Submitted by acohill on Tue, 02/09/2010 - 14:55
In a shocking discovery, music publishers have found that the law of supply and demand works. Apple loosened up pricing rules for music on the iTunes Store last year. Record companies immediately raised prices. Buyers immediately bought less music. The record companies are shocked, shocked that buyers don't want to pay more. What could have gone wrong? Higher prices signal less supply, and in turn, demand tends to drop. Record companies might want to send a few of their high paid execs back to high school to retake an economics class.
Submitted by acohill on Sun, 02/07/2010 - 12:08
Apple, as the company has in the past, has begun to upset, er, apple carts. With the announcement of the iPad, Apple also announced a book section in the iTunes Store, with a business model that is exactly the same as the hugely successful music model they use. For both books and music, Apple will collect 30% of the sales price of the item, and the publisher/seller collects 70%. The seller of the item sets the actual price. This is called the "agency model."
Whose apple cart is upset? Well, it is Amazon, who has insisted on setting prices for publishers that sell books for the Amazon Kindle. This has irritated publishers, who think that popular and fast selling items ought to be priced differently, and conversely, slow moving items should be able to be reduced in price. It is a simple, time tested model that helps keep supply and demand in balance.
Amazon got away with it for a while because they had the only popular ebook reader. But now that Apple has announced the iPad, publishers are likely to abandon the inflexible Amazon. Look for the Kindle to appear in supermarkets in a few months, mixed in with those remainder books for $4.99.
What does this have to do with community and municipal broadband? Well-designed open access, open services networks let providers set prices, and simply take a revenue share that helps pay for network operational costs. This approach encourages innovation and competition among providers. Insisting on fixed prices (the Amazon model) drives service and content providers away.
Submitted by acohill on Tue, 01/05/2010 - 10:15
Here is a roundup of rumors about the new Apple tablet. Apple has announced a media event late this month, but is not saying what the announcement is about. Until very recently, most pundits were guessing Apple's table computer would not be announced until June of this year, but I think the increasing interest in the Google Android phone may have caused Apple to move up their announcement to suck all the oxygen out of the room and take the media focus off Android.
If that is Apple's strategy, it is likely to work. The iTablet or iSlate (nobody really knows what the final name will be) will relegate the Amazon Kindle and other bookreaders to strictly second tier status, much like the iPod put all other MP3 music players into a permanent also-ran status, and completely transformed the music industry.
There is still much debate about whether the new device will have an iPhone style interface or a Mac style interface, with the conventional wisdom betting on the iPhone. But what a lot of people forget is that it probably does not matter very much, because the iPhone is a Macintosh underneath. Every single iPhone has the full power of a desktop or laptop Macintosh. So the iSlate may look more like an iPhone, but as it evolves, Apple can easily and quickly add more functionality just by peeling away the cover on the hidden power.
Why is this device going to be revolutionary? It won't be just the technology--Microsoft has a tablet operating system for years. What Apple is likely to unveil along with the iTablet is a new section of the iTunes Store, stocked with magazines and newspapers. iSlate owners will be able to subscribe to a wide variety of publishing content and get the content wirelessly on their iSlate. This will save the rapidly collapsing magazine and newspaper businesses, which have been unable to find or build their way out of the two century old paper-based distribution model. With the cost of distribution of a newspaper or magazine slashed to nearly zero, papers and magazines will be able to focus on high quality writing and reporting, which is always in short supply.
As with other breakthrough Apple technologies, new kinds of opportunities will emerge quickly, creating new businesses and jobs where none existed before. One big sea change will be in higher ed, where colleges and universities that are smart will simply issue every student an iSlate on the first day of freshman year. Faculty will be able to provide their students with very high quality (book quality) class notes, multimedia presentations, and even administer tests via the iTablet. Can't they do all that now? Sure, but not with the kind of high quality interface and superb usability that the iSlate will bring. And textbook prices should come down, although some textbook publishers will resist.
The iTablet will allow new college textbook writers to enter the marketplace quickly and easily, just the way the iPhone App Store has created thousands of new software publishing businesses. Writing a textbook will no longer require years of negotiation with publishing houses still operating on a business model developed during the era of Charles Dickens. Instead, textbook writers will be able to market directly to faculty at colleges and universities, with the textbook distributed at very low cost via the iSlate Textbook Store.
