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Month May 2007

F8 and that Telegraph road

The launch last week of Facebook's platform initiative, F8, has generated a lot of talk, much of it in the mainstream press.  Its a compelling story, Facebook is becoming a platform, out maneuvering Myspace, doing to the web what Microsoft did to the PC.   Its a story we have heard before, it seems to recur periodically.  However, the announcement last week was mostly about distribution –  it didn't involve either deep or open access to Facebook data nor open access to its infrastructure.   F8 as it stands today is a partnering platform.  This one more small step in a long negotiation that is taking place between web sites on how data is owned, on how its shared between sites and how people navigate through services on one site to another.   This conversation is still in its infancy.  

XML really began the process of lateral data flows between sites and the vision of the semantic web offers a rich set possibilities — yet it's early days — most sites still operate in vaccum's and most user data is still stuck in proprietary silos.   And while the technology certainly needs to evolve so do the scope and kind of business arrangements.   The web of contracts, contracts between vertical sites, contacts between sites and users – needs to evolve in order for the vision of the semantic web to reach some of its compelling end points.   Weaving, back to the Facebook announcement.  What happens next is more interesting than what happened last week.    Facebook has taken a different approach to Myspace – who has opt'd to control much of its third party innovation through fairly simplistic interfaces and binary business driven rules, more like a traditional media company, vs. letting the community really build on top of the service in a meaningful manner.     As the Facebook platform evolves there are a handful of things I will be watching:

1. How deep are are the API's that Facebook is going to present to the community.    Facebook markup language is a proprietary API, the "platform" maybe wide in terms of distribution but its not deep, there is little to no access for third parties to the social data or infrastructure that makes Facebook such an interesting service, and its not open for developers to just build on, everyone accepted into the platform has to be sanctioned by Facebook, the degree of openness, real openness (vs. marketing gibberish) will dictate the depth and the value of the platform.   Amazon has done a great job at developing a set of platform services — starting with the affiliate model, extending it into community and then the Mechanical Turk and the elastic computing cloud services.  These web services were built step by step along with trust and a degree of openness that surprised many.    Pretty much every startup I work with today is using EC2/S3 — if Facebook going to have the same influence over the web application space, if so they need to open up more than a distribution funnel. iLike's weekend server hunt demonstrates a need on the infrastructure side, but the is also a real need re: social data.    Offering Facebook users the ability to port social data, their social network across applications and letting applications developers innovate on top of that data set would be really interesting.

2. How will the application metaphor evolve?   I see the metaphor Facebook has applied as the most interesting thing in the announcement last week.  The web has spawned many interesting platforms for micro application development.    Applets, plugin's –  from WordPress to Firefox to Myspace there is a an active ecosystem of development around many web sites.    But the term application suggests user control beyond a widget or plug-in, applications are often monolithic, the management of applications by the underlying OS is usually benign and in service to the application (get me that device driver)  — the term application presents a high bar for Facebook to jump over.    To me the use of the term suggests a rich set of API's and a clearly defined layer – a layering of both technical and business terms.   Its an exciting challenge to see if they can make this truly an application environments.   And if they do, what is Facebook's relationship to these applications?   The identity issue below is only scratching the surface of this question.   It was fascinating to me that in the announcement last week most of the mainstream press look in the rear view mirror for metaphors — this was going to be like windows was to the PC.   I hope not — we don't need another OS, what we need are open development platforms — and open access to data.    I did a lot of work on platforms a long time back — back in 1998, I invested in a company called WebOS that tried to go down the path of applying the desktop metaphor to the web, of duplicating the inadequacies of the desktop on the web.    There were few people comparing last week's announcement to Adobe's Apollo — Apollo is setup to be a more traditional, extensible platform.  One of the companies I am working with — im in like with you — is developing much of its service in Apollo.   Apollo is truly a web application environment — offering state management outside of the browser, for example Apollo will let me do my web mail while I am unconnected.  But Adobe is building this as a platform service, like Flash the intent is to proliferate the tool set across the web, developers will adopt it as will end users and like Flash it will provide revenue from scaled developers paying Adobe a license fee.   This is a platform business model that the market understands.   A cross platform run time isnt as sexy sounding at F8, but it might be more meaningful.  And then there is Firefox 3 — another valid comparison that didnt seem to come up in many discussions.   

