Mike Linksvayer points out the release of Songbird 0.2, an early preview of an open source iTunes competitor based on the Mozilla code base. And he predicts that Songbird (or a product like it) will do to Apple what the Web originally did to AOL and other proprietary online services in the 1990s:
Someone mentioned to me today that if the web were like iTunes you could only connect to msn.com, which reminded me of speculation that earlier aggressive intellectual protectionism online could have led to a proprietary cul de sac in online services. In that post I said without explanation that aggressive protectionism is being allowed to kill or stunt online music. People have been noting for awhile that protectionism enabled iTunes’ dominance, or as Techdirt put it “How The Recording Industry’s Obsession On DRM Made Apple So Powerful.”
I’ve downloaded Songbird and played with it a bit, and it is pretty impressive in some ways. However, I don’t think Apple will have any reason to sweat until they implement iPod integration. Songbird has a “devices” menu, so I assume that’s coming. It’s also a little strange that they don’t offer MP3 ripping functionality, given that some of its developers previously worked on WinAmp.
But what they’ve implemented so far is quite impressive. I hope eMusic is talking to them about tighter eMusic/Songbird integration, as this would give eMusic customers a much cleaner way to buy music than the current clunky “download manager.” And of course Songbird would benefit from having a music store as tightly integrated as iTunes is with the iTunes Store.
It appears that some of this functionality is available via extensions, but if they want to put a serious dent in Apple’s market share, they’re going to have to bundle the most important extensions seamlessly with the main product.
Ars reports on the NBCU 2.0 initiative, NBC Universal’s bid to cut costs and diversify into more cutting-edge media formats in a bid to keep up with the pace of change:
NBC plans to slash costs on prime-time programming by no longer producing expensive comedies and dramas for the first hour of prime time (8pm in the Eastern and Pacific time zones, 7pm Central and Mountain). Instead, expect to see more of the reality TV we’ve become accustomed to. Think more “Deal or No Deal” and less “Friday Night Lights.”
NBC will also consolidate the news bureaus for its three networks (NBC, CNBC, and MSNBC) and network-owned affiliates on the east and west coasts. Workforce reductions go hand-in-hand with consolidation, with the network expecting to cut 700 jobs–about 5 percent of its workforce–over the next two years. Between layoffs, news consolidation, and other cost-cutting measures, the network hopes to chop $750 million in costs by the end of 2008.
This is a classic example of the long tail thesis in action: NBC’s prime-time programming are the “blockbusters” of the TV world, and they’re bleeding viewers as more and more alternative programming is created and distributed without NBC’s overhead.
I’m impressed by the decisiveness of NBC’s management. As NBC Universal television group CEO Jeff Zucker puts it: “we have to recognize that the changes of the next five years will dwarf the changes of the last fifty.” These guys know full well that their core business is going to fall off a cliff once Internet-based video distribution matures, and they appear to be doing their best to assure that’s not the only card in their hands when it happens.
I expect we’ll see a lot more stories like this in the coming years. Newspapers, record labels, and Hollywood studios are all facing a future with hundreds of nimble competitors with fixed costs an order of magnitude smaller than theirs. I think companies like NBC that recognize the threat now and act decisively to cut costs and move into new markets will find themselves much better positioned a decade hence than the companies that try to shoehorn their 20th century business models into 21st century markets.
The obvious reaction of libertarians and conservatives to news that the leftist Air America radio has filed for bankruptcy is to claim this means there’s no market for left-of-center political commentary. But that’s obviously not quite right: progressive blogs have plenty of readers, and left-wing books seem to sell about as well as right-wing books.
I think a more plausible explanation for Air America’s poor performance is poor timing. The network came onto the scene at roughly the same time as a number of other media sources that competed directly for the same yuppie demographic that Al Franken appeals to. Left-of-center blogs rose to prominence in 2003 and were a force in Democratic politics for the first time in 2004. By 2004, The Daily Show had become the source for television news and satire among 20- and 30-something professionals. And a lot of young people began relying on their iPods, rather than the radio, for in-car entertainment. In short, Air America was fighting for a bigger piece of a shrinking demographic.
