Will Apple Dominate the TV and Movie Industry?
Yesterday, I looked into how the modular by design approach impacted the music business. Today, I’m examining how music stores are selling tracks. Much has been made recently of the battle between Apple and Real Networks. After their attempt to partner up with Apple were rebuffed, Real Networks introduced a new product called Harmony, which allowed songs bought in the RealPlayer music store to be played on an iPod. Of course, Apple was shocked and threatened lawsuit. In a way, the reaction by Apple was to be expected as they were trying to create a new bundle around the online music business. Their model is not one of album sales but one of an integrated media package that includes both a device (the iPod) and a service (the iTunes music store). This contention is encapsulated in the way they present their offering on the Apple site. The tab at the top of their pages clearly states “iPod + iTunes” and the company sees them as part of the same offering. By introducing a different way to buy and manage music on the iPod, Real Networks attacked the heart of Apple music strategy, unbundling the device from the service. While Apple…Read More
Yesterday, I highlighted the modular by design approach and what modules are. Today, we delve in, looking at the first industry to get impacted: the music industry. When Napster introduced the concept of sharing songs, it was not so much the idea of sharing that was wreaking havoc on the music industry; it was the fact that albums were now being sliced and diced. Traditionally, the music industry has been organizing around the concept of album sales. When developing a new music album (which is only a compilation of several music tracks,) the music industry decided to bundle some good songs, along with some so-so and sometimes some bad ones. The idea is that they would promote a few songs in the media and use those as a way to sell albums. Where the economic breakdown happens is that not all songs have the same value. As a result, the idea that a hit song is worth the same amount as a B-side falls apart. So if you take the current album-related economics model, you end up with a product of 10-15 tracks, which retails for somewhere between 15 and 20 dollars. Based on that concept, one can argue that…Read More
A new survey just highlighted that three quarters of teens feel that file sharing should be legal. This pretty much caps any chance for the music industry to survive under their current model. The issue here is that if kids are perceiving file sharing as something that should be legal, they will probably not grow out of it. Half of the teens that were polled had downloaded free music and gave an interesting set of reasons: Those who download music but have never paid for a download say they download because: They only like one or two songs on a CD (59%); They want to get music quickly (48%); They believe that music is too expensive to buy (46%); They want to get music for free (44%); They want songs that are not available for sale (40%); And they believe that music should be shared (38%). There is hope though. If you look at those stats, stores like the Apple iTunes Music Store or the new Napster can satisfy over 50 percent of the public. The third point, however, shows issues relating to pricing. Obviously, the Internet has had an impact here as kids are probably more aware than their…Read More
Back when they came out, I said that tools like Tivo and Replay could change the face of television watching. A couple of years ago, I assumed that game boxes would be the new home media center. What I missed, though, was the end run that Tivo was doing around the game companies. With yesterday’s announcement that they would offer connectivity to computer platform, Tivo is placing itself square in the middle of the convergence world. Their strategy is simple: focus on the core engine and use the PC as a storage area. It is braindead simple logic. The Tivo box comes with a big hard drive but it is mostly filled with TV programming. Alternately, the box does not need to provide web surfing as attempts by companies like AOL and Microsoft have failed in that space, probably bringing on the realization that most people don’t want to surf on their television sets. Thus, Tivo leaves the download of music to computers for now. The reason I am saying for now is that I expect them to eventually offer a more widespread network connectivity set in the future. However, they realize that most Tivo users are probably already computer…Read More
There’s an interesting Michael Wolff piece in New York about the declining value of content. (Disclaimer: I used to work for Michael in the early 90s) While I generally agree with the concept that content is becoming more widespread and that there is an increase in the amount of content being produced, I fundamentally disagree with his assumption that people do not pay for content. If that were truly the case, where would box-office revenues go? What about video and DVD rentals? His pointing out the fact that changes in behavior show that most people will steal music and movie content on the Internet is largely due to the fact that there are no clear alternatives. Attempts to offer a crippled service like the new Napster or Pressplay are not enough (After all, if I pay for a service, why does the stuff I downloaded expire). Give us an all you can eat legal buffet at a price point that does not gouge us and we will come. Or start paying the artists and your case will be stronger when you tell us that we are starving them. Right now, many people pay for cable TV. Basic price gives you…Read More
With Linux becoming a strong alternative to Microsoft’s operating system, some members of the open source community are setting their sights on a new target: the music industry. The group has introduced a new sound format called Ogg Vorbis, which promises to deliver better sound quality or smaller digital music files than the popular MP3 file format. Ogg Vorbis is a fully open, non-proprietary, patent-and-royalty-free, general-purpose compressed audio format for high quality (44.1-48.0kHz, 16+ bit, polyphonic) audio and music at fixed and variable bitrates from 16 to 128 kbps per channel according to a statement on the official Ogg Vorbis site. MP3 was designed by committees so it ended up with a bunch of useless junk in it says Jack Moffitt, project manager on Ogg Vorbis. Because we designed Vorbis from the ground up, we have streamlined a lot of the technology and created better algorithms for encoding and decoding. The new format, which uses the extension .OGG, was developed as an alternative to MP3 and already has a long history. Seven years ago, Chris Montgomery, now one of the leaders on the Ogg Vorbis project, wanted to burn his CD collection to his computer. However, the hard drive he…Read More