The big, sheet of paper size screen of the iTablet will allow colleges and universities to create "virtual registrar" interfaces that will give students the ability to fill out and submit forms quickly and easily from anywhere, with much better interfaces and ease of use than Web forms (because of the direct input pen interface).
The iSlate will also boost TV show and movie sales, with the existing iTunes TV/movies section all ready to send video content directly to a large, comfortable, easy to watch screen.
Apple has been planning this for years. Note that Apple has had wireless keyboards and mice for some time, and continues to roll out improved wireless devices like the popular Magic Mouse. Prop the iTablet up on a desk, start typing away on your wireless keyboard, and you have most of the functionality of a laptop.
If the first decade of the 21st century was dominated by Apple and the iPod, the second decade will be dominated again by Apple with the iSlate. Stand by and watch the fun begin as the publishing world is turned upside down.
Submitted by acohill on Tue, 12/29/2009 - 15:05
The recently announced Blockbuster store closings will cut about 20% of the firm's stores. Blockbuster plans to replace them with kiosks and smaller stores in more densely populated urban areas. Blockbuster also has a Netflix-style subscription service, but will only one-fifth the customer base of Netflix.
Based on my own experience, Blockbuster may have alienated too many customers with their outrageous late fees. They "eliminated" late fees two or three years ago, but replaced them by billing you for the full retail cost of the DVD if it was late. Once you returned it, they credited your account for the DVD, less a "restocking" fee, which, of course, is a late fee by any other name.
In practice, the service being sold (watching a movie) is identical no matter which company you get the movie from. So the movie rental business is based 100% on the quality of service. And so this is why Blockbuster is losing--Netflix does not have the late fee baggage of Blockbuster, and Netflix service is great--so great, you don't even think about it.
Watching movies may not seem to have much to do with economic development, but communities that don't have their eye on this ball will be losers later, in two different ways. High performance community-owned broadband is the only way some communities are going to get to watch movies over the Internet. Cable companies are just barely keeping up with the bandwidth demands now, but as more homes dump driving to the video store in favor of watching movies on demand, legacy cable and DSL networks are going to begin to influence where people WON'T live. That's right--young professionals don't want to live anywhere now where broadband is not available, and within a couple of years, they won't want to live in communities that only offer "little" broadband--that is, the low performance cable and DSL services.
So attracting and keeping the right kind of workforce is a community broadband issue. The second issue is how broadband is changing retail. Video stores have served as anchor tenants in retail shopping districts, as the stores provide a steady and predictable flow of people to a shopping area. As the video stores disappear, what happens to those retail buildings? What happens to the rest of the stores nearby that relied on that traffic?
In our broadband planning work, we continue to see too many communities clinging to a 1960s style of retail planning and economic development. Retail is going away entirely, but the combination of big box stores and the Internet has changed it drastically, and few places can lead with retail as an economic revitalization strategy--perhaps none can. Instead, communities need to think more broadly about how to put empty retail locations to new uses, including office space for entrepreneurs, start ups, and established white collar businesses. And the way to start that process is to begin placing duct and fiber in commercial and retail areas. Call Design Nine if you want help with thinking about your retail and economic development strategies.
Submitted by acohill on Thu, 12/10/2009 - 14:08
This Forbes article is illuminating, as it neatly describes the Google vision for taking over and dominating every minute of our lives. Google provides a lot of good and even great tools, but the question is, "At what point does Google get so big and so powerful that it sucks all the oxygen out of cyberspace?"
Submitted by acohill on Wed, 12/02/2009 - 09:19
The Huffington Post has a couple of interesting articles on the direction of journalism today. It is a weird time for news, as the old media and the new media continue to collide. There is much finger pointing going around, with many old media journalists and owners trying to make a fiscally sound transition to new media while simultaneously complaining that new media bloggers and news aggregation sites (like the HuffPost).
If you drop by the HuffPost, it looks just like CNN these days....a long way from the blogger beginnings of the site.
It is not at all clear to me that you can replace news organizations with a bunch of bloggers--news/opinion blogs work because they link to and comment on news articles. Now you can argue that the news articles are often heavily biased one way or the other, but there is still a different quality to even a biased news report compared to a blog post commenting on that report.
Maybe there is no longer much need for big national papers.....you have local news organizations (local radio, TV, news), and outfits like HuffPost aggregate local news into a "view" of national news.
