The Times' Paywall - Can It Work?

(please note you can listen to an audio blog post on this theme by clicking the link below)

So here we go. A paywall it is. After much speculation, we learn that News Corporation’s two flagship titles in the UK, The Times and The Sunday Times, are to start charging users to access online content from June. No freebies, no tiered access models, just a paywall. And the price, at £1 per day, is the same as the cover price of the print edition.

The (note, not Times Online, its current moniker) is primarily intended, it seems, to add value to the core product, the print newspaper. Of course the risk Murdoch’s team is taking is in sacrificing scale for an untested revenue model. What kind of conversion rate would make this viable? There are few precedents, though in the gaming world, a paid conversion rate of 2% would be considered successful. And even the Financial Times, the self-styled pin-up boys of the paywall, have found that only around 121k of the 1.9m who have registered for the site, are paying subscribers. That’s just 6.4% of registered users paying for content which helps them do their job, and which they often expense anyway. What chance for a generalist title competing with free rivals?

Even assuming a 5% conversion rate, that would mean 60k from a daily online readership of around 1.2m (according to the ABCe figures). Factor in that around two-thirds of the readership are outside the UK, and advertisers locally will be left with a readership of around 20k. Advertisers may say they value engagement over scale, but will they actually come on board? Even if current revenues are disappointing, they are going to be hit hard by such a diminution of scale. And the costs of delivering a high quality website will still need to be met.

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How to make a great music app

Mobile apps are all the rage these days in the music industry circles and justifiably so. Sales of traditional console-based music games have dropped significantly, but music and gaming still do make great partners. And while people’s interest in paying for music is waning, paying for apps is a growing phenomenon. Universal Music Group’s newly launched “Six-String” music app for iPhone/iPod touch is a case in point. The question now is not whether the industry should invest in iPhone apps but what is the best way to do so.

For an answer to that question let’s examine the current most successful paid music app on iTunes - I am T-Pain. “I am T-Pain” allows users to record their version of the T-Pain song into iTunes and auto-tune it. Here’s why I think the app is successful –

The game is engaging to all levels of gamers and music fans – Most people can sing an out-of-tune song into a micro phone. As the app is not very challenging it attracts a wider range of individuals and than the instrument simulation apps such as Six-String would.

It allows users to share the experience and be social – Once you have auto-tuned your voice you can upload it to your Facebook, MySpace page or email it to your friends. You can also check out the best auto-tuned songs that others have uploaded. Unlike other social games, however, this app is not really about competition and shows that music apps don’t have to be.

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Universal Music Drops CD Price to $10: First Take

At last! One of the majors finally takes the brave but long over due move to slash CD prices (UMG has announced it will be reducing prices to just $10 for frontline CDs in the US).  There have been experiments with CD price drops for the last few years.  Finally we see some marketplace movement.


The simple fact is that CDs are perceived to be too expensive for many consumers.  CD price changes will bring some much needed momentum back to CD sales but – and it’s a crucial ‘but’ – it won’t halt the decline. Instead it will slow the prolonged demise.  The CD is a dying music product format, but it has some life left in it because downloads haven’t generated the format replacement they were expected to.  With all previous music formats the successor format was firmly in the ascendancy by the time its predecessor was in terminal decline (see chart below).  So until the online marketplace gets its act together there’s a stay of execution for the CD.  And the labels need this breathing space, because the core impact of online’s under performance is that the CD paradoxically remains the bedrock of revenue.


There’s still more distance to go with CD pricing though. The next crucial step is tiered products with a basic product at c $5, the standard at $10 and the deluxe at $15.  We’re some way off that becoming reality, but it will - and must - happen some time in the next few years if maximum extended life is to be squeezed out of the shiny little disc.

