Blaming Steve

May you live in interesting times. Naughty Steve tells the pop execes what’s wrong, and some are steaming. The probleme is. Steve Job’s arguments are rather flawless. And his contrarians sometime have to hide their real feelings behind the officialy rigid copororate points of view.

Jobs argument goes like this:
– The iPod plays music. The majors only want them to sell restricted music. They have a rather convincing 70% market share. So Apple offers DRM.
– Consumers don’t like restricted music that much. So they want to rip their CDs (In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves) and put them on their iPods. So Apples offers MP3.
By popular vote, consumers are filling up their iPods with unrestricted stuff (just 3% of the music listened to on iPods is bought at iTunes). Voilá: Forget about the DRM-thingy as the phantastic lock-in of the Apple iPod customer.

So why is Apple the undisputed leader in music download sales. And making gazillions with their shiny little iPods? Other people are selling downloads, too. As other companies built cutesy music players.
Music has always been a software/hardware business. That’s why Sony still owns a major part of a major label. The old thinking went like this: Own the software (A.K.A. music), push your hardware (your real money maker). Unfortunately, the walls of this fortress made out of love, money and eternal happiness crumbled a couple of years ago. The dematerialization of music (ooops, there goes the CD) lowers the barriers of entry into the music player market. Step into any electronics discounter, and you’ll find USB-sticks with head phones attached. Because technically speaking, all you need for a music player is storage and some cheapo computing power.
But now comes to the tricky part. The user interfaces. Yes, interfaces. Because you need two. One for the player (if it’s not just a sub standard iPod shuffle-like music stick). And one for the PC, which feeds/syncs with your player.
Ever tried Sony Connect? Do you think Windows Media Player is a masterpiece of usability? Here we go. iTunes is far from perfect. But it’s holy trinity of player, PC and managing software seems refined enough to make consumers stay. Of course, the brand isn’t that bad, either.

But is this a lock in? Probably not. Let’s have a look at the German market. The download market leader seems to be Deutsche Telekom’s musicload. Well, tons of tv advertising should have at least some effect. Now let’s look at the portable music player market. In 2006, 22% of all households now do own a portable MP3 player (up from 14% in 2005). High penetration you’ll find in the higher income bracket. Lower income brackets are finally slowly taking on.
This means: the early adopters are in Apple’s core market. The downscaling already starts. And with virtually all mobile handsets becoming equipped with removable storage and MP3 players, the scene will change dramatically anyway (Hello iPhone).
But let’s come back to the Jobesian argumentation. His point is clear and simple: we don’t want or need no steenkin’ DRM. And you guys just think you do. And why is this all coming up? It happened at Midem. Some industry execs couldn’t get stopped talking about DRM. Some people couldn’t get stopped talking about execs talking about DRM.
And with <a href="Midem“>The NY Times / Herald Tribune jumping in, the whole thing started to become really public. Because, as stated before: the public doesn’t like DRM either.

10 thoughts on “Blaming Steve”

  1. I think Steve has to think a little bigger because the public doesn’t like closed systems (appleTV, iphone) either.

  2. Actually the public doesn’t care a bit how closed or open any given system might be: one gazillion widoze users can’t err.

  3. I seriously doubt that their ultimate reason for switching has been: geee, AOL is kinda OK, but I prefer to go online using an open system …

  4. Well ok but the end user isn’t the main problem after all. I think it’s the lack of third party support that’s the problem.
    Windows popularity is due to the aviable third party applications. The iPod plays mp3’s so it’s open to anybody.
    But just cingular and no third party developer allowed on the iPhone. And everything on appleTV has to go through iTunes. These are very hostile environments for third parties.

  5. iTunes isn’t that hostile, at least not to content providers. Look at stuff like the podcast integration.

    The iPhone? Good question. I guess it’s a hoax anyway 😉 Seriously, I haven’t got the slightest idea if e.g. Java apps or other goodies would run on it. But I expect at least someting like a microSafari. So at least any web based app whould do OK.

  6. Well I don’t like iTunes playing video that’s probably the main reason for my distaste;-) Second comes the crippled podcast listings. The iPhone stands no chance to live up to the promises.
    But open vs. closed systems will remain the endless battle. appleTV is just one end of the pipe.
    The other end is how do you feed the internet with moving images ? DRMed TV content (appleTV)? Streams in subpackets and walled gardens i.e. (joost/venice project)? Or start over and make the two-tier internet a reality (T-Home)?
    Well my wish would be an open architecture just with competition around aggregation and monetation of content not on delivery.

  7. My wish would be an open architecture with competition in aggregation and monetization of content AND competition on delivery.
    But I guess we’re pretty much on the same track here anyway.

  8. That’s fine as long as delivery isn’t used to make competition in aggregation and monetization none existent.
    But well we are on the same track 😉

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