An integral part of Hawaiian culture for centuries, it wasn't until the early 1960s that surfing became a worldwide phenomenon. About the same time, the theory of "packet switching," the foundation upon which the Internet was built, was first muted. Three decades later, surfing was an international sport and the Internet was a phenomenon.

New applications for the medium arrived in quick succession, sweeping over the international network like tidal waves. With them came a new form of surfing - and Baltimore native Scott Ferber, together with his brother John, caught one of the swells associated with it. The two formed a company called Advertising.com in 1998 just as the notion of marketing via the Internet was taking off.

The Ferbers weren't the first to figuratively stand up on their entrepreneurial surfboard as the online advertising swell rose, but they caught the wave. Six years later they were atop it, ranking as the online advertising industry's largest third-party advertising network, able to reach 75 percent of all Americans surfing the Web. With sales passing the $140 million mark and clean financials, Advertising.com was a success - one that proved so attractive that one of its major investors, Internet and entertainment giant AOL-Time Warner, could not resist acquiring it. In the summer of 2004, AOL purchased Advertising.com for $435 million.

Scott Ferber had led the company from the outset, guiding it through some of the gnarliest surf conditions American business had ever seen. The company survived its start-up phase, somehow avoided a wicked wipeout as the tech market burst at the turn of the century and succeeded in a business many thought would never get much traction.

Four years have come and gone since Advertising.com became an independently operated subsidiary of AOL. The company continues to prosper but the man who created it has moved on. After a short break, Scott Ferber has paddled out into new waters and a new business. He's in the "line-up" for another wave - online video - and he's got a bitchin' new surfboard. It's called TidalTV.

Ferber's Gun
In surfing parlance, a "gun" is a surfboard designed to surf big waves, a specialized tool for riding the largest, most powerful monsters coming ashore. TidalTV is Scott Ferber's gun, a Web site featuring professional video content in both long (full episode) and short ("minisode" clips) format.

Simply put, TidalTV is television online. Go to www.tidaltv.com and you'll find television programs, from news and documentaries to dramas and reality shows. Programming includes daily and classic (rerun) content from CNBC, The Weather Channel, CBS, Food Network, Sony Pictures Television, Discovery Channel and more.

What you won't find are video clips posted by amateurs like those so prevalent on You Tube. You won't find viral videos or random content being promoted for one reason or another. TidalTV.com isn't about video sharing; it's about extending professional content.

The site went live in July 2008 and has been in beta since then. Access to programming is via a familiar TV Guide-like format with scheduled shows programmed to run at the top and bottom of each hour. Scrolling through the guide allows one to see the programs showing on each channel. Click on a program to watch it instantly, whether that program is currently running or not.

Viewers can also access programming by clicking tabs along the top of the home page that classify content by segment, such as news, fashion-beauty, action, food, travel-adventure, or home and garden. This feature allows those with specific interests to find the content they're after quickly. The goal is to make TidalTV's content as easily accessible for users as possible.

Watching television on TidalTV.com is free. That's because the content is paid for by advertisers, just as it is on traditional television. But viewers can expect to see two-thirds fewer ads during an hour of programming - just six minutes versus 18 minutes or more on broadcast and cable networks.

Best of all, TidalTV is available anywhere, anytime. As long as you have a computer and broadband access, you can watch TV. It's something of a revolution, according to Scott Ferber, who likens the transition from traditional television to online television to the migration from landline telephones to cell phones.

"Twenty years ago with land lines, if I want to make a call, where do I go?" Ferber asks. "Pay phones, work or in my house. Then this thing called ‘wireless' happened. I could be anywhere and make a phone call. What are we trying to do? Let's cut the cord for television. Now I can take television with me. That was the original premise of this business. Let's put television where it's accessible, where people are."

That's the basic idea of television online. Watch it at home, in the office, in the airport or the coffee shop. The applications and implications for consumers are broad. And the business opportunity is big.

The Next Big Wave
Applications have washed over the Internet like breaking waves since its inception. The largest include e-mail, news and entertainment (everything from online newspapers and news services, to music, to porn), online commerce (eBay, Amazon and the like), social networking (MySpace, Facebook), personal expression (blogging) and online advertising. Advertising online proved to be one of the largest. Scott Ferber caught and rode that wave well.

