Jobs memo
http://www.apple.com/hotnews/thoughtsonmusic/
Have to tip my hat to Jobs...but not for the reasons you're thinking. Many will applaud him for leading the way, for being against DRM, etc... but that's not really the point.
Strategically, he shows maturity in realizing that DRM hasn't been that great an asset, and that the iTunes Music Store hasn't been that successful on a per ipod basis (see posts below). More importantly he is bowing to the changing winds in the industry.
"Some have argued that once a consumer purchases a body of music from one of the proprietary music stores, they are forever locked into only using music players from that one company. Or, if they buy a specific player, they are locked into buying music only from that company’s music store. Is this true? Let’s look at the data for iPods and the iTunes store – they are the industry’s most popular products and we have accurate data for them. Through the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store. On average, that’s 22 songs purchased from the iTunes store for each iPod ever sold."
Not every business leader that can come to this kind of realization and proactively abandon a key part of their strategy. More on this later.
It's also nice to be Steve, who as the sole leader of the company can speak as frankly as he does here.
12 Comments:
I notice that his comment is specific to music, with no mention of video. In the run-up to providing the TV replacement scenario, I think video DRM is more interesting than music DRM.
Good point. Music piracy is so bad that content owners are getting flexible. It will be a while (if ever) until the video content guys get there.
The best case scenaro I can think of is if DRM was moved to the back-end where it still can be policed but doesn't touch the consumer. What I am talking about is content filtering at the ISP level and new registration requirements when offering downloadable content. ISPs would only allow content types from registered websites. Of course, this is a weak solution that won't eliminate at home/campus piracy. But at least the internet couldn't be used as a transport mechanism as it is today. Its too easy to setup a temporary web/ftp site to enable mass piracy. No more emailing Music/Video files. In the scenaro I propose, you have to use a registered sharing site, perhpas SoapBox or YouTube. And those site owners need to pay for policing and enable law enforcement remove unauthorized content.
22songs/ipod...how can Apple make any money? hardware alone? This would seem to indicate like you suggested before that iPod users stop purchasing music after 3-4 months. Thats no business, its a fad.
Johncz,
iPod users don't stop purchasing music after 3-4 months. They just get it somewhere other than the iTunes store. The iPod owners I know buy a lot more music than they did before they bought their iPods. I know I do. I just buy it on CD and rip it or buy it from stores like eMusic that don't do DRM.
And in fact Apple's music-related income is mostly from the hardware they sell; they make relatively little from selling songs on the iTunes store.
pattismithrocks, I'll take your word for it. But still 22/ipod is pathetic compared to the # of CDs I use to purchase. I'd be curious how many books and movies per iPod they do sell.
As of late, my music appetite is less than it use to be. I don't know, things like Paris Hilton and American Idle have cheapened music.
For me, Zune's value is its utility in sharing home videos and photos with friends/family. If Zune ever gets truly integrated into Media Center and movies/audio books become available thru MarketPlace..i'll be a real Zune junkie.
Johncz,
The existence of Paris Hilton and American Idol have absolutely nothting to do with my enjoying or not enjoying all of the amazing indie music out there. Yeah, there's a lot of crap on U.S. radio, but so what. Just do what I do; don't listen to it. You don't have to look very far to find some great stuff out there.
I have 20 albums on my "save" list on eMusic, so I always look forward to the day each month when my downloads renew so I can go out and get some cool new music.
Sorry to hear you've lost interests.
The average song sold per iPod in countries with iTunes Store is higher than 22.
90 million iPods sold worldwide, 2 billions songs in 22 countries.
Unlike other music stores, Apple do make money on iTunes Store and has the 80% of the market.
off topic, I know, but I'd like to know why the Zune software doesn't install on machines not connected to the internet. My sync computer's winsock ports became corrupted (long story), and it's still running v 1.05 of Zune. I'd like to update it to 1.2, so I downloaded the installer file and copied it over, only to find that I had to be connected to the net. What gives?
So much for lock-in. If the average iPod user has that few songs, he/she is hardly "locked in" to the iPod for that measely amount of change.
Seriously, Jobs is coming out against DRM because it is GOOD for subscription music...and he doesn't/can't really afford to/ offer subscriptions...
DRM does not "confer" rights; it "enforces" rights...thus the only *real* value of DRM-less music is the lack of enforcement (think about that for a minute).
You cannot offer DRM-less subcription music (basically by definition, if you see what I mean)...
Basically, Jobs is trying to tell the music industry that they will make more money with $1 downloads (and massive theft) than by allowing subcription services to become mainstream.
Cost to possess and listen to 3,000 subscription tracks on a ZunePass for 1 YEAR: 6 cents/each ($180)...
Jobs is trying to walk a razorblade by offering to open up iTunes in return for maximizing his position as the 80 (90) percent marketshare in the hardware segment.
Once the value proposition of a ZunePass is explained to the iPod carrying teen/pre-teen market, Apple's ride is over...
Where to start?
1. According to SoundScan, the source for industry sales data, iTunes is the fourth leading seller of music in the United States (their methodolgy is 1 album=10 songs). Behind only Walmart, Target, and Best Buy and ahead of Amazon. iTunes is not only a big fish in a small pond (digital downloads) but also a pretty big fish in a big pond (US music sells).
2. The number of songs per iPod is meaningless. Some of those iPods are replacements and others are used by the same family -- you can transfer songs to an unlimited number of iPods. Also there have to be some number of people who don't own iPods who are buying music and burning them to CD's -- I did this for about a year and a half.
3. "Registration requirements for downloadable content" where the ISP polices it? Are you serious.
4. "Once the value proposition of a ZunePass is explained to the iPod carrying teen/pre-teen market, Apple's ride is over..."
Two issues with that statement. First the average preteen doesn't buy $180 worth a music a year. They listen to the same 60-80 new songs that the average top 40 radio station plays per year. Second issue, if a user cared about subscription services, what makes you think they would get a Zune instead of the dozens of much better PlaysForSure devices that work with multiple stores? Even worse, The Zune works with none of the online video stores such as Walmart and Best Buy that use Microsoft's own DRM.
Post a Comment
<< Home