Archive for the ‘Digital Media’ Category

What do universities have in common with record labels?

February 19, 2016

Interesting article on Quartz.com tracking how “the internet’s power to unbundle content sparked a rapid transformation of the music industry” and arguing that “it’s doing the same thing to higher education today.”

Let’s start with the recorded music industry.

It’s no surprise that

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline.

It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums.

What did surprise me is that recording industry revenues have dropped by half from the $14 billion in 2000.

QZ Chart 1

The eroding revenues and and internet dynamics have “changed the way music labels had to operate in order to maintain profitability.”

“The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.”

And, talk about the top 1%  and distribution of riches …

Being a recording artist these days is a hard gig …

Pressure from labels then had downstream effects on content creators, specifically artists.

The top one 1% of artists now take home 77% of revenue, and the rest is spread across an increasing number of artists.

The pain of the record labels is forced on artists through smaller royalty payments.

Ouch.

Now, what’s the parallel to higher education?

(more…)

Posted in Digital Media, Disruptive Innovation, Education - Academics, Music | 1 Comment »

What do universities have in common with record labels?

April 27, 2015

Interesting article on Quartz.com tracking how “the internet’s power to unbundle content sparked a rapid transformation of the music industry’ and arguing that”and it’s doing the same thing to higher education today.

Let’s start with the recorded music industry.

It’s no surprise that

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline.

It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums.

What did surprise me us that recording industry revenues have dropped by half from the $14 billion in 2000.

QZ Chart 1

The eroding revenues and and internet dynamics have “changed the way music labels had to operate in order to maintain profitability.

The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.”

And, talk about the top 1%  and distribution of riches …

Being a recording artist these days is a hard gig …

Pressure from labels then had downstream effects on content creators, specifically artists.

The top one 1% of artists now take home 77% of revenue, and the rest is spread across an increasing number of artists.

The pain of the record labels is forced on artists through smaller royalty payments.

Ouch.

Now, what’s the parallel to higher education?

(more…)

Posted in Digital Media, Disruptive Innovation, Education - Academics, Music | Leave a Comment »

What do universities have in common with record labels?

July 15, 2014

Interesting article on Quartz.com tracking how “the internet’s power to unbundle content sparked a rapid transformation of the music industry’ and arguing that”and it’s doing the same thing to higher education today.

Let’s start with the recorded music industry.

It’s no surprise that

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline.

It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums.

What did surprise me us that recording industry revenues have dropped by half from the $14 billion in 2000.

QZ Chart 1

The eroding revenues and and internet dynamics have “changed the way music labels had to operate in order to maintain profitability.

The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.”

And, talk about the top 1%  and distribution of riches …

Being a recording artist these days is a hard gig …

Pressure from labels then had downstream effects on content creators, specifically artists.

The top one 1% of artists now take home 77% of revenue, and the rest is spread across an increasing number of artists.

The pain of the record labels is forced on artists through smaller royalty payments.

Ouch.

Now, what’s the parallel to higher education?

(more…)

Posted in Digital Media, Disruptive Innovation, Education - Academics, Music | Leave a Comment »

Obama’s social media barrage …

October 22, 2012

According to AdAge …

Obama is out slugging Romney in digital with 93% ‘Share of Voice’ in Online Ads.

The Barack Obama and Mitt Romney camps may be emptying their war chests this month to go head-to-head in TV spots in swing states, but the online battle is a more lopsided affair.

According to research by the analytics company Moat, the Obama campaign had a 93.3% share of voice in terms of display-impression volume in September across the top 20,000 publishers, compared with the Romney campaign’s 6.7%.

Obama had 497 creative executions deployed across the web compared with the Romney camp’s 90.

30% of the Obama ads have a Yahoo Genome tag, which “suggests use of audience and data targeting.”

The top five domains where President Obama’s ads were spotted in that period were NYTimes.com, RR.com, Oprah.com, Reference.com and Yahoo.com.

Romney’s top five were AOL.com, RR.com, Chow.com, GameSpot.com and Maxpreps.com.

The scale and sophistication of the Obama campaign’s digital ad operation should come as no surprise … the campaign opened a “tech field office” in San Francisco last winter that’s staffed largely by volunteers who work around their day jobs.

Romney’s digital director acknowledged that his side is being outspent on digital, but said that they’re trying to win by purchasing efficiently and working with third-party vendors to identify key buckets of voters in swing state.

“If [they] have money to burn … good for them … It’s a spray-and-pray model.”

““Obama had 27 million followers on his Facebook page, we had less than 5 million … But when the ruling came, we saw 27% engagement with our audience while they only got 1.5%.”

The post-mortem to this election will be interesting … both from a political perspective and re: target marketing and digital media.

Obama’s team is clearly at the forefront of using technology to pinpoint people, dope them out psychographically, and get to them through digital means … Romney’s team is pretty “old school”, largely relying on traditional research and methods.

Only complicator is that Obama is spending lots of $$$ on that old school stuff, too … so might be had to sort out which of his marketing techniques are delivering.

