Medialoper

We're Not Who You Think We Are

Kassia Krozser

1 Billion Served, Another Billion Imminent

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As promised, Medialoper team coverage of the 1 billionth iTune sold continues. Today, we look at the economics of the iTunes store. Conventional wisdom suggests that margins on the songs are so low that the real moneymaker for Apple in its iTunes experiment is the iPod.

That, of course, suggests that making money on volume is quaint concept. Apple is selling approximately three million songs a day, meaning the second billion will be reached much faster than the first billion. Unless things go horribly wrong, the third billion will be even faster. 83% of legally downloadable music is sold via the iTunes music store.

Let’s pause for a moment and ask the first obvious question: why in the world would anyone not be cutting a deal with Apple right now? Why would anyone be putting all their eggs in Microsoft’s basket? Yes, two questions. If you want to sell your music on the Internet, wouldn’t it be smart to go where the money is? You don’t have to be exclusive — make deals with everyone — but be smart.

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Forget HD, It’s All About Cellphones

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It’s been a few weeks since our last CBS update, but, never fear, the powers-that-be behind the network giant (given that there are so few networks, most are, indeed, giants) haven’t been wasting time sleeping. Next up: breaking news to your cell phone.

And it will only cost you 99 cents. If that’s not enough, all those Entertainment Tonight fans out there, can get their E.T. to Go for a mere $3.99 a month. I know, I know, how can you sign up? But wait! There’s more!

In the weeks ahead, CBS is planning to introduce several other mobile ventures. Some, including a soap opera in three- to five-minute episodes meant only for mobile phones, hew closely to the company’s existing businesses. Others do not, including a subscription service offering images, games, ring tones and sound effects, and a product that will let people create animated images of themselves that they can send as messages to friends.

But wait! There’s more!

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Can Google Save The Publishing Industry?

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Publishers know they’re in a tough place when it comes to Google’s Book Search and Library initiatives. For all their posturing about copyright violations and compensation, the truth is that Google is doing the publishing industry a huge favor.

Here’s how I see it. First, there are a lot of books out there. All I need to do is look around my desk to prove this. There are more books published each year than anyone realizes. Most of these books fly so far under the radar, they don’t even register. This costs the publisher money, hurts the author, and don’t forget the trees. Pulping books doesn’t do much to clean the air.

Second, even if a consumer (I’ll use myself as an example) is aware of many of the books being published, there is no way I can discover what’s inside them, short of living in a book distribution warehouse. My local bookstores cannot keep up. Amazon’s program to “Look Inside” is great if I know what I’m looking for, but if I’m doing research, I’m using Google. I am. Sometimes maybe I go to Yahoo!, but mostly I’ve segregated things in my mind: Yahoo!, news; Google, research.

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AOL Offers Safe-For-Work Programming

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Remember the 90s? That innocent time? The days before everyone had a cellphone in their cubicle? When your co-workers would glance furtively over their shoulders, hoping not to get caught playing Solitaire? When Solitaire was, well, a radical innovation in time-wasting activities during office hours?

Those days are long gone. Television, it turns out, is not just for prime time anymore. Which is a shame because it was the last defense in the line distinguishing work and play:

Watching television is so much the opposite of work, in fact, that it’s hardly even a purposeful act: If you spend Saturday and Sunday watching television, you can credibly say you spent the weekend doing nothing at all.

With technological progress (look, Ma, I can watch TV while driving!) comes the natural American inclination toward productivity. So if you’re watching television at work, then you’re surely watching something relevant.

No wonder, then, that the latest programmers — people trying to create sustainable, popular, commercial Internet television — are incorporating workday attitudes of diligence, can-doism, detail-orientation and, above all, procrastination into new shows.

Or not. AOL has created a series of programs that meld self-improvement books with live action. Called AOL Coaches, the series of workshops (it’s the oughts, no more episodes for us) helps you deal with life’s little problems in an interactive way. Though the actual workshop reviewed sounds horrific — that could be a result of my natural reaction to Star Jones Reynolds — the idea is worthy. AOL has been moving toward original programming for quite a while. Self-help programming was just a matter of time.

Sports Illustrated Demonstrates The New Media Model

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I’m not sure how it happens that I’m the ‘loper who’s writing about this story, but life is funny that way. Yes, kids, it’s time for the annual Sports Illustrated swimsuit issue. For those of you who remain blissfully ignorant, this issue should not be confused with a catalog.

This year, fans of Sports Illustrated’s annual swimsuit issue will have an abundance of choice when it comes to formats for viewing the bikini-clad supermodels. In addition to the magazine, which appears on newsstands tomorrow, and on the Web site at sportsillustrated.com., fans will also be able to purchase any of eight specially produced videos from iTunes.com, Apple’s online store, for $1.99 each, or download content to a cellphone or to a hand-held device, through a partnership Sports Illustrated has made with American Greetings Interactive.

American Greetings Interactive? Partnership? Must puzzle that one out. Later. Let us instead dwell on the idea that avid readers* of the issue can get their swimsuits in any format they wish.

* – Surely, someone buys the issue for the clever captions.

Can Sony Stop The Betamax Curse?

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UMD, a format developed by Sony for the PSP market, is apparently being put out to pasture. Sales are simply not what were anticipated. Fair enough. There didn’t seem to be a focused plan for UMD.