3. How will application providers be promoted in Facebook?   This is critical to understanding the underlying business terms between the distributor and the application creator.   Last weeks announcement was about distribution, and it formalized an approach for Facebook partners, business development in a box, a highly scalable approach to partnering.     But what are the underlying economic drivers?     At AOL promotion and positioning was usually governed by dollars spent.    At Google it now seems to be about long term strategic value: years ago the Google services that were tiled above search results – were best in class – for finance related searches (search for a stock ticker), Yahoo finance was promoted, Mapquest was the default when you searched for a location.   Then slowly over time Google services received prominence equal or better to others.   Today its pretty much all Google services upfront, in default positions — nice to leave some pointers for competitors but as Google knows well defaults drive traffic and traffic drives revenue.  

Screenshot of Facebook's application directory

Last week the COO at Facebook, Owen Van Natta, said:  "How are we promising not to trump your application? We're going to level the playing field, developers won't be second-class citizens–we're going to compete directly with them."   Accordingly, the Facebook application directory is organized today mostly by popularity — but mostly is different to always. 

See the ringed sections of the screenshot — unlike third parties Facebook applications don't list the number of users of its applications (Marketplace is a Facebook application).    And note the that Application directory (boxed) starts with Facebook's top Applications.    Finally, as the users expands and contracts the application list (the more carat, where the arrow is pointing) Facebook's one advertisement on the page moves down, partially below the fold.  Tell me this execution isn't setup to collide with business priorities.

In Japan, on the cell phone, Do Co Mo understood that with a limited UI placement of third party services needed to be ranked by usage.   Is Facebook headed down the same path — and what does the COO really mean?? — Facebook owns this garden, competing directly with application providers is going to be, interesting.

4. How will Facebook manage identity and data across third party applications?   Some sites promoted in F8 seem to be managing identity independent from Facebook, others are doing a one click install and sign in (but even in the case of Mosoto, you are signed in for chat but to file share you need to sign in again?).    Does Facebook become a alternative identity broker on the web and if so they are going to have to a lot more open in their approach to data — open ID is a pretty high standard.      Facebook has traditionally had a fairly rough privacy policy — they gather a lot of data about their users and there has been a fair amount of controversy about it.    As they manage data across applications this is only going to get more challenging. 

5. Lastly, how does Zuckerberg social graph extend beyond the core college audience / behavior?   The feed feature added a whole new dimension to Facebook and extended the time people were spending on the site significantly, Comscore data suggests it went up by over 5 mins per day.   Fotolog has a similar, feature that alerts users to new uploads by friends — its a significant driver of our navigational based traffic.   But how does the audience and the use cases evolve beyond the core?   Will people outside of college enter in real names into profiles and will the social dynamics of the broader audience fit with the services that were built for the student based audience?   Over the past year I have started to use LinkedIn more — its starting to become useful, the network is large enough, the alerts I get from LinkedIn are useful — not spam.  I signed up for Facebook shortly after they opened up — but I didn't go back, till friends started inviting me.   Over the past 6 months I have visited the sites to confirm friends but there is nothing useful about Facebook as yet, and useful aside it better be either personal or entertaining — but like so many other social networks its about collecting connections, but whats are the services that are going to drive usage for me — I don't see it yet.   

This is a quote from Giga Om's review post the launch event, its worth a slow read.   "Zuckerberg says you can serve ads on your app pages and keep all the revenue, sell them yourselves or use a network, and process transactions within the site, keeping all the revenue without diverting users off Facebook. This was the opposite to what was stated in the WSJ article earlier this week, and gets by far the biggest reaction from the crowd."  

This got the biggest reaction from the crowd??  Maybe a crowd packed with Web 2.0 service and feature developers who are in need of an audience found it it interesting.    If a user today opt's in to use your site on Firefox — or your application on windows — or even within the grandfather of walled garden's AOL — you still get to keep the ad-revenue.  So why is this a big surprise?  Maybe the attention the announcement garnered is also about the proliferation of web based features searching for a destination to marry themselves to.

