Category: iTunes

Subscription Music Breakdown

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In the past few months, i've had quite a few questions about what "subscription" music is. This is my attempt to explain it.

Napster, Rhapsody, MusicNow, MTV, and Yahoo! all offer services where you can get unlimited music for about $10 a month. The one caveat is that the tracks you download with these services are all "rented" – meaning that as soon as you stop paying for them, you can no longer play them. The way this works is that each file requires a license to play. When you download a track you get both the file and the license. For a track to play in a player the license must be valid. Whichever service you use, they automatically renew all licenses every 30 days. If you're no longer a subscriber, the license doesn't get renewed and the files don't play. Another company, EMusic, is a little different – you get 40 downloads of mp3's for $10 bucks a month. While you don't get as many files, you get them in mp3 format and can keep them forever – you truly own them.

Why it hasn't worked? This model hasn't worked for two BIG reasons:

  • Can't find enough music to satisfy $10 a month. What do you want for your birthday? Tell me now. It's hard isn't it. Everybody knows they want something for their birthday, but when they have to think about it NOW, it's tough. It is the same with subscription music. Everybody knows they like a bunch of music and want to download it, but when you're at the front page of Napster, it is hard to remember what you want. Trust me, i've done countless focus groups – this is a big problem. If you can find what you want to download, you don't download and the value of an unlimited download service lessens.
  • iPods and iTunes. iPods are not only pretty to look at, with the iTunes player, they are insanely easy to use. As a device, they are so much easier to use than other subscription compatible devices. Using them, users don't have to ever worry about licenses and they don't have to worry about other media players or connections or anything. An ipod works with – and ONLY with – iTunes which means that it is designed to be simple. Microsoft is a platform company. They make platforms that any vendor can use to sell devices or services. Which is great, but it means that both the devices and the WindowsMedia format itself is going to be much, much more complex – and unfortunately for them, it shows. Until that extra functionality MS allows is really useful, it's only a hindrance.

Will subscription ever be a good way to get new tunes? I believe it will. It is very easy to create music now, and the amount of music being created is only going to keep growing. There is a need for people to find and explore the expanding universe of music. Once there are better searching techniques, I believe the utility of subscription music will rise.

Ian Rodgers, who works at Yahoo Music provided (in this podcast) a great way to think about the advantages of subscription music. It went something like this….

users care about 2 things regarding music: playing music and owning music. If you want to own music, you're best bet is to purchase the CD. You get the music in a lossless format which can be burned into any format at any bitrate indefinitely and also receive associated images, liner notes, etc. If you want to play music, your best option is a subscription platform which allows you to play as much as possible for pretty cheap.

I like that thought, but that doesn't account for iPods, nor the convenience of purchasing only a track vs. an entire album.

That's the theory – what do you think?

A funny sidenote that i like. WMA files (non iTunes) are protected by a technology called in the industry Janus, and by marketers "Plays for Sure." Check out a past blog post of mine which describes why this is a clever reference to a muppet.

More Netvibes & Browser Desktops

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Following up on last week’s post about Netvibes, i just noticed that they have added a few very SWEET features:

1. They now have tabs so you can set up different views of feeds. I personally have a work related tab (internety blog feeds), a sports tab (deadspin, sports guy, others), and a personal tab (moose, mowery, barbero, flickr photos, best week ever blog)

2. They have a module you can put in there from box.net which allows you to put up to a gig of files. It just a hosted storage area as an rss feed. It’s totally sweet.

What does this all mean? Basically, we’re approaching a world where the desktop is replaced with a browser. Instead of applications like Word, Excel, Outlook, iTunes, and Windows it will be a world of Writely, NumSum, Gmail, mp3tunes, and things like Netvibes. All you need is a browser and you can get all your docs, music, email, etc. All signs point to this: Google’s acquisition of Writely, Windows browser replacements like Goowy and Netvibes, more and more bandwidth being available to users, the growth of server processors (AMD Dual-Core). It’s coming…i’m telling you.

