Is Microsoft counting on Steve Jobs’ Obstinance?
Amid much hype and more than a little speculation, the results of the Zune release are in. The general take seems to be that the Zune did fairly well on the first day of release, rocketing all the way up to number two, and has fallen like a meteorite with each ensuing day on the market. That is overly optimistic; those that opined that the Zune’s original day on the market was successful are giving too much credit for the Zune coming in at number 2. The Zune as we will all recall was, massively hyped, artificially hip*, nicely featured and widely anticipated. So when the Zune rolled in at second place it should have been a huge letdown, much like if the season ending episode of Heroes finished behind a rerun of M*A*S*H*. It isn’t that M*A*S*H* wasn’t a good show but, like the iPod, it has been around for long enough that everyone who want to see it has seen the show. In short, the Zune’s introduction was an utter failure.
After initial trepidation at the release of the Zune, the fans of all things Apple can seize this moment to gloat. Covering the Zune with repeated shovelfuls of derision is the de facto response of the most smitten iPod fans while the rest of the digital music market has simply forgotten the seemingly failed experiment.
At this point it would be easy to say that the Zune has entered a digital death spiral, that the whole thing was right up there with Microsoft Bob on the big list of bad Microsoft ideas. That notion gives Microsoft far too little credit. Sure, the company is over managed with a bureaucracy that flattens the smallest nail head but it is also the company that just won’t give up. Microsoft is a lot like a wrestler in an “I quit” match with the outcome in his favor. No matter how many choke holds, arm bars or number of times he is pounded like a tent pole with a chair the guy won’t give up, the book says he must win after all. For a case study of Microsoft’s tenacity recall the fate of Netscape, Microsoft doesn’t quit, they win.
Still, this setback must sting. In fact, the more schadenfreude filled among us are undoubtedly imagining the halls of Microsoft filled with the sounds of wailing at the companies abject failure to capture a significant part of the .mp3 market. Microsoft will keep trying but there is bound to be more than little depression right? Doubtful. Microsoft is not staffed by pie in the sky by dreamers but by realists. The early results of the Zune were no doubt anticipated and prepared for. Microsoft bought name recognition and, subtly, laid the groundwork for a crafty counter attack.
Microsoft’s leaves over the punji stick lined pit of doom? Why the largely derided agreement to pony up a dollar to Universal for every Zune sold of course! The move was (predictably) derided by the most muddle headed minds in the blogosphere . Such trivially obsessed knuckleheads saw the agreement as an affront to decent non-music stealing.mp3 player users everywhere. Microsoft sees the move differently. To Microsoft it wasn’t a supplication before the might of Universal, rather it was a dollar per unit well spent to force the hand of Steve Jobs.
What does Microsoft paying extortion to Universal have to do with Steve Jobs? Recall that Steve Jobs is well known for his stubbornness. Witness the fiasco that was the Apple III, a fiasco that came about in no small part because of Steve Jobs’ obstinate refusal to allow engineers to put a sorely needed fan in the machine. Note the fact that it took over five years after Steve’s return for Apple to release the Mighty Mouse and finally realize that Steve has told music companies to go pound sand on more than one occasion. Steve Jobs decides what is right and then refuses to move. This behavior, this inflexibility will play right into Microsoft’s hands/
The way is clear. When Universal begins renegotiation with Apple in early 2007 Universal will want the Microsoft deal. No really, Universal is going to ask for a little something something for each iPod sold. If it sounds crazy remember that to Universal every song downloaded is a stolen sale, thus every iPod sold where they don’t get a cut will now be, by the companies twisted logic, lost revenue that Universal deserves. Steve will say “f*** off” (Jon Gruber has a pretty spiffy imagining of the events, he goes a long way to reach a joke The Rock could convey in a few phrases but it is very well worth reading). Universal, being the money obsessed, no value added collective group of slimy slugs they are might grow a backbone for a moment, stop suing little Timmy and pull its content from iTunes.
Other publishers will follow suit and, low and behold, soon Microsoft and those that use the suddenly archaic Plays for Sure** will be the only game in town with legal music people want to buy. That scenario will put a dagger in the iTunes part of the iTunes iPod team.
Or maybe not. What Microsoft is forgetting, what the studios seem to be blissfully unaware of, is that iTunes doesn’t sell music or iPods. Apple might tell everyone iTunes sells iPods and consumers might think iTunes sells tracks and TV shows but they are mistaken. iTunes sells convenience. Even if Microsoft’s rosiest dreams came true and the only songs left on iTunes were hits of the eighties by Limozeen the situation won’t improve for the Zune. First Zune has the befuddling pricing scheme and that is coupled with a software experience that seems to be everything iTunes is not. Therefore, it is easy to conclude that without the huge iTunes library Apple might sell a few less iPods but Microsoft won’t sell any extra Zunes. As a corollary Universal won’t sell any extra tracks but one can be sure the use of P2P programs will rise by an amount proportional to the drop in iTunes sales.