And, of course, the product and message matter, too …

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Posted in 2012 Campaign, Digital Media, Internet - Soc Networking, Social marketing, Social Media & Networking | Leave a Comment »

AT&T sets the standard for disruptive education innovation

July 2, 2012

Punch line: If corporations really want to make a difference in the American education system they need to rethink their philanthropic giving. By reallocating monies to initiatives such as gamification they can facilitate the foundational transformation that the education system truly needs.

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Excerpted from Fast Company Co.Exist: Big Corporations Can Disrupt Our Antiquated Education Model

AT&T recently announced that it had made one of its single largest grants ever to the small nonprofit GameDesk, a pioneer in game-based digital learning for at-risk kids.

The signal to educators, consumers, and legislators alike is that the company has a transformative role in the education arena.

Without question, this is a departure from the “tried and true,” philanthropic grant which … is not the disruptive or innovative approach that the education system needs. Unfortunately, most private investors–and educators–tend to be risk averse when it comes to investing significant dollars or time in disruptive approaches to teaching.

The kind of partner strategy we see from the AT&T/GameDesk partnership is exactly how senior leaders from Fortune 500 companies and their foundations need to be thinking …

Why? Because when it comes to the future of our children and country, taking a risk and investing in “game changing” technologies … sends a clear message to parents, consumers, students, and educators that the status quo must change.

Edited by JDC

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Blockbuster: Dead man walking ?

March 4, 2010

Question: when was the last time your were in a Blockbuster?

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Excerpted from Business Week: Blockbuster Plots a Remake, Feb. 24, 2010  

With its traditional video-rental business under assault, Blockbuster  has brought in restructuring advisers, looking to buy yet more time to remake itself in the face of new rivals and technologies.

Blockbuster’s plight comes amid major shifts in how people rent and watch movies. Consumers are now getting movies through Redbox, a unit of Coinstar  that operates $1-a-night movie-vending machines in grocery stores and McDonald’s outlets.

Netflix mail-order and online rental service has also stolen Blockbuster customers. Consumers are also watching movies and TV shows through on-demand cable services and electronic gadgets such as Apple Inc.’s iPod.

Blockbuster has adjusted its business, outlining plans to close nearly 1,000 stores out of roughly more than 5,000 world-wide.

As the movie-rental business has evolved, Blockbuster has moved into other video-watching services, such as its own mail-order service, DVD rental kiosks and a digital on-demand service, but it remains far behind its major competitors in those areas.

Blockbuster reaps licensing fees from NCR Corp., which rolled out about 2,500 Blockbuster Express branded vending machines last year and plans to have up to 10,000 DVD kiosks by the end of this year. Blockbuster’s kiosk presence is much smaller than that of Redbox, which has more than 22,000 vending machines.

Blockbuster’s mail-order service has about 1.6 million subscribers, compared with Netflix’s roughly 12 million.

There’s skepticism whether Blockbuster can realize enough value from new business offerings in time to offset declines at its traditional brick-and-mortar outlets.

“If they can’t build a profitable stores operation, then there is no Blockbuster. It’s real simple. If traffic doesn’t pick up by mid-year, we may just kiss this whole story good-bye. We got a dead-man-walking situation here.”

image

Full article:
http://online.wsj.com/article/SB10001424052748703503804575083792463467472.html?mod=WSJ_hps_LEFTWhatsNews

Posted in Digital Media, Retailing | Leave a Comment »

Netflix: What happens when DVDs meet 8-tracks in the junk heap?

November 30, 2009

TakeAway:  Through effective consumer management and distribution strategies, Netflix has changed the rules of the movie rental business and managed to fend off competitors along the way. 

However, as the game continues to evolve and Netflix’s distribution advantages become obsolete, will its subscription/information-based consumer loyalty model enable sustained success?

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Excerpted from Knowledge@Wharton, “Netflix: One Eye on the Present and Another on the Future,” October 28, 2009

In a year when DVD sales are falling and studios are facing major shakeups … Hollywood is beginning to look a lot like one of its own slasher films … however, there is at least one success story in the movie industry: Netflix.

… Netflix made a splash in the movie rental business by offering an online subscription model with a flat monthly fee for unlimited rentals and no late charges. Since then, despite a recession, fierce competition and the emergence of online video delivery, the company continues to thrive … Netflix is now in a race to transition to a business model focused on streaming content online …

In 2008 Netflix introduced a “Watch Instantly” service that allows consumers to stream movies on their home computers. Since then, the company has forged a bevy of partnerships to embed its Watch Instantly service in television sets and game consoles …

Netflix CEO said the company’s goals were simple: Grow revenue, subscribers and earnings while expanding into streaming content … 

However, Netflix’s DVD business faces intense competition from companies ranging from Apple (iTunes) to Blockbuster to Redbox … and … Netflix’s video streaming model is under fire from powerful rivals … YouTube … But it’s not as though competition is anything new for Netflix. So-called “Netflix killers” have surfaced repeatedly in the last decade … but they haven’t been able to stop Netflix’s momentum …

