Thursday, September 28, 2006

Digital Music Democracy

I wouldn't call it democracy, quite like the Digital Music Weblog does. Apparently, there hasn't been a very good system for creating top-40 lists or top-20 lists for singles, since most music is bought in album form. According to a BBC article,

"The current chart is actually fairly arbitrary," says Top 40 analyst James Masterton, who writes for Yahoo Music.

"A number of songs that are selling strongly have been removed."

For example, Nelly Furtado's hit song Maneater should still be in the Top 40 this week - but, because the CD is no longer available in shops, the song has been dropped from the chart.

I don't think digital downloads are necessarily going to democratize best-seller lists, just because searchability and easier production don't really impact taste. There will always be a "short head," as Chris Anderson likes to put it, and a "long tail." But it will definitely allow lesser-known (or one-hit wonders) to rise to the top of those charts, simply because people are OK risking $1 on a song they might not like, rather than spend $15 on an entire album without much guarantee of quality. And, like BBC says, the top-40 will be much more accurate.

Lessig on Hybrid Economies

I really liked Larry Lessig's post on the multiple economies that we interact with. There's the traditional, "I work for money" economy (e.g. most people's jobs), and then the non-commercial, "I work because I want to" economy (e.g. Wikipedia). Regarding these two economies,

Having now seen the extraordinary value of this second economy, I think most would agree we need to think lots about how best to encourage it — what techniques are needed to call it into life, how is it sustained, what makes it flourish. I don’t think anyone knows exactly how to do it well. Those living in real second economy communities (such as Wikipedia) have a good intuition about it.

But a second and also extremely difficult problem is how, or whether, the economies can be linked. Is there a way to cross over from the commercial to second economy? Is there a way to manage a hybrid economy — one that tries to manage this link.

Though Lessig goes on to advocate new copyright standards as a solution for managing the "hybrid" economies, I think it's more of a cultural distinction. Many people in our society feel torn between doing what they need to do for survival (economy 1) and doing what they are passionate about for their life - this gap causes the second economy, which allows people to interact outside of their normal work life.

I think that the double-economy phenomenon is a temporary symptom of a drastic change in American culture. A new wave of college graduates feel entitled to do what they are passionate about in life - even white collar, well-paying jobs are no longer satisfying. Other people are forced into or stuck in jobs they don't care about - and have more opportunities to explore their interests outside (or during) work. The symptom will disappear when new business models emerge that allow people do follow their interests, rather than simply their wallet. Utopian and idealistic? Perhaps, but until this conflict gets resolved, we'll always have two distinct economies that will never become a hybrid.

Wednesday, September 27, 2006

Barenaked Ladies Prove Labels Aren't Necessary

I'm not going to say that I'm a big Barenaked Ladies fan. But I am a big fan of the ways they've gone about distributing their music:

  • They give away ProTools files via MySpace to let people make their own mixes
  • They don't use major labels for marketing/distribution
  • They own rights to their work
  • They sell much more than CD's - digital downloads (different versions), concert tickets, packed USB drives, licensing to TV etc.
And it's going pretty well for them, bringing as much as $5 of revenue per disc sold, which has brought nearly $1M to the band. This seems like a much more natural way to sell music - creating something and letting others do what they want with it. Music moves beyond something people sit and listen to, becoming something they can interact with and make better for themselves (and others). Art is not just in the eye/hear of the beholder - it's in the hands too. And that's where it's the most valuable.

Baby Toupee

I know it's off topic, but wasn't this an SNL sketch?

Thanks, Boing Boing...

Tuesday, September 26, 2006

Ellaine's Birthday Pubwalk

This is one of the reasons I like Google maps and open API's. Thanks pubwalk!

Transparent Spending

About a month ago, I posted praises for the Coburn-Obama bill, asking for a website that lets people see how the federal government spends money. Today it was signed! Bush says,

This bill is going to create a website that will list the federal government's grants and contracts. It's going to be a website that the average citizen can access and use. It will allow Americans to log onto the Internet just to see how your money is being spent. This bill will increase accountability and reduce incentives for wasteful spending.
I think that regardless of politics, this is something everyone can get behind. And more importantly, it democratizes democracy, giving all Americans easy-to-use tools to get more information. I can't wait to see what happens now that this info is public!

