Doing Words

iTunes Festival could be a triumph… of email marketing

// July 1st, 2011 // 0 Comments // Content, Marketing, Music

In my email inbox this morning was an invitation from Apple to watch a live music festival in London starting tonight, my time. The festival has been running since 2007 but it’s been gradually morphing from focusing on attending the live event towards leveraging Apple’s extraordinary distribution pipeline to deliver to a worldwide audience. This year I think they’ve cracked it.

Via a dedicated free live event app you’ll be able to watch the three nights of performances from 62 artists, live or on-demand, free. And we’re not talking B-list bands here either, there’s Paul Simon, Moby, Duran Duran and Coldplay (yes, I’m that old).

As in previous years, tickets will also be available to attend the festival if you’re in the UK, and they’ll be available only to contest winners.

Could this be bigger — and more profitable — than Glastonbury?

From today you can buy the latest album from each artist performing from iTunes Store or from the app and I’m guessing that’s part of the reason why artist management agree to the concept.

The other reason, and the reason why the festival is most interesting, is the email marketing opportunity. Here’s why:

How many people do you know these days who own an iPod, an iPad or an iPhone? Lots, right? It’s not a static number either, it’s still growing fast.

If they’ve ever used iTunes Store to buy music, TV, movies or apps, Apple has their email address, and unless they’ve opted out, their permission to send them weekly emails about content for sale in iTunes Store.

No big deal, right? Every online retailer and content publisher has an email database. But this is an email database unlike any other, since it now represents arguably the biggest and fastest-growing entertainment content marketing database the entertainment industry has ever seen. There’s an iPod Touch, iPad or iPhone in the bag of nearly every person on the train with you, in the pocket of nearly everyone jogging in the morning. There might be as many Android phones out there as iPhones, or Kindles as iPads, but add up iPhones, iPods and iPads? Big number.

The music industry created the commercial radio industry to market new content to consumers, but never knew who those consumers were, what they listened to, and where they were at. Then, MTV added a little granularity for marketers, was able to provide some logbook data on audience size, viewing habits and geo location.

Today, businesses as diverse as Amazon, CDBaby, MySpace and Facebook have a database of content customers they can market to via email, but with nothing like the detailed purchase and consumption data Apple has access to. And not only does Apple have the biggest database of entertainment content consumers, they also own the whole stack, from bringing major labels and artists together for an event, to reaching an enormous global market of music consumers via email, to actually selling and delivering and tracking the consumption of the end content.

Analysts studying Apple’s market performance look at profit per device shipped, app sales volume, and PC and handset market share. Does anybody know what the open rates are on emails from iTunes Store? What their click-thru rates are? Perhaps Apple’s biggest untapped and unvalued asset is the ability to reach more of the world’s music fans than any other media publisher?

iTunes: what a truly global retailer looks like (yes, even in Kazakhstan)

iTunes Festival is a big endeavour, and while Apple is the king of hardware, it doesn’t yet have enough entertainment content culture in its DNA, so along the way there have been mistakes made, goals reached for but unmet, and lessons learned.

But Apple is also the king of execution — it learns perhaps better than any other major brand. This year you can watch the whole event from your iDevice of choice instead of on YouTube, and for the first time, you can watch in HD on a TV equipped with an AppleTV using AirPlay.

The world’s number one retailer of music is on the cusp of becoming the next MTV and the next Glastonbury, all rolled into one. Like, wow.

Don’t get stuck selling shovels

// June 24th, 2011 // 0 Comments // Hardware, Mobile, Products

There’s an old saying (who knows, it may even pre-date the internet) and it goes, ‘in a gold rush, it’s better to be selling shovels than trying to find gold’. Well, that only holds true if (a) you can control the market price of shovels; and (b) nobody knows where the gold is.

Once the gold deposits are mapped, or if cheaper shovel-makers start eating into your margins, you better pivot quick and become the best gold miner in the business, or the best refinery, or the best goldsmith in town. If the gold market changes from being about discovering gold to locking up, distributing and selling it, the act of shovelling becomes a much smaller slice of a much bigger pie, and your shareholders will punish you for not adapting to the changing market.