But giving up on the UMD format might not be the brightest move. If studio executives would take a moment to listen to what consumers are saying (and doing), they’d realize that like shoes, there is no “one size fits all” format. We have entered an age where DVDs co-exist with memory cards which live alongside videocassettes which share space with hard drives sitting next to big pipes from the cable and phone industries.

While there are issues of price and accessibility, Sony can save the UMD from becoming the next Beta by realizing the fundamental truths of today’s markets, including the fact that UMD is settling into a niche market. Niche markets, by the way, aren’t such a bad thing if you understand them:

. . .Sony et al should see the writing on the wall: the only titles that are selling well are those that appeal to the young male market.

Sony has a massive software library — more titles than it realizes — yet continues to cling to old business models. Continually revamping internal business units and shoving square pegs into round holes isn’t the way of the future. Winning the game means playing the game smart (Sony, call us — we know from smart). It means listening to your customers. See example below.

Sony (and the rest of you movie execs), listen up. A company named Apple has sold millions more iPods than you’ve sold PSPs. Many of those iPods were sold long before there was an iTunes Music Store. How is this so? Simple: users could exploit their already existing CD collections (although the RIAA is now trying to stop this). Imagine being Apple and trying to sell the iPod if the only thing you could put on it was materials bought from iTunes. Still think those sales numbers would be what they are? Of course not.

Cable? We Don’t Need No Stinkin’ Cable

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For the ‘loper team, most of the article in the Denver Post won’t be news…for those media executives out there, you should be restrategizing rapidly. For the analyst who gave CBS ten years to get its online act together, be afraid, be very afraid.

Buried in the article, so casually that it feels matter-of-fact, is this:

Exhibit: Nathan Burian, 24, carrying around episodes of “Futurama,” “The Simpsons” and “The Family Guy” on his video iPod. Yet he doesn’t have cable TV service, only a high-speed Internet connection.

Sure, there are always early adopters — we love them around here. And I thought the cable industry had at least another year before it started feeling the heat. It’s a good think that Showtime cut a deal with iTunes, huh?

Because I’m feeling especially helpful, I’m going to end with a little public service. In the following quote, “everyone” should not include the driver. For obvious reasons.

“I watch them when I’m riding up to the mountains with my friends,” said Burian, a catering manager at Brothers Barbecue. “I plug the sound into the stereo system, and I plug into the car power supply, and the screen is pretty big and bright. Everyone in the car can watch.”

Angry Customers = Not Good

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I know a Netflix user or two — they’re a bit like evangelists: try it, you’ll be hooked. They deliver videos and you watch ’em. Then you return them. Sure, that seems simple enough, until I calculate the actual number of DVDs I slip into the player on a regular basis. Let’s just say I’m more likely to borrow from friends who don’t mind* that it could be weeks or months before I find the time to watch, much less return, their DVDs.

I would not be a good Netflix customer. Of course, being a loyal customer isn’t always what it seems. Customers defined as “frequent” renters are discovering that avid movie-watching habits are pushing them to the back of the line. Major movie watching by customers isn’t profitable for Netflix (though the company acknowledges that this is a relatively small number of its customers). The money is made on those who only watch a few movies — because everyone pays the same price.

“In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service,” Netflix’s revised policy now reads. The statement specifically warns that heavy renters are more likely to encounter shipping delays and less likely to immediately be sent their top choices.

The problem for Netflix, of course, is that despite the policy change, the perception received by customers is “unlimited”. And as the service grows, demand will increase for certain films. I’m already hearing “I’ve been waiting forever to get it from Netflix” grumbles from friends. These aren’t complaints, per se, but resignatio. And that can turn to discontent if more customers realize that they’re being penalized.

Since the numbers are currently on the small side, it doesn’t seem to be in Netflix’s best interest to penalize fast renters, especially since there’s been a lawsuit and major press on the issue. It seem to me that these are the customers most likely to walk if they can get a better deal — like direct downloads.
* – Or at least pretend not to mind

Go Online, Young Man!

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The costs of print publications continue to rise, so it’s no surprise that Time Warner has rethought its entry into the crowded “lad mag” market (someone please remind me: where in the United States do men call themselves lads?). Why not go directly online?

THE long-awaited on line ‘zine for lads that has been under development at Time Inc. for a year, Officepirates.com, is slated to debut on Feb. 22, Media Ink has learned.

The project, which was envisioned as a weekly magazine but scrapped, is being edited by former Maxim and Details Editor Mark Golin. It will be online only and will debut with advertisements from beer, automakers and fashion advertisers.

  • Time Inc. Lad Mag Heads For Small Screen (Please Note: If you click through to the article, you will undergo some of the more onerous, odious, irritating registration ever. And that’s before you have to deal with the inevitable pop-ups.)

Meanwhile, The Heat On The Cable Industry Continues

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While the programming starts moving online and producers start seeing increasing value in creating made-for-internet product, the FCC continues to struggle with the idea of a la carte cable programming. While the arguments on both sides of the a la carte issue have merit, the recent statement by the FCC has such political motivation that the numbers and conclusions don’t feel right:

able and satellite television bills could fall by as much as 13 percent if consumers could choose only the channels they wanted to watch, the U.S. Federal Communications Commission said on Thursday, reversing its earlier conclusions.

The core issue is that this will allow consumers to prevent programming that they don’t want children to watch. Rather than suggesting that parents do more turning off of televisions (which will prevent the youngsters from viewing unsavory programming), the plan is to revamp the whole system. Of course, the Federal government won’t foot the bill for the work forced upon the (well-to-do) cable industry.