itunes

Robert Cringely is one of the higher profile tech pundits, and like all pundits, is only barely credible based on predictions coming to pass.

But he brings up again the possibility of Apple buying Adobe. 

Actually, he says flat out it's going to happen. His reasons are a teensy bit more interesting this time, plus "inside sources," but I wasn't persuaded before and I'm not now.

He uses the Final Touch acquisition as an example of Apple's commitment to pro apps, and it is...but Final Touch wasn't a $36 billion purchase, as Adobe is likely to be. 

Another example he uses is just flat out wrong: "Of course content creation has been the heart of Apple's business ever since the original LaserWriter and the invention of desktop publishing...."

Sorry, try again. Apple didn't own any desktop publishing software. Clarisworks was interesting, but they killed it for good reason. It was a distaction from their core business of building computers and OSes.

Although Apple's core business is changing -- which Apple acknowledged when it dropped "Computer" from its name -- but look at how it's changing. 

The first big clue was QuickTime, which is still being used far far FAR more as a distribution and consumption platform than a creation platform. Seriously, QT is critical to us, but are there hundreds of millions of us? No. And the most compelling content being sold in the iTunes Music Store is sometimes only marginally created with QT at all. (I said sometimes.) And even there, the big money is in distribution and consumption.

iPods? Distribution and consumption.

The iPod/iTunes infrastructure is especially interesting to me. It used Mac users as a beta test before rolling it out to the whole world...which is frankly what non-Mac users comprise. Although Apple is growing far faster than the rest of the industry, it'll still be a while before it breaks out of single digit market share, and will likely never reach the heights Apple had before Mac.

(In fact, until stabilized at 3%-ish for a while, and starting a meaningful rise this year, Apple's market share has plummeted at least 90%. Discuss.)

My point here isn't primarily about market share, but about strategy: nobody, and I mean NOBODY, who's playing for keeps can do it on the Mac alone. (Sorry FCP.) Apple's iPod/iTunes business didn't change the world until the whole world could use it.

iPod. iTunes. Distribution. Consumption.

Not creation. You can barely use 'em to create anything.

Add iPhone to the mix: one-to-one distribution, if you will, on a massive scale. 

Look, I'm an idiot. I don't know a thing. But I only barely see Adobe fitting into this. Macromedia? Absolutely. I was among the thousands of people who thought Apple should have bought the whole company when they bought FCP from Macromedia. They could have gotten it for a song compared to what Adobe paid.

(Speaking of which, I believe that Adobe paid to be taken over by Macromedia -- the best money that Macromedia never spent. Discuss.)

I say that because Flash is a far bigger distribution platform than QuickTime, and because of its dynamic nature, is part of business infrastructure in ways that QT never will be. Websites are just the beginning. QT may never be useful in a database driven infrastructure. Flash is already being used as an actual driver interface in cars! 

So where does the rest of Adobe fit into this. Photoshop might seem like a big fish, but I've heard Adobe folks tell me that they see this as the most vulnerable app in the portfolio: being undercut by digital cameras, iPhoto, Aperture and the like. Those apps are forcing Adobe to change their game to meet Apple's challenge. So why buy it? Maybe to get at Pshop's science and medical business, but that's awfully niche-y.

After Effects? Meet Motion. Encore? Premiere? Encore? Buh-bye. Not that these don't all offer some superior aspects, but $36 billion?

After Flash, PDF is the other central Adobe technology...and Steve spent a full 45 minutes spanking Flash at the WWDC a couple of years ago. Included side-by-side comparisons of performance, image quality, the whole deal. Apple's flavor of PDF came out on top.

I think some of this was a shot over Adobe's bow: yes, PC has been your dominant platform for a decade, but leave Mac development behind at your peril. But how could he not have also been saying, we'd rather have you do this for us...but we can do it ourselves very, very easily.

Again, PDF has powerful features like built-in desktop sharing, video conferencing, etc. -- but I'm still waiting to see anything here that adds up to $36 billion.

Cringely says it will be announced this week. Do you? 

I'll be honest, I thought Steve Jobs was blowing smoke when he encouraged the end of DRM. I still think the timing around the unfair business practices investigations in the EU is way, way too convenient to be a coincidence. It really did have all the hallmarks of a diversion and little more. So I'll give him all the credit in the world for actually making it happen.

You've heard the news by now of course, but I have to tell you, reading the transcript from the press conference with Steve and the guy from EMI is a gas.