One good ride is never enough for a surfer, however, and Ferber, like many others, looked at the water and saw another big wave on its way: online video. By the time he and others recognized the swell, it was at least five years old. It began in the late 1990s when increases in bandwidth, the standardization of Internet protocols and a blossoming of commercialization on the Web came together to make streaming video online a reality.

Skip ahead to early 2005 when the monster online video Web site You Tube was launched and Flash Video had become the Web standard (after whipping QuickTime, Real and Windows Media). It was at this point that video on the Internet began to take off. Through 2005, the wave began to break with launches of online video and video sharing sites from Yahoo, Google and Veoh, and TV shows on iTunes, PureVideo, OLN and many more.

But the idea of video Web sites that aggregated television content from one or more networks or providers with scheduled 24-hour and on-demand programming hadn't been realized yet. By mid-2006, broadcast and cable TV networks were permitting select samples of their programming to be streamed on various online video sites. They also began to buy some of these sites to form the basis of the platforms they use today to showcase content. Television and film companies like Sony were writing checks, as well.

In mid 2006, Scott Ferber was stepping off of his Advertising.com surfboard, leaving the company he had built behind for personal, not professional, reasons. The company was still doing brisk business, according to Ferber. "During the time I was there, we gave them perhaps 10 times the value of what we gave them initially. I'm proud of what we accomplished."

But his responsibilities under AOL expanded. In addition to leading his own firm, he took on roles managing support for AOL's first-party advertising business and serving as a consultant to Time Warner executives on interactive advertising. With the extra workload came a heavy travel schedule, which had Ferber bouncing back and forth between New York, the West Coast, Europe and Dulles, VA. With two young children and a third on the way, Advertising.com's CEO opted to take a break. Still, walking away wasn't easy.

"It was very hard," Ferber says. "I explained to everyone what I was doing and why. I wanted to walk away with as much honor as possible. But it was emotionally difficult and it's still difficult today. Advertising.com is a great company, a great place to be. How can I just turn the whole thing off? I often want to ask how things are going - I'm dying to - but I resist. Every time I meet someone from the company it's like a reunion."

Scott Ferber wrestled with that feeling though the summer of 2006, but that wasn't the only thing turning over in his mind. Ellen Uzelac interviewed Ferber for SmartCEO in 2004 and described him as a man "not going after the next big thing, but the thing after that." For Ferber "the thing after that" was online video, a wave he claims to have spotted even before he left AOL.

"When you consider your past experience - in my case, the advertising and media industry - they frame one application of mathematics," Ferber says. "So I'm thinking, what's the next thing? Well, the Web was two-dimensional. I always felt that way."

TidalTV's CEO goes on to describe a speech he heard an AOL executive give before leaving the company. "When I was with AOL, they had this thing called AOL Video and they bought a company called Truveo (a video search engine) so there was the beginnings of it," he says. "I remember seeing Jeff Bucus speak about it, saying, ‘Before I left HBO, I realized that we were putting content through a specific pipe but the pipe can change.' Wow, here's a guy who was committed to one pipe (cable TV), saying that content, in his vision of the future, could go through different pipes, including the Internet. I thought, ‘That's good to know because he and all of his contemporaries run the media business in this country.'"

Through 2006 and 2007, video content online exploded. You Tube numbers during that period quoted by The Wall Street Journal indicate that the Web site was hosting more than six million videos during the summer of 2006. By spring 2008, over 80 million videos were on the site and estimates put You Tube's bandwidth consumption as equal to the entire Internet in the year 2000.

Ferber says it came as no surprise to him and adds that You Tube's content (at least thus far) isn't really where money will be made from online video. "I understood that the good content would not be available at a venue like that because of rights issues. If you look at a couple of funny clips on You Tube, I get it. But if you look at where the money is, it's not there because no advertiser wants any part of that. Brands matter too much. What really matters is the high-end stuff."

Featuring high-quality content, the kind advertisers want to be associated with, is the idea behind TidalTV. "Sight, sound and motion is the most powerful medium," Ferber says. "Advertisers know it. Content providers know it. My thought was, ‘Why wouldn't we conceptually make an opportunity where we could aggregate content such as we see on TV and bring that to the screen where consumers spend 50 percent of their waking hours?'

