Apple Storms Hollywood

While most of the announcements around new iPod devices last week were underwhelming, Apple’s recent changes to iTunes could point to a much wider strategy to revolutionize how media is consumed in the future.

Understanding iTunes LP and iTunes Extras

For the near future, Apple’s dominance in the mobile entertainment market will remain uncontested. Entering its 8th year, the iPod has successfully morphed from an interesting new player in a small category into an all-purpose platform spanning the breadth of the audio consumer electronic landscape, portions of the mobile phone business, and while its AppleTV business is still lagging, the introduction of iTunes LP can easily be seen as part of a revamp for that platform.

The company talked a fair amount about the ability to add extra content to music tracks, forming an experience that is much more akin to that of a music LP. But let’s stop for a second and think of what a stereotypical Apple customer might look like? Somehow, the immediate image that pops in my mind is not someone who was born prior to the late 70s.

Sure, now that the iPod line has established itself as the dominant line in the portable entertainment consumer electronics world, one can see a lot of people over 40 sporting the devices but truth be told, most of Apple customers are probably younger and, to them, LPs are either something that belongs in a museum or falls in the category of music snobs. The sit-back experience and add-ons that came with most LPs is not how they have ever experienced music and it is highly probable that they will not change their behavior because Apple believes that retro is cool.

The music experience is more of an ambient one, where the track itself is the thing and where even music videos have mostly fallen by the wayside (YouTube killed the video star?) In today’s short attention span world, extra attachments to media exists in two places: on DVD and on BluRay disks, technologies best experienced when dealing with a TV screen.

In fact, when delving into the details of the iTunes LP specification,developer Jay Robinson discovered the following:

The LP frame seems to have a width and height of 1280×720. This is nice, but means I get ugly scrollbars all over my 13″ MacBook screen.

The resolution seemed interesting as I remembered it from somewhere but had to think about it for a few minutes (I’ll get into that in a the next paragraph) but it was fascinating to me that one would experience ugly scrollbars on a MacBook. Say what you want about Apple products, ugly is not something that generally comes to mind. In find, the fact that things were ugly on a computer monitor immediately gives us clues into where Apple may be going next. Since we can safely assume that Apple would not push something ugly out the door, we can also assume that the 1280×720 resolution is no fluke. And since it looks ugly on a MacBook, we may think of where else this type of media can be consumed.

720p?

1280 x 720 is the kind of 16:9 ratio that is found in a 720p high definition video mode. That mode has become more or less the default low end mode for high definition and is how most television broadcasts in the US and Western Europe are handled. It is also a format that most plasma or LCD TV can handle. But also of note is that it is the highest resolution format offered in terms of movies and TV shows sold through the iTunes store, and the highest resolution HD video resolution now supported by AppleTV players.

So we now have a clear sign that the iTunes LP content seems specifically formatted to be best experienced on a TV screen and it seems that Apple’s recommendation would be to use an AppleTV to do so.

And then, this week, Apple retired its low-end AppleTV and dropped the price of its mid-range (now entry level) offering by one third. Such a move is not just based on the idea of moving units but appears to represent a potential need for disk space and anyone who looked at the size of a DVD or Blu-Ray disk can attest to the fact that such video offerings can chew up space relatively quickly. And extras tend to add a fair amount too, which seems to increase the need for space if you are intent on renting or selling DVD or Blu-Ray like content via the Internet.

Add to this the general reluctance Apple has had to supporting Blu-Ray in their computer hardware platform (the main advantage of Blu-Ray, according to its advocates, is the ability to display video at a higher resolution format than 720p) and it seems Apple is gearing up for an assault on that category (especially since the problem of extras is now solved by iTunes Extras).

720p Recording

Meanwhile, on the Mac, the new operating system came out with a version of Quicktime that removed ability to support plugins for extensibility. While Apple is already a strong player in the video editing world, offering both professional (Final Cut Pro) and consumer (iMovie) tools, it is also interesting to note that they are starting to introduce light editing video capabilities directly into the operating system.