Some highlights that I haven't seen mentioned widely yet:

• The DRM-free tunes will be at twice the data rate.
• Your current EMI downloads from the iTMS can be upgraded to higher-quality, DRM-free for the difference in price. (This is a no-brainer purchase, IMO.)
• EMI is making their DRM-free music available to any music store to sell. And why not? They want the money, and more stores offers the potential of more money.

Anyway, you definitely want to check it out.

In the meantime, Microsoft followed this up with their own story about working on DRM-free music themselves. I still kinda like Microsoft. But this is just sad.

OTOH, the article I cite above is riddled with errors, starting with four of the first five words. It calls Apple a "digital music pioneer." What?!? Apple came late to the game, and aren't even close to the first to offer DRM-free music. They've also offered among the lowest bandwidth music for a long time, so stop with the pioneer chatter. There are other errors, too. You could make looking for them a drinking game...as if you don't have enough of those already.

Now here's the thing. None of this is even close to the "death knell" for DRM, which will surely be around even longer than cockroaches.

It's also easy to forget that there's a large-ish industry that makes money selling DRM technologies, and they're not about to give up their livelihoods without a fight. And since their customers are almost all much, much bigger than EMI, well, the cockroach thing.

DRM Watch sounds like it would be keeping their eye on DRM mongers. Nope, it's keeping an eye on DRM foes. You'll want to take a shower after reading this, but you should read it anyway.

The headline says the story's about Microsoft jumping on the DRM bandwagon, but it's actually an overwrought screed. Here's one of several money quotes: "As far as EMI is concerned, the deal was shortsighted, risky, and possibly irresponsible to the company's shareholders."

Here's another: "A more effective arrangement would have been with a major multinational retailer, like Amazon or Target, that has no current digital music strategy."

Last one: "Apple...stands to benefit most from any additional unauthorized copying resulting from the lack of DRM." Maybe, but only to the extent that they sell the most music players. As Steve J. points out, the vast majority of iTunes owners have never purchased a thing from iTMS. Their iPods are filled with the legal, DRM-free rips of their own disks. I think he's absolutely right.

No, here's the last one: "we believe that the number of consumers who would truly benefit from "interoperability" is small." Riiiiiiight.

Choose what you drink carefully when you read this, because you'll surely be shooting it through your nose with laughter.

Okay, after raining on DRM Watch's parade, the article makes some interesting observations.

One is that EMI is getting a cash advance of $5 million from Apple. He says that, combined with the new sales of online tracks, we're talking about 3% of EMI's annual digital sales of $290 Million from digital revenue (really? that sounds high to me), and a tiny fraction of the company's overall revenue of about $3.4 Billion. He's not at all clear if this is simply music revenue or includes publishing, etc. -- but that's to be expected. His goal isn't clarity as much as it is to protect his own DRM business.

That said, this squares with my own impression of the impact of online music store downloads relative to hard-copy sales -- in the low single-digit percentage range.

He also has some interesting speculation that the real intent of EMI's move was to drive up the price of Warner's attempt to acquire them. I'm not buying it, but it's still interesting.

Anyway, I have to agree with him that DRM is far from dead.

Yet.

A few weeks back, I wrote extensively about the EMI/Steve Jobs press conference, as well as the DRM establishment's response. Check it out if you haven't. It's really good stuff, and not just because I wrote it.

Well, here's the rest of the story, or at least as much of it as I accidentally found this morning.

Here again is the transcript of the press conference with EMI Group chief executive Eric Nicoli and Jobs. You'll find that Steve does much of the talking (surprised?), but both guys come off as smart, funny and self-deprecating. A nice read.

Of course, you'll want to hear it yourself. So allow me to present an MP3 of the press conference!

And because you're a glutton for this stuff, here are the slides in PDF form. How cool is that?

On one hand, the slides don't actually say much at all. That's the point. You kids out there? Don't do drugs. And don't put a pile of crap on slides!!! That point-by-point build nonsense? Strictly for amateurs. Don't ever, ever, ever do it. Seriously. Give people a big pretty picture to look at, then tell 'em a story.

If you give them a slide with a lot of bullet points, they'll read 'em fast, assume that this is all you have to say about it (especially if you read even one line aloud to them), and stop listening. It's a waste of time for everyone.

But if you show them a pretty picture, they'll immediately turn back to you, breathless, waiting for you to tell them what it means. You think I'm kidding about this? I'm not. Pay attention to El Jobso. He won't lead you astray.

Okay, slides rant over. But I have plenty of other stories to tell on the subject some other day. For now, back to fun with DRM, EMI, Apple, etc.

