Archive for April, 2007

More from Ramon Casadesus-Masanell…

April 30, 2007

I was rereading the interview with Ramon Casadesus-Masanell (an assistant professor in the Strategy unit at Harvard) on the HBS Working Knowledge website and found some more interesting statements that I want to add here.


“Our analysis reveals that, contrary to intuition, prices low enough to “kill” p2p are not optimal in large markets. The industry is better off setting higher prices and attracting those consumers ready to pay due to congestion. Coexistence with p2p, however, does result in lower prices than would otherwise be observed.”

I agree with him in the area of “pay per download” cause the “legal” distribution costs are too high to make a very intersting price for “illegal” p2p downloader. In the “subscription service” area I’m not sure if there isn’t a way to compete on the “price” level.

But later on he said a more important thing:

“Finally, to compete effectively against p2p, online digital distribution must strive to become accessible and attractive to consumers. Online content providers are in a unique position to optimize and deliver new experiences to consumers that cannot be easily matched by decentralized, self-sustained peer-to-peer networks. ITunes provides a better customer experience than file sharing networks for similar content, and this allows record companies to charge positive prices and make a profit.”

Customer experience and the brand, those are the keywords!

Lean Forward vs. Lean Backward

April 30, 2007

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Sometimes when you talk to guys from the TV business about things like TiVos video on demand and the potential of You Tube, you hear the words: “… TV will always be strong cause the people want to lean back and relax. They don’t want to be always programm director, they don’t want to make decisions. …”

Good point, and quite right. But on the other hand, a lot of people are not satisfied with  TV programmes. “… 30 channels and nothing i’m interested in …”

That’s where the buzz word “product personalisation” comes in.

You all know the wonderful internet radio stations lastfm and pandorra. The same concept will be adopted for TV very soon.
Early projects are already there, for example: Lasttv.net
It`s a very nice website. You give your username from Lastfm, and get your personalised music tv channel.
The system works with the help of You Tube. It scans your music profile on Lastfm and instead of streamed audio songs it mixes music clips from the YouTube archive and plays them in your lasttv player.

The quality is “ok” most of the time… you all know the You Tube quality… but the concept works.

So with a little more broadband speed, a little more software programming, legal or not, I can get my perfect tv channel soon.
Perhaps you could have some options, like stating which mood you are in, or which genre you want to watch (sports, series, movie), but thats it. One channel.
Recommendation systems will be your programm director.

So perhaps there will be a new kind of intermediary in the TV business very soon.
Just a thought…

Dimensions of Digital Product Design

April 30, 2007

I read a very interesting interview with Ramon Casadesus-Masanell (an assistant professor in the Strategy unit at Harvard) at the HBS Working Knowledge website:

He made me think about the different dimensions that influence the decision making process of purchasing a digital product like music. I think these are the most important (in no particular order):

– Legal Considerations (or how Steve Jobs would say: good or bad karma)
– Price
– Availability of content (catalogue, licencing… vs. rare songs/artists on p2p networks)
– Packaging (file format, DRM)
– Metadata (Database Organizing)
– Digital encoding quality
– The process of obtaining content (location/interface, purchase, consumption)
– Download speed
– Support / service
– Context

Most discussions are only about price and packaging (DRM)…
which fails to recognize many other factors.

How can we find out which dimensions customers value the most?

One very important point in the working paper “Peer-to-Peer File
Sharing and the Market for Digital Information Goods” by Ramon is the comparison of the business models p2p filesharing and itunes.

The paper demonstrates that record companies should explicitly consider the
competition from p2p networks when making pricing decisions.
For a large portion of potential customers, the decision is not “buying the product at  $x vs. not buying” but “buying at $x vs. downloading from p2p.”

Here some bullet points from his analysis in the interview:

p2p:

  • Strengths
    • It`s free
    • Variety of content
    • No restrictions on content (no DRM)
    • Constantly improving due to technological race
    • Decentralized—makes it hard No anonymity
  • Weaknesses
    • Under constant attack by industry players
    • Downloading time varies
    • Congestion problems
    • Sometimes content is unreliable (spoof files)
    • No anonymity

iTunes:

  • Strengths
    • Legal
    • Easy to use
    • High reliability
    • Metadata (i.e., information about the
      files)
    • Fast downloads
    • Works well with iPod
  • Weaknesses
    • Customers must pay for content (relatively expensive
      at $0.99)
    • Restrictions on content (DRM)
    • Less variety of content

When I read this, I was thinking about two questions:

How will the strengths and weaknesses change in the future cause of the development of technology ?
How are the various dimensions influencing each other?

Hardware for Content

April 25, 2007

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Some blogs are writing about a rumor “according to some music insiders” that WalMart (biggest music retailer in the US) will reduce its space for CDs and replace it for iPod accessories.
There we go… the brick and mortar music business is changing – selling hardware instead of content.

(via Kings of A&R)

Legal p2p Filesharing?

April 25, 2007

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The big majors (now three of them) are supporting a new firm called Qtrax, which is supposed to be a legal filesharing p2p system. It will be financed by advertisments. See the NYTimes article and the press release of Qtrax.
Its legal, yes. It uses a gnutella client, yes. BUT there is no filesharing…
Most of the songs you can just hear five times, than you have to buy them.
All files are DRM protected.

Doesn´t sound like a p2p filesharing system to me!

Anyway, two interesting things here:
First, the concept of an ad supported service. These services have  big potential cause they fit to the high consumption, but low spending behavior of the young digital music fans, those guys who won’t pay for music anyway.
And second the idea of using the peercasting concept (broadcasting+peer to peer): The users pay for most of the transaction costs themselves, which means low fix costs for Qtrax.

In my opinion, the Qtrax model will see hard times, cause the deal for the customer doesn`t sounds  so good at the moment. The customer pays for the transaction costs, he must pay for the content, and he has to enjoy the advertisement…

Theme of my Thesis

April 24, 2007

I want to write about the influence of digitalization on the media industry, especially on the entertainment industry. That means the music, film, tv, radio, publishing and games industry in particular.
There is  a lot happening at the moment, so I will specialise on the parts of prizing and product design. So one  more guy on the search for the perfect digital wave. (Feeling like being part of the goldrush…)
It`s a little bit too early to tell what that actually means concrete, but I hope I can provide more information in a few weeks. Of course I will update the “papers” sections as fast as possible.
Anyway, you will see which direction the thesis will take.

Dictionary

April 23, 2007

The meaning of my website name?
Makes any sense?
What says the dictionary?
Hmn… I like the special meaning for wave: “an intense burst of a particular feeling or emotion”
Some guys in the “old” media industry might be able to tell us about that…

The Beginning

April 23, 2007

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Millions of blogs out there. And now there is one more.
This blog should help me put my ideas down to finish my big new project: my Ph.D. thesis.
I started my thesis in November 2005, but after a call from Berlin in June 2006 i paused the project. Now I’m working in Berlin for MTV Networks Germany. The time is short, but I will give it a second try to put some ideas down… while I work…
Some guys say its not possible… we will see.

The second hope in starting this blog is to improve my English.
So hopefully the information in my texts is worth reading despite all my bad english. Iam sorry for that! I´ll try my best!

And of course, there is a third thing:
Getting in contact with you out there. Looking forward to every post, comment, discussion…

More to the theme of my thesis, please check the “papers” section…
and more information in my next post.
Thx for now.