Netflix has proven its doubters wrong repeatedly, but it is unclear how the balancing act between the company’s old and new business models will play out …

For now movie rental sales figures are playing to Netflix’s advantage … DVD rentals have held up well as consumers opt for cheaper forms of entertainment … Particular strategies have helped Netflix maintain its lead, including:  1) Keeping one eye on the road and one eye on the turn ahead … 2) Employing a subscription model … 3) Moving quickly to stay ahead …

The longer Netflix can maintain its old model while investing in its digital streaming business, the better off it will be. Rivals can’t easily emulate the company’s distribution centers and information systems that allow it to deliver DVDs within one business day to 97% of its subscribers … And, the company’s physical assets have created a “moat” around the Netflix business model …

Digital distribution lowers the barriers to compete with Netflix …

Edit by TJS

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Full Article
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2367

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Posted in Digital Media | 1 Comment »

DVDs … going the way of the 8-track.

October 22, 2009

TakeAway:  Surprise surprise … DVDs are no longer worth the floor space. 

Now, Wal-mart has essentially crushed this product in one fell swoop.  When you leave it up to retailers to force product evolution, chances are that it is too late.

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Excerpted from WSJ “Wal-Mart Scales Back DVD Displays” By Nat Worden, October 5, 2009

Wal-Mart accounts for nearly a third of DVD retail sales in the U.S. … But, as part of a larger effort to clean up its aisles and appeal to higher-end shoppers, Wal-Mart is doing away with display cases to promote the latest hot movie titles.

The move comes as major film studios are reeling from declines in revenue from DVD sales as consumers turn to low-cost rental services and digital downloads for home movies …

“We think the new strategy implies Wal-Mart no longer sees DVDs and Blu-ray discs as traffic drivers” .

The change to its DVD selling strategy is part of a larger merchandising overhaul the company calls “Project Impact,” in which it has been devoting more shelf space to top-selling products and cutting back on items that linger.

The discount giant also is trying to spruce up its image and cut back on clutter in its aisles, like corrugated displays for DVDs, in hopes that it can attract a more upscale shopper …

Meanwhile, Wal-Mart and other major retailers, along with several fast-food chains, have been adding low-cost DVD rental kiosks, such as Redbox, near store entrances … And studios have cut deals with services like Netflix …

Edit by TJS

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Full Article
http://online.wsj.com/article/SB125470337132563199.html?mod=WSJ_hps_sections_tech

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Netflix – Managing a still-hot business as its time runs out.

June 23, 2009

Summary: Business is booming for Netflix as people stay at home more during the recession. But, online streaming video is certain to overtake mailed DVDs eventually.  Netflix is trying to stay ahead of the curve.  Good luck.

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Excerpted from WSJ, Netflix Boss Plots Life After the DVD, June 23, 2009 

Netflix is a standout in the recession. The DVD-rental company added more subscribers than ever during the first three months of the year.

image

But Netflix’s CEO Reed Hastings thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix’s revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. “As a capitalist, I’d rather have Blockbuster as my primary competitor than all those Internet companies,” Mr. Hastings says. So he is quickly trying to shift Netflix’s business — seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets.

Companies across the entertainment and technology landscape are struggling with how to profit from Internet video. There’s still significant risk that Netflix could falter or lose out to another company that figures out how to do it first. And having picked his battle, Netflix may risk missing other growth opportunities: – the company hasn’t yet expanded internationally or mounted a direct challenge to kiosks, such as Coinstar Inc.’s Redbox, that let customers pick up $1-a-night DVD rentals. It is considering expansion opportunities outside the U.S. and has no plans to open kiosks.

One of the biggest hurdles will be persuading Hollywood studios to give Netflix rights to show more and better movies through its Internet service at a time when many studios are protective of their DVD-sales revenues.

The company stumbled in an earlier effort to introduce a set-top box that would bring Internet video service into the living room. Netflix developed the hardware but then abandoned it after executives got cold feet.

Mr. Hastings, the CEO says he is a student of companies such as AOL that tripped up by failing to adapt to technology shifts.

Netflix’s big break came as a different industry leader failed to keep step. In the late ’90s, the home-video business was shifting to DVDs from VHS tapes, offered by rental giants such as Blockbuster Inc. Netflix emerged with warehouses that stocked larger selections of DVDs than Blockbuster’s rental outlets could, mailing them around the country in red envelopes. Netflix charged consumers a flat monthly rate to rent as many DVDs as they liked, eliminating the late fees charged by rental chains.

Blockbuster eventually started its own DVD rent-by-mail service, but scaled it back in late 2007 after consistently losing money on it.

Now, amid gathering signs of the DVD’s decline, the industry is poised to shift again.