It seems like this flaw was exacerbated by high overhead. The network lost “$8.6 million in 2004 and $19.6 million last year, and has lost $13.1 million so far in 2006.” It’s not clear to me why it costs tens of millions of dollars to produce half a dozen daily talk shows. If those figures are driven by distribution costs–the article mentions that the network owes money to the stations that carry its programming–that seems like a big part of the problem. Their blogging and podcasting competitors are able to reach arbitrarily large audiences for essentially zero cost. Spending a lot of money to break into an over-crowded market for punditry via expensive and declining distribution format seems like a recipe for disaster.
Julian Sanchez points out a controversy among the readers of lefty blog Alas, A Blog. Apparently, the domain has been sold to a company that will add some additional pages to the domain that will have links to various porn sites, helping those porn sites increase their rank in Google searches. The commenters are outraged that a feminist blog would use his influence to help promote porn.
Brandon Berg points out that search engine optimization is a negative-sum game, so this strategy mostly just changes the relative rankings of different pornography sites without bringing porn sites in general more exposure. Which is probably true.
I personally don’t see anything wrong with pornography, so I can’t get worked up about that angle. But I think this deal is shady for another reason. Google operates by treating links from one site to another as a vote of confidence by the linker in the linkee. Google piggybacks on this web of trust to provide its users with highly relevant search results.
In a sense, a high PageRank is a position of trust. We would all condemn a professor who gave his best reference to the student who gave him the biggest check. I don’t see a principled difference here. Selling Google’s trust to the highest bidder not only harms Google but more importantly, it harms Google’s customers. If everyone behaved that way, it would lead to a world in which Google search rankings were driven more by money and less by the objective judgments of the online community.
Several places today I’ve read paeans to Tower Records which is going out of business.
An example here on DCist struck me because the author recalls her first Tower purchase, Radiohead’s The Bends. First purchase – Radiohead?! I’m getting old.
Though the write-ups I’ve seen sound the obligatory notes of sadness, there is an underlying current of inevitability – even appreciation – that a record store should find its way to oblivion. Without creative destruction, we would not have innovation. So, so long, Tower.
The first purchase I recall making at Tower – yes, age forces a retreat to what I recall – was the Dead Kennedys’ In God We Trust, Inc., purchased at the Tower in Mountain View across from the San Antonio mall. A great record. (And I assume a great CD, MP3, etc.)
How ’bout some Tower reminiscences in the comments? Who can beat the DKs for a first purchase?
From Lake Tahoe a thought: If shrinking the size of government proves a problem, perhaps one can continue to grow the private sector so that the state is comparatively small? One must take care that the state does not grow in ways that make private growth impossible. Beware unfunded entitlements…
And links to my synopses of Carver Mead’s talk, information on optical computing, discussion of talks by Steve Forbes and John Rutledge, and a discussion of distributed computing. Oh, and Peter Huber.
Here’s one more example of startups and intellectual property: this summer, a startup company called Kiko decided to throw in the towel, and they did it by putting the company’s assets up for auction on eBay. The shareware site Tucows bought it for $258,100. What’s most interesting about this is that the sale occurred in a very public manner, and the winning bidders have described in detail why they bought it. For the purposes of my discussion about startups and IP, I think this is the most interesting part of their analysis:
It was clear from their posts and such that Justin and Emmett were no longer passionate about the calendar space and were excited to do something else. They felt, and we agree, that this was worth much more with them along for the ride. Probably by a factor of ten. It would have then attracted a completely different type of buyer. We would not have paid that premium for the people. Not that they aren’t worth it. Just that our financial calculus was different. This probably kept some of the natural buyers out of the process.
