NBC To offer video download service

The New York Times is running a story about NBC offering their own video download service this fall. So it looks like NBC is wanting to get in on the download action directly. At least they're not trying to hide their reasons for it.

“We did this to eliminate the middleman,” said Jeff Gaspin, the president of NBC’s digital division.

NBC seems to be waking up to the fact that the business they are in is media distribution, and that the distribution model has shifted online. Apple saw this much earlier and jumped on it. Now that the model has proven successful, NBC is looking to go it alone.

It will be interesting to see how this plays out. Initially NBC says they will offer shows free for download just after they air. It looks like you only have one week from the air date to download and watch it however, and then it seems they won't let that episode be downloaded. The downloads themselves will be restricted to Windows-based PCs, and will stop working after seven days. It's unclear if that's seven days from the day it is downloaded, or seven days from the initial making available after the air time. This sounds like it makes it impossible to pick up a new show mid-season, then go to NBC and back sample the earlier episodes. If you really like a new show you'll have to hope for re-runs, or buy the DVDs at the end of the season.

It doesn't sound like the free part will last long however. From the NYT article:

But NBC intends to transform the service into a model similar to iTunes by the middle of 2008 - that is, consumers will pay NBC directly to download episodes of the shows.

I will have to reserve judgement on the pricing until it is announced, but I'm not optimistic. One of the rumored reasons for the NBC-iTunes breakup was pricing, that NBC wanted to charge more. I can't really see how NBC expects to charge more that Apple's $1.99 per show, especially if the shows are really only rented for a week.

I will have to test this out on a Windows machine at work, since I don't have one at home. I'll be curious to see if NBC can put together an offering that is as easy to use as iTunes. I'm a little worried about the implications for 'TV Video' downloads if NBCs model proves effective. It seems each of the old guard Networks would likely follow suit with their own video download services.

Apple got out in front of all the old guard media companies, and quickly became the new network, the new aggregator. As a customer, I don't really care about NBC, or Apple. What I care about is a simple, direct path from the content creators to me. If NBC can pull this off, and I can still watch Battlestar Galactica on my schedule instead of theirs, more power to them.

iPhone Price Drop - Go For Market Share

A lot has been said about the recent iPhone price drop. Fairness aside, I think that the price drop is signaling a shift in Apple's overall strategy that's been happening slowly ever since the first iPod was introduced.

Apple is going for market share.

The 90s were plagued by Apple executives creating niche products and being happy with their great profit margins. However the iPod success has given Apple a taste of what its like to be the market leader. Apple sees another opportunity to become a market leader in the phone space, and they know they have to compete on price. Sure they could have held the price of the iPhone high through Christmas, and probably would have ended up making more money, but selling fewer phones. The price drop indicated Apple's desire to sell more phones, not necessarily to make more money. Apple is learning from watching other companies dominate in other markets. Step 1, become the de-facto standard, worry about profits later.

Apple has a long, long way to go to become that standard, but they have a shot at least. Nokia, Motorolla, Microsoft, Blackberry, Palm, etc all have a piece of the pie right now, but it would be hard to argue that any one has become a standard in the way that the iPod has. I don't know if Apple will succeed in this market, but the price drop indicates that they are going to make a serious push to dominate it.

Music vs. Motion :: Rent vs. Own

(reprinted from my other blog - Nov 2006)

Much has been said on the different models for the various online music stores. Here is my personal take.

Music and video are two very different mediums. Music occupies one sense: sound. Perhaps you could say it occupies touch also if you turn the music up loud enough, but sound is the primary sense. Video occupies two senses: sight and sound. As a result, there are certain activities where you can listen to music, or watch video at the same time, activities that occupy different senses.

Lets take music first. Since it occupies only one sense, sound, we are free to use our other senses for other activities. We can look at things. We can move around. We can't really listen to music and talk on the phone however, those activities overlap senses.

Video is more complex. It occupies two senses, sight and sound. We can't really look around too much, or we miss the video. Moving around is also awkward since we must split our attention between the video and not bumping into things. Running on a treadmil is ok, since we're not really in danger of running into things.

If we look at the activities when one listens to music, we find that in the majority of them, the music is secondary in nature. Riding a bicycle, or driving an automobile; music is there, but it is a background activity. Our primary focus is on a different task. Video on the other hand is usually the primary task. We sit down to watch television, we go to a theater to watch movies. We generally don't do much else while watching the video. Perhaps we eat or drink, but these are momentary, fleeting activities, and still secondary in nature. Exercise might be one of the few activities that could be considered primary while watching video might be secondary.

The frequency of consumption of these two media types takes different forms. Most music, with the exception of classical, tends to be fairly short. Even classical compositions rarely reach the length of a television show or movie. These smaller chunks are more easily consumed, and on a more frequent basis. We can listen to the same song three to five times a week, and not think much of it. Most of us probably enjoy it. However we probably will not watch the same movie that often, much less a television episode, or even a music video.

Since the associated activities, and consumption frequency of these two media types are so different, might our ownership and sales models also be different? Consider the successful iTunes Music Store. Their model for media sales is ownership. We pay Apple a one time fixed cost, and the media is given to us and we own it. (Well we own a license to use the media, but it's a very long term license) We can listen to a song as many times as we want, and we never have to give Apple another cent. Now consider other online media stores. Napster, Rhapsody, and others heavily favor a subscription model. We pay them a monthly fee, and can listen to as much music as we want each month. If we stop paying, we can no longer listen to any of their music.

Now for me.

I like owning music. It takes a lot for me to add a new song or new artist to my library. I listen to my music a lot. At home playing games, on my bicycle, in my car, at work, etc. I probably loop through my music library once ever week and a half or so. The songs that are in my main playlist however I really like, and I want to have them come up in rotation every few days.

Video is another matter. I perhaps own 20-30 movies on DVD. The last time I watched one of them was 2 months ago (Star Trek II: The Wrath of Kahn). I watch a fair amount of television. I got really into Farscape and Angel, and bought a few seasons of them on DVD. I watched each episode once and haven't played them again. I'm currently recording the new episodes of Battlestar Galactica. Since I'm not usually at home in front of my television Friday nights at 10pm, I record the episodes on TiVo, and watch them when I get time. Then I delete them. I enjoy the story, but I don't think I'll ever be really dying to go back and watch them again. Before I got a TiVo, I did buy a few episodes of Battlestar Galactica off iTunes. Again I watched them once and haven't looked at them since.

I want to buy music. I want to rent video. They are different media, offer different experiences, last different lengths of time, and occupy different parts of my senses. Why should we think they should be treated the same?

Response to Cory Shields

I just sent Cory Shields the following email in response to his recent statement.

From: Mark Fischer
Subject: Source for estimated piracy levels on iPods
Date: September 1, 2007 9:30:12 PM MST
To: cory.shields@nbcuni.com

Dear Mr. Shields,

I am greatly interested in the source for your comment recently:

"In addition, we asked Apple to take concrete steps to protect content from piracy, since it is estimated that the typical iPod contains a significant amount of illegally downloaded material."

I would very much like to investigate the piracy levels on portable music and video devices, but have been unable to find a relevant study. If you have access to, or know of such a study that was the basis for your statement, I would be grateful if you would let me know.

Sincerely,
Mark Fischer