Home-video sales, mostly from DVDs, last year dropped to $14.5 billion from $15.9 billion the previous year. Movie rentals remained flat over the period, at about $8.2 billion. The number of DVDs Netflix rents every year — about a half-billion in 2008 — is still growing, and Mr. Hastings predicts the company will still be shipping discs to consumers 20 years from now.

But he expects rental figures to begin to dwindle in four to nine years.

Anticipating the demise of DVDs almost from the beginning, the company’s name  didn’t reference discs or mailboxes and the company invested in software formulas to crunch data about its customers’ tastes so it could recommend DVDs to them, a technology that could carry over to an Internet movie service.

In January 2007, Netflix began letting subscribers stream video to their PCs from the company’s Web site, allowing users to watch video almost instantly without keeping permanent copies on their hard drives. The service featured only about 1,000 movies and television shows — about 1% of its DVD selection — but subscribers could use it for no extra charge.

Now more than 20% of Netflix members regularly use the service. The company says new users attracted by streamed movies have helped push its subscriber total up 25% to 10.3 million at the end of March from a year earlier.

The online model has another benefit for Netflix. The company currently pays about 80 cents to post a DVD to a customer’s home and back. Its bandwidth costs for streaming a typical two-hour movie: roughly a nickel.

Netflix’s biggest challenge in getting Hollywood to go along for the ride. Netflix’s selection of more than 100,000 DVD rental titles is made possible by the “first-sale doctrine” of U.S. copyright law, which permits buyers of DVDs to lend them out without studios’ consent.

In Netflix’s early days, its buying team would sometimes purchase DVDs at local Wal-Marts or Best Buys if it couldn’t get copies through studios.

In contrast, to deliver movies and television shows over the Internet, Netflix has to license them from studios. So far, it has gotten only about 12,000 titles, a hodgepodge of older films such as “Diehard,” episodes of popular TV shows including “30 Rock” and a smattering of new releases.

The main reason: Netflix must compete with television subscription services like Time Warner’s HBO, Viacom Showtime and others that gain exclusive rights to show studio movies on cable channels or through on-demand systems. These pay channels have bigger audiences than Netflix and a longer history of securing movie rights. Their lucrative deals can prevent Netflix from getting Internet rights for movies until years after they’re released on DVD.

If Netflix is to expand the titles on its Internet service, it will have to considerably boost its licensing spending, from roughly $100 million last year.

“Netflix has yet to show that it has the resources and profitability to be in the markets where licensing is the business policy.

Hollywood is “clearly conflicted” about the online service’s growth because it could help accelerate the decline of DVDs.

http://online.wsj.com/article/SB124570665631638633.html#mod=testMod

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"Hyperlocal": A New Model for Online News?

May 14, 2009

Excerpted from New York Times, “‘Hyperlocal’ Web Sites Deliver News Without Newspapers”, by Claire Cain Miller and Brad Stone, April 13, 2009

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A number of Web start-up companies are creating so-called hyperlocal news sites that let people zoom in on what is happening closest to them, often without involving traditional journalists.

The sites collect links to articles and blogs and often supplement them with data from local governments and other sources. They might let a visitor know about an arrest a block away, the sale of a home down the street and reviews of nearby restaurants.

Internet companies have been trying to develop such sites for more than a decade, in part as a way to lure local advertisers to the Web. But the notion of customized news has taken on greater urgency as some newspapers have stopped printing and with the news business being in “a difficult time period right now, between what was and what will be.”

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Of course, like traditional media, the hyperlocal sites have to find a way to bring in sufficient revenue to support their business. And so far, they have had only limited success selling ads. 

One problem is that the number of readers for each neighborhood-focused news page is inherently small. “Advertisers want that kind of targeting, but they also want to reach more people, so there’s a paradox.”

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One of the most ambitious hyperlocal sites is EveryBlock, which has created sites for 11 American cities, including New York, Seattle, Chicago and San Francisco.

It fills those sites with links to news articles and posts from local bloggers, along with data feeds from city governments, with crime reports, restaurant inspections, and notices of road construction and film shoots.

That raises the question of what these hyperlocal sites will do if newspapers, a main source of credible information, go out of business. “They rely on pulling data from other sources, so they really can’t function if news organizations disappear.”

But many hyperlocal entrepreneurs say they are counting on a proliferation of blogs and small local journalism start-ups to keep providing content.

Edit by DAF

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Full article:
http://www.nytimes.com/2009/04/13/technology/start-ups/13hyperlocal.html?ref=media&pagewanted=print

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Nintendo Striking Back at iTunes … It’s No Game !

May 1, 2009

Excerpted from Washington Post, “Nintendo, Biting Back at iTunes”, by Mike Musgrove, April 5, 2009

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Open up the latest portable game gadget from Nintendo, the DSi, and you’ll be able to log onto a new online store carrying a small catalogue of software titles. If you see one that grabs your interest, you can buy and download it to your device on the spot, with prices starting at $2.

This type of purchase probably doesn’t seem exotic any more, thanks largely to Apple. Apple’s App Store, which offers software for its iPhone and iPod Touch, has had 800 million downloads since it opened last summer. Now, other mobile gadgets like Nintendo’s DSi are quickly creating their own retail outlets on the Web.

