Monday, December 10, 2007

iTunes 1 Everyone Else (look deep into scientific notation)

Peter Burrows over at Business Week wrote an article with some nice sentiments in it on the potential downfall of iTunes. While, no doubt, the toppling of iTunes would be a wonderful thing in many ways (DRM, pricing, etc), it's unlikely to happen as quickly and easily as Burrows seems to suggest. Amazon certainly has the best shot, at least in the short run: an equally trusted name offering a superior product (DRM-free and 256kbps encoding) for a lower price. So they're going to win, right?
Wrong. The biggest barrier for any new company or product is the status quo. In this case, iTunes is incredibly well established--not only as the world's largest internet music retailer, but also as possibly the most popular music player and a portal for transferring music to the world's most popular portable music players (and now phones). As a rival points out in the article "Apple's never been in the music business; they're in the iPod business." Even if you chip away at their market share on music sales (which initially will come almost exclusively from the minority of folks who use alternative mp3 players to the iPod or know about and care about the music quality difference), you still miss the convenience factor that most people see in iTunes--it's their one-stop-shop for music.
The status quo is incredibly tough to beat. It's what makes Seth Godin's idea in Purple Cow-- that you need to be "remarkable" to be truly successful--hold ground. Imeem, at least in theory, has Amazon beat. Whereas Amazon's store is evolutionary, Imeem's idea is revolutionary. Or is it? Imeem runs the risk of being ahead of its time--wifi is not ubiquitous, so we can't stream music everywhere we go. As a result, they are still not a single music solution--people will still go elsewhere to actually purchase or download music so that they can take it with them.
The idea of alternatives brings me to tell eMusic founder Bob Kohn why his website is not the ultimate solution either. In the Business Week article, Kohn asks: "People spend $10 a month to get an extra 400 minutes on their cell-phone plan. Why wouldn't they spend that to get access to all the music that has ever existed?"
Well, Bob, people don't see options in cell phones--it's something they need, and all the providers offer nearly identical prices for nearly identical products with a few very slightly differentiated features. In music, on the other hand, people have lots of options, and lots of payment options--including not paying at all. In the end, the products aren't very highly differentiated, and most people are going to go with what they know--which at this point means mostly iTunes or BitTorrent.
So how does one take down iTunes? Come up with something completely revolutionary that people find easy and useful (meaning they don't have to learn much or change their habits drastically), at a price they appreciate (though I insist that comes late in the determining factors), and doesn't make too many enemies with the suits. Ready, go.

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