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"Cloud" is the Missing Ingredient for a "Third Device" iPad Strategy

Apple pitched the iPad at launch as a third device that consumers would use alongside the PC and the phone. While the iPad has genuinely innovative software and hardware, Apple has done little new to make the device easy to use in tandem with existing devices, beyond what is already in the iPhone. Consumers must sync the iPad using a cable with PC/Mac iTunes to transfer music or videos; while photos and podcasts are easiest if loaded the same way.

Apple has left too much in the hands of consumers to transfer and manage manually. For example, if a consumer wishes their video viewing position to be remembered across their devices, then they must sync first the iPad with iTunes, followed by syncing their iPhone or iPod. Contrast that with Amazon's Kindle: Whispersync maintains a person's reading position automatically between Kindle apps on PC or iPhone and Kindle eReaders.

The same issue hits multiple areas on iPad from games' scores and progress, the reading position on Apple's own eBooks, and the preferences of Apps downloaded from Apple's App Store, email, calendar and contacts.

There are workarounds for some of the above from app developers. Games built with the Plus+ network essentially have their own cloud service built in. Consumers may sync Calendar/email/contacts with a cloud by using a specific provider such as Google apps, a corporate account with Exchange, or Apple's own MobileMe. Other apps have their own app specific cloud abilities like Evernote or the iPhone/iPad Kindle app.

For iPad to really fly, preferences, usernames, passwords, and content should transfer automatically across the different devices that Apple intends consumers to use together: PC, phone, and iPad. Apple should use a consumer cloud to do it. Consumers should not have to think, all of this should just work. Tethered sync is a twentieth century product feature.

If Apple does not extend its consumer cloud services, iPad will rely on a patchwork of cloud services to deliver the third device experience. But, as a consumer cloud is essentially software, Apple could easily fix all of these things mid-life for existing iPad owners. iPad is after all very much a version 1.0 .

Every time I think of the iPad as "the third device," the image of Orson Welles from the film the Third Man appears in my head:

"You know what the fellow said – in Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? The cuckoo clock."

iPad is no cuckoo clock, but it's not, yet, a Michelangelo either.

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Why Michael Jackson is Worth More Dead than he Was Alive

The estate of Michael Jackson have reportedly signed a deal worth at least $250 million with Sony Music.  It might seem like a lot of money (heck, it is a lot of money) but this isn’t the crazy gamble on yesteryear that it might at first appear:


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Three Key Questions for Record Labels in the Digital Age

News reports today suggest that Warner Music may be planning for buying some or all of EMI in a post-bankruptcy fire sale.  As a Brit I’d be particularly sad to see EMI meet such a disappointing end, but there is an unnerving sense of inevitability with current events.  I’m not a financial analyst and I’m not going to attempt to comment on the likelihood of Terra Firma meeting its debt obligations.  But what I do think is interesting and relevant from a strategic perspective are the questions EMI’s predicament raises about the role of record labels in the digital age.

In fact there are three key questions record labels need to ask themselves:

  1. Are they relevant and necessary anymore?
  2. Are they innovating enough?
  3. What role should they play?

Here's my take on what the answers should look like...

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Why Mobile's Time Has Come

Virtually every firm has been burned in the past by failed mobile initiatives that launched before the market, consumers, or technology were ready. This time is different. Why?  There's now the critical mix of great devices; widely available fast mobile networks; often unlimited data tariffs; a shift in mobile carrier attitudes; and a focus from US-based firms placing mobile as a core part of their strategy, this raises the amount of mobile services and content available and in so doing boosts the value of mobile to every consumer.

The spectre of Apple's innovation has driven every mobile handset maker, every mobile operator, and every media or entertainment firm to raise their game.  It's taken a while for those new smartphones and service plans to come to market. Now they are, and it is changing everything.

We're in the process of ramping up our research around mobile product strategy to help all types of companies -- in essence every firm that has an Internet presence -- to determine when and how to embrace mobile. We've published numerous recent reports, some are referenced here.

