At first blush, the decision by Warner Bros to rent movies on Facebook seems a little out of place. Sure, people watch a lot of video (mostly YouTube) on Facebook, but they don't go there to watch two hour movies, right? Well, for now they don't, but with some tweaks, they could start doing so very soon.
As my colleague Nick Thomas said yesterday in his blog post about Facebook's potential as a premium content platform, the future of traditional and social media are likely to be intertwined. Most of us, myself included, have been imagining them blending in the living room, where viewers can access Facebook on any number of devices while watching a movie on the TV. But would people be interested in exactly the reverse? When I checked in on Facebook I found the first evidence that the answer is yes.
You see here that within 11 hours of being posted, 1,914 people liked the idea of watching The Dark Knight on Facebook. This is compared to the 1,433 people who have liked the App Edition of Dark Knight that was announced nearly a month ago. (Don't try this at home; for some reason, the post announcing Facebook viewing has since been removed and I can't check for more recent numbers.)
The most important outcome of this week’s emerging tussle between Apple and Google is that we are about to have an intense and financially difficult conversation about what a fair price is for delivering customers to developers, publishers, and producers. Economically, this is one of the most critical issues that has to be resolved for the future of electronic content. Very soon, a majority of consumer experiences (that which we used to refer to as the media) will be digital. But not until the people who will develop those experiences have unambiguous, market-clearing rules for how they can expect to profit from those experiences.
The question comes down to this: Is 30% a fair price for Apple to charge? I must be clear about my intentions here. I do not employ the word “fair” the way my children often do. I am not whining about Apple’s right to charge whatever it wants. Apple may do whatever is best for shareholders in the short- and long-run. I argued yesterday that Apple’s recent decision does not serve its shareholders in the long run. Google announced One Pass yesterday – hastily, I might add – in order to signal to Apple and its shareholders that monopoly power rarely lasts forever. But none of that questions the ultimate morality of Apple’s decision or its rights.
I use the word “fair” to refer to a state of economic efficiency. A fair price is one that maximizes not just individual revenue, but total revenue across all players. Such revenue maximization cannot be achieved without simultaneously satisfying the largest possible number of consumers with the greatest possible amount of innovation.
Yesterday Apple announced its intention to tighten its hold on the payment for and the delivery of content through its successful iTunes platform. (I’ll leave off the I-told-you-so; oops, too late.) Apple will require that all content experiences that can be paid for in an Apple app must be purchasable inside the app, with Apple collecting its 30% fee. The app can no longer direct you to a browser or some other means for completing a transaction. Crucially, the in-app purchase offer must be extended at the same price as the same offer made elsewhere. Though the announcement of the subscription model was the triggering event, the policy extends to all paid content.
I do not believe this is where Apple will stop – I personally expect them to eventually deny the delivery of content paid for outside of the app without some kind of convenience charge. But my personal expectations are irrelevant here, because what Apple has done already is sufficient to make providers of content aggressively invest in alternative means to reach the market.
Subscription content services are the lifeblood of the content economy. A full 63% of the money consumers spend on content of all types comes through a renewable subscription (I’ll be publishing this data from a survey of 4,000 US online adults as part of a bigger analysis next month, hang tight). Most of that subscription revenue goes to pay-TV providers, but 17% of it goes to newspaper and magazine publishers, including their online or app content experiences.
Today The New York Times is reporting that Apple is changing its policy for allowing apps to deliver content that was paid for somewhere other than in the app where Apple would get a cut. This came to light when Sony was forced to explain why its iPhone and iPad apps were not being released as promised. This is important to illustrate clearly because this is not just about Sony. In fact, it is expected that Apple will apply this same policy to existing apps over the coming months. The most obvious target is Amazon.com's Kindle store, but we have no reason to believe it will stop with eBook retailers; instead, this policy should also affect magazines, newspapers, even videos and games.
This represents a shift for Apple. Going back to the iPod days, Apple only sold music because it helped sell iPods. When Apple added the iPhone app store, it allowed Amazon to add a Kindle app because it would only make iPhones more valuable to potential buyers. The same held true for the iPad. But now that the company has built such a powerful ecosystem of devices, content, and consumers, it appears Apple is eager to ensure it can collect any and all tolls along its proprietary highways. I note this with some irony because it was just three weeks ago that I praised Apple's surprising openness in a report explaining the iPad's rapid growth:
There are rare moments in technology when everything changes. When the entire framework defining how we interact with machines (and consequently, each other) shifts perceptibly. That happened when the TV was invented, it happened when the computer mouse was made available commercially. These kinds of changes forever alter our economics, our social life, and our individual experiences.
It's now about to happen again. Only this time, the shift that is coming is on such a large scale that not only will it change things dramatically, it will usher in a new era in human economics (and therefore, everything else).
We call the new era the Era of Experience. I'm working furiously to complete a report detailing all the specifics so you'll understand what this era entails and, importantly, what you can do to anticipate this era rather than follow it.
In fact, at our Customer Experience Forum in New York City during the last two days in June, I gave an exclusive preview to the 600+ attendees of what the Era of Experience was. In my speech, I gave a live demo of the PrimeSense technology that the people at Xbox built on to create the Kinect for Xbox 360 platform. This platform incorporates a full-body gesture control interface, voice control, and face recognition. It's as if all the science fiction we've been reading for decades was really just a how-to manual for Kinect. Oh, and this future-defining platform costs all of $149.99 at Amazon.