The screen Ferber is talking about is your computer monitor, a screen that is not necessarily fixed. He argues that the screens you consume television on currently are mostly static. That means the majority of viewers can only be in front of those screens for about 10 percent to 20 percent of their waking hours. But what if the same content could be made available on screens in front of which a huge portion of the population spends a considerable part - up to 50 percent - of its day?

"That would be big," Ferber says. "Even if we could only expand content viewing by 2 or 3 percent, that would double total television consumption time in the U.S."

Currently advertisers are spending close to $25 million for online advertising, according to TidalTV's CEO. That's a fraction of the $140 million he claims they are spending on television advertising.

"So I thought, ‘Go where the money is,'" he says.

It's a notion that has occurred to many interested parties and a reality that content providers can't ignore. Given the swell of video content already online, TV networks and film and television production studios are eager to get on top of the situation, determined to make money from the properties they hold the rights to. The big wave that was online music almost closed out before that industry got wise and no one wants a repeat of those difficulties.

Consequently, Scott Ferber isn't alone in paddling out to catch the next big wave. Though the idea for TidalTV came to Ferber in summer 2006, he didn't actually begin the company until May 2007, taking more than a year to gather content and build the Web site. In the meantime, other surfers joined him out there on a variety of surfboards.

 

The Lineup
"The lineup" is the area just outside where waves begin to break. It is here where surfers congregate to wait for the "bombs" as the sets roll in. TidalTV is out there, but it's only one among many entities trying to catch the online video wave.

The most direct competitors are other content aggregators who, like TidalTV, are endeavoring to present free high-quality television and film content licensed from a variety of providers. Among these are Joost.com and Hulu.com. Both have a head start on TidalTV and some other advantages. Joost was the first major aggregator to debut to the public, launching in spring 2007, and has investment from CBS and Viacom. Hulu was next in March 2008. Hulu differs in that the Web site is a joint venture of News Corp. (Fox) and NBC Universal. The two joined forces to launch this separate content aggregator as a way of managing the release of their premium content over the Internet. In addition, they held talks with ABC and CBS, inviting them to place content on Hulu.com. So far they have declined.

TidalTV has no backing from any major network. Funding comes from Ferber himself and two venture capital firms, New Enterprise Associates (which previously invested in Advertising.com) and Valhalla Partners. Together, they invested $15 million in May 2008.

Other online TV and film content aggregators, such as Veoh, Sezmi and Vuze, operate differently. Some mix licensed content and the ability to file share or "publish" video content. Revenues are garnered from a blend of advertising content including targeted display and in-stream video ads, or integrated custom sponsorships. There is also a range of TV Web sites offering licensed content for one-time fees. JohnQ TV is one example, charging $39.95 for television and movie content. Other sites require that users download video software or act as "TV guides," funneling viewers to TV channels from around the world. Sometimes they work, sometimes they don't.

Of course, the major television content providers already stream video of their own hit shows in both full episode and clip format on their own Web sites. These include NBC.com, CBS.com, ABC.com, Fox.com, ESPN.com, HBO.com, MTV.com, SpeedTV.com and many more.

Also in the mix, and competing in a slightly different way, are video search engines. Web sites like Blinkx.com and CastTV.com comb the Internet for video content, including copyrighted material from television and film producers, and even canvass sites like Hulu, Joost and TidalTV. They aim to attract viewers by linking them directly to the content they're after instead of having to go through content aggregators. Finally, there's You Tube, which for free does a little of everything. And there's more out there, too.

Andy Plesser, the executive producer and founder of Beet.TV (a video blog set up to explore the transformation of media, particularly online video) and New York PR firm, Plesser Holland Associates, calls the mushrooming world of online video "a vast ecosystem." His view, derived from years of research and number of online video industry roundtables organized by Beet.TV, is that there will be contraction in the online TV sector but multiple portals will always exist.

"I think the biggest companies that have the greatest distribution power - You Tube, Hulu, Yahoo, etc., and the network and cable Web sites - will continue to be the place where video is shared and searched for online," Plesser says. "That said, the interest of consumers is so vast and so varied that portals will expand. There are videos being created to serve any interest and they're being distributed online. The challenge for the content creators is how they can make money."

Hanging Ten
The phrase "hang ten" is known throughout the surfing world and well beyond. But most non-surfers have little idea of its meaning. To hang ten is to surf with all 10 toes on the nose of the surfboard. It's a way of showing skill and showing off - possible on longboards only, the guns appropriate for surfing big waves. To successfully hang ten on the online video wave in the face of stiff competition, Scott Ferber will have to offer viewers a package of easily accessible content they desire and pair that with an attractive venue for advertisers.