If Universal ends up rebuffing Apple’s offer of “nothing” when the contract talks roll around and cite Microsoft as the way things should be done you’ll hear a lot about the end of the iPod and a fiery Zune being reborn from the ashes. Like the Phoenix, it will be just another myth.
Note to Microsoft: “Welcome to teh socia1” is hipper than “Welcome to the social”
Plays for Sure: Now with less than 1 in 4 chances of actually playing!
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Comments
I’d much rather be part of the culture that is right than the culture that is left.
I have no interest in being part of a manufactured “culture” that bows at the altar of a giant greedy corporation and demands that anyone who dares criticize that corporation should “go elsewhere”.
If you do, then that’s your problem.
iPod get a great enemy!!!!!!!!!
Would waiting for that man.
If Apple is really a good company. They will return the favor with more innovation.
I bought an iPod not because the features, or coolness. But, because of the damn good sound, and sync.
The other competitor have offer a lot features than iPod, and believe me, in Malaysia iPod is not number one, because of the lackness feature, and price.
So if iPod could give more features, i really love it.
iTunes Music Store, or any place that sell music are all greedy in my opinion.
My brother is a musician, and he don’t get a lot of money from the Cd sold.
He got a lot of money from performing.
Music industry people is just a money minded people that only thinking about whether the music can sell, not quality of the music.
The argument is the iPod is selling the music. Jobs will give them a dollar per iPod sold. Then Jobs will require the publishers to pat Apple up how much to get onto the itunes store? Now it’s free for Universal or EMI. two can play that game. You want access to itunes, how much is it worth to them?
There will be no fee’s paid to publshers. Simple.
And then the movies studios will demand a fee for DVD player sales.
Not going to happen.
I’ve never seen M*A*S*H. I’ve only seen a handful of Twilight Zone episodes. I’ve never watched Miami Vice, Starsky and Hutch, Dragnet, Happy Days, Growing Pains, Three’s Company, Bosom Buddies, Gunsmoke, The Avengers, Mission:Impossible, Hogan’s Heroes, The Munsters or I Dream of Jeannie.
Meanwhile, for some reason I loved watching The Addams Family in black and white as a kid and for whatever reason truly enjoyed Mad About You during the mid nineties in late night syndication.
I doubt that these shows will be all be released on home video in the next decade, and I truly doubt that they would all sell well at an SRP of 40-50 USD, considering the flooded market. Mad About You has already failed to meet expectations with their season one set, hence the best of collection that followed. Ed, an NBC show languishing in tv hell from the fact that it contains licensed music, would find a better chance of full redistribution in a digital medium than with traditional DVD. Then again, all I really want is to see Captain Lucidity one more time.
There are a lot of shows that deserve to be seen again, but in the market set up by iTunes and DVD sets, it just isn’t practical for anyone to be able to watch whatever it is they might want to because they’d have to buy it.
Enter the Zune and it’s potential to open up the market to subscription based services. With such a rich backlog of quality television that is just sitting there collecting dust, a subscriber might check out whatever it is they would be interested in, be it the latest Universal hit series (a Battlestar Galactica or a Heroes if you will) or an older Universal show that someone may have recommended (Miami Vice, Alfred Hitchcock Presents, Murder, She Wrote) and it would all be covered in a Universal Subscription, pardon the pun.
Sorry about how this is hardly relevant to the article besides the mention of Heroes, M*A*S*H and Universal, but I wanted to get that out there.
<i>Enter the Zune and it’s potential to open up the market to subscription based services.</i>
I think there are a number of advantages to a subscription service, for TV and film as well as music. There are certainly film titles I’d rather pay a couple of bucks for and give up after 3 days than pay $10-15 for and keep forever.
But the lack of this option and the refusal of the market’s dominant power (Apple) to implement it is why consumers get the short end of the stick with monopolies, no matter which company is involved.
It is not simply “refusal to implement it”, it would require massive re-negotiation of contracts.
Personally I would never go for a subscription download service. I don’t want that commitment to a store. Some people might though.
I think it’s a worse model, and one that the vastly overwhelming majority of consumers have eschewed in favour of the traditional shop. But I sympathise with this objection: “There are certainly film titles I’d rather pay a couple of bucks for and give up after 3 days than pay $10-15 for and keep forever.”
Personally I quite often just want to see a film, not own it. At the moment either I have to rent it from an actual shop (gasp!), or get a subscription with lovefilm.com, or buy it - which may actually be cheaper than renting it if it’s an oldish film. But I’d rather pay a small amount to download it (in DVD quality) just to watch it say 1 or 2 times then have it disappear.