Intent and that Telegraph Road

A long time ago came a man on a track
Walking thirty miles with a pack on his back
And he put down his load where he thought it was the best
Made a home in the wilderness

I do think its worth do ask whats the intent behind the Facebook announcement, who is meant to serve and whats the need behind the F8 initiative?    The Facebook was launched as a service for US college students.   It was full of social tools, it let you build out your own network, post events, notes, photos and most importantly its all private, so that students can develop a profile that is real vs. many of the fantasy based profiling you see on Myspace and other sites.   Facebook achieved a lot of its early traction for the same reason as Cyworld did– you could enter your College, your year and actually find friends, colleagues, friends to be, cruches etc.  Because people used real names on the service — emails were verified by domain and you could find anyone in your university.   This was and is a big idea — few sites have a relationship based with their users that maps to real identities.     Anyone who has attended a US university or college knows exactly what this is about. Then came the monetization.  

Facebook started with advertising, they achieved some remarkable successes by mid 2005 they became profitable, they had 2,000+ colleges and 20,000+ high schools on the service.   And the audience was rabidly engaged — 2/3rd's of the active membership came to the site everyday.     But look at Facebook's reach through 2006 — it is flat, because by 2006 they had tapped into an audience and grown the business about as far as it could go given its natural limitations: students.    Reach tracked by AlexaThey were now faced with the question of how to scale your business beyond its base.   They could go global — there are services like FriendsReunited in the UK and Australia who are demonstrating, albeit with differences , that the market exists outside of the US for a Facebook like service.    And /or they could opt to extend the scope of the Facebook offering and try to reach a broader audience in the US beyond students.   They decided to push on both fronts but most significantly in September last year Facebook opened up to users irrespective of whether they were in school or not.   In 2007 Facebook's reach more than tripled.  Before they opened up the doors to the broader audience they were adding 15,000 members a day, today they are adding 100,000 a day (NYT stat, note Fortune says 150,000 a day).  They now have 24M active users, posting mostly Photos, notes and events.

Then came the churches then came the schools
Then came the lawyers then came the rules
Then came the trains and the trucks with their loads
And the dirty old track was the telegraph road

But now reach has extended they need to find ways to get people to spend more time on the site.  Here comes the platform initiative.  The platform that was released last week is about extending Facebook in a different manner to the other social networking sites.  Its about continuing to extend Facebook features by offering distribution of third party applications on Facebook.  Yet the features been added are contained within the Facebook experience.   Out the gate its a great opportunity for fledgling sites, particularly sites that are more of a feature than a destination — Facebook is offering one click installs for applications within Facebook. Its about distribution and its about continuing to drive the amount of time people are spending on the site, which in turns drives advertising.  Facebook is playing the same game as media aggregators have played since the dawn of time.    Whether its Disney, Yahoo or AOL — its all about getting in front of the distribution firehose — they are selling their audience.   Day 1 its not setup as a sale.   Remember that AOL used to pay service providers to offer content and services within the walled garden — then in 1996 when AOL hit a scale it stopped paying providers and started charging — bit by bit AOL flipped the model.  This all seems far less interesting and ambitious than the headlines suggest.   Zuckerberg told Kirkpatrick that what Facebook is unveiling would be "the most powerful distribution mechanism that's been created in a generation."  I hope its is more than that.     If Facebook's F8 is about trying to extend the size and scale of innovation and services in what amounts to another a walled garden experience it will another building block in the long history of web hype.  The Facebook has a great social platform to build off, I hope they are brave enough to let their users take their data and extend services beyond their control, beyond the walled garden.  

A last point worth making is the absence of Microsoft, Yahoo, Ebay and AOL in the platform / social networking space.     Live.com was meant to be a web development platform — but things hewed back to Windows with the launch of Vista.  Microsoft developed much of the thinking behind the web as a platform — with hailstorm and then live.com — but IE7 and Live haven't taken the lead.   Yahoo made all these great acquisitions, many of which they they have left in silos and failed to build upon.    Ebay has this amazing social / trust network that links merchants and end users.    We think of profiles as been specific to social net, but Ebays profiles as they relate to trust and commerce and communications (skype) are a trove of data that could be opened up to users, applications and the web as a whole.  And the merchant relationships, what about extending them into advertising.     Like wise with AOL — there was a recent comment about the importance of opening up AIM, again…     Its amazing to see the leaders of earlier generations of the web MIA — gone from this social networking race.

The semantic web needs to be distributed at its core, another walled garden is too low a bar for a really powerful and interesting social network to aim for.  I hope Facebook actually step beyond the marketing hype and deliver a social platform for the web.

