ChaosScenario

iWMD: Why No One Reads License Agreements

Thanks to John Keehler for pointing out this little gem in the iTunes software license agreement. I've minced no words in the past in expressing my displeasure towards lawyers in general, but this one takes the cake.

"You also agree that you will not use these products for any purposes prohibited by United States law, including, without limitation, the development, design, manufacture or production of missiles, or nuclear, chemical or biological weapons."

I'm just glad someone said it. It's long past time we did something about the burgeoning problem of people who use music software for the development of WMDs. At least we can take some comfort in knowing that, should someone develop the Atom-Pod, Apple's lawyers will sue them for trademark infringement. - Cam Beck

Marketing News Roundup, February 6, 2007

I normally don't provide simple links without commentary, but I find myself with little time and no shortage of meaningful fodder. I'll instead couch all my commentary in the headlines I choose.

Internet Demographic Takes an Unexpected Turn

NFL Chooses Nielsen Over Consumers

Bill Gates Whine: No Fan of Apple Ads

Disney Sells 1.3 million Movies on iTunes since October

Not Compatible with iTunes: Wal-Mart Joins Movie Download Fray

- Cam Beck

Lifelong Learning for About a Buck

Not long ago, the brilliant Roger von Oech endorsed the "Teaching Company" as a facilitator of learning. I like Roger for many reasons, not the least of which is his ability to quote obscure Greek philosophers at will and tie it into something relevant and even poignant, but the cost of entry for these lectures (which I have little doubt are worth every penny) is a little steep.

While I still plan on taking Roger up on his recommendation eventually, as the recent consumer of a brand new iPod and someone who has yet to make good use of his Audible account, I was excited to learn that I could purchase audio broadcasts of various topics from the Biography Channel for only 95 cents each.

I'm really the only history buff in my family (although I'll be sure to work on Faith a bit), so I don't get to watch my favorite channels much (History, History International, Military, and Biography). Since books are typically expensive (and can't be read while driving), being able to download these gems for less than a dollar each represents a great opportunity for me to get my fix without needing to sacrifice time with my family.

Kudos to the Biography Channel for making the content available online without forcing people to either pay an arm and a leg or listen to advertising. Now, would they offer the content for free with advertising, I'd be okay with that, too.

iSue over iPhone: Turnabout is Fair Play

It was only a matter of time. In this case -- less than 24 hours after the announcement of Apple's new highly touted iPhone.

The problem is, as I pointed out over on David's blog awhile back, Cisco already has the trademark on that name. It has owned it since 2000. Now the lawyers are getting into it, and that is never good news for consumers.

The funny part of all of this is that Apple's trademark lawyers have been strutting their dominance over the marketplace concerning the use of "Pod" in other companies' marketing materials (including names) -- like a peacock seeking a mate. Apple, on the other hand, uses the entire "iPhone" name, not just part of it, and believes itself to be above reproach.

Given the latest resolution of the stock shenanigans involving Apple CEO Steve Jobs, I'm not so certain they're wrong... but expect to see either a settlement or delayed availability of Apple's yet-to-be-(re)named product.

With consumers chomping at the bit to shell out $499 for Apple's new convergence hardware, it's certainly in Apple's best interests to get this issue behind them, quickly. Leave it to lawyers to make life at least, if nothing else, a bit more entertaining -- and expensive.

Assuming Cisco's claim to the "iPhone" name is valid, Apple should pay them to use the name, or else they should use a different one. Apple, on the short end of many of these types of lawsuits, ought to know better. - Cam Beck

What Can't Google Do?

For those who have been living in a cave, Google is reported to be in talks to buy YouTube for about $1.6 billion. Although I know their accounting wonks have to do a cost-of-capital analysis, it has to be comforting for them to know that, with $10 billion in the bank at the end of June, they could pay cash for the online video gorilla.

Now, as a personal maxim, I will never feel sorry for billionaires who get outsmarted in the marketplace, but this move has me thinking that Bill Gates can't win for losing. I mean, besides having a net worth of $48 billion. Besides that, the guy is the Bad News Bears of business.

First, he's known to have been upset that Apple beat Microsoft to the marketplace with a media player and music download service. Second, he's also known to covet consumer Internet applications. Practically owning the word processing and office application suite market, he realized such pricey options would become outdated and that Internet applications are the future of computing. Yet Microsoft had to watch helplessly as Google purchased a great word-processing Internet-based application, Writely, and further encroached into Microsoft Office's territory with free online spreadsheet, e-mail, and calendaring applications. On top of that, Microsoft had to undergo lawsuit after lawsuit around the world as well as a public "brain-drain" as some of its top talent bolted for Google.

Just when it looked like Microsoft might get something right with the release of its media player, Zune, and its corresponding media download service (which would include, one presumes, movies), Google is looking to change the rules again, and Microsoft has to be afraid of what that means.

