Monday, September 10, 2007

snapshot 9/10/07

Apple sells one millionth iPhone
Apple Inc (AAPL.O) said on Monday it has sold its one-millionth iPhone, just days after cutting the price of its smartphone by $200 and a few weeks ahead of the expected date to reach that target. The device, launched to much fanfare 74 days ago, combines a mobile phone, Internet browser and music and video player. Apple has said it will sell 10 million by the end of 2008.


New Apple products, services on holiday horizon
Not content to rest on its laurels, Apple has unveiled its master plan to extend its digital music dominance into the coming holiday season. Here is how the latest:

iPOD TOUCH
What it is: A Wi-Fi-enabled, touchscreen carbon copy of the iPhone in every way except that it has no phone functionality. For the first time, users can search, browse, sample, buy and download music from the iTunes service directly from a portable device -- no computer needed. The company will release a software upgrade for the iPhone in the coming weeks to allow the same. What it means: The company's decision to make the iTunes music store accessible via Wi-Fi marks perhaps the most significant evolution of the iPod/iTunes juggernaut since it made a Windows-compatible version of iTunes.

STARBUCKS PARTNERSHIP
What it means: Although the companies may play this up as a music discovery move, it's really about the Wi-Fi. With more than 5,800 hotspot locations, Starbucks is the largest single provider of Wi-Fi Internet access in the country. The deal gives users free access to the T-Mobile Wi-Fi network in participating Starbucks locations, meaning there is no need to log in or pay to browse the iTunes service. While only 600 Starbucks locations in New York and Seattle will support the feature when it goes live October 2, the partnership could serve to educate users on the relatively new concept of accessing iTunes via Wi-Fi -- in much the same way that the "American Idol" partnership with Cingular taught Americans how to text-message.

RINGTONE SERVICE
What it is: Allows users to create a custom ringtone from any of the 500,000 songs in the iTunes catalog approved for ringtone use, for an additional 99 cents. At press time, Warner Music Group and Sony BMG confirmed that they were providing music for the service. Sources close to the situation say Universal Music Group is not participating at this time. What it means: Ringtones were noticeably missing from the iPhone debut this summer. While this new service fixes that problem, it's also led to complaints about consumers paying an additional fee to create a ringtone out of a song they already own -- particularly when multiple programs are available online to create ringtones out of existing files for not only the iPhone, but many other devices as well.


Music industry betting on 'ringle' format
As the recording industry wakes up from its summer slumber and starts thinking about what will motivate the consumer for the holiday selling season, the major labels are getting ready to launch the "ringle," which combines the mostly defunct single format with ringtones. Each ringle is expected to contain three songs -- one hit and maybe one remix and an older track -- and one ringtone, on a CD with a slip-sleeve cover. The idea is that if consumers in the digital age can download any tracks they want individually, why not let them buy singles in the store as well? It also enables stores to get involved in the ringtone phenomenon.

Sony BMG Music Entertainment, which came up with the ringle idea, and Universal Music Group are going to be the first out of the box with ringles. The former will unleash 50 titles during October and November, while UMG will have anywhere from 10 to 20 titles ready. The Recording Industry Association of America has approved the "ringle" name, and there is an industrywide logo to help brand it. But except for Sony, each major still needs to cut a deal with a digital aggregator to allow consumers to redeem the ringtone.

Sources suggest the ringle will carry either a $5.98 or $6.98 list price, while the wholesale cost to retailers will be less than $4. If it's $5.98, ringles will have a 31 percent gross margin, shy of the 35 percent profit margin that CD albums carry nowadays; if it's $6.98, that would give retail a 42.7 percent gross margin, similar to the profit margin cassette and vinyl albums enjoyed back in the day. On the plus side, big retailers like Wal-Mart, Target, Best Buy and Amazon have agreed to support the configuration, although all of them may not be ready to do so at launch date, sources say.


Apple Slip-Up A Further Hint At Imminent iTunes Movie Rental Offering?
An apparent slip-up on iTunes Store’s customer complaints facility seems to lend further credence to earlier reports Apple will unveil a movie rental service via the store this fall. Mac developer David Watanabe and Engadget both found references to a “RentalMovie” content type alongside “Movies” and “Ringtones” in the store’s problem reporting page; the facility lets customers inform Apple if they have not received the download, if the quality is insufficient etc.

FT.com in June reported Apple was in discussion with studios including Walt Disney and Paramount to launch a movie rental offering this fall, with movies costing $2.99, expiring after 30 days and able to be transferred to devices like an iPod or iPhone. iTunes Store already offers movies for sale at $14.99 for new titles. It wouldn’t stretch the imagination too much to see Apple also bringing rentals to the lounge via Apple TV.