Loyalty currently is at the top of my research agenda. Why? I think that marketing organizations have been approaching loyalty with uneven success by adopting established approaches mainly based on points or rewards. Maybe we should look at loyalty from a wider perspective and try to embed it in our efforts to build a better brand experience for all customers. I’d really like to know what you think about this topic.
If you're a senior marketer, I'd appreciate it if you'd take the time to answer here .
What can you expect when you click on that link?
Your answers will help me get a better understanding of how marketers see loyalty initiatives as a component of their plans, if they are happy with their loyalty programs and if there are common pains that marketing organizations share around loyalty. Why? Well, we think that loyalty needs to become a higher priority for marketers to get the best returns in the future, and we think that to do so, we maybe need to rethink our overall approach to loyalty, moving the focus from rewards to a consistently satisfying brand experience.
At least, that’s what I’m thinking right now . . . you tell me. I look forward to your responses.
This will be an unusual post for me. No big industry event to comment on, no data to reveal. Nope. Today, I'm just sharing with you how much fun I (and 5 million other people by year-end) am having with Kinect.
Yes, that is my hand, and yes, that is more of me than you expected/wanted to see. If you look closely at the big knuckle on my index finger, you'll see two white slivers embedded in the flesh above the knuckle. Those are slivers of glass. They are embedded there because in going up to smash a volleyball over the virtual net, I slammed my finger through a lightbulb, tearing the flesh from my knuckle and allowing random pieces of glass to find their way into my finger.
No, I am not going to sue Microsoft (though I'm sure someone else will eventually try, which is why Kinect is absolutely peppered with warnings to be careful, they are clearly anticipating a lawsuit at some point).
It turns out I'm not alone. Search YouTube for "Kinect Fail" and you will find lots of video of people elbowing each other, smacking each other on the head, and so on. In my older New England home, all of my guests above six feet tall have a tendency to smash the ceiling with their hands -- one very tall friend actually did the long jump with such enthusiasm that he smashed his head into the ceiling. Both the ceiling and the head survived in tact.
Brace for impact. What I'm about to say is going to make a lot of people angry, including some of the people at Google who are going to rightly point out that when they pre-briefed me on today's Google eBooks announcement, we never once discussed ad-supported reading.
Instead, they told me all about their plan to establish a set of tools that will offer eBooks to people looking for book information through Google's search engine. They explained that this will make it possible for the millions of people who conduct book-related searches every day to have easy access to 3 million books -- some out of copyright, some out of print but under copyright, and a full range of in-print titles including bestsellers. They also described how independent booksellers will be able to use the same set of web-based commerce and reading tools to build their own branded eBook stores to finally extend their brick-and-mortar customer relationships into the digital space.
Since then, I've spoken to half a dozen reporters who were also pre-briefed and they have all had a similar set of questions: can Google compete against Amazon (no, but it can compete against Barnes & Noble), is it too late to make a dent in a mature market (no, less than 10% of online adults in the US read eBooks, there's plenty of room to grow), is Google's cloud-based strategy unique (yes and no, it supports all devices except the Kindle, but the Kindle platform actually supports as many devices as Google will).
Last week, The New York Times broke the news that Google is launching a new eCommerce platform targeting fashion brands: Boutiques.com: http://nyti.ms/9DlCu. (Disclaimer: I worked for four and a half years at Google, but I was not involved in this project.)
The launch pushes the envelope of how technology can help consumers navigate and discover fashion products and trends by:
Taking vertical search accuracy to the next level.
Using social as a centerpiece of the experience, giving celebrities, fashion bloggers, and ultimately everybody the capability to create a "personal boutique" with the fashion items they love for all to have a peek.
Taking advantage of the latest visual search technology that helps users in mixing and matching colors, patterns, and trends.
I think that the approach to product discovery of Boutiques.com is a very interesting development in eCommerce as well as for brand marketers. Why?
Boutiques.com offers a much richer way for consumers to explore brands online by shifting the focus from product to the context in which the product will be ultimately used. I would expect Google to target notoriously difficult categories to contextualize like furniture and cars.
Data, data, data . . . retail aggregators like Boutiques.com have the opportunity to develop unique insights on demand trends that many brands will be happy to pay for.
As cross-brand navigation becomes an easier and rewarding experience, the current cornerstone of today’s brand digital presence — the Web site — will face increasing competition from innovative retail formats, and as a result, brands will need to develop a syndication strategy for their branded content across platforms.
Time to get my hands a bit dirty. Last week I posted an eBook forecast with a brief explanation of why the book business may complete its digital revolution more quickly than other media businesses have. Turns out this assertion was more difficult to hear than I anticipated and I got some very insistent (and worth reading) comments. The discussion that ensued both on the blog and outside of it was very complex, this is not a simple matter. However, there are parts of it that are very simple that I have to clarify, even though it means rolling up my sleeves a bit. Allow me to draw into this discussion John Thompson of Cambridge University who gave a very worthwhile interview to the Brooklyn Rail this month to discuss his recently published analysis of the book industry, Merchants of Culture. I will refer to just one of his specific comments:
"There are many people who just love books and they love the ideas that are expressed in books; they love the stories that are told through books and all of it. They’re very attached to it.... They cherish the book. And they believe that this is an artifact that they want in their lives. And some of the technological commentators in this industry just completely miss this point."