Not long after the original press conference, EMI Senior Vice President Jeanne Meyer did a great follow-up interview with bloggers at The Download Squad. (In case you were wondering, bloggers do indeed carry enough weight to get VPs from multinational companies to sit down with them. I suspect that the Download Squad strategy included just asking. So if there's some heavyweight you want to interview for your blog, just ask.)

Here are some choice bits:

The reason we decided to go with a DRM free version was because of the lack of interoperability between the various stores and devices were becoming too confusing and too frustrating.

So it turns out that EMI's strategy was based, at least in part, on the limitations of the iPod/iTunes closed architecture! Read it again. It's her point not mine, but I'm surprised we missed this before.

Not that she's singling out iTunes, though:

It will allow any retailer to sell our music to the owner of an iPod for example, not just iTunes, at the same time it will allow iTunes to sell music for people to buy for use on any number of different digital music devices and in fact mobile phones.

This quote might be the most interesting to me:

When we offered DRM free in an standard format next to a DRM free but with a higher bitrateand priced a little higher consumers on a ten to one basis went for the premium product.

I'm totally in the majority on that count, but I'll be interested to see how it holds up. On the one hand, the MP3/MP4 format is a testament to how little sound quality matters when compared to convenience. (CDs are too, for that matter.) But when higher quality is every bit as convenient? Maybe.

Also worth remembering: that the average number of tracks that iPod owners buy through iTunes is 20. Twenty. But let's put it this way. Say every iPod is responsible for just a single download of higher quality, non-DRM music that they wouldn't have bought anyway. So 100 million times $1.29 equals....where's my pencil?....$129 million dollars. I'll take it.

She also notes, as Steve did, that nearly all music currently sold has no DRM. Even if every downloaded track had no DRM, it would account for far less than 10% of overall music sales. Which begs the question, what was the fuss in the first place? Anyhoo.....

Two last updates, one new and one old. The new one first. Steve says no dice on the subscription model for iTunes. ""Never say never, but customers don't seem to be interested in it," he says, "People want to own their music." Hard to argue.

On the other hand (I'm saying that a lot, aren't I?), I watch whatever it is, 20 or 30 hours a week watching subscription TV (okay, closer to 40 once you throw in Red Sox games), and maybe 2-4 hours a month watching DVDs I own. So all the hoop-de-doo about subscriptions being the wrong model is nonsense to me. Subscription models have been proven again and again. We just don't have the right model of the right model yet.

Wait! The whole XM thing is the perfect evidence that subscription models for music do work well enough for a sizable and fast-growing audience. And radio's ratings are up while TV's are down. So there. You don't have to either own music or steal it to listen to it.

Now here's the old "update." Folks as old as me will remember when Real Audio was the coolest thing ever. Cooler than QuickTime, by a long, long shot. (Not that QuickTime could stream then. Could it?) Rob Glaser seemed like a stud because, when Apple was adrift and a non-player, he left Microsoft with the express purpose of kicking MS's ass...which for streaming media, he totally did...uhm, until...well, I'm not sure when. But sometime around when they became RealNetworks, Real became (or was revealed as?) the lowest quality, most invasive annoyance on the net. Am I wrong about this?

Anyway, here's Rob at the end of 2005 saying that the iPod's reign is going to fade "closer to 2 years than 10" (although he makes an interesting analogy with Apple's computer market share sliding from 40% to less than 4% at the time of the interview), the reason the subscription model isn't getting traction is that most people steal their music (what?), and using Lynyrd Skynyrd as an example of why Real's Rhapsody music subscription service is the coolest. I was going to say it's hilarious and provocative in equal measure....but it's more like 75% hilarious, 10% provocative, and 10% "huh?" and 5% sad for anyone who remembers when Real was cool. But you'll dig the interview. Maybe a lesson to never say anything about anything about the future in print, even online, because you'll almost certainly look like an idiot later. 

Speaking of which, where's my dang rocket car? Didn't somebody say we'd have rocket cars by now?

CNN reports that Apple has started charging credit cards for the shipment of Apple TVs. They continue, "Analysts say it's likely to sell well initially." Wow. You think so? The same analysts believe that Apple has taken pre-orders for more than 100,000 units, and, well, since I read it on the internet, it must be true.

Blog pioneer (he was doing it 10 years before blogging had a name) Dave Winer reports that one of his readers says he got a notice from Apple that his has actually been shipped. I got Dave's link from NewTeeVee, who quotes Dina Kaplan of Blip.TV: “The impact of Apple TV is going to be pretty big.” You think?