But I hardly see that it’s rational to bash apple for adopting a sales model without also bashing all the other shops who sell music and DVDs. The problem is there is no good solution to the problem of occasional digital rentals in existence.
Apple not out of line in using the same sales model as every other retailer of music. Your gripe is with the status quo, not with Apple.
I think it’s a worse model, and one that the vastly overwhelming majority of consumers have eschewed in favour of the traditional shop.
That’s like saying that the vast majority of consumers have eschewed OS X in favor of Windows and therefore they PREFER Windows. When you’re dealing with a defacto monopoly, what the consumers do and what they would actually chose to do isn’t always cut and dry. Maybe they haven’t eschewed subscriptions so much as they have to use iTunes with their iPods and iTunes doesn’t have that service. And that those who use a store with BOTH services, by and large choose the subscription service.
But that’s not even the point. The point is that they should have the choice and they don’t because the monopoly power won’t let them.
Apple not out of line in using the same sales model as every other retailer of music. Your gripe is with the status quo, not with Apple.
Y’know, when the fanboys are DEFENDING iTunes, it’s a revolutionary model that’s going to change how we all buy music and put the dinosaur music model out of business.
But when I point out how they have the opportunity to add services that would benefit consumers, suddenly they’re no different than any other brick and mortar and shouldn’t be expected to behave any differently than Walmart.
That’s bullshit, Ben, and you know it. Why is it that every other download store can pull off subscriptions AND sales (you can do both at Rhapsody, Napster, etc), but not iTunes? Is all the fanboy talk about how the labels should be so grateful to Steve Jobs and how he holds all the negotiating cards really such complete and utter malarkey?
But if you want to relegate Apple to the status of just another big greedy corporation that’s less interested in choice for consumers than they are the bottom line and maintaining marketshare, then I’m with you there.
That’s like saying that the vast majority of consumers have eschewed OS X in favor of Windows and therefore they PREFER Windows.
It is not in the least like this. The vast majority of windows users have inherited windows usage from a time when it made vastly more sense to be a windows user in comparison to a mac user. The important battles for domination of the OS world were fought 10 years ago when Apple was struggling with an unmanageable code base and had little honestly recommending it any more.
You’ve misunderstood me, and reality, just for a change, B. Consumers have amply demonstrated they prefer the sales model to the rental model. This is a wide, general fact of the music industry. Nobody rents music. There is a persistent market for rentals and stores for this persist on the high street.
But there is far more money - and interest - in sales than in rentals. Definitely. I’m not sure what exactly you stand to win by trying to demonstrate this obvious fact is untrue.
I think the problem is in post 21 you conflate two separate ideas. Firstly - you would like to be ably to digitally rent movies. Fine - a feature request from apple this is. Secondly, that apple not already offering a subscription model is evidence that the iPod’s dominance is hurting consumers.
Firstly, these two ideas are different. A subscription model allows you to download as much as you like for a flat fee, and is generally for music. Rentals, where the media disappears after a set time, would certainly be an idiotic way to sell music, but is something lacking from the digital media delivery industry as a whole. Thus when you say:
<i>"That’s bullshit, Ben, and you know it. Why is it that every other download store can pull off subscriptions AND sales (you can do both at Rhapsody, Napster, etc), but not iTunes? “</i>
...we are talking at cross-purposes. I have already stated my disinterest in whether apple offers a subscription model. The criticism you level though regarding rentals, which I was trying to address, is not substantiated by the above invalid comparison. I apologise if I was not clear about this in post 22.
Secondly, this second idea “that apple not already offering a subscription model is evidence that the iPod’s dominance is hurting consumers” I find patently absurd. Not offering a service is not an abuse of power. Rarely if ever have I seen anyone request a music subscription service from iTunes and the lack of one is something that a small minority of people will lament.
Some may lament another thing, confuse the two and accuse them of market abuse, however.
On a wider consideration, I realise that we are in agreement. The problem is one of not being able to choose your music store - there is only one effective choice for iPod, which is iTunes, which is but one store and operates in but one way.
And here we agree - how wonderful it would be if there were the ability to choose from a number of competing music stores, offering different models perhaps, and easily import media from them into the iTunes jukebox! But this is not the case, since Apple was forced to choose between adopting Microsoft’s PlaysForSure DRM or developing its own, no other digital music emporia being in existence at the time.