Ask Ferber how he plans to hang ten and he gets very animated, relating concepts born of experience with Advertising.com and a basic understanding of business fundamentals. He has a plan to distinguish his start up from competitors and he knows what TidalTV can do for its clients. "We can extend content," he says.

"We'll make content available when people aren't in front of a TV. Our value proposition is that we're getting the content owner incremental audience. Who wouldn't want incremental audience? What CBS proved from their internal data, as I understand it, is that the more they distributed their content on the Internet, the more it reinforced their offline numbers. In aggregate, it does that. Give me your content. I'll make you more money from people who aren't watching it when you have your scheduled showing of it."

TidalTV will make content providers money in two ways, by paying providers licensing fees for their content (buying it in other words) or by entering into revenue-sharing agreements where TidalTV sells a portion (usually the majority) of the ads around the programming and the content provider sells the rest.

Ferber admits that online TV has the potential to cannibalize broadcast and cable television because of its on-demand format. In fact, many have touted television on the Internet as a liberation of consumers, taking television away from its traditional "by appointment" format to a medium on the consumer's terms. From schedule to programming, the idea is that the viewer would have the choice of what to watch and when. But TidalTV's CEO says that idea isn't really practical yet, at least for an aggregator like his company. It would require an immense amount of content at a prohibitive cost. That impacted his design for TidalTV and his concept of monetizing it.

"My original desire was to go out and get live television, put it on the Internet and see if we can monetize it with ads," he says. "The reality is all of the contracts are set up so that you can only get that content on a per-subscriber basis. Unless we were willing to go out and aggregate all of that content and turn around and charge people on the Internet, we wouldn't be able to afford it no matter how many ads we sold. So I thought, ‘Well I guess I can't do linear (live) feed.'"

Currently no online Web site has content like that. And according to Ferber, they can't legally offer linear feed unless they engage in per-subscriber contracts. "You can go to CBS' Web site five hours after CSI runs and see the latest episode but not before. That's when the money's made. That's where that $70 billion is."

So TidalTV must sell ads around the content it offers. Fortunately, selling advertising is comfortable and familiar territory for Ferber. The larger challenge is obtaining content that attracts viewers and advertisers. But it's a chicken and egg problem. How do you get content and advertisers if you can't show sufficient audience numbers? How do you get viewers if you have no content?

"You've got to show providers money and an audience," Ferber explains. "In the beginning I had no audience but I had money and credibility. You have to go to content providers and say ‘Here's what I want to do. Here's my plan to get audience and here's the money behind it.' They saw it and believed in it and now I'm delivering audience. The content providers are saying, ‘Oh my gosh! You did what you said you were going to! That's great. Here's more.' That's the process of building the business."

So far the building is going well. Ferber says that comScore Inc. (the leading database for Internet media metrics) measured over 200,000 unique views of TidalTV in July, half-a-million uniques in August and over 900,000 in September. Advertising.com's previous success has also helped. When the ex-Advertising.com CEO calls content providers or advertisers, they're more likely to take his call.

There remains, however, the challenge of competing with the Hulus and Joost's of the world and the network and cable providers for both high-quality content and advertisers. That's a tall order. Scott Ferber's solution? "We're not to going to compete directly with them."

"All of the big stuff - ‘American Idol,' the Emmys or what have you - is great. But if I'm Kraft and I sell macaroni and cheese or I'm selling butter, wouldn't I want to be in food programming or kids programming? That gets a higher yield," Ferber says. "What you've got to do is create custom, aggregated, vertical content environments for advertisers. Home Depot would rather be seen along with do-it-yourself content. They'll take spots during CSI but they'd rather be in a custom environment. Our strategy will take us in that direction. We do have CBS and Sony (and now CNBC) content but to say we're going to compete with any of the networks is ridiculous. What does Scott Ferber have experience doing? Creating a ton of value. That's what we can do for advertisers."

So rather than offering broad premium content, TidalTV will offer high-quality content targeted at specific audiences, filling different niches. They'll also court content providers from outside the world of electronic media.