This story isn’t about gold mining, it’s not even about shovels. But as with most of my writing, I need analogies to set the scene. This post is actually about the smartphone market, and it’s partly a response to a post by Jojo over on 37Signals, where Jojo asserts that the new Nokia N9 handset may still be successful, even though the app offering for the N9 looks sparse. This post started out as a comment at the end of Jojo’s post, then got way too long for anybody to read at the end of many pages of other comments, so here it is in full.

Here’s the thing: the N9 will find customers and will be profitable, but will it be a big enough success to do what Nokia shareholders *really* want from the company? To take back #1 place? No. And the answer lies in the way Nokia just keeps selling shovels. Or, if you prefer, keeps making TV sets…

Oh dear me. Billions of dollars, thousands of well-paid employees, and this is what you see when you first go to Nokia.com?

The handset market is changing

Being a handset maker is becoming a smaller slice of a much bigger pie, in the same way that making TV sets is now a small slice of a pie mostly made up of content production, distribution/licensing, and advertising.

By sticking to handsets and partnering with Microsoft for mobile operating systems, what Nokia has done is to commit to making TV sets, handing the content production to Microsoft (the networks, remember, are already owned by carriers).

That would be fine, if making the hardware was still a premium margin business, or if the market for content was still unproven. But a seething mass of Asian manufacturers making Android handsets are cutting all the margin out of making smartphones, and the market for content is very much proven. VERY much proven.

For Apple, meanwhile, is the fastest-growing content production, distribution, licensing and sales business that the media industry has ever known.

Shareholders expect Nokia to make the same leap and the reason it’s taking a hammering is that it’s failing to do so. In fact, it’s been failing to do so for a very long time.

Build a better marketplace

Enough of TVs and shovels, they’ve served their purpose. Nokia can be a successful and profitable handset manufacturer, but it is now clear that it won’t be the biggest brand in the mobile space unless it has the biggest content marketplace. Mobile content is now largely about music, TV, movies and, more than anything, mobile apps. How’s Nokia doing?

Not good. Nokia’s first opportunity to build an app marketplace was actually with the N-Gage platform, which it launched in 2003. Apple didn’t launch the first iPhone until mid-way thru 2007. Here we are in 2011 and Nokia’s had several attempts at building a thriving content marketplace, yet has been overtaken by every other competitor of note, most especially by Apple.

Nobody likes inertia, especially a shareholder

Nokia’s had an eternity in ‘market time’ to see the change coming, from a hardware market to a content market. It’s even had the luxury of being first to market with a content store. Yet with each strategic decision it makes, and with each product releases, it just confirms that making hardware is written so deep into its corporate DNA that there’s no room in there to become anything else.

That’s OK, it doesn’t necessarily mean that Nokia’s doomed, it just means that the market will adjust its valuation of Nokia, and we see that happening right now, with shareholders pricing in the adjustment, realising that Nokia’s probably only ever going to do one thing well, and that’s make shovels.

You’d like to sell digital content? First, print and sign these contracts

// June 10th, 2010 // 0 Comments // Music

You want to sell music, TV, movies or apps on iTunes Store? First you apply for an iTunes publisher account, and when you’re accepted, the manual labour begins. You might have thought you were entering a Brave New World of media as digital bits, but for now, it’s back to the Stone Age for you.

Apple asks you to print out and sign a 70 page contract, in duplicate, for each geographic market iTunes services (US/Canada/Mexico, Europe, Japan, Australia/NZ, then you have to FedEx that stack of paper to Apple in Cupertino, where they will manually review each signature page, countersign each contract, and FedEx back your copy. They then scan and store their copy in some vast archive.

Apple feels this stack of paperwork and penmanship is necessary before you enter into the business of selling digital content over their digital distribution network.

Sadly Apple has yet to adopt digital signature technology

In defence of the iPad I don’t yet have

// May 23rd, 2010 // 0 Comments // Hardware

I’m still waiting for my iPad 3G and another iPad (just wifi) for Boy8 and MrsBigyahu. I’ve used several; I get it, they’re going to be huge. While I wait, I’m frustrated by friends complaining that they “don’t want a huge iPhone, without the phone” or “won’t be getting one because it doesn’t have a camera.” You’re not getting it.