Open Facebook

I don't know why people complain about Facebook opening itself up to everyone - the more open, the better! Plus, like Zuck said on NPR - it's not like they're changing their privacy rules.

TechCrunch has this covered describing the new privacy features:

  • Block other users in specific networks from searching for his or her name.
  • Prevent people in those networks from messaging, poking and adding him or her as a friend.
  • Control whether his or her profile picture shows up in search results.

Wireless 2.0 - 4G or WiFi (or Both?)

Several articles have come through today about the next generation of wireless networking. The New York Times has great article about Samsung's 4G network, built to deliver 1 Gbps. GigaOm reports that UMA (Unlicensed Mobile Access) companies are partnering together to help devices transition between cellular and WiFi.

It seems silly to build so many networks. There's the power grid, the phone grid, the cable grid, a couple cellular grids, wireless/WiFi/WiMax grids, fiber-optic grids. The problem is that they're so expensive to build that companies want to milk revenues for as long as possible - even if it means limiting their own innovation.

This is why technology like UMA is so important, because it allows people to use their devices on many of these networks, consolidating them from the eyes of the consumer. Seamless transition will be important, not only for companies who don't want to abandon their older networks, but also for consumers who want as fast and universal access as possible without needing to switch devices/networks or own multiple devices to access them.

Monday, September 25, 2006

The Clash on Music Industry

In a recent interview with the Guardian, former Clash/Pink Floyd manager Peter Jenner stated:

The current record company model might well morph into that of venture capitalist licensors, working in partnership with artists to develop their businesses.
Grant Robertson at the Digital Music Weblog didn't like this, saying "You can help give down and out industry executives the chance to have that much needed eyelift... Each month you'll receive a letter from your industry executive, detailing his or her progress and exactly how your money has helped them maintain their lifestyle.

I'm not sure this is what Jenner is trying to say. What I would envision is people who know the music industry (especially as it's changed) inside and out can help bands that they like market themselves. It could look like artists like Beck or producers like Brian Eno, who have done an excellent job navigating the changing music world, reaching out to younger artists to help them by sharing experiences. Sure, the experienced guy is going to take a cut - but in the long run, everyone wins. At least, that's how successful VC's work.

Free Simpsons!

I truly hope that this site doesn't get to publicized - only a couple blogs have caught it so far (didn't realize anyone still watched rocketboom). Anyway, there's this cool site that just plays every Simpsons episode - for free!

I'm sure it won't last - it can't be legal. But it does have a lot going for it:

  • Simple to use & navigate
  • Video quality is poor (less likely to watch on actual TV, less likely to anger Fox)
  • Easy to link to individual episodes
Hopefully studios/networks will look to what makes this sort of thing popular (beyond free), and can start using those principles to make on-demand content available to consumers. Maybe if each show had its own simple site that was easy to find, navigate, and link to?

Sunday, September 24, 2006

[Games] On Demand

Retrieving content on demand/online is not a new concept by any means. From news (web sites), music (Napster -> iTunes/Rhapsody), and video (Comcast, YouTube), it would be hard to argue that the distribution isn't revolutionary. There's a great article on GigaOm about Video Games on demand that reminded me about something I've thinking about for a while.

I was talking with a friend of mine the other day about the Blu-Ray/HD-DVD battle. We quickly agreed with each other that:

  1. Fighting over standards benefits nobody
  2. Neither of us will buy a player until a "winner" emerges
  3. 3) By the time (2) happens, the technology will be obsolete.
The only benefit we could really find for the medium at all, in fact, was for storing massive amounts of data that needed to be physically delivered to someone else - not for watching movies. To complicate this even further, it seems like there is a growing resentment about physical goods like DVD's. There have been so many "new formats" that it's very difficult to talk someone into buying a new machine.

Hopefully most folks will wait out the current format war, which should probably go the way of SA-CD vs. DVD-CD. We'll buy all our movies online - and won't need to worry about which titles are available on what platform.

Friday, September 22, 2006

DRM - Why Do People Care?

Engadget's The Clicker has a nice essay on DRM today. And judging by the comments, many people feel very strongly about the issue. It's nothing new, but asks the question, "Where do people get their sense of entitlement with regard to content? At the end of the day if that's how content owners choose to sell it, isn't that their right? Isn't ours simply a choice of to buy or not to buy?"