"I'm going after magazine content," Ferber enthuses. "I'm going after In-Style Magazine. They have the best writers and richest content across a number of areas and they're looking to produce video. I'm trying to pick up all that content. National Geographic is a great example. How many people now watch their TV shows? They're one of the top five cable TV channels period (now featured on Tidal) across all ratings consistently but they're definitely not one of the top five magazines. But they started as a magazine. They realized they had a great asset they could put to a new use and take to a new distribution platform. That's what everyone else is trying to figure out. Look at TMZ. TMZ went the other way. They were an Internet site and now they're a TV show."

Ferber compares his plan for attracting advertisers to what he did at Advertising.com. When advertisers wanted to purchase ads on Yahoo, MSN or AOL, they would go to those companies, not to Advertising.com. But advertisers looking to target their message to specific audiences would visit his first company.

"If you want to get your message out and have it measured across multiple sites and with unduplicated reach, I solve that problem for you," Ferber says. "I'm not selling DVD players inside of TidalTV. Instead I'm selling Lexus, for example, on the idea that we can get their brand message to the right people. It's different math, a different pitch, that's the key. I'm after the stuff that the Hulus and the networks, by definition, will always give second shrift because they have to promote their own stuff. But it's top-quality content."

It all sounds interesting, but TidalTV will have to do more than just hang ten to succeed. To keep viewers interested the Web site will require some good moves to outsmart and outlast the competition on the big wave.

Carving
TidalTV is going to have to "carve" the online video wave, just like surfers carve. In surfing, carving is making semi-symmetrical fluid turns. It's a skillful, artful way of making the most of riding a wave. Pro surfers carve for points on the pro surfing tour. Scott Ferber is carving to give his Web site the most user-friendly, most appealing qualities possible.

As Internet pros know, a Web site that is too difficult to access or make use of fails quickly. That's why TidalTV is constantly evolving, simplifying the way it presents programming to its target audience (ages 25 to 54). In its first iteration, Ferber and his team chose to present TidalTV in a TV Guide-like format they thought would be most familiar to the older demographic they seek. That look is still a part of the Web site, but to serve viewers interests more readily and move a bit further away from tradition (after all, online video is a new medium), changes have been made.

"People definitely enjoy programming themselves," Ferber acknowledges. "But our goal is to ‘surface' content. If you click on a tab called ‘food' because you want to see programming about food, I'm providing relevant content to you. We liken programming to the ability to surface content. We only have a small screen space but I've got a library that could fit on a thousand screens. How do I enable you to easily and quickly find what you want? What you're seeing is our constant attempt to improve that."

Improving awareness about TidalTV is another priority. The company's CEO first plans to get the word out via standard marketing, marketing with TidalTV's content partners and through the Internet itself. Second, he says TidalTV will make distribution and syndication deals so it can put its content on other people's Web sites - it will pursue widgetization.

"Widgetization" in the case of TidalTV would amount to embedding it in other portals. Ferber gives the example of a Facebook user who has a streamlined version of the Web site on his own Facebook page. Beyond that, the viral nature of the Internet should help lead many viewers to the site.

Asked about how it feels to be "starting up" again Scott Ferber replies, "I love it. I wish, on many levels, that the economy was in better shape, but outside of any nightmare scenario in that regard, I'm so happy from a personal and business point of view."

Being involved in his business is what drives TidalTV's CEO. A consequence of that was the resignation of the company's first CEO, long-time Advertising.com lieutenant Mollie Spillman. Ferber made Spillman CEO of his new venture as it launched, positioning himself as chairman. But it was an unrealistic role for Ferber. Quickly, he became involved in day-to-day operations. Spillman understood his enthusiasm and resigned. Ferber says it was an amicable split.

Ferber is up and surfing again. Though TidalTV caught the wave later than many of its competitors, Ferber thinks his timing is good. Being too early, he argues, is expensive and often more complex.

To illustrate his point, Ferber cites a bit of Internet history. "The first online site was an auction site called OnSale.com well before eBay, but eBay beat it thoroughly, got bigger and you never heard of it again. What about ‘Friendster.com'? Didn't they own social networking online? What about MySpace? Didn't everyone have to have a MySpace page? As far as I know, it's Facebook now. No one has figured out video content online yet."

TidalTV seems to have as good a shot as any of its competition. Scott Ferber has already proven he can surf the big waves.                       
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