Your Linux Data Center Experts

A few weeks ago, Slashdot had a story about a music executive speaking at a Cellular Phone conference. He was admitting that the music industry was wrong to stand still while their customers were switching to P2P. Of course, he was saying that the mobile industry needed to make sure that they were delivering music to their customers.

However, I think the “mobile operators” are much worse off than just needing to deliver music to their customers. In a very similar way to how the music industry, wireline phone companies, and newspapers are already in trouble. It's all about where the value is: seeing it and being willing to react to it.

Read on for more…

The music industry has been annoying me for decades because of their single-minded devotion to having to milk every dollar out of the consumers. They sold CDs as being able to last forever. When early CDs had deterioration problems that resulted in even pristine discs becoming unplayable, the industries response was initially one of “Well, you should just buy replacements”. And the fine print on CDs proclaimed that it was not permissible to lend CDs out, did you know that? Annoying.

Long before the P2P fiasco that I started boycotting the RIAA because of things like the above. Over 3 or 4 years I purchased 400 CDs. Then one day I just stopped. I no longer wanted their product, because of the baggage that came along with it. It was like the clinically insane girlfriend that you love but just have to break up with for your own mental health.

The music industry seems to think that the value they provide to their customers is primarily related to shipping plastic Frisbees with secret marks on them. They don't seem to be willing to understand that it's not about the disc. In fact some customers find the plastic-disc format they deliver their content in to get in the way. I know this because I'm one of them.

The value to the consumers in music isn't in the CD, or the restrictive licensing. I'm not here to talk about where the value in music is, so I'll just leave it at saying that it's obvious to me that the value isn't where they think it is.

The newspaper companies are in a similar boat. They seem to think that the value to the consumer is getting them a dead tree. I recently heard, that the newspapers can't give their papers away to younger people, because the consumers don't want the clutter around. The content isn't worth the mess.

The value in the newspaper is the content and getting it to a targeted community (by location, interest, etc). Some of this information is “news” (I prefer to call it infotainment, which I think is a more honest word for it). Some of this information is in advertisements, including things like classified ads, movie listings, product and event announcements, etc… You know, things like google local and craigslist are providing…

Evelyn Mitchell has said that the newspapers could have been google, and I think she's totally right. Google isn't a search company, they are an advertising company. Google gets text advertisements (which look shockingly like old-style classified advertisements) in front of people.

The value to the consumer is in the information, but not in the “pay us $10 a month for it” sort of way. The value is in the content, the money is in the advertising.

Satellite Radio is in the same boat. You want me to pay to listen to the radio, with advertisements on it? I haven't listened to terrestrial radio in my car since I got portable music player integration. I can have my own soundtrack with me, instead of having to have someone else's soundtrack pushed at me. It's an especially wonderful thing in late November when I'm already tired of the happy holiday music.

The mobile/cellular industry is especially in trouble now, I think. They are “leaving money on the table” because they want you to pay $20, $30, $60 and up per month for putting a device on their network.

This is what the article I mentioned in the beginning of this musing got me thinking about. The value isn't in having the device, in fact I hate having the devices. More devices are just more things I have to keep charged. They'll put up with a device if it does something useful, but that's not the real value. The value to the consumers is in what they can do with the network, of which voice communication is just one thing.

Then a couple of days after the Music Exec article, I saw that the Amazon Kindle came with an EVDO connection, and it all clicked. They should give away the wireless data connections. The more things that have them, the better. Dollars per month per device are preventing people from integrating cellular data into devices, leaving money on the table because people can't make use of the network.

I don't know if this is how the Kindle works, but it totally makes sense to me to give away the EVDO connection on the Kindle book reader, and not charge customers access to Amazon's ebook portal, but having the vendor pay a cut of the book purchase to the network provider.

There are tons of applications for the cellular network, which people aren't taking advantage of because they aren't worth the $60 per month per device that the cellular companies want for a wireless.

This came up in a discussion with Steve Woodbridge tonight after dinner. He was cursing Verizon because their network was too closed. I passed on that Verizon has recently been committing to opening up their network. After some discussion about the value of the network, I think the value is really in the applications that run on the network.

Giving away the connection, and getting someone other than the device user to pay, could generate a lot of income that they don't currently have.

The network wins because they have more opportunities to get money from people who wouldn't pay the $60/month with a 2 year commitment to get data service on the device. It benefits the consumer because they can buy content when and where they want it. It benefits Amazon because, well, consumers can buy content when and where they want it. :-)

Everyone wins.

And you can imagine pretty much every device having the mobile connectivity in it:

  • Digital camera: People would pay to not have to screw with memory cards filling up I bet. Upload a picture when you take it. Include location information gotten from cell tower triangulation. Never have to set the clock on your camera again…
  • PDA: No brainer: Automatic sync to and access via a central server. Get it to an administrative assistant service to help plan my days. Of course, all the things the PDA phones do…
  • Radio: Order the song that's playing now and add it to my digital library. This advertisement is something I want more information on, send it to me or have someone contact me.
  • Car: Where the hell am I? Can you navigate me, via voice instead of having to watch a display? I don't want one of those navigation systems… How fast is my teenager driving and where? Where did I park my car? Hey, it's cold outside, can you start that baby up, I'll be out of the mall in 5 minutes. Where is a gas station?
  • GPS: Automatically upload my location to a web site.
  • Music player: Suggest other music that's like this. I really would like to buy a song to listen to now. I already have a copy of a song, but it's just not with me. I sure would like to listen to the college radio station in Colorado while I'm in Chicago…

All of these things are worth some small or possibly even large monthly or one-time fee for the services, because that's what's important to the consumer. $60/month for the ability to do it isn't as compelling as $1 per event to do it 60 times. Or 100 or 200.

A large part of the problem seems to be that the businesses in question are just not willing to admit that there's a problem with what they're doing now. “It's been working for decades, why change now?”

So where does the value exist in what you are doing?

comments powered by Disqus

Join our other satisfied clients. Contact us today.