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OK, so Amazon might have guessed that launching a one-day sale of Lady Gaga’s latest album for just 99 cents –$11 less than iTunes — might provoke millions of rabid fans to swamp its online music store. It has only itself to blame for its servers crashing yesterday and royally pissing off said fans, some of whom loudly told the press they won’t come back.
But that’s not the real news. Here’s the real news – or, shall we say, the data points: .
- If you price music reasonably, people won’t bother to pirate it;
- iTunes’ near monopoly on legal digital downloads will evaporate the moment someone comes along with a more attractive model;
- Streaming music from the cloud will become a huge factor in music industry sales over the next year or so;
- You don’t have to make money on digital music sales to drive your overall business to profit.
I use the term “data points” because none of my points above will surprise anyone who’s been following digital music sales over the last few years, least of all the music executives who mule-headedly continue to tie the industry’s fortunes to CD sales and $12-an-album digital downloads in the face of all countervailing evidence.
Why has the RIAA’s countless suits against pirates had virtually no impact on the “infringement” of music by non-payers? Because it’s not a moral or legal issue in the minds of most people. It’s a supply-and-demand issue. Give the public a better alternative, and they’ll fly to it in a heartbeat. That’s point 1.
Those of us who do try to do the right thing by buying music on iTunes — and try to force our children to do the same — do so with gritted teeth, completely aware that most people could care less. Give us an alternative and we, too, will fly to it in a heartbeat. That’s point 2.
Point 3 is self-evident. Streaming from the cloud has arrived.
Finally, Amazon clearly didn’t do this deal because it wanted to make money — not when Interscope presumably charged Amazon about $7 for each Lady Gaga album Amazon sold. It probably didn’t even primarily do the promotion because, as some suggested, it wanted to get a jump on Apple’s own expected launch of a music cloud service over the next month or so.
Why then? Well, isn’t it possible that if millions of people think Amazon is a cool place to download music, they’re going to buy other stuff, too –say, iPhones, iPods, iPads, cell phones, computers and other stuff to play all that great music on? Does Apple make most of its money from iTunes or from devices that support it?
At some point, some people decided they’d better eat the costs of their mule herd and invest in tractors to haul stuff if they wanted to survive. Which side of history is the music industry on?
Whether or not the Nintendo 3DS takes off, it represents a seminal moment for 3D. The game player — rolled out for the U.S. market at the Game Developer’s Conference in San Francisco today — is the first mass market hand-held device that shows 3D images without glasses. A swarm of other 3D devices, mostly phones, is expected to hit the market over the next few years.
Besides 3D games, the device will also be able to play 3D trailers, starting with The Green Lantern. This summer, you’ll be able to stream Netflix movies and TV shows — although whether in 3D or not wasn’t immediately clear. The 3DS goes on sale in the U.S. on March 27.
Curiously, 3D without glasses — still considered years away for movies and television — is much easier to achieve with mobile devices. Traditionally, the lenses and mirrors required to create the illusion of 3D have only worked on large screens if the user stays at a fixed point from the image; move a bit in either direction, or add additional viewers, and the effect is lost. It’s much easier to stay in a fixed position for a tiny mobile screen, making 3D without glasses much more practical.
Although it’s revolutionary, it’s not clear that the 3DS will dominate the market. For one thing, it’s expensive: at $250, it’s as much as 60% more expensive than Nintendo’s last portable release. And a new breed of smartphones capable of 3D is also in the works, making the value proposition for parents — who are shelling out hundreds for kids’ phones that already play games — much less clear.
Since Apple tends to be the smartphone trend-setter, here’s some of the more interesting speculation (most gleaned from Engadget and ReadWriteWeb) about what next summer’s roll-out of iPhone 5 will feature — and competitors will rush to duplicate.