Is Yahoo Music Down For The Count?
http://uk.reuters.com/article/internetNews/idUKN1028784420070910
Management has promised a major restructuring with "no sacred cows" and informed rumors suggest that this could mean a major overhaul or even the closing of Yahoo! Music. Even as Rhapsody, iTunes and Amazon have unveiled new initiatives, Yahoo! has stayed silent; perhaps unable to react because of shifting top management or perhaps following Napster's wait and see attitude.

In the rapidly evolving digital music marketplace waiting can be deadly and it is possible that Yahoo Music will allow its self to be left in the dust. But it is hard to imagine that Yahoo! could consider itself a broad based consumer service without a strong music component. The Yahoo Music service is among those expected to be trimmed and its fee-based subscription music offering overhauled or shuttered, the report said.


Rhapsday Sets Us Straight On Their New MP3 Directory
I posted earlier in the week regarding Rhapsody’s new MP3 Directory designed to make it easier to find which songs they are offering DRM-free. While I applauded the move I noted that it was not as easy as one would like to find mp3’s in the general Rhapsody music storefront. Matt Grave’s of Rhapsody’s parent company Real wrote to say:

“…there actually is a way to see if a song you’re looking for is available as an MP3, but it’s not in the search results. instead, you need to go to the album page where the songs are available. if you look at the right side of the interface, there is a “buy” button that allows you to purchase downloads. when a song is available as an MP3, this button will read “buy MP3.”

this is just a preliminary version of our MP3 store. we’ve gotten good feedback so far from subscribers but we’ll be refining and improving things in the coming months. thanks for the feedback.”


Get your Grooveshark on: new P2P service will give users a cut of the sales
A new peer-to-peer music service developed by a "team of enterprising college students" has a novel twist on the music sales business: give users a cut of the sales. Grooveshark is currently in beta and claims to have signed a number of independent labels up for its service. All the sales traffic will go over a P2P network, and users will be "rewarded" for sharing their music.


50 Cent Sprinkles Digital Exclusives Ahead of Album Release
Heavy-selling rapper 50 Cent is now sprinkling a number of digital teasers ahead of a Tuesday album release. The album, dubbed Curtis, is already being primed by a Justin Timberlake collaboration, as well as a well-timed face-off with Kanye West. Both artists will release their albums on the same date, a nice perk for retail and a boost for both artists.

That Kanye rivalry played a major role in the recent MTV Video Music Awards, though digital promotions are just as important. In that light, MySpace recently began streaming the 50 Cent album in its entirety. The destination is also offering a series of interview exclusives. And last month, the artist sparked a do-it-yourself video challenge on YouTube. Meanwhile, 50 is being heavily demanded on Eventful (eventful.com), a destination that allows fans to request artist appearances in their hometown or college campus.

Elsewhere, Rhapsody is offering an exclusive track, "Moving On Up," and fans can grab an MP3-based, pre-release album download on the 50 Cent website (mp3store.50cent.com). That is part of a broader, DRM-free experiment being triggered by Universal Music Group, one that currently excludes the iTunes Store.


Rhapsody America Splashes at Video Music Awards
As promised, the recently-launched Rhapsody America threaded itself throughout the MTV Video Music Awards on Sunday, the beginning of a broader promotional push. The joint venture between MTV Networks and RealNetworks, first unveiled last month, pointed to the VMAs as a consumer launching pad. The spots featured performance clips from the Foo Fighters, Kanye West, and Fall Out Boy, and pointed to Rhapsody as the place for music online. As previously indicated, the venture carries the simpler Rhapsody title for consumer purposes.


The future of DRM
This point brings us to the key difference between perfect DRM and commercially practical DRM--a commercial solution merely requires that pirated content is clearly distinguishable from authorized content by ordinary users. Although many people are willing to play pirated content, most aren't.

But none of these technical requirements address the social drawbacks of DRM. No matter how well implemented, DRM will always annoy some people, and will always present one more potential source of problems. I think we'll find that some--and perhaps most--kinds of digital content can be profitable even without effective DRM. Just because something's possible doesn't mean it's necessary...but if DRM is necessary, at least it's possible.


OKCool, the First Facebook Record Label?
.After developing the application, the developers decided that it wasn't enough to have developed the delivery mechanism, they wanted a say in the music as well, and so OKCool Recordings was formed. Since launching the label and the Facebook application just a week ago , OKCool has been joined by Web savvy label SMtv Music and drum and bass artist DJ Krust and other labels are approaching Pushhit every day.

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