Songbird's Here

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There’s a new media player that’s been released called Songbird. iTunes has dominated as the go-to media player for people to play music. And with WMP, Winamp, Yahoo Music Engine and others (J. River) it would seem that the space is pretty saturated. How could a new player even hope to catch up, let alone beat these other players?

The answer is the open-source community. Similar to how Firefox has used the legions of developers to create a great product with many extensions/plug-ins to be better than Internet Explorer (IE), Songbird hopes to do the same to WMP and iTunes. In fact, Songbird is built on top of Gecko (Firefox’s core engine) so it’s basically a media playing browser that is open for developers around the world to use.

Version 0.1 was release 2 weeks ago and 0.1.1 was released this week. While still not as feature rich as other players you can see the potential and let me tell you, it’s only a matter of time before great extensions and services leverage its openness to create a superior experience to iTunes and WMP. extn_birdmeditating.png

AOL's State of the Union

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Time Warner just announced their quarterly numbers. Although TW profits went up, AOL subscribers continue to drop down to 19 million. Just a few years ago they were over 35 million and now they’ve shed around 16 MILLION members. Why is this? Could it be that all the areas they were once dominant in they are now not even second tier? In this new world of social media and collective intelligence AOL is nowhere to be found. As a former employee (2000-2004) at both AOLTW Corporate and AOL Broadband i’ve seen some things. Here’s my take:

  • Social Networking & Blogging. Currently being dominated by MySpace, thefacebook, and others such as Friendster, yahoo 360, etc.. AOL plans to launch something with AIM soon (AIMspace), but i’d say they are about 3 years too late. Why would anyone switch from MySpace to AIM? Tied in closely with this is blogging. So many people, novices and professionals are looking for a place to put their thoughts, rants, and memories. So, while Google is buying Blogger and Yahoo is partnering with Moveable Type, AOL is sticking with their AOL Journals which is very limited in custimization, doesn’t have RSS, and can’t be hosted. I think they either need to get serious or get kill it.
  • Music Services. There are several viable music services out there. For the moment, let’s ignore the fact that everyone and their mother is using iTunes. What else is there? There are music subscription services such as Rhapsody, Yahoo Music, Napster, MusicNet, and eMusic (description of each below). AOL has rested on MusicNet for the past 4 years and last year bought up MusicNow for around $10 million. They had roughly 250k-300k MusicNet subs and i doubt they have anything close to that with MusicNow. At least with MusicNow they are building in community features (i think with MusicStrands), but does it tie into the AIM social network – doubtful. Does it tie in to AIM? Probably not. Is it featured on AOL anywhere? No, not really. When you’re this far behind, the best thing you can do is call in the community. This is what Yahoo’s done with the YME. They know they’re behind in terms of features and functionality, so they made a robust plug-in architecture so the rest of the world can help them catch up. This is why i think Yahoo will be the biggest player after Apple.
    • Rhapsody has been around the longest, is the most web-based and gotten in bed with MS. They have some interesting radio features but for the most part is somewhat klunky. It will be interesting to see what happens with this once MS gets their paws all over it. Supposedly, all MSN music will be powered by Rhapsody.
    • Yahoo Music (with Yahoo Music Unlimited) is slick. As i mentioned above, iIt has some great API’s and ties in well with Y! Messenger. The subscription service is cheap ($60 a year). Unfortunately it has very little subs, but that could change if the WMA issue gets better.
    • Napster is getting better and better, but still has relatively few social aspects. It has a good library and great branding but not much else.
    • eMusic is differentiated with an mp3 library. It’s not all-you-can-eat but it is ipod-compatible which makes a HUGE difference in this world 45 million iPods. They don’t have any mainstream artists but have almost all the indie artists.
    • MusicNet has the largest subscription library but it is simply a fulfillment engine. It powers services such as Virgin, Cdigix, and even Yahoo!. But there is no community here.
  • Advertising. This is when i realized that AOL will always be the JV squad in the internet game. Yahoo was serious about music and went out and bought MusicMatch for $500 million in 2003 and Launch Music (good article) for $12 million in 2001. AOL waited 4 more years then invested $10 million for a MusicNow library. Then advertising emerged as a viable and powerful revenue stream, Yahoo! spent 1.6 billion on Overture and AOL spent a few hundred million on Advertising.com – forever relegating them to minor league ball. Not that they’re doing incredibly poorly, but will they approach anything like Google’s Adsense? The old AOL would have bought whoever it needed to stay on top.
  • Mail. AOL’s golden nugget is the screenname. Users won’t switch because they don’t want to lose their email address and they pay $24 bucks a month for it. Meanwhile Gmail comes out with (basically) unlimited storage – for FREE. Then Yahoo and Hotmail counter with equal storage. Gmail and Yahoo continue to make their services better and better with slick javascript (gmail is the AJAX gold standard) and the new Yahoo Mail Beta is supposedly amazing. What is AOL doing? They make mail the most click-intensive application ever. You need 3 seperate windows to just send a message. And to make it even worse, your mail still expires after 28 days. Wtf? When will they wake up and realize that on a scale of 1-10, AOL is batting about a 3. Let’s break mail down even more:
    • Authentication. AOL requires you to sign on each time you come to it’s site. Sounds reasonable. However if you go to check your mail multiple times a day, it gets annoying. Neither Yahoo nor Gmail makes you do that. Even if you check “remember me” – it doesn’t.
    • Session Time. Gmail lets you stay signed in all day (and actually b/c of this launched a slick app – check out my future post). AOL signs you out after 15-20 minutes. Why are they making it such a pain to read your mail? Should services try to delight the customer?
    • Inbox. Time to bring in some AJAX. The interface is slow and ugly.
    • Integration with other services. No AIM, no real precense, no easy to access address, nothing.
  • Video. This is one space where AOL is doing ok. If you look at the types of video becoming available on the web from amateur (caught-on-tape) on one end to amateur narrative films (iFilm) in the middle to professional content on the other end. AOL is focussing directly on the far end of professional content only. They have deals with many major players to stream the video (NFL, CNN, E!, NBA, WB, etc.) however they make it hard to find the video or to use it anywhere outside of AOL. Their new hi-Q initiative using Kontiki is very interesting because it downloads and dramatically improves up the quality of the video, but the there isn’t much content available in Hi-Q yet – it’s currently only trailers and music videos. My question is where’s the focus on short video clips? There’s an explosion of content coming from short clips such as SNL’s Lazy Sunday that is being distributed through YouTube, Veoh, and now MySpace. This is where the eyeballs are. This is what users are passing around and looking for on the internet. However, AOL is focused on bring TV to the small internet screen. IP might be a delivery mechanism for that someday, but eventually it’ll be viewed on a big screen. I’m much more optimistic about Tivo/Netflix or MS Media Center applications. They have made some big investments in video search. But i don’t know any users to use video search. Basically there are only a few players that host a lot of video (YouTube, Google, and iTunes) and users go to them and search. If something isn’t there, they’ll check one of the others.
  • Instant Messaging. AOL just released Triton, a much needed upgrade over the AIM application that hadn’t been changed for over 4 years. It is still cluttered with Ads, doesn’t integrate blogs or music. Also, check this out: there’s an AOL address book, but now there’s also an AIM address book (powered by Plaxo). And, to make their AOL Mail even more insignificant, there’s now AIM mail which is the exact same thing, but for free. How could you not expect users to be confused when you can’t even integrate AIM with AOL? I’ve started using Yahoo Messenger lately and found it to be just as full featured but with less bugs and easier to use. Google Talk is simplier and easier to use too. Obviously all the users are on AIM so that’s going to be the dominant player for years to come, but it’s horrible how they’ve failed to extend the AIM platform – no API’s, no major improvements, and increasing more cluttered with shameful attempts to suck cash out of it (games, voice, ads, etc.)

This is a long synopsis of a large multi-faceted company but it pains me to see how each step of the way they continue to build creative and useful applications to benefit their members.

Thoughts?