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Some see Apple’s online software store as having hit close to home for Nintendo, which has long dominated the mobile gaming market. The most popular category in Apple’s software store, after all, is entertainment-related software.

DSiWare is “basically a direct response to iTunes . . . Apple definitely came up and bit these guys on the rear end, and this is Nintendo striking back.”

In terms of downloadable content, Apple’s store offers almost 7,000 games. Nintendo’s DSi store launches today with five titles, not including a free Web browser that DSi users can download to their device.

Nintendo says the company has adopted a different strategy than the competition. Just about anybody who pays a fee and passes an inspection by Apple reviewers can sell his software on the iTunes store, but that’s not how Nintendo has approached this market. The roster of titles Nintendo approves for sale on the DSi store will be “more like the content you’ll find at a film festival”, as opposed to its competitors’ catalogues, which are “more akin to YouTube.”

Edit by DAF

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Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/04/AR2009040400098_pf.html 

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Hollywood’s Newest Concern? A Big Red Vending-Machine

April 17, 2009

Excerpted from LA Times, “Redbox’s $1 vending-machine video rentals worry movie studios” By Dawn C. Chmielewski, March 30, 2009

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The hottest thing in movie rentals is as old as the Coke machine — and just as red. Redbox movie kiosks are popping up by the thousands in supermarkets, drugstores, restaurants and convenience stores around the country. The kiosks stock DVDs that rent for $1 a day, a remainder-bin price that is less than a cup of coffee at Starbucks.

For all the talk about the Internet, Wi-Fi and cellphones becoming the new gateways to watch movies and wiping out the corner Blockbuster, a ubiquitous vending machine the size of a refrigerator is becoming a growing concern to Hollywood.

Consumers are pulling DVDs out of the Redbox kiosks in record numbers, undermining longtime economics that have propped up the movie business — and in the process triggered a backlash from a major studio that sought to cut off Redbox’s supply of hot new DVDs …

Redbox operates nearly 12,900 kiosks throughout the U.S. — four times as many locations as Blockbuster — and plans to introduce 7,100 more by the end of the year … Consumers rent a DVD from the machine using their credit or debit cards, which enables Redbox to charge an additional day’s rental if the DVD is not returned within a 24-hour period. A typical kiosk can earn significant coin: about $50,000 annually in revenue per machine in operation after three years.

Blockbuster … started rolling out its own DVD-vending kiosks last summer … “We have been watching very carefully as they have progressed … We think it is very consistent with what Blockbuster does, which is to provide convenient access” to home entertainment.

The discount DVD rental business worries Hollywood movie studios because of fears that it is undercutting DVD sales, which dropped 13% in the fourth quarter … DVD sales historically have been how the studios earn a profit on movies, because ticket sales are barely enough to offset production and marketing costs. Some studios believe that consumers will forgo buying DVDs if they have a cheap option to rent movies …

The kiosks caught on, especially in supermarkets, where they catch customers’ eyes as they push their grocery carts through the checkout counters.

The combination of errands to fill the cupboard and rent movies, as well as the consistent flow of customers, turned out to be advantageous … “It’s a regularity of traffic, and the biggest single place people are going after the supermarket is to their homes,” Redbox’s Kaplan said. “Consumers tend not to rent DVDs when they’re not going home” …

Video industry analyst Adams estimates that the kiosk rental market, which totaled $519 million last year, will reach $1.4 billion in five years — or about one-fourth of Blockbuster’s 2008 revenue.

“You could view that as directly competitive” with Blockbuster, Adams said. “It’s a cheaper option, and during a recession people embrace it.”

Edit by SAC

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Full Article:
http://www.latimes.com/business/la-fi-cotown-redbox30-2009mar30,0,3496501.story?track=rss

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From Bad to Worse: New Competitors for Struggling Sirius

April 8, 2009

Excerpted from BusinessWeek, “Serious Threats to Sirius Radio”, by Olga Kharif, March 30, 2009

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Since its inception, satellite radio bragged that unique content represented a key competitive weapon in the crowded digital media market. Just last year, former rivals Sirius and XM spent a combined $446.6 million on programming and content alone. But as Web radio and mobile radio applications flourish, they are beginning to erode the value of Sirius’s pricey content deals.

Companies like the Web radio service Pandora, Foneshow, Stitcher, and Slacker—as well as traditional content providers—are broadcasting portable and mobile content that is cheaper or even free. Moreover, these upstarts can often replicate Sirius programming. One example: On Mar. 30, MLB will release an iPhone mobile application that will stream games live from all 30 teams—which is what Sirius customers get now—and offer video clips and live score updates for $10 for the entire season.

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For Sirius XM, this competition over price and content comes at the worst possible time. The company is looking to monetize its content through mobile phones to complement its traditional outlets. Auto sales, which have fueled Sirius’s subscriber growth for several years, have slowed to a crawl. Ditto for retail store sales now that electronics retailer Circuit City is gone. Even worse, many consumers have slammed their wallets shut amid the recession.