Happy birthday Fotolog

Today is Fotolog's 5th birthday — a few words, and some images to mark the day.   It has been an amazing five years for Fotolog.  The history of the site is fairly straightforward.    Fotolog was started in mid '02 by Scott Heiferman.   Adam Seifer came on board soon after and took over the project and Scott focussed on building Meetup.   

The vision of the service was to cater to new picture taking behavior — as people were starting to adopt digital cameras the use cases around the capture and processing of images was also evolving.  Pictures have always been social – but the digital world was giving images a whole new social dimension.  Fotolog was created as a social media network — the genesis was Photo Blogging, the result was a mixture of social networking and user created media sharing.   This is what Scott's original Flog looked like:     

First Cyper Picture

The layout of Fotolog, was and is intentionally simple.     Fotolog has resisted the temptation to add feature after feature — rather it has stuck to offering a handful of features, similar to Craig's list the focus has been on the content and the conversations.    From the early days Scott and Adam had the vision that the pages on Fotolog needed to be social.    They needed to include not only your images, but also images from across the network, providing a visual navigation that today drives much of the time our members spend on the site, a self formed, organic distribution system, letting members see and be seen.    Complementing this social network of images they added comments and guest book entries — making the experience one where media intersects with communications, day in day out, millions of images collide with billions of conversations.     The growth of Fotolog has been steady and consistent — but it took 2 years to gather real steam — as the chart below illustrates.   In early 2005 we hit a million members — amazing to consider, since we are now adding close to a million a month.  

Milestones Flog

The phenomena started in Brazil.   Adam will tell you that in those early days he was concerned that Fotolog might get stuck in Brazil, Portuguese isn't a global language.   But Brazilian's have turned out to be a strong early indicator of global internet phenomenas — from ICQ to Hotmail to Okrut to Fotolog, Brazilians seem to have a knack for early adoption of global social platforms.  The Fotolog audience started skipping geographies and borders and today we sign up members from approximately 70 different countries everyday.    Our audience is still very large in South and Central America and we have complemented that base with strong European growth.   The primary language of Fotolog is images, beyond that the chatter around the site includes and mixes many different languages.  

This is what the home page looked like when we hit a million members.   Its not that different to what the home page looks like today — again, simplicity and consistency has mattered to the history of Fotolog.  

 1MM Flog'ers

Out of interest I checked how many of the 15 members with images above were still active on Fotolog.    A quick check of member names and recent posts indicated that nine of them have updated Flogs in the past six months.    Four of them have updated their Flog in the past 3 weeks — juju15 , lepadilha, tabata, mash — its amazing that after years members are still coming back and using Fotolog to share their world 

Yesterday we had 673,150 uploads to the site — with our regime of one photo a day and 8.3M member accounts that means that yesterday a little over 8% of the people who have ever signed up to the site, uploaded a photo to Fotolog.    That doesnt included all the members who just visited friends Flogs — but to have 8 percent of your membership coming back everyday is pretty engaging and pretty amazing.   Fotolog also hit #18 on Alexa earlier this week — our highest ranking ever.   The traffic on the site continues to surge — our reach continues to grow (see a ranking vs. facebook), and for people who want to relate us to other US photo sites (which I always say is a poor comparison, given that Fotolog is about self publishing and socializing and photo's just happen to be the medium, they aren't the end), see the relative traffic rankings over the past three years, vs. other photo sites, Photobucket is picking up share, Flickr seems to be flatlining, and Shutterfly is still a seasonal processing site.     Fotolog is a testament to the creativity the internet has unleashed — millions of people sharing moments of their lives through images and conversations.  

A thank you from the team in NY to all of the people and all of our members who have made this global collage of conversations possible.  

And read Adam's Birthday post here .    

The Photobucket Sale and Fotolog

In the wake of Photobucket's sale last week to News Corp., people have asked me two questions: 

(i) How is Fotolog different from Photobucket?
(ii) Why did News Corp. buy photobucket? 

With the week now over, let me take a pass at answering both questions.  

How is Fotolog different from Photobucket?  

Photobucket and Fotolog are both built around media (photos and videos) and they are both related to social networking.  And they are both experiencing rapid growth.    But that’s where the similarity ends. Photobucket is a tool that is agnostic of destination – while Fotolog is a destination. Photobucket stores image-based media, then distributes it to your page on social networking sites such as Myspace, Bebo, Piczo, Friendster, etc. Fotolog is a destination where you post one image a day which then becomes the center of a social interaction/chat with your friends.  It’s intentionally simple – stripped down and focused on the social media experience. 