We already know that the iPhone 3G S can record video, a key feature of the offering, and we’ve just witnessed the introduction of video recording capabilities within the iPod Nano (and we can assume that it’s only a matter of time before the iPod Touch gets its own video recording capabilities) but here’s where it gets interesting: the iPhone 3G S could theoretically shoot 720p video as all the hardware to do so is there.

The rise of YouTube and the success of Flip cameras have shown Apple that a portion of the consumer market is interested in recording and viewing video. While the YouTube offerings tend to be generally of a lower video quality, the introduction of 720p as a default recording chipset in Apple’s offerings appears consistent with the company’s attempt to cater to a higher end whatever market it enters.

So it would seem to be a normal progression for Apple to eventually move its product lines to producing 720p content that can then be redistributed.

Today, that exporting can happen via synchronizing one’s iPhone’s GS or exporting content to iTunes, YouTube, or MobileMe from Quicktime X. MobileMe and YouTube appeared to make sense but why export to iTunes?

A user generated marketplace

The success of the iPhone as a development platform has surprised many, myself included. In the short span of a few years, Apple has created a marketplace that is rumored to be selling US$200 million a month’s worth of application software in increments of about a dollar. If you’re making 30 percent of that revenue by hosting the apps and handling the distribution, you might notice.

I would venture that there are now a number of discussions around Apple as to how to reproduce this phenomenon across other categories. With the rise of YouTube, Last.fm, MySpace, and other, Apple is now also witnessing the rise of the independent and while the company has had some success in bringing video content to the iTunes store, it has not been able to get the rich margins it is getting from the music industry (something the music industry now appears to regret) and from iPhone developers (who, for the most part, are not large companies) from TV and movie producers.

True, the company now offers rentals and sales of video content but what if it could open up a marketplace where every independent content creator could distribute content? What if independent movie-makers or musicians could sell directly through the iTunes store and provide content on all the apple platforms (TV, iPod, phone, computer) with a single click. I suspect that many would be willing to give up 30 percent of their revenue in order to get to that public.

The components all seem to be there and it seems to me that it won’t be long before Apple starts pushing the idea that we are all content producers (an old idea at Apple, which was at the source of their creating the iLife suite) and we can all make some money at producing that content. Having done so, Apple would not only have control of the music industry but could also assert itself in the TV and movie space.

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About the Author

Tristan Louis

Writing and working on the internet since 1993, I've launched six companies, of which two went public and three were sold. This is my personal site and all opinions here are mine.

  • Yacko

    Yep no doubt 720p. It’s high def with the least bandwidth. Even with big consumer pipes, 1080p would be a pain. It’s good enough. Only the biggest monitors have 1920×1080 resolution. Lesser laptop and monitor screens generally exceed 720p. One more reason for 16:9 720p that is not mentioned – I’ll bet the coming Apple tablet has exactly that resolution or better.

  • http://www.tnl.net/blog/ Tristan Louis

    Yacko,

    The bandwith issues makes total sense. As far as the tablet, it would also make sense though I suspect that tablet-like technology will make its way into the macbook and iMac series soon too…

  • Patrick

    “Entering it’s 8th year” should be:
    “Entering its 8th year”.

  • http://www.tnl.net/blog/ Tristan Louis

    Patrick,

    Thanks for noting this. I’ve corrected it now.

  • http://www.facebook.com/mxtbcca mxt

    RE: “it is also interesting to note that they are starting to introduce light editing video capabilities directly into the operating system.”

    An OS is the interface between the physical hardware (drivers) and application software. The app software may be user facing or just component to component.

    Apple is NOT introducing “light editing video capabilities directly into the operating system”! They are bundling some video editing software with the sale of their machines that include an OS and a bunch of other useful software that their customers will enjoy.

    mxt

    THINK
    think different
    Think Open Source

  • http://www.tnl.net/blog/ Tristan Louis

    Mxt,

    I’d beg to differ. Since Quicktime X is an integral part of the OS and the quicktime toolkit is part of the OS itself, it appears to me that it’s not going too far to assume that they could potentially offer access to the editing tools via API. As such, I would continue arguing that it is indeed part of the OS.