Now, new rivals are making Sirius look overpriced and stodgy.  To find growth, New York-based Sirius must change from a satellite radio company into one that offers pure content through new distribution channels, such as mobile.

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In its latest quarter, Sirius added a net 82,945 subscribers—down from 1.1 million in the same quarter of 2007. Growth could pick up if the radio service were to be bundled with Liberty Media-owned DirecTV. The two satellite companies could also cross-market to each other’s subscribers. Liberty, which has a 40% stake that is convertible to Sirius XM shares, is also working with the company on a business plan aimed at cutting costs, such as Sirius’s talent fees.

Still, it’s hard to fathom Stern taking a huge pay cut when his Sirius XM contract expires at the end of 2010. He has said he may retire then, but he also may shop around for a better offer if Sirius decides not to pay. Stern contributed roughly 2 million of Sirius XM’s 19 million subscribers. While a near-10% customer base is worth plenty, Sirius may well decide it is not worth $100 million annually.

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The New Competition:

Some of Sirius’ 69 music channels have already been replicated online. As much as 40% of Slacker’s 1 million monthly listeners come from mobiles. The service is free for those willing to listen to 30 seconds to two minutes of advertising per hour. For $3.99 a month, Slacker has no ads and allows song skipping.

iPhone users can now listen to talk shows through a service called Stitcher, which grabs RSS feeds from online podcasts and allows users to “stitch” together custom radio channels of popular news and talk shows. Stitcher users listen to 5 million minutes of radio a month, up from 1 million last August, and is on track to reach 1 million users by the end of 2009.

Foneshow lets any phone with text messaging capabilities to catch custom talk radio programming.  Whenever a new show segment becomes available, your phone receives a short text message with a link. You hit “Send,” and your phone starts streaming audio, which you can pause, skip or forward to a friend.

This summer, Myine Electronics, begun by two former satellite radio hardware engineers, will launch a device called Abbee. The $250 gadget scans FM stations and records songs onto an internal hard drive while erasing all commercials. The gadget has a cable for use in a car, the domain of satellite radio.

Edit by DAF

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Full article:
http://www.businessweek.com/print/technology/content/mar2009/tc20090327_877363.htm

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Free Downloads to Save the Music Industry … say, again

February 19, 2009

Excerpted from the New York Times, “Music Industry Imitates Digital Pirates to Turn a Profit”, by Eric Pfanner, January 18, 2009

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After years of futile efforts to stop digital pirates from copying its music, the music business has started to copy the pirates.

Online and mobile services offering listeners unlimited “free” access to millions of songs are set to proliferate in the coming months, according to music industry executives.

Unlike illegal file-sharing services, which the music industry says are responsible for billions of dollars in lost sales, these new offerings are perfectly legal. The services are not really free, but payment is included in the cost of, say, a new cellphone or a broadband Internet access contract, so the cost to the consumer is disguised. And, unlike pirate sites, these services provide revenue to the music companies.

Perhaps the most prominent service offering unlimited downloads has been Comes With Music, which was introduced in Britain last fall by Nokia, the world’s largest maker of cellphones. It lets users download as many songs as they want, from a catalog of more than five million tracks, when they buy certain Nokia phones.

Other services offering unlimited downloads are being introduced by Internet service providers, which many people in the music industry say hold the key to curbing piracy because of their direct relationship with Web users.

“At the end of the day, we are not going to stop piracy, so let’s embrace it,” said one industry insider.

Music companies have balked at such arrangements in the past. But they are showing a newfound flexibility in licensing their material as their existence becomes increasingly threatened.

Cellphone manufacturers, meanwhile, are eager to add music services as the battle of the smartphones heats up among companies like Nokia, Apple and BlackBerry.

Edit by DAF

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Full article:
http://www.nytimes.com/2009/01/19/business/worldbusiness/19digital.html?ref=technology&pagewanted=print

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Domino’s beams pizza to consumers … well, almost.

January 21, 2009

Excerpted from Marketing Daily “Domino’s Lets TiVo Users Order Pizza Via TV”  by Nina M. Lentini, November 17, 2008 

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Why get up? Now, couch potatoes who subscribe to TiVo can order a Domino’s Pizza through the service…

Say you’re watching “Monday Night Football” and an ad for Domino’s Pizza shows up. Right there, as you view the ad and hear your tummy growl, you can click through, order the pizza and have it at your home in about a half hour…  

Domino’s is targeting TiVo subscribers as well as potential subscribers…This includes a special tag in its TV ads that TiVo servers can recognize, thereby allowing the click-through during the ad’s broadcast. Also, at TiVo “central” or the service’s “home page,” where subscribers can view their shows…one of the top five options will be: Order a pizza from Domino’s…

TiVo will tout Domino’s Pizza and the fact that it can be ordered through the service in its subscriber emails and billing statements. In addition, TiVo’s sales force is touting educational and training material to push the fact of this innovation…

Edit by SAC 

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While Domino’s has taken to TiVo, Papa John’s is luring Facebook fans with free pizza.  Papa John’s current promotion promises a free pizza to fans who join its Facebook page.  Both pizza makers have had used internet ordering for some time now, but are continually looking for ways to break through the clutter.  Papa John’s also offers text message ordering.  In the words of a Domino’s VP of Marketing from this article, “The only thing better is if we could actually beam the pizza to the consumer.”