It's a good point - copyright was created for a reason: to allow creators to sell their work. Under U.S. law, it's their choice to sell it, give it away, or Creative Commons-it. As consumers, it's our choice whether or not to buy, and laws of economics will govern their choices.

The laws of economics may or may not apply to digital content in the same way they do for tangible goods, as iTunes has found with their 99-cent pricing scheme. And there are lots of new business models emerging to handle the relatively new scenario where Marginal Costs of Production = 0.

In my opinion, we feel entitled to free access to anything where the MC = 0. As capitalists, many Americans dislike monopolies - which are the only entities that can price products above marginal costs. So by trading pirated content, consumers force the standard laws of economics. This doesn't just apply to content, but software (games, OS, etc.), a bus ride, parking, news, air at the gas station, or whatever other products exist where consumers understand that the marginal cost is essentially zero.

From the comments, however, it seems that most people dislike DRM not because it forces them to pay for music, but because it won't allow them to use it how they'd like. Maybe they're just not admitting they want to steal, but flexibility seems to be most important - so that you can listen to & manage music on any of their devices (which could rack up a lot of fixed costs for the consumer), or watch video content on things other than a computer (Tivo, etc.). Of course, Engadget commenter's are probably not a statistically balanced sample of the population!

Some of my favorite comments so far:

JAC @ Sep 22nd 2006 12:16PM

They were raping us with music CD prices and software prices before, now we have them by the balls, theyll still make loads of money, just not as much as before.

EdZ @ Sep 22nd 2006 12:17PM

They don't know they're paying the same as a CD for a file that may or may not play the next day, or at someone else's house, or on their portable player. But they'll pay anyway, because they don't know, and the seller isn't going to tell them. The buyer is agreeing to terms of which they are unaware of.

Ralph Anseus @ Sep 22nd 2006 12:23PM

You tell me. Did you pay to use the Pirate Bay logo?

Jerryg @ Sep 22nd 2006 12:27PM

The problem is that if I pay for content (music, movie, whatever) I should be able to play it, in my car, house, portable anywhere I want. I should be able to take my movie over to a friends house and watch it or take my music with me to a party and play it. If I get a new portable regardless of who makes the player, it should work it that to. Untill these things are adressed a merry pirate i shall be!

Matt @ Sep 22nd 2006 12:54PM

Let's assume that there are no grocery stores or fast food options, the owner of the overpriced gourmet restraunts have made sure of that. Then assume that you are not allowed to share a meal with any of your family or friends. Or maybe you can, but then you have to buy far more food than you really want or need including food that you don't like.

This is more comparable to the situation with digital content today. I would think that in this kind of situation, the moral qualms about not paying the restraunt owners would begin to decrease, significantly. You'd be lucky if people weren't rioting in the streets.

I'm not condoning piracy, but people are tired of the rules that the industry is forcing on them. They're tired of re-buying albums in new formats. They're tired of DRM'd files that won't play where they want them to. They're tired of having the rules dictated to them on how they can do things.

Amazon and Tivo - Unbox Boxed?

The TiVo blog this morning reports that Amazon may be distributing movies via the TiVo set top box. According to the Yahoo! report, however,

Shares of digital video recording pioneer TiVo Inc. gained in premarket trading Friday on a report it is in discussions with Inc. to create a feature that would allow consumers to automatically transfer downloaded movies to their set-top boxes.
These sorts of things always sound like a good idea up front - especially if Amazon would let you download the movies directly to your TiVo. But it sounds more like you would have to download a movie using Unbox and then transfer it to the TiVo. I tried Unbox out and wasn't impressed with the quality, selection, or overall experience when I hooked my laptop up to my HDTV. Neither was anyone else.

I don't think this will go anywhere (sorry, Zatz). I'll take a Netflix set-top instead, or a Mac iTV.

Thursday, September 21, 2006

Digital Content Pricing - Pay-For-Quality?

The Digital Music Weblog, which is quickly becoming one of my favorite blogs, noted today that the Philadelphia Orchestra has started to price discriminate for digital music, based on the quality of the recording.

  • Compressed versions of major works are sold for $5. Entire concerts sell for $10.
  • Lossless formats are sold for a premium.
  • Files do not come with any DRM.
I think that this is a great approach for marketing and selling music. Outside classical music though, fans are much less concerned with the sound quality of the file - so not too many people would be willing to pay a premium for lossless formats.