  • http://www.definitivemind.com James Katt

    I would recommend Apple do the following:

    1. Apple TV: small form factor, 2 GB capacity, Mac OS. This is a mild update of the current Apple TV.

    2. Apple TV Pro: similar width to a Stereo Receiver, but much thinner in height. Multiple Hard drive for up to 8 GB + of storage capacity. Multiple outputs to allow connection to existing stereo amplifiers and TVs.

    Both can do downloaded Apps (e.g. games), movies, music and music albums from the iTunes Music Store. Both can have controllers for downloaded games – i.e. go after XBox and Playstation but for casual games – the huge numbers that are being sold in the App store today. One can also browse the internet (e.g. during parties, etc.). Controllers use bluetooth and have accelerometers. Keyboards may be connected.

    One can have their entire music collection and video collection obtained from the iTunes Music Store or other sources such as Amazon.

    The interface is NOT Mac OS X, but an adaptation for the family room – a simpler, touch-like user interface – since it will be used primarily for entertainment.

    This would be Utopia for the living room.

    It would also spell deep competition for receivers and audio stereos. One can connect them directly to powered speakers, for example to bypass having the need for other audio gear.

    It can also connect via iTunes to internet streaming video and audio sites! Think about all the radio stations that broadcast on the internet.

    It can also connect to various internet content sites such as NBA.com for broadcasts of multiple basketball games at the same time. The NBA can even write an App for it to be downloaded from the iTunes App store.

    Imagine THAT! WOW! I want one – especially the Pro model.

    This would be the ultimate family room entertainment device that would also appeal to every audiophile and videophile.

    Who needs DVDs and Blue Ray disk?

    It can grow in the future – as pipes get wider and storage gets larger – to encompass full HD video as well. This would insure that Apple has a market for upgrading hardware (where Apple makes its profits).

    Tah Dah!

    Do you hear me, Steve? He already probably thought about it.

    Independent producers would have a field day! They can create content and sell it directly to consumers on the iTunes store. Apple would become the center of the entertainment world.

  • http://www.tnl.net/blog/ Tristan Louis

    James,

    I assume you mean TERAbytes, not GigaBytes :)

    I doubt they would add any store beyond iTunes (definitely no Amazon connection there) and I suspect that a small remote or way to connect to it via the iPhone would make sense.

    And I fully agree with you that there will probably not be a DVD or BluRay drive in that…

  • Marco

    User generated marketplace, wasn’t that supposed to make Youtube rich? Turned out nobody wanted to pay to see anything that wasn’t a movie or TV show. Hulu’s making a dribble of cash but it’s a few percent of what the same content fetches on cable/satellite delivery. Sure, download/stream on demand is the future, and there’ll be some tug of war between the purchase-to-own and rent models.

    Will Apple open up an advertising-based revenue model in iTunes/iPod/AppleTV? Run ad insertions against user-generated content? Seems unlikely.

  • http://www.orphanroad.com Frank

    Really all Apple needs to do is add a “Publish to iTunes” command to the File menu in Final Cut, Logic, Garage Band, and iMovie.

    One move and they would cut the legs out from the content distribution industry.

  • http://www.9giantsteps.com George Howard

    content providers can already access the iTunes marketplace by using a service like TuneCore (et al.) to get their music on the store.

    Apple *could* make the process more direct, but I’m not sure that it’s in their interest to do so. Companies like TuneCore essentially take on the burden of making sure that the content is submitted to the iTunes store in the proper format, etc. Additionally, the rights issues surrounding music are equally, if not far more complex, than those around apps. The constant gripe about the app store is the approval process. I can’t even imagine how long it would take for apple to approve a song/record via their submission process given that – due to the far lower barriers of entry for making music as compared to making apps – would mean an exponentially larger number of songs/albums being submitted for approval than there currently are apps.

    None of this is to imply that it can’t be done, only that it may not be in apple’s interests to do so.

    [disclosure: while I no longer work with them on a day-to-day basis, I was one of the original TuneCore founders, and still have an interest in the company.]