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Full Article:
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=94922

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As downloading slows, Apple raises iTunes prices … but only on popular tracks … Huh?

January 7, 2009

Excerpted from WSJ, “Apple’s iTunes to Change Pricing Strategy”, Jan. 6, 2009

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Apple unveiled significant pricing and copyright changes to iTunes.

The changes include a new three-tiered pricing plan: songs will cost 69 cents, 99 cents or $1.29 …  the “vast majority” of the songs will cost 69 cents, though the most sought-after songs — which generate most of the sales on the service — will likely cost $1.29 as both Apple and the major record labels try to boost revenue growth. The wholesale prices charged by the record labels are likely to change to reflect the new price points. The new wholesale prices couldn’t be immediately learned., instead of the 99-cents fixed price Apple has used almost exclusively.

Apple’s moves appear to be a response in part to shifts in the digital-music market. Digital-music retailers in the U.S. sold more than one billion songs in 2008. Apple surpassed Wal-Mart as the world’s largest music retailer. But, growth in paid downloads slowed significantly in 2008, rising 27%, compared with a 45% increase a year earlier.  Amazon.com sells many songs at a cheaper price than iTunes and without copy protection, giving users more freedom to do what they like with the songs they have purchased.

Apple also said it is dropping digital rights management, or copy protection, from eight million songs in its catalog effective immediately. Digital cognoscenti long have railed against DRM, saying it hobbles buyers’ ability to use music the way they want.  Apple’s DRM has made it complicated for consumers to use … and made it difficult or impossible to play songs purchased from the iTunes Store on devices other than the iPod or iPhone.

Users can pay 30 cents a song to upgrade previously-purchased songs in their iTunes library to a DRM-free version.

Full article:
http://online.wsj.com/article/SB123126062001057765.html?mod=testMod 

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KEH Take:

(1) For MSB MBAs who took AMS: an example of the “Long Tail” and  customized pricing in action — low prices on low volume products — edging up to what the market will bear on popular ones.

(2) I can’t prove it, but it’s my sense the free downloading (i.e. “piracy”) is on the rise again. If true, Apple’s move to $1.29 on popular songs may backfire. Downloaders may be comparing to “free” again — not to Wal-Mart’s or Amazon’s prices

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Netflix and TiVo Expand Their Niche

November 17, 2008

Excerpted from the Associated Press, “Netflix, TiVo Team Up After 4-Year Courtship”, by Michael Liedtke, & BusinessWeek “TiVo Does Netflix”, by Cliff Edwards, October 30, 2008 

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Netflix . and TiVo . are finally joining forces to deliver more movies and old TV episodes to their mutual subscribers, consummating a relationship that was supposed to come together four years ago.

Under the partnership , the latest generation of TiVo’s digital video recorders will be able to beam selections from 12,000 movies and TV shows offered through Netflix’s streaming service, which must be piped over high-speed Internet connections. 

TiVo ended July with 3.6 million subscribers and Netflix ended with 8.7 million subscribers. The streaming service is available at no extra charge to any Netflix subscriber paying at least $8.99 per month for DVD rentals — a prerequisite that most customers meet.

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Both companies have been moving aggressively to add more value to their services.

Netflix now has struck deals with Microsoft, Sony, Samsung, LG and Roku to deliver movies and TV shows through televisions, set-top boxes and game consoles.

TiVo, which charges a monthly or lifetime service fee, has expanded from its partnership with Amazon’s Unbox video service. In recent months, it has added CinemaNow and Jaman movie downloads and the Rhapsody movie subscription service.

Netflix is a bigger deal to TiVo because people who own the standalone box won’t have to shell out any additional cash. It might one day become an industry-changing deal if Hollywood opens the floodgates on the amount of content they license to Netflix and offers more current movies for streaming.

Most anyone who owns a TiVo will tell you how much they love it … but the service remains a niche product. Potential customers have balked at both paying for the box and monthly service. Each announcement of additional functionality helps overcome that reticence and offers another proof-point that TiVo has a lot of life left in it still.

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In addition, the growing selection of streaming devices could help boost Netflix’s profits by causing subscribers to request fewer DVDs. Each DVD rental makes a round trip through the postal service that costs Netflix 84 cents, so fewer requests will lower expenses.

Netflix still has to pay movie and TV studios licensing fees for the streaming rights, but that doesn’t cost as much as mailing DVDs.