However, recording companies could distribute poor-quality (radio-quality?) tunes for free so people can really judge whether they like & listen to the music. Then, when they want something good to listen to on their iPod/car/etc., they can pay for the upgrade to higher quality songs. It could be a great way to generate some buzz!

Wednesday, September 20, 2006

Online Travel with

I'm not sure why I haven't seen much written about this great new site someone referred me to. Maybe I'm just behind the times, but is a great travel search site.

  • Simple intro page with helpful details. The calendar displays the next two months, since people often schedule travel a month ahead of time. Cities auto-complete so typing BOS will bring up Boston or Bossaso, Somalia.
  • Displays results as they are returned. This is a nice feature because it takes a while to search so many different sites.
  • Easy search modification. Sliders let you modify departure and arrival windows, with quick results displayed. This is a very quick, intuitive feature.
There are certainly some downsides - ads are everywhere, to the point of being pretty distracting. Search results are sometimes inconsistent. But overall, it's a very useful tool that I'll continue to use until someone tells me there's something better!

Tuesday, September 19, 2006

Music Publishing > Music Recording

The Digital Music Weblog has a good analysis of a USA Today article describing the new trends and economics of the music business. Apparently:

  1. The recording industry, dependent on album sales, is hurting (duh)
  2. The publishing industry, which makes money when songs are reused in games, TV, movies, commercials, etc., is doing really well (interesting)
  3. Publishers still aren't happy, going after lyrics and tabs sites that "rip" content.
No one will argue that the music industry is changing, and no one seems to agree how it will change. Grant Robertson says,
It's becoming clear that performance rights, touring and merchandise sales are the driving sector within the business. We're heading towards a model where it's less likely that touring will drive record sales, and instead the Internet can drive your band's touring success.
I think that music will become a collective, social experience. The content itself will be valuable, and consumers, films, and TV shows will always buy music (unless they're paid for product-placing music - I'm not really sure who pays who here). If a band can only make singles, people will only buy the singles. If a band can make an album (like Sgt. Peppers), people will buy the album.

The most valuable part of music, however, will become the performance. Especially now, when many music fans are sick of lip-syncing, well-marketed personalities, the true musicians will put on amazing shows that bring people together in a real-life setting. This experience is what makes people shell out over $100 for U2 tickets - and to see their favorite MySpace band in action.

I'm also struck by the fact that publishers want money for lyrics that are simply printed in their album covers. They should be distributed digitally alongside iTunes purchases!

MyBlogLog Fun Tools

I haven't seen much from many of my favorite blogs about this cool site called MyBlogLog (actually, I only heard about it from Praxis). It's a site that is similar to Feedburner or Technorati in that it tries to create a community of bloggers my offering cool tools - and they're all about the numbers. Feedburner gives people metrics on how many people subscribe to their blog. Technorati tells you how many blogs link to you.

MyBlogLog shows daily reports of the number of page views, where people come from to view the site, and what they click on. A couple things surprised me:

  • Just about everyone came from Google (as opposed to other search engines)
  • People on Google sometimes go through a couple pages of results
  • Just naming posts something close to what someone might search for could get you on Google's first page of results
I think MyBlogLog could be pretty successful because it's good for the small guys. If you're not in the Alexa Top 100(000), you're not going to get much help from Technorati. Feedburner's pretty limited, at least as far as its free service. But this one could do pretty well - especially if they can find incentives for people to participate in its community features.

FON's $5 Router - La Fonera

I've always liked FON. Any company that encourages people to share with others (and let them make money too, if they want) is a good one in my book. To make it even better, they're helping to build an ever-present wireless Internet by encouraging everyone to activate their hotspots.

By selling a $5 router, FON can encourage even customers to build out a base of more wireless access points, which really just benefits everybody. According to GigaOm, it will allow people to create two wireless channels - one public, and one private. This should ease folks over any security fears, and help the company get some critical mass. It might also help folks like me who don't need to buy a new FON-compatible router, but for $5 are happy to join in the fun.

And I'd be a Linus with it...

What About the West?

AWS is now over. The latest spectrum auction of wireless frequencies pulled $14 billion from wireless companies (for essentially the air), though the results were somewhat surprising. T-Mobile came out on top, buying about 50% more than any other carrier - even though their cellular footprint is much smaller (currently No. 4).