But who then covers "national" and "world" news? Rupert Murdoch of News Corp. wants to charge for it, and the Wall Street Journal is already doing so successfully. And to muddy the waters even more, the FTC says it is considering providing subsidies to news organizations. It is hard to see how that could turn out well--do you really want a government bureaucrat deciding which newspapers and TV stations ought to get free government money at the expense of those stations and outlets that don't? And what if the government doesn't like the point of view your news organization embraces? This is a double-edged sword of exquisite sharpness.
Hat tip to Ed Dreistadt, who is always thinking about these issues.
Submitted by acohill on Tue, 12/01/2009 - 11:22
Barnes and Noble is about to release an ebook reader called Nook. The bookseller and publisher wants to compete with the Amazon Kindle and the Sony Reader. It is easy to find people who say they love their Kindle, but I remain skeptical. I do think that within a few years, we will reading many more books using some kind of reader device, but I think the long-rumored Apple tablet is likely to crush these dedicated devices.
One of the arguments for dedicated book readers is that it is no different than lugging around a paperback--which I do all the time when I travel. But a paperback can be handled roughly--I don't have to worry about cracking the screen of a paperback, it never runs out of battery life, and it requires no charger. Once you have an ebook reader, you have to think constantly about charging it, loading the books on it, handling carefully, and even losing it--lose a paperback, and you are out $10. Lose or misplace your ereader, and you are out hundreds of dollars, and the hassle of replacing all the books stored on it.
A tablet device the size of the Nook or the Kindle that also does email, Web browsing, and handles light office tasks is going to be much more popular than adding another electronic device to your life.
Submitted by acohill on Mon, 11/30/2009 - 09:47
USA Today has an article noting some of the "Cyber Monday" shopping deals. But Glenn Reynolds at Instapundit says, "Who cares?" Reynolds makes a good point--that Cyber Monday evolved back when broadband at home was rare and people waited until the Monday after Thanksgiving to shop online--at work, where broadband connections made it much less frustrating. Nonetheless, online retailers expect big sales.
Submitted by acohill on Wed, 11/18/2009 - 09:23
Bing hasbroken the 10% market share for online search. I continue to like Bing--it returns fewer and better results than Google.
Submitted by acohill on Tue, 11/17/2009 - 09:03
If you ever wondered how the "free" video channels on the Intertubes could make any money, it is becoming apparent that the plan all along was to turn them into TV, complete with ads. And you can't turn the ads off. The stop button on the players does not work while the ads play.
It's not really surprising--someone has to pay for the bandwidth to deliver video. But with the emergence of ad-supported online video, it is another nail in the coffin of old-fashioned analog TV. The cable companies, in the early and middle years of this decade, bet many billions that they would be able to maintain control of their TV monopoly, but they are being squeezed because their business model for delivering Internet is broken--no matter how much bandwidth a cable customer uses watching online video instead of old-fashioned "TV," the cable company does not make a cent more. And even the newer cable systems, because they used an antiquated shared bandwidth model, can't keep upping the amount of bandwidth indefinitely without degrading their TV service.
They could quickly and easily dig themselves out of this hole by changing their business model to an open access, service-oriented architecture, but so far, they seem to prefer trying to hold on to their monopoly instead.
Submitted by acohill on Thu, 11/12/2009 - 11:27
Bing, the Microsoft search engine, can now return results from the Wolfram Alpha computational engine. So you can enter queries into Bing that require computation and the query gets passed to the Alpha engine and then returned via Bing. I continue to think Microsoft has a real winner with Bing, which returns better search results, in my opinion, than Google.
Submitted by acohill on Tue, 11/03/2009 - 13:29
MediaMemo reports that Apple has quietly begun to talk to some TV networks about making all their content available on the iTunes Store for $30/month. This might not sound like a good deal for the TV networks, but in fact, it is very bad news for the cable TV and satellite providers. With an economy in the doldrums and millions of households looking for ways to save money, a $30/month Netflix-style subscription for most popular TV content might look very good compared to $50-$60 per month for 500 channels of blah.
When thse schemes come up for discussion, someone always brings up network news and the cable news channels. But who watches that stuff? Not anyone under 30, and even other demographic market groups now often turn to the Web first, rather than TV.
