Why It Matters That 1,914 People “Like” Being Able To Stream The Dark Knight on Facebook

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.

A screen capture of a the Facebook fan page for The Dark Knight

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.)

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Apple’s 30% And Google’s 10% Fees Are Too High

 

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.

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Apple's Policy Harms Subscription Providers Today, Apple Tomorrow

 

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.

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Apple Clamps Down On Paid Content Delivered To iPhones And iPads

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:

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We Are About To Enter The Era Of Experience

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.

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Killing Me Softly With Kinect...And Leading Me To The Next Big Thing

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.

Xray of my injured fingerYes, 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.

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Google eBooks Paves The Way For Ad-Supported Publishing

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). 

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On The Certain Economics Of Relegating Paper Books To The Margins Of The Business

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."

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Netflix Is Now Primarily A Digital Video Company

Netflix announced its Q3 2010 earnings a few weeks back and the numbers were every bit as positive as people have expected. The company added nearly 2 million subscribers in the quarter, almost four times as many subs as they added the same quarter last year. Yeah, four times as many. While Comcast and Time Warner announced net subscriber losses. At the same time, the cost for Netflix to acquire a customer has fallen 26% in the past year. Funny how when you digitize the customer relationship and the product at the same time, all your costs go down.

The number I always wait for from Netflix is the percent of subscribers that used Netflix Watch Instantly in the quarter. It rose to 66% this quarter, up from 64% last quarter. And remember, this was while adding 2 million new subscribers, which means that new subscribers are adopting Watch Instantly at a rapid rate instead of waiting to get used to Netflix; in fact, they're probably joining Netflix just to watch instantly. This is, of course, why Netflix will likely offer a digital-only plan that subscribers can pay for if they don't even want to pretend to put DVDs in their queue. 

Why is this important today? Because it was just now that I finally dug through the summary financial results to find this gem of a quote, something that was briefly reported when Netflix announced it results, but was not fully understood in most of the reports I read. I want to resurface it because this is a big deal: 

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eBooks Ready To Climb Past $1 Billion

Consider it an inauguration of sorts, a celebration of the eBook industry becoming a member of the major media club just as digital music and online video have before them. When you influence a billion dollars, people have to take you seriously. In the book business, it means that traditional publishers can no longer live in deny-and-delay mode; meanwhile, digital publishers get invited to better parties and people in other media businesses like TV and magazines look over and wonder if they could cut a slice of this new pie just for them.

To honor the occasion, we have just published our five-year forecast for eBooks in the US for Forrester clients. The punchline is this: 2010 will end with $966 million in eBooks sold to consumers. By 2015, the industry will have nearly tripled to almost $3 billion, a point at which the industry will be forever altered.

Right now, the number to track – and the one that determines how many eBooks will sell – is the percent of a consumer’s books that are bought and consumed digitally. To get at this number, we have to understand how people get books today. Did you know that the two most common ways people get books today is borrowing them from a friend or getting them from the library? Evidently content – at least in the book business – is already quite free, even without the help of digital.

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