- iTunes Moves to the Cloud. With last April’s acquisition of now-defunct streaming music service Lala.com, Apple showed that it thinks subscription or ad-supported music services have a future. Given that most people still steal, rather than buy, the music they play on their iPhones and iPods, a cloud-based iTunes service would be a logical way to rope in many of those people. Rhapsody, Napster and Spotify have proven there’s a market for such services; but they don’t have Apple’s ability to create mass appeal.
iPhone5 Spoof from BizarroComic.Blogspot.com
- Facial Recognition. I have facial recognition software on my Toshiba laptop, and it sucks. Apple’s acquisition in September of facial recognition software concern Polar Rose suggests that it’s thinking about adding that capability to computers and devices, ReadWriteWeb speculates. If such software actually worked, you’d have something potentially a lot more effective than lock codes.
- Mobile Payments. Apple has filed patents for a mobile payments service as well as terms like iPay, iBuy and iCoupons, leading RWW to speculate that the iPhone 5 will ship with a chip enabling users to use their cell phones as digital cash. The idea is hardly new — Google and other mobile players have their own mobile wallet initiatives — but, as always, Apple’s moves carry particular clout.
- Digital Butler? Apple has envisioned a future of people speaking directly to machines for decades; it once released a video simulating a user doing just that. Its purchase of an SRI offshoot called Siri last April suggests to RWW that it’s planning to roll out a service allowing consumers to use use their voices or type to get answers to simple questions like: Where’s the closest Chinese restaurant? Or how do I get to the corner of La Cienega and Olympic? Google, of course, is well on its way with voice-based mobile Google services, but it’s clunky and inaccurate.
If nothing else, all this hopefully is a comforting reminder that innovation isn’t dead in Steve Jobs’ absence.
Sprint’s new Kyocera Echo Dual-Screen smartphone is designed to solve a fundamental problem that’s been around as long as cell phones: How do you fit something in your pants pocket that truly has all the capabilities of your computer? The iPad doesn’t fill the bill: even if you add talk functions, it won’t fit in your pocket; and you feel like an idiot if you held it up to your ear (the main criticism of Dell’s Streak tablet/phone). On the other hand, the iPhone doesn’t cut it either. No one would mistake that small screen and cramped real estate for their computer.
Enter the Echo, the first phone that truly takes on the computer-in-your-pocket dream. Rolled out with great fanfare yesterday in New York, the Echo has dual 3.5″ touch screens, separated by a patent-pending pivot. Users can either use the two screens together as a 7 inch tablet, or separately, to run two applications similtaneously.
Plenty of immediate problems suggest themselves: will users put up with a tablet that has a big crack in the middle? Will shorter battery life (the Echo is shipped with an extra) make the phone impractical? Does the thing actually work? (Reviewers had the Echo only long enough for a few minutes apiece.)
But as a groundbreaking effort, the Echo is a winner. It points to yet another new category of devices that fit in your pocket, with screens or other features that effectively make them much bigger. You can imagine phones with screens that slide out or fold out in pieces; projectors that enable users to view (and type) on table tops; or wirelessly handshake with any available screen. In fact, you don’t have to imagine it. All of it will be here soon enough.
Technically, BlackBerry is still the world smartphone leader, with some 40% of the market. But for all practical purposes, the new race for dominance is between iPhone and Android, which are neck-to-neck with 20-something shares. If you doubt that, look at the run on Verizon iPhones today: Verizon sold its entire stock in a pre-sale before the sun even came up. BlackBerry’s major advantage — its superior texting capabilities — are rapidly becoming irrelevant in a world where predictive texting, Swype and other emerging text input methods are making touch-screens the equals of QWRTY keyboards. How long until BlackBerry becomes the next Palm? Or at least the next Nokia?
Apple now faces an interesting dilemma in the U.S.: stick with Verizon and retain the patina of exclusivity that made iPhones such hot items on AT&T; or blast the iPhone to as many carriers as possible to win the numbers game over Android (as in Europe). For now, conventional wisdom has it taking the first course, as it worked superbly before and Steve Jobs isn’t around to rock the strategic boat.
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