Q&A with Johan Meulekamp, Regional Manager Northern Europe, Digital Island B.V.

Digital Island is a U.S. based company, founded in 1996 on Hawaii. It is a global e-business and content delivery network that provides the following services:

• Network services. It has direct network connections into over 25 countries on all continents worldwide or covering 95% of the global business community
  
• Hosting services. Managed application-hosting services at regional data centers located in Hong Kong, Tokyo, Honolulu, San Francisco, New York and London
  
• Content distribution via content distributors bringing the content close to the end-user
  
• Application services

Currently it employs over 500 employees and has its headquarters in San Francisco, California. In Europe it has offices in London, Amsterdam, Frankfurt, Paris and Geneva.

streamingmedia.com: Johan, who does Digital Island address? Who are your customers?

Johan Meulekamp: Our customers are enterprises that have business critical web based applications. We find them in the Financial Services, e Publishing, Media and Entertainment and Hardware- and Software industry. From each of these verticals we have customers with the highest revenue per customer compared to the competition. There are some big names like Financial Times, Cisco Systems, E*Trade, Master Card, Warner Brothers, CNBC, CD Now, American Express, Sony Music, Virgin Records, House of Blues etc. In general, our customers have a focus on expanding their business to more than one country or even on a global scale. For Europe the momentum is there!

Q: And your competitors?

A: Main competitor is mostly the in-house IT department of large companies. If they need to deploy their e-business on a global scale they want to do this themselves. However, this is a very time consuming and costly exercise given all the different regulations in the various parts of the world and on top of that finding the right technical people to support this. Digital Island can provide them with these global services, supported by a 24 hour 7 days a week, 365 days a year Network Operations Center in London and Honolulu.

Other competitors are the hosting providers, the network providers like the bigger carriers or PTO's or content distributors. However, none of them have such a consolidated service offering like Digital Island. A number of them offer for example hosting services in Hong Kong or Germany but still cannot offer a global reach and coverage. Digital Island is bypassing with its private fiber-optic global network all congested Internet points like the Internet Exchanges in Europe and the Network Access Points in the USA as well as the oversubscribed public Internet transatlantic links. Digital Island has its own private managed global network. Because we own and manage this network we are able to give our customers Network Service Level Agreements on availability and minimum packet-loss, on a global scale.

Some times I make the comparison to an airline. Imagine you want to fly to Australia. You can choose to fly with for example KLM from Amsterdam to Rome, and then another airline to Athens, another to Singapore and finally a plane to Sydney, Australia. If the party who is waiting for you at the Sydney airport doesn't see you arriving (!), where to complain? It could be anyone of the airlines between Amsterdam and Sydney or a congested airport. That is why most airline travelers make the choice for one airline that can bring them straight to the destination. And that is exactly what Digital Island does: it delivers content straight to the destination country where the end user resides. Global service delivery and global Service Level Agreements assure the quality and excellent web performance as perceived by the end users.

Digital Island offers the only comprehensive two-way Global e-Business Delivery network, helping business deliver a fast, guaranteed and relevant customer experience worldwide.

Q: Digital Island is a specialist for content delivery with ambitious plans for the European market. What can we expect - what services are you going to focus on?

A: We are a company with passion: to help business successfully conduct e-Business around the world. Digital Island is not only a specialist in content delivery but offers a fully integrated set of services: Content Delivery Services, Network Services, Hosting services and Application Services. Only Digital Island offers a private dedicated, worldwide fiber-optic network and assumes responsibility for the entire transaction.

At the end of 1999 we merged with Sandpiper Networks and that was an ideal combination with Digital Island. Sandpiper deploys a network of over 1200 content distributors. These content distributors are used to bring content like large data-files or content that contains audio and video information closer to the end-users in fact often in the same building as where their dial-up connection terminates. Together with Inktomi and SUN we are expanding this rapidly to in total over 6000 content distributors worldwide. As we speak we are installing these Servers in every European country at the so-called ‘last mile providers' or top-three Internet service providers and TV cable-operators in specific countries. There are several benefits for all parties involved and of course for the end-user, giving them a fast, consistent and reliable web-experience.