What surprised me most, however, was the geographic distribution of the wireless spectrum. According to GigaOm:

  1. Verizon Wireless was very active in Auction 66, securing 13 licenses in the Northeast, Southeast, Great Lakes, Mississippi Valley and Louisiana.
  2. T-Mobile was aggressive in acquiring spectrum licenses in the North East of US.
My question: where's the love for the West coast? I would think companies like these would love to roll out the latest and greatest to us early adopters first! Where else do execs tote their newest Treos and Blackberry's with pride? It seems to me that this is where ideas are made - so building your customer base here first should be the way to go.

Or maybe I'm just upset because I won't automatically get better service.

Friday, September 08, 2006

Internet vs. "Traditional" Media

Jerry Brito argues today over at TCS Daily that the Internet will cause the demise of "traditional" or mainstream media, citing social, technical, and economic forces:

Watching television is a passive activity. To be entertained, you don't have to do much more than turn on the TV and surf until something good comes up. If there were no channels to surf, only thousands of programs you could call up on demand, how would you know what to watch? Even if shows are available for download online, consumers appreciate the effortlessness of a boob tube with its preset package of a couple hundred channels.
This is quickly becoming VERY untrue. No one likes to channel surf - mainly because there is no filter to separate good content from the bad. Only word-of-mouth can help people decide what to watch. On the Internet, Netflix- and Digg-like recommendations will bring new programs to viewers' attention. Add time-shifting with TiVo to the mix, and channel surfing will go the way of the cassette tape.
Delivering high-quality live video over the public Internet to massive audiences is not yet technically feasible and may never be given the architecture of the Net. Moreover, Internet video streaming does not compare to the clarity and quality of a traditional television picture and it is also is very expensive to originate.
That's very shortsighted, especially given rapidly expanding fiber-optic networks across the world. Soon, there will be no difference between content delivered over traditional cable and IP - in fact, IP options will be able to provide much more HD content than what digital cable can provide today.

At some point, there are only so many hours a day that media and entertainment can fulfill. And if Internet-enabled options are more attractive than traditional television, it's going to take away from mainstream TV time.

Nothing Is "Private" on the Internet

After some discussion regarding good "Internet Names," I decided to do some quick google searches on myself. Not the usual first & last name, but also email aliases, AIM names, etc. I quickly found that everything I've ever posted online is very available to anyone. This included Amazon reviews, comments on notable blogs, and profiles on websites (like Cork' or

I started to wonder whether or not this bothered me. For one, anyone (employers, friends, enemies) could dig up lots of information about what I think and say - and potentially use it against me. What does this mean? Here's a top-5 for controlling your own comments and "privacy":

  1. Act like whatever you say/post will be published on the front page of the New York Times. This is an old rule-of-thumb ethics test that really applies to online contributions. Be prepared to have anyone and everyone view what you say, without it embarrassing you.
  2. Don't post anything in anger. It's very difficult to retract angry comments you make in real life. Doing so online can be at least as difficult, and you don't want to post anything you regret.
  3. Don't post anything under the influence. For similar reasons as number (2), it's important to have a sober mindset while posting something online. There should be a "PUI" rule stating that you can't Post Under the Influence.
  4. Select a good Internet name. If everything you do online is categorized under an alias that cannot be associated with your real name, then it's hard to map online comments to your online self. It's important to make sure that these are never associated with your real name (i.e. a single page doesn't list your AIM as funnyboy365 right next to your real name, Gilbert Androssi).
  5. Use good language. Nothing's worse than having examples of your poor writing all over the Internet. It's embarrassing, so be proud of what you put out there!
Nothing is private, except stuff like Credit Card numbers & banking - I'm very glad that didn't come up on Google! If you say something - anything - you should mean it and be prepared to defend it. So add content at your own risk!

Thursday, September 07, 2006

Just a Great Essay On TiVo and Cable Co's

From Engadget's The Clicker:

Make no mistake about it -- TiVo and cable are not friends. Cable views TiVo as not only a threat to its large rental revenue but also as endangering the billions of dollars they expect to come from add on services (PPV, music and DVD purchases, etc.). There is no way that they're going to open their arms and help the process. The best we can hope for is that shame, public perception, and the FCC will keep them close to honest. In the meantime, it's fun to watch them both pretend they're like BFF. It's a little like watching the Simple Life -- one, drunk with power, and the other doing its best to hold on to the spotlight.
See the whole post! It's good, but I don't necessarily agree with all of it. I love to see companies that are not direct competitors work well together. Cable's core business is really wires to homes, combined with distributing media content over the wires. Tivo's business is allowing customers to control their media as they wish. That's what people pay those companies for.

