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Amazon Effect Takes a Bite Out of Apple

Today's public unveiling of Amazon's DRM-free MP3 music download service is the tipping point we all have been waiting for lo these many months.  Adoption of a competitive, rights-liberated download service by a giant retailer like Amazon means that the point of no return has been crossed in the war against content tyranny.   Mark this date for the kiddies to look back on some day.

Launched with two million songs by 18,000 artists, a sweet deal with EMI and Universal, Amazon can introduce both freedom of choice and a little price competition to the music world mix.  By shaving a dime off most songs--$.89 versus the standard $.99 on iTunes--Amazon points out the old Silicon Valley saw that "better is cheaper" and makes consumers think twice.  Once Amazon works out some of its bugginess (Om Malik does a nice job comparing Amazon to iTunes today), it will permanently change consumer perceptions and expectations. 

The point is, the days of over-controlled licenses and perpetual copyrights are staggering to their demise.  Like Jason Statham's badass character Chev Chelios in the film Crank, the DRM-mongers are living on adrenalin alone; the end, however, is nigh.

NFL Hit the Jump Point with Video Scandal

This past week's dust-up over video recording by the New England Patriots franchise shows what happens when a 'jump point' arrives and organizations aren't ready. 

For the National Football League, the issue was reduced to a compliance matter; there are rules dictating where video taping can take place and the team deviated from the rules.  Fines were levied sufficient to warn the entire 32 team league not to do likewise.  The problem is, the rules are archaic and unenforceable.  Given that teams in any professional sport work hard to prepare and gain every competitive advantage they can, it is no surprise that technology like video is being used to record play formations and signals.  All teams do this in one way or another.  No shocker here.  Indeed, gathering competitive intel is a recognized part of every competitive area from war craft to marketing strategy.  The rub is the attempt by the NFL to restrict the use of technology.  Not gonna happen.  In fact, the NFL's quaint approach shows just how far behind--or deep into denial--the organization really is.  I'd like to introduce their top brass to the honchos atop the recording industry.  Make for a nice club.

No, the NFL is on a fool's errand if it thinks it can stop the penetration of technology into its business.  As Austin Powers might say, that train has sailed.  The Patriots were fined for putting a camerman in a restricted area.  In effect, he was getting a shot angle the NFL wanted to limit.  Today, on any given Sunday, you might have 40,000 camermen sitting in the seats with cross hairs set to every angle.  My phone takes photos and video, and likely so does yours.  Fans could easily record a 360-degree look at the game and email in the views to their favorite teams.  Illegal?  Not according to the rules.  And unenforceable anyway.  High-powered binocular cameras could be perched anywhere in the stadium to achieve the same result in stealth mode.  Heck, you can use high-powered lenses in the permitted areas and get the same results the Patriot's man was attempting from the sideline. 

Cameras, which are everywhere today anyway, are a permanent fact of life.  You can't stop the recording of our lives and times, and in a situation like a big sporting event, no one should have a presumption of privacy to begin with.  These are very public times.  Limit field recording by teams and they might just fix a camera to the Goodyear blimp and get the shot anyway.  I know, because I saw them doing it when I zoomed in on Google maps.   

Traditional Economists do not Understand the Power of the 'Jump Point' Economy

Another business report issued today amplifies the pronounced lack of understanding by traditional economists for the underlying forces driving the emerging global economy.  That report, released by by the National Association for Business Economics, paints a gloomy growth picture for the US economy in the year ahead.  The report tapers back growth expectations for this year to 2 percent, compared to 2.2 percent in its May outlook.  Moreover, the economy, it says, is now projected to grow by only 2.8 percent in 2008, versus 2.9 percent in its previous survey. The biggest risk factors cited?  Of the 46 "forecasters" surveyed, 60 percent felt that recession was the biggest worry, only 25 percent cited inflation. 

Given that these predictions are pulled out of a dimly-lit rear-view mirror, it is hardly worth calling them forecasts. 

The truth is, subtle and not-so-subtle changes are taking place in the fundamentals of the global economy; these changes are profoundly altering the old rules and measures of economics.  We are now much closer to finally realizing the post-scarcity economics espoused by New Growth advocates like Stanford's Paul Romer.  In effect, we are rapidly approaching what I call a Jump Point in world affairs and global economics.

Every day, 70 thousand new players join the global economy via mobile devices and the Internet (often they are one in the same very affordable entry point).  Every hour the old arbiters of "equilibrium" and command and control are vanishing from the scene, as people all over the world connect directly.  Every minute new value is being created by and exchanged among new economic participants not captured in any business survey.  A new crop of economists believes this new growth surge will reach its fly-wheel stage in the next 1000 days.  Then, the old rules and metrics will matter less because they will measure less of what really matters. 

Reading through these dismal reports makes me realize that it would be a grand waste of creative power--one of the inexhaustible and abundant resources of New Growth economics--to spend my time navel-gazing about subprime loans and job statistics.  Does anyone ever look at the big picture any more?  I think we simply love to wallow in our own waste matter (another thing apparently in ready supply) when we don't understand change.  Hand-wring if you must, but the coming economy is going to be big, very big.  Get over it, already. 

iPhone Rebate Fiasco, Whiners Cheapen Apple's Brand

Apple is not used to whiners: the culture of Apple's customers--if not Apple itself--changed yesterday and the implications are huge.

