Commoditisation of Presentation Recording

In a presentation from the 2007 O'Reilly Tools of Change for Publishing Conference, Tim O'Reilly describes how "free is actually a precursor of value in some other form". In other words, when one part of a value chain is commoditised, value migrates to another part of the chain in order to assure the flow of profits.

This is relevant to presentation recording - what some call 'lecture capture' - because this business is becoming a replacement for the commoditised learning management systems (LMS) business. Many of the sales and management staff in this business, and certainly those at Echo360, come directly from LMS businesses such as Blackboard and WebCT. They are have moved into the presentation recording business because they percieve that the money is now in extending LMS's to incorporate video recording, podcasting and automated publishing.

However these folks are making a mistake about the source of value. Today, almost all vendors in the presentation recording space are charging a lot for capture station hardware and software, and charging very little if anything for the server software. But capture is going to be commoditised as soon as there are drivers built into the OS that support distribution of display graphics. We already see many proprietary mechanisms for distribution of display graphics, including wireless projectors, classroom management software that rely on mirror drivers, and the like. VGA is a dying analog technology (Apple doesn't even include a VGA connector on their machines) and the move to distributable display graphics in digital form is inevitable.

The value will migrate to intelligent management of rich media content on the server, with key features being scheduling, editing, bookmarking, annotation, and reporting of viewer statistics. I predict that by 2010, the price of capture station software will collapse from its current SRP of US$ 5,000 to about one tenth of that, US$ 500. When that happens, look for the revenue model to flip from the capture station to the server software.

The only question is, with their current mindset, can vendors like Sonic Foundry, Accordent and Echo360 (formerly Anystream) actually survive the transformation?