“Netflix has really stumbled upon something that’s pretty clever  …  the customer gets the instant gratification of watching a movie over the Internet, studios get more licensing fees and Netflix saves money.”

Edit by DAF

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Full articles:
http://www.businessweek.com/ap/financialnews/D944J9SG2.htm & http://www.businessweek.com/the_thread/techbeat/archives/2008/10/tivo_does_netfl.html?chan=top+news_top+news+index+-+temp_technology

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If You Can’t Beat ‘Em…

October 22, 2008

Excerpted from BusinessWeek, “Can MySpace Save the Major Music Labels?”, by Catherine Holahan, September 12, 2008

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The major music labels have made a sharp reversal that may improve their prospects. For years they fought Internet companies for fear that their music would be stolen. Now they’re racing to capitalize on the new opportunities on the Web. “The labels were very reticent to embrace change at a time when it could have actually worked to their advantage,” says eMarketer’s Paul Verna. “Now there’s a sense that they have no choice.”

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Meet the record label, version 2.0. After nearly a decade of plunging music sales, the labels are trying to overhaul their traditional business. Instead of just selling recorded music, they want to use music to sell a range of related extras, from online advertising to mobile phones packed with tunes. The new business model puts the Internet at the heart of the industry in an attempt to transform artist Web sites from promotional vehicles into money-making enterprises.

The biggest bet on this new model is MySpace Music. The joint venture between News Corp.’s (NWS) social networking site and the three largest record labels—Universal Music Group, Sony BMG Music Entertainment, and Warner Music—is set to launch in the next few days.

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This is the label’s most ambitious push yet to develop online advertising and e-commerce revenues. The labels will have equity stakes in the new venture. They’ll also get a cut of the revenue from ads on artists’ pages, as well as those from music downloads, ring tones, merchandise sales, and concert tickets.

The record industry has been hammered in recent years by online piracy and a dearth of mega-hits, with sales sliding steadily since their peak of $14.6 billion in 1999. Last year was the industry’s worst yet in terms of revenue losses. The total value of digital and traditional sales dropped 12% in 2007, to $10.4 billion, compared with a 4.4% slide the year before.

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The idea behind MySpace Music is that it can help generate revenue for artists every day, not just around an album’s release. The venture gives the labels access to MySpace’s global audience of 118 million users and its ad sales team of more than 250 people. It also provides the labels with a prominent venue to pull in audiences and advertisers with new types of non-music content, including music news, behind-the-scenes videos, and artist interviews such as the one with T.I.

Major advertisers are signing up. Industry sources say MySpace Music has signed multimillion-dollar ad deals with McDonald’s (MCD), Toyota Motor (TM), and other major brands for its launch. MySpace is designed to do more than bring in ad revenue, though. It also gives the industry a new channel through which to sell songs, ringtones, T-shirts, and tickets.

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MySpace Music may prove to be a model for future ventures on the Net. If the concept works, it could help the labels turn other online hangouts, like the leading social networking site, Facebook, into forums for music sales and related revenues. It could also help demonstrate that the labels will see tangible benefits from new contracts under which they share in advertising, e-commerce, and merchandise sales. “If they do all that, then maybe they can stem the tide of these rapidly falling CD sales and start to see the pie get a little bigger,” says Verna, “But it is definitely a big if.”

Edit by DAF

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Full article:
http://www.businessweek.com/print/technology/content/sep2008/tc20080912_717914.htm

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Will Sports Fans Cheer for New Slingbox?

October 7, 2008

Excerpted from The Washington Post “A Lot for Sports Fans to Like, but the New Slingbox Still Isn’t a Slam Dunk” by Rob Pegoraro, September 25, 2008

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Watching television on a computer screen is no special achievement these days. Between the free streaming video on the Web and TV downloads at iTunes and elsewhere, you don’t need to work too hard to turn your computer into a replacement for the tube.

But if you can watch your own TV — with your local shows, your team’s games, your recorded programs — on a computer monitor, and do so hundreds of miles from your home, now that’s something else…

That’s the trade-off of the Slingbox, the Web-connected “personal broadcaster” from Sling Media. Today, this division…is introducing the latest Slingbox, a high-definition device that fixes two flaws of earlier versions but can’t do much about some other underlying issues.

The new $299.99 Slingbox Pro-HD, like older models, can take any video input and relay it over the Internet to a computer or smartphone running SlingPlayer software. But with a simple antenna, this model’s digital TV tuner can pull in high-definition broadcasts off the air for free; with enough bandwidth, it can send those programs out in nearly their original quality.

With the player comes an updated SlingPlayer 2.0 that — finally — adds pause, rewind and forward controls. You still can’t record a broadcast, but you can now pause it and zip ahead or behind.

A review unit loaned by the company, running an almost-final version of its software, usually performed those tasks without complaint but still exhibited glitches…

Slingbox owners seem as passionate about these boxes as any group of gadget enthusiasts, in many cases for a simple reason: This is the easiest way to follow their sports teams when they travel or move out of town…

Edit by SAC

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Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403037_pf.html

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