The Photobucket acquisition affirms the importance of user-generated content of any media type — images, video, etc. — and media's emerging relationship with social networking. I often call Fotolog a social media site because it's all about the intersection of media and communications, two things which were once like oil and water — they traveled on separate pipes and represented distinct experiences. But they are now coming together in fascinating ways. It's early days, but I believe that the combination of media and communications — gifting, sharing and transferring social capital, between users/members, via user-generated content or digital assets that represent identity — is a more than a trend. 

The first generation of social-networking sites stressed self-publishing over connections (from Geocities, to Tripod to Blogger).  The next generation focused mostly on connections (sixdegrees, and friendster are the classic examples here — tools to gather friends and connections, as social capital accrues in theory to the people with the most connections). The third and current generation of sites blends media with connections — each with a different emphasis. 

Focusing in on Photobucket and Fotolog — the difference between the two is clear when you look at traffic and usage data. Both sites are on a tear. Alexa (link #1 below) ranks Fotolog as 24th largest in the world — Photobucket is 44th . As CEO of Fotolog, I'm obviously privy to more data, but focussing on proportionate growth — the Alexa link shows rapid growth for both sites. Comscore measures Photobucket with 28M uniques and us with 13M. Comscore is panel-based, and at Fotolog we are working with some other data shops to confirm this data.  We recently starting dropping Quantcast pixels on our site and they track us at 26M uniques — data sources aside, the point here is that both sites are large and growing fast. 

Site usage patterns tell a different story. See the table below with Comscore data from March — the average minutes per day is hightlighted. Photobucket averages 7 minutes per day while Fotolog averages 23 minutes per day. Fotolog does 261M total visits, compared to 90M for Photobucket. Media-wise Photobucket has 2.5BN photos, Fotolog has about 1/10th that number at 230M – but in order to maximize user response, Fotololg only permits one up load per day.  Photobucket also offers video, which Fotolog is targeting for the future. Socially, the sites couldn’t be more different, given Fotolog’s status as a destination with an emphasis on conversations.  Our site has more than 2BN conversations posted, approximately 10 per image. 

Data table

In terms of user profile, Photobucket and Fotolog are both very international. Alexa tracks 29% of Photobucket's audience as US-based (Myspace-related) with a further 5% in the UK (Bebo) and the remainder apparently pretty evenly spread worldwide. I do wonder how accurate this data is — as approx 60% of Photobuckets traffic is tethered to Myspace which in turn is mostly US traffic. I know in Fotolog's case the Alexa geographical ratings are different to our Google analytic ratings. Last month a fifth of our traffic was in Southern Europe (Spain, Italy, Germany), which doesn’t come across clearly on Alexa. Fotolog has members signing up every day from 70 different countries, with the bulk of our audience in South/Central America (where the viral growth first took off) and Europe. The site is growing in some European countries, month over month, at a blistering 28%. Numbers like that compound fast. And the growth is 100% organic, with no marketing or member incentives. 

So why did Newscorp buy Photobucket?

The first reason that is much cited for the transaction is defensive — News Corp. / Myspace bought Photobucket to make sure no one else bought them. News Corp. understands that the media on its social network is vital to the experience, and having a third party manage the bulk of the media on MySpace was a risk. This concern can only have been exacerbated with the rise of YouTube and its purchase by Google.   Moreover, Photobucket's push into video must be attractive for News Corp. as a foil for its competition with YouTube – it’s no coincidence that since that deal, Myspace has been so aggressively promoting its videos on its homepage and elsewhere. So media matters — but this is more than media or UGC – It’s also the most common form of digital personalization.   Taking photos out of their analog construct, they are a very simple form of digital customization, it’s far easier to take a picture of something than to render some customization in photoshop. On Fotolog we have tens of thousands of pictures of people's computer screens while gaming, or desktops, or pictures of people sneekers – Fotolog members have posted over 60,000 pictures of Converse / Chuck Tailor's — or custom images.  In other words, this is about personalization, and the camera or a "picture" is just a tool.  

