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Edifying exquisite equine entrapments

Monday, 11 December 2006

iTunes store - because of, not with

The NYT repeats a familiar incredulity about iTunes store sales but misses the point about Apple. Apple is a hardware company — it makes its money from selling good hardware with good margins. The iTunes Store has always been pretty close to revenue neutral for Apple - the vast bulk of its sales revenue goes through to the Record Labels or TV companies. With Apple absorbing hosting, payment processing and customer support too, I'd be surpised if it makes enough to cover the iPod's advertising budget.
This has an interesting beneficial effect - because Apple cares more about the iPod than the Store, they have embraced Podcasting (equally revenue neutral, and a good way to fill iPods) and kept the iTunes Application's CD-ripping abilities (while its ability to sync to non-Apple mp3 players has withered away). What is becoming clear is that DRM, even Apple's DRM with circumvention built-in, does destroy value for customers. The labels are realising that they inadvertently handed the keys to their music to Apple, and so are moving towards selling non-DRM'd files instead.
Apple's hardware sales model is going to be put to the test with the iTV set-top video playback box due next year. Other companies are bundling such boxes with cable TV, in return for a subscription. BT Vision is trying a different tactic - a set-top PVR that uses free over-the-air TV along with the ability to purchase Video too, but bundled with their broadband internet service.
The question for both of these is how well they will enable the playback of amateur media, which can be indistinguishable from 'bootlegs', as well as video from the big media content the companies have partnerships with.
Watching my boys play videos with their friends the other night, they didn't make hard distinctions between the Harry Potter 5 trailer, silly internet flash animations, Pachelbel's Canon in D played on guitar, and their own home-made videos. All were media to share with each other and talk about.

Technorati Tags: Apple, iPod, iTunes, Live TV is Dead, long tail, marksbrothers, video

Posted by Kevin Marks at 10:52

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About Me

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Kevin Marks
Kevin Marks works on IndieWeb and open web tech. From 2011 to 2013 he was VP of Open Cloud Standards at Salesforce. From 2009 to 2010 he was VP of Web Services at BT. From 2007 to 2009, he worked at Google on OpenSocial. From 2003 to 2007 he was Principal Engineer at Technorati responsible for the spiders that make sense of the web and track millions of blogs daily. He has been inventing and innovating for over 25 years in emerging technologies where people, media and computers meet. Before joining Technorati, Kevin spent 5 years in the QuickTime Engineering team at Apple, building video capture and live streaming into OS X. He was a founder of The Multimedia Corporation in the UK, where he served as Production Manager and Executive Producer, shipping million-selling products and winning International awards. He has a Masters degree in Physics from Cambridge University and is a BBC-qualified Video Engineer. One of the driving forces behind microformats.org, he regularly speaks at conferences and symposia on emergent net technologies and their cultural impact.
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