Our World. Our Minutae.

Friday, November 18, 2005

Navio ... Sony's Dumbest Idea This Week

Business 2.0 is reporting that a new startup working with all the major record labels will soon be going after the itunes market by selling you a track you can "keep" forever and you can decide on the format you choose (ipod, cell phone, PC, etc ...) ... they reverse-engineered the ipod to get the ipod to accept this format.

Nevermind that Sony is involved in this venture and how poisonous the name is now to digital consumers ... after the summer where they settled a payola scandal for the record label, and a class action lawsuit in which they made up movie reviews, everyone at Sony apparently needs an ethics class or 7.

While on the surface, this seems like formidable competition for the itunes store, if you look beyond the inital thought, you realize it's just sadly inept.

First, the record labels cannot agree on anything so whatever they finally agree will be a camel designed by a commitee under the auspice of the U.N. They will basically end up as it is right now but after spending yet untold millions AND charging it to the artists.

Why? Consumers have had online stores, Mp3 players and digital audio formats BEFORE the ipod and itunes and yet, basically chose to ignore them. Why? Because they were designed by webmasters, marketing people, promotions people, lawyers, their lawyers and even the manufacturer reps handing out specs ... designed because the webmaster wanted to cross it off their list, by marketing people to add more FLASH, by PR to highlight their "most important" artists, by the lawyers on all sides - not sure what they contribute but the'll make sure to in their thoughts just to charge $400 an hour and of course because they are specs ... you'll notice that NONE of these are designed for people or more importantly MUSIC PEOPLE.

The itunes/WMA stores could not be a fairer test economically speaking. The mp3 players are sold in the EXACT same stores and on the INTERNET. The music tracks available at the major music stores sell virtually the EXACT SAME tracks. Yet, one store holds 70% of the market and one player holds 70-90% of the market and market segment of mp3 players.

Who do they blame? Apple marketing ... by marketing, what they are really saying is that us, the CONSUMERS are so STUPID that we are snowed by marketing. Sure, we will buy inexpensive items on a whim and we are subject to marketing but honestly, who can sell 600 million tracks and over 30 MILLION ipods just on marketing? That we are so POWERLESS that a shadow of people dancing are enough for us to shell out $200+ dollars ... Really? By that measure, there would be NO unsuccessful products as long as you ran a few ads a week? Really?

There must be something more. Yes, ipods are fashionable and ipod ads are nicely done but the success of the ipod is really quite simple - it delivers what it promises. It promises you can listen to a huge amount of music easily. Yes, it has a lot of add-ons like podcasts, video, contacts etc ... but the core reason is a very simple proposition. Do you like to listen to music?

And the key it delivers is CONVENIENCE. Convenience (along with the right pricing) trumps ALL. Yes, trumps all. Laserdiscs are actually a higher video fidelity than DVD's but they lost to VHS because of convenience. Or even why DVD trumped VHS - yes, the cost of the players helped but if you had to rewind DVD's - would you care the fidelity was higher than VHS? Not really. You would think - why pay $300 plus a new format when I still have to rewind but being able to jump anywhere? Analysts and early adopters/tech geeks always think specs will carry the day - if so, people would be buying a lot more $800 graphics cards. It's not specs or features that the "mass market" craves, it's CONVENIENCE. Why do you eat a particular fast food resturant? Because it's on the right side of the street? Why does Starbucks open two stores across the street from each other? CONVENIENCE.

itunes delivers convenience. You click on the BUY button. It DOWNLOADS it AUTOMATICALLY, when you plug in your ipod, it loads it for you.

That's why people do not need competiting stores - what is simpler than that?

(Proof - how's business at Rhapsody? The tracks you can almost also play on ipods?)

Now, the itunes store is not perfect for every person in every scenario you can envision but if you want a track and you don't want the CD, or wait for the CD or go to the store and hope they have the CD - itunes is there. Is there a tradeoff? Of course, but a CD is also compressed audio but that's another argument.

So, what does Navio promise? A DIFFERENT DRM music format than the Apple one (fairplay m4p) - the music buying market is comprised of people who want to own CD's and in many aspects, loath DRM and want their MP3 at a higher fidelity (320 kpbs VBR) over what itunes can deliver. These people know how to convert their CD's and probably also know how to download free music - so would they buy a track with a different DRM? Unlikely - why would they?

The promise they can keep the track forever? Honestly - how compelling is that? People cannot keep track of their CD's, housekeys and banks accounts when they move - they're going to expend so much energy on a $.99 track? Not to mention, that format ALREADY EXISTS - it's called a CD!

And while people skirt over the fact you can burn your itunes track to a CD and thus eliminating the DRM, my guess is the RECORD LABEL's DRM track is NOT going to offer you this option since they are letting you download to a multitude of formats - so again, why wouldn't you just the CD if you love the song so much you want it on your ipod, phone & computer?

Another selling point is that you cannot "lose" this track - you really trust the multitude of record labels to keep track of you & your music FOREVER? That you completely trust SONYBMG music to hold onto your account, even if inactive for 11 months as you serve in Afghanistan - that they will promise to keep you in their system forever & ever? Can you imagine calling tech support to retrieve YOU LIGHT UP MY LIFE?

Or is it easier just to buy a CD and if you lose it, just buy another CD?

Does this make owning an ipod, PC or mobile phone EASIER or more WORK for the average user (the only audience left since the high end user of digtial music is not goinbg for this)?

So, why would you do it? How much can you save on a track? The record labels are NOT going to sell you a "forever" track for LESS than an ipod track - same as a Sprint music track - $2.50? Remember, you will own it FOREVER - don't you think they'll sell it to you for $9.99 a track but if you're an artist and you're 22 years old now, you wouldn't want to give up royalties for that long unless you get a huge lump sum now, right? So, IN DA CLUB will cost you $39.99?

But can you transmit it to your hologram in 2017? Or are you better off buying it for $.99 and backing up your ipod and worry about 2017 when it rolls around? Your kid's photos , yes but long will you actually care about GOLD DIGGER?

The really sad thing is that the record labels and perhaps Sony most of all has spent nearly $100 million on "copy protection" that does not work on Macs or Linux and now is malware and being recalled ... ALL charged to the artists? Why about just lowering the cost of CD's $2 dollars? Too radical?

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