  • http://www.tnl.net/blog/ Tristan Louis

    Marco,

    I think the approach Apple would take to UGC is different from YouTube’s in that it would probably go after monetization scenarios instead of offering free content wrapped in advertising. Remember that Apple has no competency in the ad space but Google does…

  • http://www.tnl.net/blog/ Tristan Louis

    Frank,

    Publishing to iTunes does not mean publishing to the store but I agree with you that such a 1-click approach could be revolutionary.

  • http://www.tnl.net/blog/ Tristan Louis

    Orta,

    Do you have more details relating to those hooks? Care to elaborate?

    TNL

  • http://www.tnl.net/blog/ Tristan Louis

    George,

    I was not aware of TuneCore so thanks for chiming in and telling us about it. Having taken a cursory look at it, I suspect that the company’s model is not too far from where Apple might go (though I suspect that Apple would embed their offering deeply into iTunes and their editing tools)…

    As far as the approval process, it’s true that there would be issues but I suspect that they would define something akin to the app approval process. It might rankle a lot of people but ultimately could mean substantial revenue for Apple, which is the thing they would be most interested in if they take this approach.

  • Michael

    The Apple tablet will be the replacement for the Apple TV. When you’re at home, it will “live” with your TV setup (not in the home office), but when you take it with you, you’ll still have your video content with you on a device that will make for very high quality viewing & listening. It will work in conjunction with an Airport Express kind of thing that will allow you to hang additional HDs off it for additional storage.

  • http://www.tnl.net/blog/ Tristan Louis

    Michael,

    An intriguing concept. So you assume that they’d get rid of the box completely and use some kind of Airport Express like device to connect to the screen. That would make sense, with the table being a touch-like full screen experience…

  • James Gowan

    All I’m wanting is an Apple TV with a DVD player or a pro model with a Blu-ray player. I’ve got two 50″ Vizio Plasmas and only one of them has a Mac Mini — I don’t really want to have to buy another Mini for the other one. I’d rather have a less expensive Apple TV that at least could play a disk. Is that asking too much?!

  • James Gowan

    Sorry… I got off point in the post above —

    About Apple’s iTunes LPs (iTLP) … I think they are a great idea and think that adding in greater value will really help justify the higher price points they’re asking for (I believe Dave Matthew’s iTLP is about $20). But worth it! It has lots of songs, videos, pictures, facts, artwork, lyrics! I think Apple is going to do very well with these. I will certainly be buying them.

  • http://www.tnl.net/blog/ Tristan Louis

    James,

    First, I think that you won’t see BluRay in any Apple devices for the foreseeable future. It appears that introducing BluRay in their product line would only diminish revenue for the iTunes store movie and TV downloads and could lower Apple’s chances at getting good deals in that arena (on the broader end, BluRay does not seem to get traction (and I say that as someone who owns a BluRay drive).

    iTunes LP may be adding value to music but, as I said in the entry, because music is not experienced in the same way as movies, I suspects that iTunes extra is really more important and iTunes LP is just Apple’s way to obfuscate what they’re trying to do.

  • http://jayrobinson.org/ Jay Robinson

    Since I first dissected the iTunes LP, http://jwr.cc/x/3, I have figured out a lot more about the format. It is most definitely destined for AppleTV; there are mentions of it throughout the code. One of the first tags inside the index.html says ‘meta name=”hdtv-fullscreen”‘. I cannot wait to see my iTunes LP and iTunes Extras on my AppleTV.

    The other interesting question is since Apple will provide an HTML engine in the AppleTV, will they let us browse the Internet?

    • http://www.tnl.net/blog/ Tristan Louis

      Jay,

      Thanks for sharing what you found.

