mschindler.com

This morning I heard about Real Networks new pricing scheme designed to grab some of the iTunes Music Store’s market share. “Really, 49 cents?,” I thought. I immediately began to think about how the iTMS is supposed to be a “loss leader” designed to sell iPods, not music. The cut Apple gets from each of its 99 cent song downloads is minimal, or so they claim—barely enough to cover the cost of the huge bandwidth operations necessary for sending large files over a network. And Real doesn’t sell a hardware device like Apple’s iPod to actually turn a profit. “Real must be planning to lose money on this,” I presumed. In fact, I found out later, that they even said so in their press release.

All of this still being digested, I began to think about how although Real’s been in the streaming media game for much longer than Apple, Apple is killing them with a 70% hold on the downloadable music market. That’s gotta sting a little.

And it sounded a bit like Real was getting desperate. “Oh, well, it will all work out for the consumer,” I thought.

Then I remembered the heap of trouble Real asked for when they decided to “reverse engineer” Apple’s DRM (the lock they use on their song files to protect against piracy) in order to get Real content to play on the best selling iPod. Apple released a statement saying they were shocked that Real would do such a thing and put into question the future compatibility of music that skirts around Apple’s license protection in order to get on the iPod.

So, I began to think that it might not be a good thing after all for the consumer—just for Real in a short run, if even that. Indeed, I found out later that the pricing structure is temporary. Presumably, Real cannot continue to sell songs at that price anyway. Why, then, would anyone happy with the iTunes/iPod arrangement want to switch? Sure, you’d pay for legal music at a sale price but at the risk of allowing what you purchased not to work on your iPod in the future.

And then I saw this phony grassroots site Real points to, putting pressure on Apple into opening up their DRM technology. They even posted a petition for people to complain to Apple.

But that’s not what happened. Disgusted Apple users took aim at Real instead, who’s had its own history of proprietary business schemes. The petitioners berated Real for being the hypocrites that they are. My favorite poster declared to “anti-sign” the petition. For the most part, it just goes to show that most consumers already feel that they have made a choice.

I left work thinking about the Mac vs. Windows debate. I don’t know why. It occurred to me then, as a user of both platforms, that I don’t give myself enough credit in speaking about the subject. I do know what I’m talking about. When I say that the Mac provides a better user experience, I’m basing that judgement on empirical knowledge. I spend an equal time in both worlds daily. Arguments related to market share (which is where this argument always goes), whether it works in Apple’s favor or not, are really beside any point and always have been for me.

The larger point is this. Mac users, and probably now a lot of iTunes users, are so by a matter of choice. No argument, especially some made-up argument about “freedom of choice” from a competitor is going to make a difference to people who want a better user-experience, have experienced it first hand, and know how to get it. Apple has cornered that market fair and square.

Unfortunately, companies like Real still have this to learn.

This entry was posted on Wednesday, August 18th, 2004 at 5:39 pm and is filed under technology. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.