I'm not mocking Apple TV, just the analysts. And not even all the analysts. Jonathan Hoopes is an analyst for ThinkEquity, and has been bullish on Apple for a long time. (He rates Apple a buy, with a target of $120/share. You can look it up.) He sent a letter to his clients with a slightly more articulate take on the potential impact of Apple TV:

"In addition to sharing digital content within the home, we believe investors should understand the value of the various potential business models that Apple TV could enable.

As a digital media content delivery vehicle positioned in users' living rooms, we think the AppleTV/iTunes combination could become as disruptive to legacy video purchase-and-consumption behavior as the iPod/iTunes combination has been to the traditional music business model."

Ah, disruption! Now we're talking.

Jeremy Horwitz adds another dimension to the picture:

Apple has quietly added an “Export to Apple TV” feature capable of creating high-definition videos viewable on the Apple TV accessory. Unlike Export to iPod, which currently creates sub-DVD-quality 640 by 480 videos,

Export to Apple TV creates not only full DVD-quality 720 by 404 videos, but also 1280 by 720 videos.

He's done a little experimenting with this, and observes that a 90-minute movie weighs in at about 3 gigs. That sounds about right, but it also sounds a little heavy for Apple TV's initial offering of a 20-gig hard drive. (Oops.)

Still, check this out: the video from Jeremy's experiments so far only plays back in iTunes! It seems to herald HD delivery through iTunes. I don't think our boy Hoopes was even aware of this when he wrote in the article linked above that Apple TV is poised to blow Netflix clear out of the water, and is a step away from torching TiVo too.

That said, Apple is quick to admit that the average iPod user has bought 20 tracks from the iTunes music store. Which suggests to me that the stunning majority of iPod users have bought nothing from iTMS.

So this is one area that Hoopes is clearly flat-out wrong. iTunes isn't disrupting the music industry's basic business model. I don't think it ever will. Disrupted the portable music player industry that iPod was so late to join? Absolutely.

Is it going too far to say that iPods have taken off because you don't need to buy anything from iTMS to get a dandy experience? iTunes is awesome software for ripping your entirely legally purchased CDs and elegantly getting them on your iPod.

Unlike the iPod, Apple TV will require payment to view content on a big screen. Apple can't include DVD ripping tools in its official software so you're going to be limited to viewing content purchased from the iTunes store.

That's Jason O'Grady, one of the hardest of the hardcore Mac users ever. Like Hoopes, I think he lets some of his arguments take him off course, but I think he's zeroed in on this: Apple TV takes off when I can use it for my media.

Anyway, we're about to find out, ain't we?

One of the favorite games of Mac Kremlinologists is looking under the hood of new releases to find "hidden" text strings for hints of what's coming. Monday's release of QuickTime 7.1 hints at a whopper: Apple TV could be doubling as a game hub.

What Apple has not yet said, but is quite apparent from Monday's iTunes release, is that Apple TV will also sport some rudimentary gaming capabilities. "Are you sure you want to sync games? All existing games on the Apple TV," reads a localized string file hidden in the software. Another reads, "Some of the games in your iTunes library were not copied to the Apple TV [...] because they cannot be played on this Apple TV."

 

In total, iTunes 7.1 includes a little over a dozen text strings relating to game management on the new Apple device. In addition to syncing, the strings offer user prompts for various other operations such as removing games, preventing unauthorized games from making the sync, and warning users when their Apple TV can no longer accept new games due to a lack of space.

 

Note that this is still a long way from becoming a full-bore gaming console a la the Wii, et. al. Instead, it looks like a way to sync your iTunes games with your Apple TV.

Wait, iTunes games? Apparently so. On the one hand, this suggests something pretty lightweight, not nearly as intense as a console experience. On the other hand, two developments shed still more light on this.

In an interview with Wired, the former general manager of Xbox's online download component now works for a gaming company in a role that includes porting games to new platforms:

It will be about taking the stable of franchises and games out of PopCap's studio and adapting, customizing it for different platforms -- adding multiplayer, new play modes, HD, customizing the user interface and display for Zune, ipod, Apple TV, Nintendo DS, PSP.

 

And how's this from Apple Insider?

Students at the Savannah College of Art and Design reported today receiving an e-mail from a recruiter working directly for Apple, Inc., who appears to be actively tracking down skilled graphics designers among those enrolled in the school's Fine Arts programs. Those hired for the summer program would be tasked with creating "consistent, high quality 3D and 2D art for games," the message said.