      I suspect we may see an AppleTV version of Safari, but probably without Adobe Flash (in a fashion similar to the one on the iPhone)

  • Pierre Lebeaupin

    You know, I have been thinking about this for a slightly different case: when Apple introduced HTTP streaming (first in iPhoneOS 3.0, then Snow Leopard). Why did they introduce this technology instead of using existing streaming technologies like RTSP that they had always supported so far (with e.g. QT Streaming Server)? Sure, there’s the fact HTTP Streaming does not need special firewall support, but in my opinion it’s a side bonus, not the whole story. The whole story, in my opinion, is that it makes much easier to set up a live content “streaming” server. It’s simple: no one can reasonably set up a RTSP server on its home connection (usually horrible upload bandwidth and ISP terms that prevent it anyway), and installing one on a remote host requires special hosting that allows you to install any software on the server, which is an expensive proposition; and at any rate this is a technically complicated endeavor; so it’s both technically and financially challenging for individuals or small entities. So the RTSP servers that exist tend to be controlled by big content providers who are stringy with they RTPS “channels”.

    Any parallels? See where I’m going?

    With HTTP streaming, while you do have some non-trivial setup on the recording side (camera + encoder + stream segmenter software), the complexity is entirely on the local side and from there the result “just” needs to be sent as it is recorded to regular HTTP hosting (which of course you’ve made sure has sufficient bandwidth to serve the connections you’ll get). While one could make a permanent TV channel with this tech, this strikes me as so last century, instead I think it will be more for event-like things, for instance an indie band could record and broadcast its concerts- live. I think it has the potential to generate a revolution similar to the “radio libres” (a movement in France in the 70s-80s similar to that of LPFM broadcasting in the US).

    • http://www.tnl.net/blog/ Tristan Louis

      Pierre,

      Brilliant line of thought. I hadn’t considered the http streaming but your analysis makes total sense and seems to tie into the idea of broadcasting from the iPhone. One could easily charging for some “live report from the scene” for example….

  • Ryan Gray

    Uh, the 13″ Macbook is already 1280×800, so full screen 720p is not a problem. 720p content in another window is where the scrollbars come in. Does iTunes LP have a full screen mode?

    • http://www.tnl.net/blog/ Tristan Louis

      I think it does but I need to double check.

    • http://www.tnl.net/blog/ Tristan Louis

      Ryan,

      Thanks for mentioning that. You know, I had totally missed that. I just checked the resolution on my macbook and you’re right. I think iTunes LP can go full screen ( wasn’t that part of the demo during its introduction?) but will have to double check.

  • http://wordskill.com donnacha | WordSkill

    I agree with Michael that the new AppleTV will be the tablet – when they introduce it in February, it will be considerably more expensive than competing netbooks, so, Apple will be working hard to counter the inevitable meme that you are paying hundreds of dollars extra merely for the Apple brand. To do this, they need to entirely merge the AppleTV line into the tablet, to give at least one clear example of a known value above and beyond what the netbooks can offer, notionally justifying $229 of the extra cost.

    Michael suggestion of an Airport like device that you stick into the back of your TV is also bang on, although this will, of course, cost an extra $50.

  • A.T.

    Sorry to say this, but apparently you have no idea what is going on regarding iTunes or online publishing in general. Almost every single artist on Youtube, with even a small following is already publishing to most of the available online stores (not only iTunes) through services like http://www.tunecore.com/

    And guess what, they don’t pay 30% commission, but $0.99/track

    And iPhoto, iMovie or iWeb are great tools to create content you want to share with your family and frieds, but not for things you want to sell, that should be pretty obvious, there is no indication what so ever, that Apple intended otherwise.

    I have no Idea where you are going with that idea that video editing is build into the OS. Even if it was, you can only clip the beginning or the ending, how useful is that for content producers who want to be payed for that content.

    Whatever, you build your ideas on wrong assumptions and make up things as you go. Alas, kudos for getting featured on DF for this BS.

    • http://www.tnl.net/blog/ Tristan Louis

      A.T.,

      Thanks for the comment,

      True, tools like Tunecore are indeed part of the equation in today’s world but what would happen if Apple decided to disable access to the iTunes store from it? What if iTunes Connect were the only way to get onto iTunes? Would artists then abandon Apple?

      iPhoto and iMovie are indeed consumer tools but I’m sure that they could be an entry. There’s a lot of consumer generated content out there that, for one reason or another, does not necessarily need high production value. So your assumption is based on the concept that Apple would need to make many changes to “professionalize” those tools, which I suspect is a flawed assumption.