I do appreciate the FCC's role in promoting and enforcing cable card technology. But the cable companies need to realize how much value could be created just by working together - many people have upgraded their service for TiVo. More people will want more HD programming with TiVo series 3 - playing nice would be win-win-win for everyone.

T-Mobile Can Win By Opening Up

When I read Ars Technica's report about T-Mobile's upcoming cell-to-WiFi service, this stood out:

Early reports are that consumers will only be able to use the dual-mode phone service on their home WiFi networks at first. Our sources tell us that there appears to be no such limitation either with the phones or the T-Mobile At Home service. The dual-mode phones currently being tested are able to switch seamlessly between the cell network and any WiFi network that the user has access to, including nearly 8,000 T-Mobile HotSpots and secured wireless networks.
I keep forgetting that T-Mobile has WiFi hotspots in every Starbucks - and there are a lot of those. Especially in densely-populated cities like San Francisco, where there's a Starby's on every corner, T-Mobile isn't too far away from ubiquitous wireless coverage. That means that these WiFi/cellular devices could have all sorts of IP-enabled applications, and have enough access points to make them fairly useful (with cellular as a roaming backup for voice).

If T-Mobile opened up this technology to share with any device manufacturer/cellular provider, then lots of folks could take advantage of this - and pay T-Mobile for it.

Silicon Valley Gets Wireless 2.0

The New York Times and CrunchGear have reported some news that has made my day - bringing ever-present wireless Internet to the Silicon Valley, perhaps as soon as early-2007.

  • I.B.M and Cisco will create the infrastucture to build 1500 square miles of wireless coverage for 2.4 million residents.
  • Basic service will be free, faster service will cost a monthly fee.
  • Special equipment may be necessary to bring service into the home.
  • Cities are free to invite rival wireless carriers (e.g. Google/Earthlink in SF, Clearwire).
  • Providers may charge extra for VOIP calls.
This is great news for everyone who lives in the bay area. For most, DSL will become obsolete, as the wireless service will provide sufficient bandwidth to replace existing service. People will be able to access the service everywhere, not just in their own homes. Once nationalized, this can not only replace DSL, but cellular as well. I've called this Wireless 2.0.

I like that companies and governments across the country are seeing the value of ubiquitous Internet access, and are taking action upon themselves rather than waiting for Telco's to catch up. I can't wait until applications start to take advantage of this kind of functionality, reducing all of our dependencies on cell phones for mobile computing. Mobile versions of Google Maps and other localized services could actually start being useful once they're removed from the cellular world.

Amazon Unbox vs. Apple iMovie

The facts (rumors?):

  • Apple's Movie Download Service iMovie is expected to be announced on Sept 12.
  • iMovie should allow movie purchase for $10-15.
  • Amazon's Movie Service Unbox is expected to launch today, Sept 7.
  • Unbox should offer movie rentals at $4 and purchases for $15, as well as TV show purchases for $2.
  • Apple should offer Disney movies (including Miramax and Lion's Gate). Amazon gets just about everyone else: Warner Bros., Fox, Paramount, MGM, Lionsgate, Sony and Universal.
What I think:
iTunes clearly has the marketing advantage. They have a strong iTunes user base (understatement of the year) to offer the iMovie service to, and as rumor has it, a wide-screen video iPod is coming to show the movies on. Apple has proven that they can sell media downloads with sufficient protection and has users trained to do so via iTunes.

Amazon has an uphill battle to fight, but has one thing in their advantage: rentals. Though DVD sales has been strong, most people prefer to rent. Like I've said before, music is great to buy since people listen to it over and over. Movies are different because you don't - you're not going to watch anything hundreds of times. Being the first to actually offer Internet rentals will give Amazon an advantage over others like iTunes, or Netflix.

I'll try them both, and there are many other factors to consider like picture quality, audio quality, and DRM. But the next few months will be great for trying out new products - like Netflix's set top box and TiVo Series 3.

UPDATE: Zatz gives us a preliminary review of Unbox. I'll need to check it out this weekend.