We also did not need a huge base of retail users. They are nice and we will provide them with a great home but if this had been much of a success outside of Mike’s 53,651 it probably would have attracted more financial buyers or domainers and the price might have ended up more than we were willing to pay. It is worth noting here (and we also talk more about this in the podcast) that there was clearly interest in the domain name and the traffic. We will certainly monetize that as it is a space we know well, but we also may choose to sell the name off as it is not core for us. Either way it is another place where we, more than most/all other buyers who would be interested in the calendar functionality, will be uniquely able to take advantage of the assets.
This is interesting because this gives us a rare opportunity to guage the value of a company’s bare code without the staff, customers, and other assets that usually accompany it. Both Kiko’s founders and Tucows seem to believe that the code is valuable–$258,100 is obviously not pocket change–but that a functioning company is worth an order of magnitude more.
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Here’s another example where the the theory that startups and platform companies need intellectual property to do business doesn’t seem to apply. I just noticed today that MapQuest has unveiled a beta of an ajaxy web-based map feature. They’ve basically copied Google Maps, which I raved about last year. It appears that Yahoo! Maps also recently unveiled a clone of Google’s map interface. Microsoft and Rand McNally appear to still be behind the times.
I’m very surprised that it’s taken them this long. The concept behind Google’s draggable maps is not complicated. Indeed, a lot of the code is right there in the page source, where anybody can look at it. Writing the server-side code to support it isn’t trivial, but it’s hardly a mammoth undertaking. It’s possible that the problem was that it requires beefier servers (or better load balancing, or whatever) to handle the increased load from serving up more images, but this is Microsoft, Yahoo, and AOL we’re talking about. If anyone has the resources and know-how to build scalable web sites, it ought to be them.
What does this have to do with the startups and IP issue? It seems to me that this is a perfect test case of his hypothesis that companies can “simply take any ideas revealed and implement them.” There was very little mystery, in the abstract, about how Google’s mapping feature worked. Yet it took two of the deepest-pocketed companies in the computer industry 20 months to implement the idea, and a third is still working on it. In Internet terms, 20 months is forever. Mapquest has been bleeding tech-savvy customers like me that whole time.
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Matthew Yglesias notes Michael O’Hare’s prediction that consolidation of the newspaper business will be bad news for an informed electorate:
The traditional business model of a paper newspaper, in which readers’ attention is sold to advertisers by placing the ads next to news on a physical page, is broken. One fracture is a very broad withdrawal of public attention from anything that takes very long or much effort to engage with, from music to books and news; another is the IT-driven transformation of text from a product that can be denied to anyone who doesn’t pay for a physical object to a practically non-excludible public good. Still another is a phenomenon not fully understood, which is the much greater difficulty advertisements have drawing attention on a computer screen than on a paper page, evidenced by the flashing ads that now pop up screaming for attention over content on newspaper web pages. And we may also be seeing an example of “Baumol’s cost disease”, the steady increase of the relative cost of products like expert, competent, writing (music performance, in his example) that can’t take advantage of productivity improvements through technology.
When O’Hare says it’s difficulty for online ads to attract attention, he seems not to have heard of a little company called Google. It’s on track to earn $10 billion in revenues this year almost entirely by selling ads on computer screens. Google’s hundreds of thousands of advertisers don’t seem to be having any trouble getting users’ attention.
Given that most people still get most of their news and entertainment via non-Internet sources, there’s every reason to believe that the total size of the Internet advertising market will be an order of magnitude larger than that in a couple of decades. In a $100 billion market for Internet eyeballs, there should be plenty of room to pay people to do high-quality news-gathering.
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Tower Records is going out of business. It turns out that in the 21st century, shipping little plastic disks to brick-and-mortar retail stores is not a very lucrative way to distribute music. I expect we’ll be seeing more announcements like this one in the years to come, as the Internet cannibalizes 20th century music distribution and promotional models.
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