negotiated the rights to reformat those songs legally for all the rights holders. Companies like Apple iTunes, XM Satellite radio, Warner Music, EMI and others were early customers. Loudeye was the last IPO of the technology "bubble" going out in March of 2000 twenty times oversubscribed with a 100% purchase rate of the stock on the road show. The opening day trade was the largest one day gain of the year at that point. Early investors made over 200x their money on that day. Even as the overall market turned and brought Loudeye down with it, the fundamentals that Loudeye was started to exploit continued apace. Audio and video became a standard part of the PC experience and has even passed through platform that to the phone. Lets check the stats:

The average connection speed of a PC to the Internet is an always on broadband (256K or above). You can't buy a PC without built in audio and video. The average hard disk size is 500 GB. 1TB of RAID costs under a grand (a 250x reduction). MP3 as a format is everywhere along with the players and even new formats like DivX, Ogg Vobis, etc. Real Networks has morphed from a software company into a content subscription company. Microsoft has a full blown digital media strategy including player, content management, server, theatre quality HD playback and a set of home media servers and devices. Apple has changed the world with the iPod. My cell phone does e-mail, wifi, has a camera, plays audio and video and is made by Nokia.

So a cell phone company buys the leading digital audio/video infrastructure company. Fitting in a way. Best of luck Loudeye and Nokia.

Posted by Martin at August 8, 2006 10:16 AM

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I saw the article in the Times and checked back here to see if you had a response. It must be amazing to see something you've borne grow to this level - very cool to see you touched by it on a personal level. Congratulations!

Posted by: skyflyer3 Author Profile Page at August 8, 2006 4:52 PM

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