Why? YouTube holds almost half of all traffic for online video sites. Google video holds 10%, but Google, as the dominant search engine, is perfectly poised to be top video distribution network simply by virtue of the fact that nearly everyone visits there. Apple has about 3/4 of the music download service market. With these ubiquitous services, what compelling benefit can Microsoft possibly offer to get people to change?

I don't think Microsoft will be satisfied if it is only able to capture a 10% share of the video download market, but as they have surely noticed by now, Google is nimble enough to dance circles around Microsoft, but too big to be pushed around by the software giant. Which such strengths, is there anything Google is incapable of doing? - Cam Beck

Starbucks is Podcasting?

Yet another company has entered the podcasting fray, but this time from someone you might not expect. Starbucks has launched "Coffee Conversations", a weekly podcast dedicated to educating listeners about coffee. It's an audio podcast, and each episode is around 15 minutes in length.

So how would I rate the effort? It's marginal at best. While I think there certainly are people who would value absorbing some knowledge about coffee, the execution could have been much better. For example, in iTunes, the podcast doesn't have any artwork. This is a big deal, since that artwork can be a primary way that podcasts are browsed in the iTunes store. In addition, it appears that this podcast may be very short lived. On the "Coffee Conversations" page on the website, it says the following:

"Join our experts each Tuesday in September for Coffee Conversations, a unique audio series exploring the world of coffee."

So the podcast is just a September thing? That would mean listeners are only going to get 4 episodes... not much of a reason to subscribe. - John Keehler

Launch "Coffee Conversations" in iTunes.

Apple Movie Download: A Review

Engadget recently posted a nice summation of the Steve Jobs keynote speech, and since I was anticipating the unveiling of Apple's movie download service through iTunes, I was excited to learn about its launch--as well as the other useful product enhancements and launches Apple announced. One of them in particular, the iTV, could potentially blow the doors off of the movie download business. But let's not get ahead of ourselves. At a $300 price point and some of the other barriers inherent with downloading movies over a home Internet connection, it will take some time for this device (or some version of it) to become mainstream.

The pros:

• Usable interface
• Consistent ordering process
• Ability to start watching movie almost immediately after purchase
• Portable on iPod and between computers

The cons:

• Can't burn a playable DVD
• Aspect ratio doesn't adapt to screen size
• Playback bugs on PC

Naturally, the first thing I did after loading the new iTunes software was install it on my computer and pick an old movie to download.

Ease of Use and The Long Tail
To my delight, the process was just as easy as downloading a song, but true to their promise, it actually did allow me to start playing the movie a minute after I started the download. The ordering process is a huge advantage Apple has over its competitors, and it should not be underestimated. Apple's success in the music distribution industry ensures that people will be just as comfortable purchasing a movie as they are purchasing music--which they are doing in droves anyway. This bodes well for the long tail once Apple broadens its movie offerings.

Playback Quality
On the downside, the playback on my PC laptop (IBM Thinkpad 1.73 Ghz Pentium M with 1 GB of RAM running two monitors) was a little choppy on my peripheral monitor. It seemed to work okay on the laptop's monitor for the most part, except for one instance when the audio got out of sync with the video. To fix this, I just stopped and restarted the play.

Download Time
Unfortunately, with my high-speed connection at work, the download actually took one hour, not the thirty minutes promised by Apple. That might have happened because a lot of people were trying it out, and that slowed down Apple's service. If that's true, then it's a testament to the popularity of this idea and the power of anything Steve Jobs says at his keynote speeches. (See the webcast here.)

However, since the entire movie downloaded faster than I could have finished watching it, the extra time was of little importance to me.

Portability
I was also interested in experimenting with portability. As of right now, it is not possible to burn a playable DVD from iTunes, but I was able to back up the movie to a DVD and then restore it on my Mac at home (G5 dual-processor with 1 GB of RAM and an Apple monitor). Although this process was very easy and might be something I would do regularly, I doubt it is something most people will need to do.

The video plays on the video iPod, and with the right equipment setup, that can be played on a TV (something I haven't experimented with yet).

Flaws in the System
The in-window controls are a little different with the new version of iTunes, and I think Apple did a pretty good job of keeping it out of the way while still making it accessible and usable. However, on my PC, at least, the program was a little buggy. Not only was there the choppy playback on the second monitor, but (with the iTunes application minimized) when I paused the movie and tried getting it to play again, the playback window disappeared, and I had to restore my iTunes application to get the playback window to open again. That was a little annoying.

On my Mac, I happily did not experience this problem, but since the two operating systems handle how iTunes gets minimized differently, I wouldn't expect to experience the exact same problem on the Mac.

The video size is being touted as nearly DVD-quality. I can attest that on my 20-inch cinema display, it's not bad at all. On an iPod, though, the widescreen version I purchased makes for a very small view. I prefer widescreen versions for normal-sized TV screens, but it's not ideal for the small viewable area of the iPod.

