snapshot 10/08/07

Zune plays new tune with social networking
Microsoft's introduction of three new Zune media players, combined with an updated version of the Zune digital music service, suggests that the relatively lackluster response to the initial Zune offering has not fazed the computing giant from advancing its digital music agenda.

The key to what Microsoft is calling "Zune round two" is not so much the features of the new devices -- such as the touch pad and flash memory -- but rather the added social networking elements the company is integrating into the broader service, especially via a development that Microsoft is calling Zune Social.


Why the iPod can be conquered
Apple's hugely popular digital music player isn't as ubiquitous as most people think, which explains why rivals like Microsoft keep trying to dethrone it, writes Fortune's Richard Siklos.

According to Solutions Research Group (SRG), a research firm based in Toronto, Apple is on track to have shipped nearly 120 million iPods worldwide by the end of this year, and nearly half that amount - about 60 million - Americans own at least one of the devices. (Many iPod owners are repeat buyers.) Thus, while the iPod is by far the leading mobile music player, it's penetration of the U.S. population stands at around 20%, and it is lower overseas.

By comparison, according to SRG's Kaan Yigit, Motorola (Charts, Fortune 500) has just under 30 percent of the considerably larger mobile phone market - 230 million handsets - in the United States. And, of course, that's a lot lower penetration than Microsoft's domination of desktop computer operating systems. In short, the iPod's numbers mean that MP3 players have not achieved must-have status for most people.


Yahoo’s Ian Rogers To Music Industry: “Inconvenience Doesn’t Scale”
Yahoo! Music demonstrates this scale discrepancy perfectly…Yahoo! Music is the #1 Music site on the Web, with tens of millions of monthly visitors…But the ENTIRE subscription music market (including Rhapsody, Napster, and Yahoo!) is in the low millions…even after years of marketing by all three companies. When you compare the experiences on Yahoo! Music, the order of magnitude difference in opportunity shouldn’t be a surprise: Want radio? No problem. Click play, get radio. Want video? Awesome. Click play, get video. Want a track on-demand? Oh have we got a deal for you! If you’re on Windows XP or Vista, and you’re in North America, just download this 20MB application, go through these seven install screens, reboot your computer, go through these five setup screens, these six credit card screens, give us $160 dollars and POW! Now you can hear that song you wanted to hear…if you’re still with us. Yahoo! didn’t want to go through all these steps. The licensing dictated it. It’s a slippery slope from “a little control” to consumer unfriendliness and non-Web-scale products and services.



Starbucks’ iTunes Digital Releases and Plus 2 Cards
Even locations that haven’t yet gotten the free Wi-Fi Music Store access (which is to say, most of the chain’s stores) have started to sell iTunes Digital Releases and Starbucks Cards Plus Two, such as the ones shown above. The Digital Releases provide full album downloads—here, Eddie Vedder’s Into the Wild film soundtrack with four bonus tracks and a digital booklet, and KT Tunstall’s Drastic Fantastic—while the Starbucks cards are drink gift cards with two iTunes song downloads of your choice. Full details are in our earlier news story; I thought you might want to see how they actually look.


Terra Firma Chief Presses Digital Agenda, Urges Progressive Steps
Terra Firma chief executive and newfound EMI owner Guy Hands recently pushed a digital agenda to employees, and urged a shift away from traditional distribution and formats. Hands offered the agenda within a leaked memo, one that may have slipped on purpose. "Rather than embracing digitalization and the opportunities it brings for promotion of product and distribution through multiple channels, the industry has stuck its head in the sand," Hands wrote.

Instead, the financier urged a more progressive train of thought. Characterizing the Radiohead choose-your-price approach as a "wake-up call," Hands underscored the need to move away from the once-proud CD, and also suggested a shift towards a venture capital-style thinking. Instead of massive, upfront advances, Hands offered a strategy that involved the financing of specific albums and tours, in exchange for a piece of the profits.


Digital Content Marketplace Zipidee Set to Launch; Gets Funding
Zipidee, a San Francisco-based marketplace for digital content, is set to launch over the coming week, with unspecified venture backing from Individuals’ Venture Fund, Novus Ventures and Khalda Development, reports Red Herring. The site will allow third-parties to set up their own online stores, a la eBay (NSDQ: EBAY), to sell “long tail” digital content like music, videos, ringtones, e-books, and games. Zipidee will facilitate the transactions, while providing its own proprietary DRM system, should the vendor want that. Company founder and CEO Henry Wong is a veteran of AdECN, the online ad marketplace acquired by Microsoft (NSDQ: MSFT).

Of course, Zipidee is far form the first company to tackle this market. A host of startups have been doing similar things for a few years now, but getting people to pay for this type of content has obviously proven to be difficult. Early players Digizaar.com and RedPaper have quietly disappeared. It’s not clear how Zipidee will separate itself from the pack.


Facebook and iTunes Teaming Up?
To fight off the evil empire that is MySpace, tiny entities Facebook and iTunes may be teaming up to bring a musical component to Facebook's offerings (while offering Apple another venue to sell their music).

According to the unconfirmed rumblings, Facebook is working on expanding their interface. Musical artists will now have special pages with integrated widgets for promoting band events. The upcoming iTunes widget will allow users to sample and even eventually buy music through Facebook (in support beyond the current iLike software). iPod owners who use Facebook will surely take glee in this new integration, but honestly, many of us avoid MySpace like the plague because it's full of a bunch of losers with crappy bands.