See, what will make the iPad successful is not the list of technologies included in the specification list. When the iPhone was launched, sceptics pooh-poohed the lack of hardware (especially the low-res camera and lack of a front-facing camera). The iPhone went on to sell millions. It was because of how the included technology was implemented, not which technologies were included.

First, Apple provided a high-quality app development toolset that allowed third-party developers to write so many different apps, not just operating on the OS but addressing the hardware in the phone in a consistent and reliable manner. (See “The best camera to have is the one with apps on it” http://doingwords.com/?p=1995)

Next, Apple provided a great retail experience for consumers and developers in iTunes Store, leveraging the iPod’s vast community of music, TV and movie customers to rapidly create a new market for iPhone apps. There’s never been a simpler, more seamless click-to-buy experience than finding and buying a new app from your iPhone. Apple knows the best way to sell iPhones is to market apps not iPhones — when was the last time you saw an ad for the iPhone itself?

I’m predicting the iPad will be an even greater success as an entertainment device than the iPhone because it’s not a compromise between a phone and an entertainment device.

It has a brighter, clearer screen with a far wider viewing angle because it doesn’t need to fit in your pocket, so it allows two people to watch a show together, read a book together, compete or collaborate on a game together. It has a 10 hour battery life because it doesn’t need to keep a 3G radio powered up and connected to a tower.

Unlike a MacBook Air, the iPad has no ‘up’ orientation — we can pass it around a table without needing to re-orient the screen or input area, making collaboration faster and more natural.

Unlike a MacBook, it’s light enough to make no significant impact on your shoulder bag, it doesn’t need a power brick to get through the day, it’s awake instantly and it’s significantly faster at all compute-intensive operations than your iPhone.

Multi-tasking? Please, the only common purpose I can think of for multi-tasking on a portable device would be polling an imap mail server while you’re reading an ebook or surfing the web, and Apple provides for that with push and pull email services. If you get an email while you’re reading, the iPad (and iPhone) will pop up a badge. Click on the badge and the iPad (and iPhone) will hold your front app in its current state and open the email for you. Other apps (such as eBay or Facebook) can access the same push notification services to push you a badge notification that you’ve been outbid on an auction item or that you’ve been tagged in a Facebook photo.

You don’t need multi-tasking to do this and leaving it out makes the device simpler to manage and preserves battery life. Try explaining to Nanna why her battery’s only lasting three hours because she’s minimised instead of quit her mail app. No thanks.

The iPad converts your next Economy plane seat to a Premium Economy seat. It makes a bus or train journey a potentially collaborative, social experience. It makes a visit to Nanna’s a chance to go through the latest family photos without having to teach Nanna a single thing about using a computer. It allows a classroom to get straight into educational play without first installing patches, removing viruses and debugging the network and printer connection.

And that’s the single most important benefit of an iPad: it puts real-world use first. It hides computing from the user. You don’t need to learn how to use it.

No less than five completely unhelpful options from iCal

// April 15th, 2010 // 0 Comments // software, User experience

Just a small post but here it is: 1,233,522 seconds? 1,233,522 seconds? WTF? Quick, in your head, how many hours is 1,233,522 seconds? Anybody? I didn’t think so.

I’ve seen iCal do some stupid things before but this about takes the cake. What’s worse is I don’t know what I did to deserve this or what I need to do to get my hourly reminders back. For Pete’s sake.

Hey, Apple? When you’ve finished buffing your floor-to-ceiling mirrors to a flawless shine so you can bathe in the glory of the iPad, do you think you could possibly spare a couple of developers to knock some of the rough edges off iCal’s unholy seething mass?

I don’t want more iPhone apps, I want better iPhone apps

// November 18th, 2009 // 0 Comments // software, strategy

Fred Wilson writes in The Power of Instant Approval that Apple is risking its lead in the smartphone app market by forcing app developers to wait on approval from Apple before publishing their apps on iTunes Store. It’s a growing industry concern — does Apple risk being overtaken by competitors? I think Apple understands the consumer relationship better than any competitor in the smartphone market and that’s why in this case, the cathedral can win over the bazaar.

The greater risk is that the industry may turn away from Apple if groupthink decides that Apple’s strategy is flawed. We’ve seen it before.