And again, because of our integrated service offering and private global network, we are able to provide our customers with real-time reports indicating for example exactly how much content is delivered to a specific country. This information is available to all our customers on an individual base via a secure web page.

Digital Island has presence and resources available in Europe to support European companies to conduct e-business on a Pan-European or even global scale. We also are working together with partners like the Netlinq Group in Amsterdam.

We have noticed that there is a high demand for Streaming Media Services in Europe. There are a number of companies; we call them I-builders that offer these kind of service already. Those are the companies with whom Digital Island wants to work together, to enable them to offer a truly global Streaming Media solution to their customers.

We are focusing also to those companies that want to expand their e-business beyond borders. For start-ups and smaller companies we have a so-called Global Incubation Program, which means that Digital Island invests in those companies by means of reduced charges for our services.

Q: If a company wants to make use of streaming services for video for example, what can they do?

A: The global network infrastructure is already in place for all major formats, so what our customers need to do is to give us their streaming media files, we host them and make sure they come available to a worldwide audience, so:

Call Digital Island:

• discuss the possibilities
  
• fill out the form mentioning specific requirements and
  
• upload the content at the Digital Island Staging Server.
  

Digital Island takes care of global distribution to the Content Distributors and… off you go. A URL at the customer's website will point to Digital Island's Streaming Network Services with Best Distributor Selection for fast delivery of streams. This all is a matter of days rather than weeks.

Although users see only one URL, TraceWare enables our customers to send content that is specified for particular countries. This means users see always content that is for them, in their language or designed to their cultural taste.

Q: Your recent acquisition Live On Line is a content aggregator webcasting e.g. live concerts - who is able to see and listen to these events in Europe - how do you distribute it and what are your plans concerning European content?

A: As a result of the acquisition of Live On Line, we can supply complete turnkey live and on-demand streaming events, including a syndication service that makes the content available on any number of relevant Web sites to increase the size of the audience. Other services include encoding for all majors streaming formats, satellite-signal acquisition and full production crews. The benefits to corporations consist of reduced cost, single point of contact worldwide, and faster implementation of commerce-enabled streaming media events. The live Streams are traveling across Digital Island's Global Fiber Optic backbone, bypassing the always-congested public Internet. This gives the end users in Europe and anywhere in the world the best quality Streaming Media you can get.In Europe and especially in the Netherlands we are in discussion with a number of companies who are in the same business like Live on Line and have experience in creating live webcasts. The Netlinq Group, headquartered in Amsterdam is one of our partners and from their site already experimenting with Global Streaming Media Services.

Furthermore we will start soon with 24*7 Radio Streaming Services for one of our Benelux customers as well.

Q: Distribution costs for streaming media are considerable. Is this going to be paid by advertising only or do you see different revenue streams - now and for the future?

A: This is a very interesting question. First of all, the costs per end users for distributions via the Internet are minimal compared to more traditional methods of distributing information by other media. Even the costs for distributing a one-hour live concert are within a few dollarcents per end-user. Digital Island's Footprint Media Services, one of three new content delivery services, supports Transactive Multimedia, or the ability to integrate streaming audio and video with seamless ad insertion, pay-per-view features and e-Business transactions. Without interrupting the live event, consumers can now click on an ad, link to a form, and complete a transaction over Digital Island's secure global network, which connects directly to the origin servers. In the USA, one of the largest credit card companies promotes the BlueCard via live streamed concerts The response of the consumers (prospects) whom are watching and listening is very high, much higher then you would get from for example direct mailing. In the BTB arena, companies will need to offer a greater amount of analyses and comment. This happens already on sites as from the Financial Times who offer basic contents for free but increasingly charge for additional analyses including on-demand-streaming services. Who had ever heard before of Ananova? Using Digital Island's Footprint Streaming Media Services and On-Demand Streaming, Ananova is broadcasting news and information bulletins simultaneously to online audiences worldwide. Ananova is the human face in front of Ananova.com's real-time news, information and e-commerce services. It is essential to provide end users watching to Ananova a fast, guaranteed and relevant web experience. In the USA we work with companies who are specialized in finding sponsors for On- Demand or Live Streaming Media events. For European companies also there is the opportunity to market their brand in the USA and beyond (Asia, Australia, South Africa for example) quite easily in combination with Streaming Media events.

