Markham Lee_

Browser Wars: What Are They Good For?

For those that say the browser wars are about money, I ask again: did the winner of the last browser war benefit financially from it? Back in the '90s the expectation was that the winner of the browser war would effectively "own" the Window to the Internet, and as a result would easily be able to monetize that advantage.

This turned out to be a pipe dream as the winner of the browser war didn't benefit financially in the end, and now finds itself investing more in the browser to keep up with an upstart.

The newest entrant in the war has other things in mind and could "conceivably" benefit, but what is more likely to happen is that multiple companies will spend tens of millions of dollars to develop products that will converge (in a sense) in terms of capabilities and in the end, see little benefit.

14 years after Netscape and no software company has really been able to show the financial advantage of having the dominant browser.

My techie side is excited in terms of seeing new technology, but my more practical investor side is rather unimpressed.


-M

Record Companies Starting to Shun iTunes

Quick thoughts:

1) If the record companies die then we won't have any music to buy.

2) I've personally supervised the production of CDs in runs of less than 1,000 for small artists, where the cost was under $1/CD often in the $0.80 range.

If you're running off millions of CDs, have your own facilities, etc, the cost is undoubtedly lower.

3) The analysis is a hypothetical to be sure, but it does illustrate why many artists and the record companies prefer to sell albums.

It would be different if iTunes sold more albums than single songs or a given artists, as the $7/sale the record company received would be close to a CD sale and would be "good enough" to keep everyone happy.

4) I don't disagree with the fact that many people prefer to buy singles and it does favor the consumer, just noting that eventually it could kill the producer of the content you're paying for.

5) The Camry example is meant to indicate order of magnitude i.e. selling 200k CDs generates more $ than 2.2 million digital downloads of single track.

Anyway, we all agree a new model is needed, we all agree that selling albums is more profitable, we agree that consumers prefer track downloads.

BUT

What kind of model allows the record companies to survive and make consumers happy at the same time? Right now both goals are at odds with each other.

And if the record companies die?

There won't be much of anything new to download

I suppose I should probably point that I've never bought a digital download in my life, I use rhapsody to listen to music at work or occasionally drop a song on my Mp3 player, but to buy a digital track?

Never.

I always buy CDs prefer I like the sound quality better, but I suppose that's a topic for another discussion.


As always thanks for reading.


-Markham

Record Companies Starting to Shun iTunes

My cost assumptions were a rough estimate from when I worked as an audio engineer, like I said an independent artist can get a run of 1,000 CDs for about $0.80/CD, so with the scale the record companies work with...even when you add in the things you mentioned, their costs are relatively small compared to the cost of the CD.

Digital Equipment Helps a lot to be sure to the point where it reduces costs so that selling on iTunes isn't a problem? Doubtful.

Can you record an album with a cheap digital set-up that is no more expensive than the average home studio?

Yes.

But the top end digital equipment, converters, mixers, microphone pre-amps, monitors, microphones, etc, that you'll find in a top studio are still vary pricey. So for most big artists I doubt the price has come down that much.

Especially many people still like to record in Analog or some form of hybrid analog/digital set-up.

-M

Record Companies Starting to Shun iTunes

The real issue is that compared to the CD model selling music on iTunes is mathematically analogous to Toyota having to sell Camrys for $2.5k instead of $25k.

What company can survive when the economics change so drastically, especially when your production costs aren't getting cheaper by a similar order of magnitude?

It's easy to talk about a "new model" but quite frankly I haven't seen anyone suggest one that enables the record companies to survive. The CD model may be dead, but digital music is killing off the record companies. If selling 250k CDs generates more profits than 2.2 million downloads and the market is heading towards the latter, the record companies are going to die off.

At this point is pretty simple math yes iTunes favors the customer and that's great, but at some point you'll have fewer record companies (if any), which means fewer producers of the music we all love.

I prefer Jazz and Classical, most people my age prefer Hip-Hop and Pop music, but we all love the music we listen to.

Record companies die off, we all wind up with fewer choices - because the indie channel won't be able to generate as much exposure for artists nor will it be able to market a pop artist (a musical commodity of sorts).

It's great to put on our "music snob" hats (I've been guilty of this too) and say that no one should listen to pop music, and all artists should work it like Ani Difranco and tour a lot, put out their own CDs, etc, etc....

but.......

That's a myopic perspective, yes I happen to love Ani's music, but most music buyers aren't interested nor will they ever be. The top songs on iTunes are all pop music and the people who listen to it ENJOY IT, and the money generated by those pop stars has helped subsidize artists like Jeff Buckley, Tori Amos, the big labels Jazz and Classical labels, etc.

If the pop stars go, we lose a lot of the stars we music snobs like too.

I think there are a lot of unforseen consequences that people aren't thinking about.

For me this argument isn't about pop vs. jazz, or greed or the death of the CD model, it's about the fact that no company can survive if the price of their product drops by 90%, when their production costs are the same.


-M

Foreclosure Stimulus to Boost Tech's Four Horsemen

This article would make sense if the only people with housing costs were homeowners. Not to mention the fact that it would be fiscally irresponsible for these homeowners to spend their new found savings on technology toys, as opposed to using it for savings and debt reduction.

Nothing good comes out of encouraging financial irresponsibility, we only have to look to the present for evidence of that.

-M

CD Sales an Improper Proxy for Measuring Purchased Music Demand

Responding to a couple of comments, thank you for the interest BTW.

1) Around my Jr year of college people would say to each other: "Dude, don't buy that CD - I can send you the MP3s over the network". Than Napster came along and it got even easier to do. When people argue for file sharing, they just want the convenience of free music IMO.

I can see the indie music argument, but it's not like you can browse music on a P2P network, you have to know what you want in advance, so demand is still driven by pop music.

I think Pandora's box has already been opened though, once people can get the product for free and it's seen as having the same value as the paid version. Downloaders don't feel as if they're getting a lesser product when they download Mp3s vs. buy CDs, paid downloads don't help as you're getting an identical product that you can do more with and not paying for it.

2) I think the CD is a dying format as my generation (and younger) prefers the iPod/MP3 player and digital format combination over the physical format and a CD player. As an audiophile I purchase all CDs as I like the superior sound over digital formats, which makes me an oddity amongst people my age. A lot of my friends almost look at it as some sort of throwback hobby, like people who collected Vinyl in the 90s.

I can think of very few people my age who still purchase CDs, and the ones that do are usually audiophiles or people who just haven't embraced the digital world.

The question is: how will the record companies survive in this new world? They're easy to vilify but how many companies can survive people either getting the product for free and/or in a way that's significantly less profitable?