Could Google's Android Market really overtake Apple's iTunes Store?

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Presentation: how the iPhone changed my life

// June 24th, 2009 // 0 Comments // Communication, Presentation, Social Media

I’ll be presenting this short talk at an Optus event, hAPPlication, in Sydney, all about launching the iPhone GS and iPhone 3.0 to Optus customers and press. It’s 2:48am now and the event is happening this evening (oh my! I must go get some sleep now) but here’s the presentation…

And here’s the video!…

iTunes 8.1 update fulfills my desire for “social music”

// March 17th, 2009 // 0 Comments // Uncategorized

“With iTunes DJ, iPhone users that have Apple’s Remote application installed can request songs to be played. Users can also vote to control when songs are played. The DJ feature even has its own preferences, so you can send a welcome message to users and control whether voting is turned on or off. You can also require users to type in a password to access iTunes DJ’s features.” – Macworld

Thank you Macworld, that is so cool! Why didn’t that feature get more press coverage? Since the first Bluetooth connectivity was announced for the iPod I’ve been dreaming of a way to have a room full of people collaboratively controlling the music playlist.

Back then I was thinking about a Bluetooth or FM transmitter dongle that would assign you a unique ID within range of the DJ’s master dongle attached to his Macbook and running a controller app. The DJ could choose to accept a song playing back from any one of the unique IDs within range or queue up a playlist from the songs being suggested by the audience.

But that would be hard. This ought to be much simpler; just setup an AppleTV, or a Macbook with a direct out to a stereo, or via an Airport Express, and the party be started.

…oh, people would need an iPhone or an iPod Touch, naturally, but really, who doesn’t need one anyway?

The voting system could add some spice to the interaction. I can see Twitter being used as a backchannel (as it inevitably is) on people’s musical taste (or lack thereof.)

I must take some time out this week to set something up at the new Pollenizer office — this could be great fun at our welcome drinks.

Nice work, Apple!

[UPDATE:] With Apple’s announcement of broader support for Bluetooth, third-party hardware and apps, Steven Levy of WIRED magazine had a very interesting question about serving iTunes songs from one iPhone/iPod to another over Bluetooth. The Apple guys fielding questions didn’t say ‘yes’ but they didn’t entirely say no either… could my dreams of a giant, collaborative music party be closer than I imagined? Stay tuned!

HTC’s Android handset: the little droid that can’t

// November 10th, 2008 // 0 Comments // strategy

As fun to get to know as an early Linux install, for all the same reasons.

I’ve got no mobile clients at the moment but I’m a mobile geek so I’ve been watching with great interest to see what the market makes of the first handset to ship with Google’s Android mobile OS. I’m not surprised that it’s gotten a rave review by people who like to overclock their PC and a ho-hum review from people who just want something as easy to use as the iPhone but not from Apple. I’m surprised that Google and its partners really believe they can create an open architecture for mobile handsets that can compete with the seamless nature of the iPhone. I don’t think it can.

Everything that makes the iPhone such a revolutionary user experience depends on Apple’s ‘cathedral — its absolute control over hardware, operating system and applications. Even third-party applications are developed using Apple’s tools and marketed and delivered in a market tightly controlled by Apple.

Everything reviewers find disappointing about HTC’s first Android handset boils down to the difficulty in making a ‘bazaar’ product work – not controlling every aspect of the product and its software makes it harder design things that work smoothly.

Will the cathedral or the bazaar approach win out in the mobile handset market? Apple’s incredible success in the music player market suggests the cathedral is the model to adopt whenever you’re shipping high volumes of units to consumers who aren’t geeks – they just want something that works.

Google and its handset partners will probably garner a large and sustainable market of customers who like to take pride in their ability to configure, tweak and debug their Android handset, but that will always be a vastly smaller market than the number of people who just want to be delighted by how easy their phone is to use.

Android handsets will get better and better, but the capabilities will drift further apart over time, so that Android handsets will get better at specialist field applications – the sorts of things tablet PCs often do now — while the iPhone gets better at entertainment content and services.