TV on demand is coming, and the cable TV providers are going to be the big losers.
Submitted by acohill on Wed, 10/28/2009 - 09:14
An interesting fight is brewing between the movie studios and the movie rental outfits. And as usual, it is upstarts like Netflix and other Internet movies on demand outfits that are causing the problem.
For the movie studios, selling DVDs is extremely profitable. Renting, not so much, because they sell a few copies to a Blockbuster or a Netflix, and the rental company gets all the rental revenue. Until Netflix got a toehold, the studios were not too worried about the rental business because video stores also sold a lot of DVDs. Who has bought a DVD from Netflix? Answer: nobody. And the whole movies on demand via the Internet is making things worse.
Why spend $20 to buy a DVD you might only watch two or three times over the next year? If you can pay Netflix one monthly flat fee and watch the movie on demand as many times as you want at no extra charge, why buy? And that's the rub. The Internet is killing the DVD business. Movies are not much like music. The iTunes store sells millions of songs every day, because a) you can listen to music while doing something else, and b) most of us will listen to a song many times. Movies require a dedicated block of time, and there are few movies anybody wants to watch more than once.
The traditional movie and TV business is collapsing under the weight of an obsolete business model. The studios and content owners, instead of adjusting their business models to fit the new dynamic, are engaged in an ultimately futile attempt to hold back the tide. Their answer to sagging DVD sales? "We won't let you rent movies--we're going to force you to buy them." The plan is to not allow movie rentals for at least a month or two after the DVD is released for sale, on the theory that people just can't wait, and will buy it. There may be a few movie fans that will go for that, but the rest of us will just wait.
Submitted by acohill on Wed, 09/16/2009 - 07:52
As I predicted many years ago, the video store is on the way out. Blockbuster has just announced it is closing more than 900 stores. Netflix and video on demand over the Internet has taken its toll. Blockbuster has added a Netflix-style ordering system with the supposed advantage of being able to drop movies off at the local store, but that's just a dumb idea that was always dead on arrival. Netflix has a superior service, and even though the quality of video on demand via the Internet is lower than watching a DVD, we're all adjusting our expectations downward because of the convenience of on demand viewing.
More and more TV is being watched in small, low resolution windows on computers rather than via cable and satellite, and no one seems to mind. Blockbuster says they are going to switch to kiosks of DVDs in many different kinds of stores (e.g. supermarkets, quick stops, etc.). Yea, that will make a big difference. The kiosk model may prop them up for a couple of years, but eventually, DVDs will go the way of the CD--the iTunes Store is now the biggest seller of music in the world.
Long term, bandwidth is going to become a big issue for on-demand services, and communities with high performance open access broadband networks will be far ahead of regions still limping along with Internet access via copper (DSL and cable).
Submitted by acohill on Wed, 09/16/2009 - 07:43
The latest Web phenomenon is Animals with Lightsabers, proving once again that no idea is too stupid for the Internet. This particular flash in the pan is not likely to last, as you can be amused by a squirrel with a lightsaber only so many times. The object lesson is that the Web and the Internet continue to dismantle traditional publishing. Once upon a time, this sort of topic was the domain of small, cheaply printed novelty books that tended to be popular as Christmas gifts but actually never got opened past about 2 PM on Christmas Day. They ended up in the remainder bin of the local bookstore three months later for $4.99.
Music stores are nearly dead, bookstores are dying, and the video store is next. Although some have engaged in hand-wringing over the loss of jobs related to these shifts in the industry, the new technology is creating new markets and work opportunities, often for better pay and bigger businesses. Just one example is the enormous new market for software for the iPhone, where one and two person companies are raking in hundreds of thousands of dollars a year working from home, selling software via the Apple App Store for $1.99. This market and these jobs did not exist less than two years ago, and the the opportunities created far exceed dusting records for minimum wage at the local music store.
Submitted by acohill on Tue, 09/15/2009 - 08:12
If you have not tried Microsoft's Bing search service, you may be surprised. Bing seems to do a much better job of delivering relevant search results than Google. On a few queries I tried for topic areas I am familiar with, I found Bing producing fewer results of much higher quality, especially on the first couple of pages. Bing also is trying to integrate information from other Web sites and information sources in a thoughtful way, especially if you are trying to identify how to get to a business. It is nice to see Google finally have some serious competition.
