Bob Lefsetz is a music industry observer, and publisher of the Lefsetz letter:
A great day for Apple.
Not such a good day for Amazon, Google and the recording industry.
Apple has a problem. Android penetration. I could mention RIM/BlackBerry, but if you think that company and its devices still count, you’re Canadian. Android sales have superseded those of iPhones. How to beat back the tide?
Software is harder to sell than hardware. You can’t see it. It’s the difference between admiring someone from afar and getting to really know them. They may look beautiful from a distance, but up close and personal you might find nothing to converse about. Software is the conversation. And no one’s software works as well as Apple’s, because of device integration.
Sure, the iPod looked cool. But Apple won because of iTunes and synching and… Software. People eventually get the message.
And they’re gonna get the message about iCloud and when they go to their mobile carrier they’re gonna pay extra for an iPhone, just like they pay extra for Apple laptops and desktops. They’ll buy iPads, not Android devices.
This is a huge win for Apple.
Google finds itself lost in the wilderness once again. Trying to do everything, Google does nothing well other than search and e-mail. Google is the new Sony. If someone ever comes up with a better search engine, which is not impossible, Google is toast.
As for Amazon? Music and consumer cloud storage is an afterthought. Amazon would like to win here, but if it doesn’t, it can shrug its shoulders. Amazon still owns retail in so many categories, and is the king of server space rental.
As for the music industry…
Unlike Apple, the music industry is very shortsighted. There is no tomorrow, only today. Steve Jobs is seriously ill and he’s looking to tomorrow, the labels still haven’t pulled their heads out of yesteryear.
How do you make music pay in the future? How do you get a ton of revenue for recordings?
By getting everyone to pay.
Think about that, it’s not a hard concept. The outline has already been drawn by the mobile companies. You drop the price until everyone buys in, then you slowly raise the price under the rubric of adding new features, i.e. texting. Twenty five years ago a cell phone was a grand and calls were a buck a minute. Now plans are dirt cheap and cell phones are free, even ten year olds possess them. I can legitimately posit that not a single person reading this is without a handset.
How do we get everybody to pay for music? By dropping the price and making it easy.
You call that subscription.
Cable TV is a subscription. As is Netflix. As is your cell phone plan. Don’t say people hate subscriptions, that they don’t want them, it’s about offering a great service at a fair price.
The record industry refuses to do this.
Don’t point to Rhapsody and Napster, that’s like trying to sell a 2001 computer, or a Vanilla Ice record.
How can you get everybody to buy a mobile subscription?
We can debate that all day long, but it’s become almost irrelevant. Because today, Apple killed subscription.
Yes, iCloud scan and match is subscription. But the concept of renting your music, like you rent cable TV, that’s kaput.
And what did it cost?
$150 million. For approximately $40 million to the bottom line of each recording company, you know they’re not going to share the revenue with artists, the labels sold out their future.
It’s like Nintendo being paid a bunch of money to never develop the Wii.
It’s like Electronic Arts being paid to never develop mobile games.
It’s a denial of the future.
Who in the hell is going to buy a music subscription for even $3 a month when for $25 a year you can have everything you own, even stole, at your fingertips via iCloud. That’s if you scan and match, if you bought the stuff on iTunes, it’s FREE!
Spotify, MOG, Rdio, they were just trumped by Apple. By an industry looking for short term profits unaware of the future.
This is not hard. Like I said, subscriptions are everywhere. But like Wimpy, labels would rather have a hamburger today instead of owning a McDonald’s tomorrow.
How cheaply they were bought off! $150 million is nothing to Apple, look at its cash hoard! Apple gets an opportunity to dominate with its iPads and iPhones for this paltry payment.
It boggles the mind.
Yes, few people are paying for subscriptions today.
But right now Spotify and MOG, even the aforementioned Rhapsody, synch your playlists to the handset wirelessly, almost instantly, 2000+ tracks in the case of Spotify, but almost no one knows about this, because almost no one has used these services.
It’s like Amazon trying to compete with Apple selling music. People would rather pay twelve times the price to Apple for the GaGa album. Apple has retail stores throughout the world. Apple’s infrastructure is so great, no one can compete.
Steve Jobs stands on stage and says it’s all about mobile and the music industry is too stupid to get this. Afraid to make a free desktop offer to ensure a healthy subscription model in mobile, the record industry just shot itself in the foot.
You’re selling dope here. Spotify is free on the desktop. But you’ve got to pay on the mobile handset, handsomely, don’t you get it, that’s where the growth is!
Where’s the growth now? Certainly not in digital track sales. And for a measly sum you can put everything you’ve STOLEN in the cloud. The labels made this deal for a percentage of $25 a year, for a service most people won’t even use?
This is so dumb it’s almost incomprehensible.
The labels have been snookered by Steve Jobs, who could sense their ignorance and preyed upon them.
Let me ask you, how come Steve Jobs believes in renting movies and not music? Isn’t it funny that the scan and match service is a subscription? Apple could have an all you can eat music subscription in the future, but why?
If people have the history of recorded music at their fingertips for one low price it doesn’t only benefit the labels, but the artists, the promoters, everyone in the music ecosystem. Because the barrier to checking out new music is so low that people will do so and spend money in music. Now we’ve ensured the future of a last century model, where you’ve got to buy it to hear it. Huh?