People sometimes forget that Apple now owns a controlling stake in one of the biggest Hollywood studios, has very powerful relationships with what remains of the music industry, has a great set-top box (AppleTV), a robust delivery platform (iTunes) and is rapidly funding (presumably eventually to acquire) iPhone application developers.

Android may put price pressure on Apple, but we’ve seen with iPods how ready Apple is to crush competitors when it comes to price.

Could Google outmarket Apple? The word-of-mouth hype that created the Google behemoth was mostly an accident — byproduct of a bunch of people working really hard and keeping their heads down while the market watched with fascination. Google’s got no clue when it comes to marketing – how else to explain why they left their mobile platform with its original codename when they launched it? Is “Android” accessible? Cute? Sexy? Fun? Yeah, maybe if you like fiddling with code, but otherwise, probably not.

iPhone App-onomics and prospecting for gold

// September 4th, 2008 // 0 Comments // software, Startup, strategy

Thirty minutes after installing 2.01 on my iPhone 2G I had purchased and downloaded 21 new iPhone apps. The whole experience – from finding to buying to downloading and installing – was so quick and easy that my credit card barely warmed up as the money drained away. I had to force myself to stop before I blew it. It was clear there was going to be quite a market for iPhone apps.

Later, I was talking to some friends who had a mind to start an iPhone App development business – would I like to be a part of it? Well, yes! Though the volatility of any new market can be a challenging place to start a business.

Weren’t they worried about planning for their business before the economics of iPhone apps was really clear? Beyond the obvious risk of not yet knowing how long it takes to build apps, how do you know what to charge and what your revenues are going to be? What the hot categories will be? How best to market your apps?

Their response was the right one: we don’t know, but the opportunities are as big as the risks – if we happen across a successful formula we could have a great business. I think that’s a great attitude and I hope to tell you more about this new Aussie iPhone App developer when the time is right.

Meantime, the volatility of a virgin App economy (“apponomy”?) trying to establish itself is becoming clear. Average prices for apps started way up, and now developers are concerned that prices for some apps have been cut in half, others have gone from paid to free. I think Marco Arment, the lead developer at Tumblr and developer of the iPhone App Instapaper, has it right when he predicts that app pricing should turn out to be fairly inelastic – that it shouldn’t matter whether you’re charging $2 or $10, the challenge is in getting someone to pay at all.

The problem with inelastic pricing is that it comes with significant momentum, both up and down. If consumers come to an Appstore and the average price for apps is $0.00, that makes it very difficult to charge even $2.00. If Apple had a problem with apponomics and decided to institute, say, a compulsory $2.00 charge for apps, that would set the expectation that apps are not free, and consumers would then be more likely to pay $5-$10 because of the perception that “apps are not free.”

The challenge for Marco and other developers trying to make a living doing this is: for most app developers, this is not a living, it is not even a main focus of work. Never mind the hobbyist developers doing it for fun, it’s the big businesses using Appstore as a marketing vehicle for their main desktop software that can really hurt your business. They don’t need iPhone customers, but they do need their desktop customers to have access to their software on their iPhone – those are two different things. A big software company that doesn’t really care about iPhone app revenues can really hurt your business if they’re in the same space.

Marco also talks about whether or not to make the iPhone version of Instapaper his main business and not developing any subsequent apps. His first app has been very successful: is he best to build on that success by developing more apps, or by improving the app he’s already built? Many would say to keep one foot in each camp, but Marco calls it right when he makes his decision: you double the complexity of your business and how it is affected by the volatility in the apponomy if you keep a foot in each camp.

The apponomy will settle down as it grows, though Apple may need to assist it in doing so – using the same email marketing it uses to promote music that will be popular on iTunes Store, featuring app developers on Apple.com and by supporting good developers with pricing breaks, free training and access to advice from the App platform development team. Whatever actions Apple takes, it needs to be fast, but subtle. Lots of small, incremental changes please – if they wear their hobnail boots as Apple sometimes does, it will only start the apponomy oscillating more wildly.

Meanwhile, this is a gold rush. Is there really gold in them thar hills, or is it just iron pyrite? There’s only so much you can learn from the greenhorns running out of the supply store with shovels and wheelbarrows. Sooner or later you have to buy your own shovel and go see for yourself… Marco, where’s the store?…