Submitted by acohill on Tue, 09/01/2009 - 14:56
eBay has announced it is selling Skype. The auction giant bought the VoIP phone company several years ago for $2.6 billion, has already written off $1.4 billion and apparently hopes to get $2 billion in the sale--Meaning Skype never made eBay much money. In a related story, Skype has announced it is doubling its rates for international calls, where the firm makes most of its revenue.
Skype calls can be crystal clear or maddeningly noisy, and part of the problem is that Skype carries a lot of traffic across the public Internet, meaning so-so quality as a voice call traverses several different non-Skype networks. It is not a problem inherent to VoIP--done right, VoIP phone systems can be better than traditional copper-based land lines. But Skype has one of those "we'll give a lot of service away for nothing and make it up in volume, or international calls, or subscriptions, or something" business models. Skype's biggest asset is excellent VoIP software--it is an excellent tool that supports text chat, voice calls, and video calls. If they figure out their business model, the firm will do well.
Submitted by acohill on Thu, 08/27/2009 - 08:21
Sony has announced it's $400 ebook. Intended to compete with the Amazon Kindle, the device costs $100 more than the Kindle but works with several open ebook formats, giving users access to a wider range of books.
Both devices are likely to founder. Everyone is sick of lugging around multiple devices, and worse, all the special cables and chargers needed for them. I'm kicking myself for buying a small Nikon camera without checking on the data cable--the camera uses a proprietary cable instead of more common mini-USB cable, meaning I now have to lug around yet another cable.
Enough information is leaking out now that it appears very likely that Apple is going to release a tablet device either this fall or in early winter. When it is released, it will kill both the Kindle and the Sony ebooks. A Apple tablet will support email, Web browsing, and probably thousands of applications, as opposed to the ebooks that do only one thing. We just don't have enough room in our bags and briefcases to lug around a laptop and an ebook device, and for a lot of us, a capable tablet will replace both the relatively heavy laptop and will also serve as a very capable ebook reader.
Book publishers are playing along with Sony and Amazon right now because they have to, and it's a good way to gain some experience with the economics of ebooks. But a more popular device that supports many book formats, not just one or a few, will swamp the competition. It's only a matter of time.
Submitted by acohill on Fri, 08/21/2009 - 12:40
Here is an interesting article about a study of current "cloud" computing services, which "seem to come up short. This really should not be a surprise. Businesses that think cloud computing services are going to be a panacea for their IT problems are going to be very disappointed.
First, cloud computing is just the latest IT industry buzz phrase, and is the latest in what is now a forty year history of selling old wine in new bottles. In this case, we are talking about very old wine indeed. Cloud computing is just the mainframe. And the mainframe was redefined in the early eighties as the mini-computer. And the mini-computer was redefined in the early nineties as client-server computing. And client-server computing became Web applications. And Web applications became Web 2.0. And Web 2.0 became cloud computing.
But all of those buzz phrases were and still are architecturally quite similar. The user is connected at a distance to a central repository of data. However, as the distances between the user and the data have grown, network latency, or how long it takes data to travel across the network between user and repository, has become a big problem. The Internet offers virtually no control over latency, for a whole variety of reasons, including the fact that the Internet was never, in its original design, intended for real-time transaction-based processing (cloud computing).
The answer is robust local, high performance open access broadband networks, which allow two things to happen--you can move the cloud closer to the user, and you can control and limit latency. Distributed cloud computing improves performance and reduces or eliminates the single point of failure that is being designed into some cloud environments. Apple, for example, is building a giant data center in North Carolina. But what happens if that facility loses power in a major storm? Apple and other cloud competitors like Amazon and Google do create redundant data centers, but a few massive data centers can't solve the latency problem the way putting cloud servers on local open access networks can.
Submitted by acohill on Tue, 08/18/2009 - 14:43
Digital music downloads continued to gain a larger share of the music sales in the U.S. While CDs still are the most popular way to buy music, digital downloads increased in the first half of 2009 by 50%, up to 30% of music purchases. The iTunes Store is now the largest retailer of music in the country, with 25% of the total market.
The success of iTunes is due in part to the increasing availability and affordability of broadband--without it, the iTunes Store is unusable. Music downloads are a great example of how broadband creates new opportunities that did not exist just a few years ago. Broadband enables new jobs and new businesses.
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