      As far as video editing built into the OS, if the core separation of tracks, frames, etc… could be easily access through some of the QT API, some new tools could emerge. Not sure of what but my gut tells me that directionally, it might work. And direct publishing from the OS might allow someone to use any professional tool and publish to store with a single click.

      You have the right to feel my assumptions are incorrect and you are right that I’m projecting based on those assumption but that’s what prognostication or forecasting is about.

  • http://jayrobinson.org/ Jay Robinson

    Negative, the iTunes LP cannot go full-screen… yet.

  • Hamranhansenhansen

    Apple had been around since 1977 and inspires great product loyalty. There are many 40 Mac users. The idea that Apple is a turn of the century phenomenon is completely wrong. During the 80’s the Mac was the only interesting computer and definitely the only creative one. During the 90’s it was still the only sensible choice. Most of the music from the late 80’s and the 90’s was made on a Mac in some way. The Web was invented in 1990 on a NeXT cube by a guy who is well over 40 now.

    Young whippersnappers, etc.

    • http://www.tnl.net/blog/ Tristan Louis

      Hamranhansenhansen,

      As the former owner of a Sinclair zx81, I would beg to differ on the idea that the Mac was the only interesting computer in the 80s. I also believe that the Amstrad line in Europe and the Commodore 64 were interesting machines :)

      As far as music, you’re inherently wrong. Most of the music from the late 80s didn’t involve the mac.

      And Tim Berners-Lee did indeed invent the web a while back but I think it was around 1991, if memory serves me right (I administered sunsite.unc.edu, which we launched in 1993 and was one of the first 25 sites on the web)

      However, while what you point out is interesting, what does it have to do with the discussion at hand?

  • Nathan

    Tristan,

    I think Hamranhansenhansen was taking exception to your statement that the “stereotypical Apple customer” was under 40.

    The reality, I believe, is that the bulk of music consumption is by teens to 20-somethings (that period when they have a lot of time & energy, some spending money, and not yet saddled with career and family). This is not specific to Apple or the iTunes store. As an older music appreciater myself, I also believe that the over-40 crowd is a fairly wide tail, but it doesn’t wag the dog.

    Thanks for the insightful & thought-provoking analysis. It should be fun to see where this all goes. I’d like my appletv to be more useful.

    Cheers,
    Nathan.

  • http://www.tnl.net/blog/ Tristan Louis

    Nathan,

    I’m not yet over-40 (getting pretty darned close though) but the reality is that most of the new technologies are aimed at the sub-30s crowd, whether it is in music or in the rest of the consumer electronic space. We can wish it otherwise and it’s true that there are MANY customers over 30 but it appears that the primary concern of electronics manufacturers are to ensure support in this sub-30s crowd.

    Decrying that reality does not make it go away, as you rightly point out :)

  • http://www.icebergcreative.com Kurt Trew

    I think that Apple is in a prime position to be able to offer consumers a gateway to a multitude of media because of its experience in digital publishing. I also think that early next year Apple will be forced to reconsider the name, iTunes. It’s still half relevant, but with the introduction of in recent years of films/movies, spoken word, e-comic distribution (via the iTunes LP, podcast etc., the ‘Tunes’ part of the name will have to change to truly reflect the broad offerings that the company will be able to offer. I wrote about this in my graphic design blog.

    I also think that the Apple TV and the Mac Mini would form the perfect merger. A ‘casual’ computer that could offer basic functionality as a home computer, but would excel at functions with regards to entertainment would give Apple a real way in to the Media Centre market.

    • http://www.tnl.net/blog/ Tristan Louis

      Kurt,

      I suspect that iTunes will remain the name going forward, much as we have stores like “Tower Records” still in existence. And I, like you, suspect that the future for the mac mini is as a media center type of PC, something I initially talked about almost 5 years ago. Since then, though, I’ve come to think that Steve Jobs does not want to mix the entertainment experience with the computing one so the mini is a bit of an odd bird these days…