Beyond this strategy my guess there is a broader opportunity — Photobucket is a photo and video tool that could become a web-wide locker for the storage of digital media. Just as eBay's acquisition of Pay Pal wasn't meant to just serve just eBay, my guess is that NewsCorp’s purchase of Photobucket isn’t just meant to serve MySpace.  The opportunity is to serve the web, I suspect that’s the broad strategy.   Granted, there are risks to a broader strategy — eBay didn't effectively execute and while Pay Pal has recently picked up share the first few years after that acquisition amounted to treading water at best.    The fact that Google is now driving into the payments business is a testament to that failure — eBay had the running room to be the web payments platform.   There is also an audience risk — Photobucket users might not pick it as a the service of choice for other media types, the audience may move on and News Corp. could be faced with a whole new dominant parasite on its host in 18 months.    Given all of this the deal once again distinguishes News Corp. as one of the media companies in the world driving headlong into building digital media assets that are indigenous, not extensions of existing franchises.

Lastly, people wonder what the Photobucket deal means in terms of valuation and monetization of social media sites. On this front, the acquisition is good news for Fotolog and our peers. In contrast to You Tube, Photobucket demonstrated that UGC could be effectively monetized, a path that we are following at Fotolog.   The market has valued highly a popular tool that facilitates social media networking communities.   That only reflects well on both the segment and both the destinations and tools associated with it.   

nanking

I went to see Ted Leonsis’s film Nanking this week. It is a hard movie to write about, let alone see. The film documents the rape of Nanking, an event that I thought was named as a metaphor for a city that was pillaged. Pillaged it was but the people were also indiscriminately raped. It’s an awful, gut wrenching documentary of human nature and war. It is also a story of eight or so people who managed to save hundreds of thousands of lives — but there is little to no glorification of their roles, its told upfront, in your face, the words are taken directly from the diaries of survivors. Disasters of this kind are usually told from a distant, sanitized, and historical perspective. This movie does none of the above — similar to Spielberg’s Shoah documentary. Amazingly one of the people who saved so many was the head of Siemens — a Nazi. I also didn’t realize the dates of the massacre — this was 1937/38 — a full year before the start of WW2. Seemingly we leant nothing, would things have turned out differently if this history had been documented and telegraphed around the world?

A few people asked me — should I see it? I think its a personal decision that warrants a few minutes of thought. We are at war today and almost everything we see if filtered through the sanitized lens of our media — this film is about war and the depths of human depravity, its not nice and the loose ends aren’t tied up in a way that gives you any closure. The bravery of a few people is a small measure compared to the depth of evil that is documented. I never understood the degree of attention that rested on Koizumi’s decision to visit the Tokyo War Shrine. I now understand what an historical affront that was.

Finally, documenting the tools of war propaganda — so literally — was something I had never seen before. It’s clear why this history was never clearly documented or told in Japanese history books. Why the soldiers wanted the westerners out of the city before the military arrived. Seeing clips of Japanese journalist filming children getting candy from soldiers as the people of Nanking were been “liberated” — while nothing could have been closer to the truth. Even if you insist on discussing the many subjective truths that make up history — there needs to be some averaging, and history here has been seemingly devoid of any perspective. Nanking is a reminder to chew carefully before consuming any news media today. For that reason alone I think its worth seeing the film.

Hybrid waste

I am trying out the Canon TX1 hybrid cam. I am a big fan of hybrids — for the past couple of years I have used the Sony DSC M1 hybrid. This Canon promises a lot and thus far seems to deliver fairly well. The Camera is very stripped down and easy to use — but the ergonomics aren’t as good as the Sony, harder to hold and shoot with one hand. Stills are 7.1 pixels and other than the flash (which is weak) the stills are good. The face identification software does a really good job of finding faces — less clear whether the adjustments it does once it has found faces is worth much, but that strange allure of technology recognizing a human feature is enough to make one think it must be have some value.

Video is just weird. Canon promote this as an HD hybrid and sure enough the video is 720p, 16:9, 30fps. But it records in M-JPEG (Motion JPEG – basically a string of jpeg images?!). Hugely inefficient at encoding, gives you approx. 13mins of video on a 4 gig card? There is the advantage that you can pull a still from the video stream, which is kinda interesting if you want to wade through a gazzillon frames for the 1/30th of a precious second. But why M-JPEG, Divx or MPEG4? I suspect they wanted to (a) save on licensing fee’s — and (b) make sure the camera wasnt too good at doing video. The tension that hybrids have for Camera manufactures persist — if its too good then people wont need to buy two devices. But the choice is an interesting testament to how the plunging cost of storage continues to radically effect technology standards.