Tuesday, September 05, 2006

OK GO at the VMA's

It's not often on a Tuesday night that I turn on the television and have MTV as the first channel I see. Even less likely that I feel the need for such a strong dose of pop culture that I watch what's currently on - the VMA's (video music awards). But tonight, prompted by my appreciation for the well-chosen Jack Black to host the show, I watched it.

The first hour or so was typical. But then Chris Brown came on stage to announce OK GO (who I was first exposed to by Stephen Colbert),

These next performers recently put the video on the web and within weeks, they had over like 3 million hits. But the budget was, maybe, bout $4.99.
I love what OK GO has been able to do. They have been one of the first artists or groups to propel themselves through the viral market to hit mainstream success, having a choice spot in the VMA's. They didn't need a major label or distributor. They didn't need a large production studio. They instead took advantage of democratized tools of production and distribution, posted their low-budget videos on YouTube, and let the fans do the rest of the work.

OK GO still needed talent to be able to do what they did. The music is catchy and fun, and the videos are great - Chris Anderson called it the best treadmill music video ever made, which is a huge understatement. What impresses me most is that they could do their Treadmill video live on MTV (posted on YouTube within minutes, shown below). Definite talent. And it speaks volumes for the crowd's ability to filter the signal from the noise.

There is a lot of junk out there, but it is very encouraging that everybody now has the tools to pick the winners without (old?) MTV culture decide for us.

Movie List for iTunes

CrunchGear has the first list of movies to appear on the new iTunes movie store. I'll certainly be trying this out, but Apple will have to prove excellent movie quality before I start going to buy rather than rent. Even high-quality streaming video really doesn't look great on a 50" TV.

From Walt Disney Pictures: James and the Giant Peach, Pocahontas, The Lion King, Aladdin, Chicken Little, Herbie: Fully Loaded, Sky High, Ice Princess, National Treasure, Pirates of the Caribbean: The Curse of the Black Pearl, The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.

From Disney/Pixar: Toy Story, Toy Story 2, Toy Story 3 (?), A Bug’s Life, Monsters Inc., Finding Nemo, The Incredibles, Cars.

From Miramax: Cold Mountain, The Hours, Chicago, Cinderella Man, Scary Movie 1,2,3 and 4.

From Touchstone Pictures: The Royal Tenenbaums, Pearl Harbor, The Sixth Sense (with Hollywood Pictures), Unbreakable, Gone in Sixty Seconds, Shanghai Noon, Deuce Bigalow Male Gigolo, The Hitchhiker’s Guide to the Galaxy, King Arthur, Hidalgo, Open Range, Signs, Reign of Fire.

Apart from Disney and Pixar, Lion’s Gate Entertainment will make the following, mostly horror, movies available: American Psycho, Dogma, Ghost Dog: The Way of the Samurai, Pi, Requiem for a Dream, Open Water, Dirty Dancing: Havana Nights, The Punisher, Fahrenheit 9/11, Crash, Alone in the Dark, Hostel, Saw 1 and 2.

Monday, September 04, 2006

iTunes Pricing

There's been more conversation over at the Digital Music Weblog about Apple's insistence on keep downloads fixed at 99 cents. Grant had made the audacious proclamation that supply and demand doesn't apply to digital music. It's certainly an interesting stance, and I certainly think Apple should hold on to the stance, though not for economic reasons. But it still isn't really true.

If I'm selling a song on iTunes, it costs me no more to sell the 1001st song than it does the 1000th. Same goes for the 10,001st, 100,001st and millionth +1 copy. That's what I mean when I say that supply and demand doesn't apply. I didn't have to build a larger distribution network for my millionth sale than I did my 100th, and if I only sold 101 copies, I didn't lose money by building a larger distribution network than I already had. I never had to lose in the act of guessing how large an audience I could build. And furthermore, the cost of doing that a second time is no greater than the cost of the first time, nor is it burdened with the debts of my first try.
It is certainly true that the marginal cost of selling songs in the digital world is completely flat (let's assume for argument that it's >0, so that this line of thinking holds up). And normally, in a perfect competitive world, Price = Marginal Cost. So, if the MC is the same for all songs, then it may follow that Price would hold constant at the same level.

But there are two other factors still at work here. The first is monopoly. Copyright holders for music have a monopoly on the music they sell. There's no true free market as long as there is copyright. Otherwise, MC really does equal 0 in the digital realm (see Napster), and the price would drop to zero.