Movie Prices and Summary
The price points (starting at $9.99) on the movies are pretty high for a service that doesn't allow you to burn your own DVDs, but I think I realize why Apple set it at that level. Right now the studios depend on revenues for DVD sales and rentals. The movie companies probably fear that putting the prices at rental or near-rental price would likely result in a net decrease of revenue. This fear is not unfounded, but it's also not insurmountable.

Getting the mass market to look at their PCs as digital media centers is going to be made more difficult as long as the value of the product is not commensurate with what people are getting in return. People want to be allowed to take their movies wherever they go--to use them however they want. As long as the studios don't get that, Apple (plus Amazon, Guba, and Movielink) will meet resistance from consumers in their efforts to adopt this behavior. Rather than fight their consumers, movie studios and rental companies should look for ways to accommodate them--even if that means considering ad-supported content to help bring down the price.

- Cam Beck

In Defense of Apple

I really want to be able to use other music players with iTunes. Don't get me wrong. I like the iPod just fine--and I'll like it even more once the wireless version comes out--but more than that, I like having options. The iPod may very well be the best music device available, but I want the freedom to use another device with my favorite music download service, even if doing so winds up being a bad decision.

Companies, like people, have a vested interest in making good decisions. If they fail to deliver what the audience wants, the market punishes them.

Government agencies and elected officials have a vested interest in self-preservation, so the immediate temptation for politicians whenever the market demands something companies aren't delivering is to intervene on behalf of both the market and, in many cases, the competitors who contribute to their political campaigns.

That all brings us back to Apple, who was recently ordered by the French government to make iTunes compatible with other MP3 playing devices and to make the iPod compatible with other music download software.

Even though the result is what I want out of iTunes and the iPod, I must object to this unnecessary and dangerous intervention. I'm not an expert on the French constitution, and I like French dressing and french fries as much as the next person, but I can see quite plainly the injustice of the French government telling Apple how to make a competitive product that increases its chances for success. It's hard enough to compete with Microsoft in the overall technology marketplace without having the weight of an entire continent on one's back.

Even as I write this, new media devices are being introduced that might force Apple to revisit the wisdom of its compatibility decisions. It seems everyone wants a piece of this pie, and no one needed the government to tell them to do this, because there is a profit motive to giving people what they want. No one is forcing anyone else to buy iPods or use iTunes. People have done so because it is one of the best, if not the best, way to download music and make it portable.

What's worse, as consumers, we are nearly powerless to influence the results of this dispute. For its part, Apple's website makes it no easier for users to find out what they can do about this travesty. I think they understand that the best thing people can do is to buy more Apple products, which they continue to promote.

I would hate for Apple to become one of those companies that takes out ubiquitous advertising in order to compel the government to do something (such as was the case with the recent Wright Amendment fiasco in the Dallas/Fort Worth area), but its news pages would be the perfect place to direct interested people to write, blog, and otherwise be an influence where they can to make sure our government responds appropriately to this restriction on the market that surely at least violates the spirit of the World Trade Organization's charter, that was supposed to protect the freedom of companies to fairly compete in the global marketplace. - Cam Beck

John Keehler on Across the Sound

Our own John Keehler was the guest of honor this week on Across the Sound, Joseph Jaffe's podcast. John talks about the success of his Lost Cast podcast, Joseph talks about his recent online experiences in South Africa and they both weigh in on consumer generated content, including Yahoo!/Loyd Braun, Current TV, and MasterCard. Check out the winners and losers and tell us if you agree of know of even bigger winners or losers that should have been there.

Across the Sound is a great podcast that, in my opinion, has improved upon an already good thing with the addition of guest interviews. As Pete mentioned in his ClickZ article, this is one that all "new marketers" should be subscribing to and listening on a regular basis. Subscribe to the podcast in iTunes by clicking here. If you like it, don't forget to support it by voting for it in Podcast Alley. - Paul Herring

ABC Starts a TV Revolution

ABC has done something HUGE today. According to AdAge, ABC will be offering free downloads of popular TV shows such as LOST and Desperate Housewives for FREE. The downloads will be ad supported, and not necessarily from the same advertisers supporting the original broadcast versions of the show. You can also read more about the announcement at Revenews.

This is a big announcement for a number of reasons. Here are a few:

• TV is now in the hands of the viewer
  This move means that consumers outside of DVR and "on-demand" services will have the option to view shows anytime they want. The beginning of the death of "primetime."
• iTunes loses dominance
  It's still the beginning, but iTunes is already the dominant player in TV show downloads. But at $1.99 a pop, who the heck wouldn't download a free version with some ads. I certainly would be more likely to watch the free version.
• New advertising revenue stream
  For television networks, this is big because this TV extension means a new channel of advertising revenue. And guess what, it's actually trackable!

These are just a couple reasons this move is revolutionary. Of course, there are big obstacles for ABC to overcome to make this truly popular. One of the biggest questions is how do you keep people from skipping ads on a download? I hope they don't resort to weird proprietary formats and unfriendly DRM. It's a sure way to keep people from skipping ads, but there's nothing like DRM to dampen the potential of these free downloads. - John Keehler