But look - Microsoft who for years pioneered the PlaysForSure initiative that might have provided a market of interoperable music stores, however ghastly it would have been for MS to possess that market, has evidently decided that this system is unworkable, and started another music store that currently provides a far worse, more confusing and limited customer experience, in “a move that prompted Peter Sealey, a professor at Berkeley’s Haas School of Business, to observe, “I’ve never seen a business so blatantly screw its business partners.” [1]
I repeat, the problematic situation you have identified is not caused by Apple, but is a symptom of the deep faults with the current state of the digital music industry. The fact that Microsoft has so viciously shafted all its digital music partners whose legitimacy and relevance it previously pretended to be supporting potently indicates the systemic problems from which digital media is suffering.
[1]link
Clarification (as usual): The enlightening question is “what needs to happen?”
And the real answer is not “Apple needs to offer a subscription service for music and rentals for videos otherwise it’s abusing its power”.
The real answer is that independent digital music stores ought to be able to sell music on whatever model they choose, and this music ought to be able to be imported to whatever jukebox software for whatever music player.
Why apple should be unwilling for this to occur defeats me, since the iPod/iTunes has always competed on the basis of its qualities as a music device and system, and a wide range of competing compatible services for getting legal music would hardly hurt their market leadership.
There would be no reason to close the iTS, but a range of alternatives would be available for whiny shi^n^n^n^n^n^n^n^n^n people’s widely varying preferences.
Sub-clarification: ceding the iTS’s leadership to the likes of napster would not harm the iPod’s competitiveness to the likes of creative.
Btw comment 5 of http://theappleblog.com/2006/12/08/please-give-fairplay-to-the-riaa/#comments is rather rational and balanced on the subject of iTunes DRM and I’d be interested to hear what you thought of it.
Okay, I guess I should have known better than to defend consumer choice around here.
Consumers have amply demonstrated they prefer the sales model to the rental model.
Um, no they haven’t. Music stores don’t rent music. Apple iTunes doesn’t rent music. It’s not that consumers don’t want to rent music; they can’t. But when presented that choice at alternative retailers like Napster and Rhapsody, they have chosen the subscription option.
Btw, it was also conventional wisdom at one time that consumers don’t buy singles. But Jobs was the one who insisted on a different model from the status quo by offering singles instead of whole albums.
The naysayers like you were probably defending the status quo, the lack of choice, and the fact that selling albums makes more money. But Jobs followed the singles model anyway.
That was, of course, before iTunes was a monopoly.
But there is far more money - and interest - in sales than in rentals. Definitely. I’m not sure what exactly you stand to win by trying to demonstrate this obvious fact is untrue.
There is obviously more money in sales, that’s why the brick and mortars and probably Apple to a large extent aren’t interested in subscritions. I’ve never argued otherwise - in fact, I’m suggesting that this is the root of the problem, corporate greed.
I’m simply saying that the consumers should be given that choice so they can decide what they want. You’re defending Apple’s bottom line interests, and I’m defending the consumers.
I repeat, the problematic situation you have identified is not caused by Apple, but is a symptom of the deep faults with the current state of the digital music industry.
So you spend your whole post DENYING that there even is a problematic situation (according to youconsumers have all the choice they want).
Now you concede that there IS a problematic situation, but that Apple deserves absolutely no blame, even though they practically OWN the “digital media” market that you say is suffering from systemic problems.
And for bonus points, you (of course) shift that blame to Microsoft, despite MS’s obvious floundering and even though the combined marketshare of ALL the partners that MS shafted (including itself) is less than a third that of Apple.
Pathetic, Ben. Pathetic.
Btw comment 5 of http://theappleblog.com/2006/12/08/please-give-fairplay-to-the-riaa/#comments is rather rational and balanced on the subject of iTunes DRM and I’d be interested to hear what you thought of it.
It’s sort of rational but it’s not the least bit balanced. He creates arbitrary thresholds and then puts Apple just below it, and then creates a RIDICULOUS threshold that Apple will likely never reach. Convenient.
And it all leads to the inevitable conclusion that nothing should be done about Apple’s DRM (until somehow or other Apple reaches the magical 80% marketshare of the ENTIRE music distribution industry) and that we should just wait a few years and see what happens.
And for bonus points, he attacks Microsoft. Natch.
Sometimes in these discussions we get to a point where someone twists your meaning, states things you said that you didn’t and half-wilfully misunderstands to such an extent that what you just wrote is the best rebuttal.
Possibly I should be more clear - though possibly you should stop personally attacking people - I am all for consumer choice. That is not the difference between me and you.
The difference between me and you is that you blame apple for the digital music industry’s problems, whereas I think they are endemic and largely brought down upon us by the RIAA.
I was really hoping for a reply to see what you actually thought about the things I said. I increasingly see that you are unable rationally to consider points of view that differ from your own, only to twist people’s words and accuse them of saying things that they patently didn’t say.
To me, discussion is not just about winning arguments. Honest.
Troll.