And, to pull together in a little more depth why mobile and why now, and set out how we can help different types of firms with their mobile strategy, we've put together a short document. Anyone can read this, whether or not you are a Forrester client:- Forrester's CPS Mobile Consulting capabilities

For the cynics out there, especially those too lazy to follow that link, here's my take on why mobile's time really has come:

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Pink Floyd Score a Pyrrhic Victory for the Analogue Age

Pink Floyd yesterday won a court battle with EMI over the label’s ability to sell individual songs from the band’s albums in digital format.  There’s a fair amount of debate about what sort of precedent this may set and its implications for the broader digital music market.  In my view though the ruling is an unfortunate and retrograde step that reinforces many of the 20th century shackles that continue to prevent the 21st century music business from truly breaking free of its analogue past.


As I proposed in my Music Product Manifesto, the future of a successful music business - if there is to be such a thing - depends squarely upon radical product innovation that follows consumer demand rather than try to dictate it.  The world has changed markedly since the days when the needle was cutting grooves into the master lacquer of ‘The Dark Side of the Moon’.  In those days the record labels had a near-absolute monopoly of control of distribution.  If you wanted to have a copy of ‘The Dark Side of the Moon’ you had to buy a copy in your local high street music store.  But in the digital age the audience has complete control.  If a modern day fan only wants to download ‘Money’ they have the freedom to skip the other 9 tracks on the album.  And it doesn’t matter if Pink Floyd have succeeded in stopping EMI from selling it that way, because if iTunes doesn’t let you download ‘Money’ on its own then BitTorrent certainly will.


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Forrester's New Blog Platform is Live!

As many of you will know, Forrester has been busy building its new blog platform and last night it went live. We hope you like the new look and feel, and all of the new tools (e.g. “Polls” and “Most Recommended Posts”) that will help us analysts engage more with you the audience

* Everyone’s welcome here. Forrester analysts use blogs as an input into the research they produce, so having an open, ongoing dialogue with the marketplace is critical. Clients and non-clients can participate – so I encourage you to be part of the conversations on Forrester blogs.

* We still have team blogs focused on role professionals. Our role blogs, such as the CIO blog and the Interactive Marketing blog, are a rollup of all the posts from the analysts serving that specific role professional. By following a role team blog, you can participate in all the conversational threads affecting a role.

* And now we’ve added analyst blogs as well. If you prefer to engage directly with your favorite analyst, you can. Look on the right-hand rail of the team blog and you’ll see a list of the analyst blogs. Just click on their name to go to their blog. Or type their name into “Search”. An analyst blog is a place for the analyst to get reaction to their ideas and connect with others shaping the marketplace. You’ll find the blogs to be personal in tone and approach.

* You can monitor analyst tweets. On role team blogs, you will see the recent tweets on the right-hand rail from analysts serving that role. On analyst blogs, the tweets shown are specific to that analyst.

* New “Recommend this post” functionality makes it easy to weigh in. If you find a post useful and insightful but don’t have time to post a comment, simply click “Recommend this post” to encourage others to read it.

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Why You Must Evaluate Owned Media

The media meltdown has been a major theme for the Consumer Product Strategy team at Forrester. We have of course covered its impact on traditional media companies (see my last blog post about the BBC’s latest strategy review, which elicited a response from a senior BBC exec). But just as importantly, the media meltdown — where digitization leads to the collapse of traditional business models based on controlling the distribution of inherently scarce content — is creating challenges and opportunities for non-media companies, too.


As I wrote in a report last year, We Are All Media Companies Now. Every company, every brand, every organization now creates and controls content on its own Web site, for example , to address its own audience directly. But not all get it right. Engaging an audience with content requires skill sets which many non-media companies do not yet possess. The reality is that we are all content strategists now, too.

For non-media companies using content directly to engage consumers, the barriers to entry have never been lower, but with so many Web sites competing for eyeballs, the competition has never been fiercer. While "paid" media remains vital to marketers and strategists, "owned" media — content created to engage directly with their consumers — is an increasingly important tool and part of a wider content strategy.

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