Content goes from king to the new loss leader

By now it’s fairly well-known that selling digital music downloads is a tough business with thin margins.  However, across both online as well as brick-and-mortar retailing, music and video is being used more universally as a loss leader and it’s not clear what this trends means for content in general.  For example:

• for Apple, digital downloads are not something they make a lot of money on, however, it enables their hardware universe (iPhone, iPod, Apple TV).
• for Amazon, many people have suggested that digital downloads is a traditional retailing loss leader.  It drives people to their page, where Amazon hopes to sell them something above and beyond the digital download.
• for wal-mart, CDs and DVDs have been used for a long time as a loss leader.

The New York Times is reporting that Apple’s new deal to sell movie downloads (as opposed to their rental business) is not a great deal for Apple from a dollar perspective.  So, Apple appears to be using the same model here as they did with the iPod.  Effectively they are relegating the movie downloads to a loss leader in the hopes of selling more Apple TVs.

So is content no longer king?

Live Mesh – the ultimate P2P platform

Live Mesh was introduced yesterday by Microsoft.  It is the brain child of Ray Ozzie and really seems like an out-growth of the work he did with Groove.  At its simplest, Live Mesh is basic file sync.  But another way to think about Live Mesh is as the ultimate P2P platform.  When people think of P2P they think about Kazaa, Napster etc where everyone’s files are available to everyone else.  Live Mesh is different from vanilla P2P because it adds the following:

• control over who sees what files
• creates a personal P2P cloud amongst your own devices (file sync)
• the concept of your own cloud store
• a platform, which will let ISVs build applications on top of it

So what does this mean?  Live Mesh has the following implications:

1. Cloud storage companies can kiss their businesses good bye because cloud storage is integrated with Live Mesh.  Cloud storage is a thin margin business and only those with scale can make it work.  After the shake-out likely survivors are MSFT, GOOG and AMZN.  I should be clear that there may be still be a lot of 3rd party applications that leverage the infrastructure of the big 3 but if you are doing your own storage thing, you better switch now.
2. Sync is a big deal because if done right it has the ability to transform our digital lives.  I know that sounds like hyperbole but if you have more than one computer you will likely have blown productivity managing your files.  It basically makes computers (and devices) more useful.  There is a lot of people playing in this space but by virtue of creating a platform and a standard set of APIs and protocols, MSFT has the chance to win big time.
3. MSFT has an advantage over GOOG and AMZN here because they have better distribution (by virtue of their operating system).  Additionally, they have been marketing to ISVs for years.  Don’t underestimate this.  Once Live Mesh is integrated into Visual Studio, any kid with rudimentary Basic skills will be able to build applications on top of the mesh.
4. Going back to the P2P angle, Live Mesh can be a content delivery platform.  If I were a content company I would start thinking about this right now.  Streaming media has economic issues that Live Mesh solves.  Microsoft should be out licensing this to every device maker on earth.  The consumer electronics companies will be reluctant participants but they should embrace it because it enables them to compete with Apple and frankly they need help in this area.  If you look at Ray Ozzie’s memo, he talks about the 3Cs the first being content.
5. Social networks are about interaction whether it be IM, posting or sharing.  Guess what?  Live Mesh addresses posting and sharing and if done right will make it easier.  YouTube flourished because it let people embed videos in HTML.  Well, Live Mesh can take this to the next level, facilitating what Fred Wilson calls micro chunking.

However, the biggest key to Live Mesh’s success will be how much lock-in is baked into the platform.  If all protocols are published and any one can interact with Live Mesh completely at the protocol level and for free, then Live Mesh could be transformative.  If the above is not true, the Live Mesh will fail because lock-in does not work on the web.

Backing up is hard to do

Backing up your data is a pain.  And so not many people do.  This is very broken in this day and age when hard drives are cheap.  Jeremy tells you why you should.  Add to this that more people have more DRM’d data on their hard drive.  In theory it’s no harder to back up this data.  In practice, it’s a bit more complicated than that.  Stories abound.

Now please backup your data!  And do it before Valentine’s day because otherwise it might be “breaking up is hard to do”.

Blogged with Flock

Old news – Google Sketchup available for the Mac

If you like Google Sketchup, it seems to now be available for the Mac. This is probably old news but I really like the program (although I should confess I don’t use it a ton). If you have not tried it you might want to since it is free. It is a 3D software tool. It is interesting from a UI perspective in that it has a limited number of tools yet is pretty powerful.

Another free and cool program is paint.net. It is for Windows only. This is more of an image manipulation program.

Update – Randomly rebooting Macbook Pro

I have to apologize to the Flock folks. I have stayed away from using Flock but my random restarts persist. So Flock had nothing to do with it. So much for that theory.

Oh, I forgot, Macs never crash. It must all be a recurring hallucination. Argh….

Microsoft is bad; Apple is good

Om posts about Microsoft’s upcoming Zune phone (which is a rumor) and how Microsoft will surely screw its partners again. This post is not a defense of Microsoft but Om’s flogging of Microsoft gets a bit old after a while and seems naive. In this case it seems particularly goofy because the product in question is still only a rumor. Perhaps Om would like to check in with Adobe, Avid, Digidesign, Musicmatch and Dave Winer about their experience with Apple as partners. Hmm…

Flock causes my Macbook Pro to crash

Just an update on my Macbook Pro troubles. I decided to pare down the applications I use to see if that would help. My conclusion is that Flock causes my MBP to crash. This is not scientific but I will refrain from using Flock and we will see how it goes. So far the results are good.

Mac quality or lack of quality??

I bought a Macbook Pro this fall for work. Nice computer except it has a serious issue. It randomly reboots. It never had this problem until after I had it for a couple of months. Such a drag. I never had a PC laptop with this kind of problem. I never really believed the Apple-PC crap (note I spent 8+ years writing code for the mac on a mac) but Apple’s ads really add insult to injury when you have this kind of problem. It appears that as Apple grows their quality suffers. Of course the problems with Macbooks and MacBook Pro are all over the internet. I am not alone but what a pain. Argh….

Branding 2.0: Zune = Hyundai & Apple = BMW

Michael Gartenberg has a recap of what he thinks would be help Zune bemore successful. A lot of it (as usual) is good stuff, however, I take issue with one of his statements.

Let’s face it, Apple and iPod are strong premium brands for consumers. Zune is not. It’s hard to price yourself the same as a BMW when you’re an Hyundai.

Michael may be right about the pricing but I think branding is very different today than it was 10 years ago. A brand can be eroded and also built much quicker than in the past. With regards to Zune, I actually think Microsoft has done a decent job of getting the brand on the map (my teenage son’s friends know and talk about Zune even though they mostly have iPods). Of course they still have a lot of work to do and they may eventually lose their battle against iPod. However, brands can now be built very quickly (eg YouTube) and I think the internet and blogs in particular have an important role here.