The other factor is Willingness To Pay. If Person A has a WTP for the new Christina Aguilera track of $3.00, and Person B would only pay $0.50, then the record company (or iTunes) would want to sell Person A 1 copy rather than a copy of each to us at $0.50. So as long as the demand curve has a normal shape, at least for a particular track, meaning that the price for different songs in a perfect market would vary, since it would be a fairly obvious assumption that demand for some songs would be greater than demand for another.

Friday, September 01, 2006

Why Is Google Image Labeler Fun?

Google's trying to improve its search results for images. Since those folks know that computers can't really understand what is in an image, it's asking people to do it for them, taking crowdsourcing, to a new extreme. The Google Image Labeler site shows,

You'll be randomly paired with a partner who's online and using the feature. Over a 90-second period, you and your partner will be shown the same set of images and asked to provide as many labels as possible to describe each image you see. When your label matches your partner's label, you'll earn some points and move on to the next image until time runs out. After time expires, you can explore the images you've seen and the websites where those images were found. And we'll show you the points you've earned throughout the session.
Of course I tried it. It was fun for the 90 seconds. Me and Raider2044 got 2100 points - though I'm not sure why that didn't show up on the leader board. I can't imagine why anyone would want to do this for too long though, especially long enough to get 91300 points. Maybe people like seeing their 'net name published on a Google site.

iTunes' 99-Cent Rule

Music industry execs, for a long time, have been fighting Apple to soften their fixed-price rule for songs. Currently, every track on iTunes sells for 99 cents. The music execs argue that popular songs are worth more than less-popular songs, so consumers should be charged more for them. This is simple supply-and-demand, and most Economics-101 students would agree with this line of reasoning - variable pricing can be good for everyone.

The Digital Music Weblog has a great take on this though, defending Apple:

I've said this before. A buck a tune works on a very simple level for most music buyers. It's easy to equate one thing with another; One buck? one tune. When you bring a sophisticated "black box" price structure to a service like iTunes, you increase the amount of decision making required for the user to make a purchase.

99 cent downloads make the purchase a clear choice, which simplifies the buying decision. When you introduce a more sophisticated pricing structure to the mix, the music fan is forced to have a more complex internal dialogue.

Do I like this song? What price is it? Is it worth the premium? Maybe I should just wait until it's 99 cents like the other songs I bought. If I buy this higher priced song, does that affect the number of songs I can buy in total?

The true fact of the matter is, supply and demand law doesn't apply to digital downloads. I _know_ that song will still be there if I come back later. Applying a tiered pricing structure to digital downloads applies a false market force to the equation; consumers have grown smarter about the methods used to fleece them.
I'm not sure if I completely agree. But it is interesting to see how notable Long-Tail markets (like Apple and Netflix) have had a lot of success with fixed pricing, where "premium" or "hit" content doesn't carry a premium fee.

Blogger Update - Sorry

Apparently when I moved to the new Blogger platform, it re-published many previous posts. Sorry for those who had their readers clogged.

Movies on iTunes

The rumor mills are abuzz with chatter about news that iTunes will start offering movies for download by the end of 2006, at prices ranging from $10 to $15. Apparently this has been "confirmed" by Business Week. TechCrunch says,

Apple is pushing for, and apparently getting, $14 wholesale movie prices on new releases. They plan to retail new releases for $14.99 and older movies for $9.99. Normal wholesale DVD prices are $17. Walmart pays that normal wholesale rate, and now anticipates losing a significant share of their 40% market share in the $17 billion annual DVD market. Given that it will be trivial for iTunes users to simply burn a DVD of these movie downloads, Walmart has good reason to be worried. Netflix should be nervous, too.
Being able to purchase movies online will be great - and many folks will probably go out and purchase a Mac Mini [UPDATE: new and improved Mac Mini] that they can hook up their iTunes downloads to their huge HDTV's pretty easily. And when they add HD movies, the endless debate over HD-DVD and Blu-ray will go the way of the Laserdisc. But Apple still needs to prove that people want to actually purchase (rather than rent) movies.

Music is great to sell outright because most people listen to songs over and over again. Movies are very different - with few exceptions, most people watch each movie once or twice. And while no one will argue the success of DVD-sales, it remains to be seen whether the rental business model or actual sales will prove most successful. Apple doesn't seem to like offering subscription, at least for music, but maybe they can make an exception for movies.