Streaming media is adding value to a web-site.Just some figures:

- 70% of the end users click for related web content during the stream
- 60% click on related advertising during the stream
- 49% buy advertised products on line
- 44% click online advertisements regularly
Source: RealNetworks and Microsoft (December 1999)

One third of the web-site visitors stay longer at the web site because of streaming media. Streaming media will add additional revenue possibilities as well.

Q: Can you tell us about the European - situation cable versus satellite related to rich media delivery - what is your strategy?

A: I believe that broadband cable companies will be the enabling accelerators for Streaming media in Europe. First of all because of the extended bandwidth they can offer to the homes and businesses and secondly the absence of telephone charges as we see them for dial-up connections. Cable companies are for Digital Island main target to have our Footprint™ Streaming Media Servers deployed. Beneficial for both, opportunities for revenue sharing and last but not least offering their end users a greater choice. I have to say that the ones we have spoken so far are very enthusiastic, however some of them have capacity problems in their own backbone so it might be too early for these cable-companies to step into the bandwagon as the Americans say. But that's a matter of months I believe.I don't think that Streaming via Satellite will be a great success in Europe or at least in western-European countries with a very high density of TV-cable and other type of broadband connectivity Ethernet type of connections, as we can find in Sweden already.

So we are expanding rapidly in Europe as well. Overall, worldwide, over the last 16 months our number of employees increased from about 70 to over 500 now. Together with the expansion of our network, Footprint Streaming Media Services, data centers, our seventh data center in Tokyo will be opened the May 18th and the increased number of business partners we are working with you will hear a lot more about Digital Island over the coming months.

Q: Working for a US company with a mainly US based customers, is in your opinion Europe behind with respect to e-business and e-commerce?

A: Good question and I am happy you are asking this. Yes and no, Europe is behind in that sense that there is a lot more e-commerce based trading in the USA. Reason is the absence of telephone-charges per minute giving end users and consumers rather cheap access to the Internet. Secondly the culture, Americans are used to ‘buy on distance' by means of the telephone for example, we all know the 1-800-FLOWERS alike numbers and they have in general their logistics in place which enables them to deliver their goods country wide, overnight if necessary.

No as I believe that in Europe we have all the building blocks in place to get e-commerce and e-business rapidly up to speed and on top of this we are used to our own European culture of doing all things somewhat different in the various European countries. Being used to different cultures already it is also easier to adapt yourself for different cultures outside Europe as well.And this is really our advantage compared to US originated e-commerce and e-business.

Also the technology can help you with that. Digital Island can provide you with TraceWare which enables the web-based application to present right from the start the web-page in the correct language, currency etcetera or with the specific products available in that country only. If we look to Streaming media it helps you also with the rights management. For example if you have rights to publish in Asia only, TraceWare will exclude all other regions on a per country basis. The time is over that companies have to deploy a Web-server themselves in each region, country or continent to address that specific market. It becomes a matter of finding the right partners with whom you want to work with.

Q: Can you give us some examples of Streaming Media activities by Digital Island?

A: Sure. We have bookings for live broadcast almost every single day of which most of them are really famous. Also for the European audience like a webcast streamed live from the Hard Rock Cafe in New York on Thursdays or one of my own favorites: Pink Floyd at (http://sfx.liveonline.net/pinkfloyd/). You can find them all listed at Digital Island's website.

But the most exciting is the integration of rich Streaming Media Services with on-line transactions, that's where the money has to come from. And in this chain of activities all components are important. Andersen Consulting researched the reason why transactions over the Internet sometimes failed. In nearly 30% of the cases this was due to bad web performance, unacceptable download times, crashing web-sites etc. This is not only a direct loss of revenue but also providing the company with a bad image to its customers. We have customers who just signed up with Digital Island for that reason, providing their end users with an excellent web-experience and as such protecting their good company image. Again all components are important; it has to be fast, reliable, relevant and as such enhancing brand loyalty and customer satisfaction. And it has to be secure. None of Digital Island's fully hosted customers were affected by the DoS (Denial of Service) attacks. We have taken special measures to provide this to our customers.