In Palo Alto, there were lines around the building.  In San Francisco, hundreds of people queued up to be the first to own one (and if my friend's son is an example, many in line were paid by others to wait in the midday sun).  All this hoopla just to be the first on the block to own the coveted iPhone. 

For my part, I waited--and risked being tagged a laggard--because I need a 3G phone and an iPhone 3G version was slated for Christmas.  In the meantime, friends and colleagues who early adopted have been lording over me and everyone else they run into with an air of superiority.  They have, for months, been the center of attention where ever phone calling is permitted.  And they have enjoyed being special.  The high price of the iPhone? A non-issue, as the phone is in a league by itself, they argued, not fair to compare. 

So, after months of enjoying these rich psychic rewards (in an age, mind you, when a day's lead time over others should be considered a luxury) these self-same technorati turn out to be just a pack of price-sensitive whiners after all.  For shame.  And worse, Steve Jobs bit, turning the technically-compelling, sensually-pleasing iPhone into a blue-light special commodity.  Bad move.

Look, everyone knew the price of the iPhone would come down--certainly by Christmas and folks, if you didn't know, this is the start of the Christmas season.  Besides, Apple aficionados have always been willing to go where the beige crowd fears to tread.  Sure, the cost is a little higher, but the value is too--and it;s fun to be different.  Why the hand-wringing now?  The fact is, the iPhone has brought to Apple a lot of non-traditional Apple consumers.  Entering the bloodied theater of mobile phones was a big boy move, but it has had its consequences: Apple must now learn to deal with a whole new crop of customers--and in a highly price-sensitive market.  No, Apple is not used to whiners.  But, Steve Jobs blinked and this is a harbinger of bad things to come.  We've entered the "price" phase of competition months before it was necessary.  These are holiday ill-tidings indeed.

iPod Continues to Cluster Frag the Music Industry

A couple of years back, I had the folks at Creative Artists Agency splitting a gut laughing when I called them to hire Bob Dylan and his son Jakob Dylan to play a gig together.  Father and son had publicly pledged never to play the same stage together, they said; everybody knew that.  Except me, apparently.  Anyway, I put the offer in and whaddya know, they accepted.  Our private show in Silicon Valley remains the only time pop and son have ever played together, but it proves, that the mythologies of the music industry are paper thin.

Yesterday, Steve Jobs announced a new crop of iPods, including the sixth generation "classic" and new video Nanos.  Per usual, the announcements touched off a new round of debate over the impact Apple is having on the beleaguered music biz.  The iPod is killing the music industry?  Another myth meant to mask the industry's shortcomings.

Yes, today the entire music industry is in a sink hole of death.  According to the prevailing myth, Apple is the force mejeur.  Lynn Hirschberg at the New York Times summed it up nicely on Sunday: "The mighty music business is in free fall — it has lost control of radio; retail outlets like Tower Records have shut down; MTV rarely broadcasts music videos; and the once lucrative album market has been overshadowed by downloaded singles, which mainly benefits Apple."

Lynn goes on to quote music monster David Geffen who nails it: "Only 10 years ago, companies wanted to make records, presumably good records, and see if they sold. But panic has set in, and now it's no longer about making music, it's all about how to sell music. And there's no clear answer about how to fix that problem. But I still believe that the top priority at any record company has to be coming up with great music."  Bang.

Today, a compulsion over music distribution has distracted the music industry from its number one mission: turning out great music.  In the end, distribution format never mattered and never will.  From wax to MP3s, to paraphrase Chumbawamba, the only thing that really matters is the music.  The iPod need not shake up the music industry any more than the eight track did.  No, the real problem is the suits have taken all the danger out of rock n' roll, sucked the beatitude our of Jazz, homogenized street music until it smells of sugary vanilla. 

No, the only thing wrong with the music industry today is the music.  When the top dogs at the major labels start to understand that mass markets are dying, that albums are an anachronism, that music designed for distribution at Walmart is the real cancer, that concert formats are stale, that DRM is a throwback to the Industrial Age--only then will they get back to producing great music that stirs the human spirit and creates for artists something more important than a distribution channel: a lifelong audience.  Distribution will come and go, but a loyal audience will always pay to see and hear an artist it loves.  That's where the focus should be.  Bruce Springsteen and the E Street Band have a new album, Jimmy Eat World has a new album, Jakob Dylan has a solo album in the works.  That is music news.

Back from the Lab

My 100-day hiatus is over. 

The new book, Jump Point, is completed and the manuscript is off to Jeanne Glasser, my talented editor at McGraw-Hill.  The book will hit the shelves on January 20; although you die hards can pre-purchase a copy today on Amazon.com. 

A lot has happened over this past summer--I have pent-up stories about more than a few boneheaded moves by marketers and advertisers struggling to adapt to the Jump Point economy.  I am sharpening the hatchett as we speak and am eager to start right back up where we left off a few months back.  Are you ready?  Let's go.