According to various sources quoting an article from Associated Press (Alex Veiga), Microsoft has teamed up with MTV to create a music service of its own, called URGE. I don’t know how many previous attempts Microsoft and MTV made, each for his own, to come up with an iTunes killer. But it seems to me that in times when a product or brand different than Microsoft is widely accepted as a new standard, former leaders in the music business and giant software companies find themself threatened enough to join forces with their former foes.
One would assume that more variety in music and greater choice of download services would be a good thing for the industry, all to the consumers benefit. Wrong. Truth is, this does nothing for the people. In fact, it’s just another try to push them away from buying iPods, and chosing Microsoft-technology based music players instead. Which is fine. But they are specifically excluding iPods to use the new music service.
“The biggest paradox is, the people who are most likely interested in an MTV-branded music experience are also probably the demographic that has the highest interest in the iPod,” was a quoted statement from Michael Gartenberg, vice president of Jupiter Research.
Any possible benefit for users aside, just from an economic point of view, this makes no sense at all. The iPod owns 78% of the portable music player market and iTunes has an 80% coverage of all download services market share.
In the end, nobody wins. Microsoft seems eager to not lose more ground in the consumer electronics market, before they even had a chance to conquer it. Over the past few months they have been sitting there, paralyzed, stunned, watching the iPod bubble grow to an extent when it really started scaring them. No wonder they think it is URGEnt to do something. At first, the iPod was seen as a belittled attempt from an outsider computer company to fulfill the needs of a few nerds listening to an exotic music format called mp3. At the time when the iPod was introduced, mp3 was still cited in conjunction with software piracy and Napster, then a peer to peer download service. When the success of the iPod became clear, it was still regarded as short term phenomenon, not meant to last for longer than a couple of years, and still aiming for gadget loving people.
Now it has become clear, the iPod has substantially changed an entire industry, even more so, it has changed the way people live and experience media.
The content offered by Microsoft and MTV (actually Viacom) is yet to be seen, and the quality of this content, or added values for the consumers benefit are unknown. URGE is scheduled to launch in 2006. It’s a mystery to me how they intend to make profit, let alone survive, in a market dominated by the iPod, completely ignoring one of the most basic and profound business rules: supply and demand.
I think a major mistake of computer companies and entertainment giants is to regard this market separatedly, with an inwards oriented view. In order to overcome the iPod dominance, anyone entering this market will have to look at three points:
- Provide an integrated hardware- and software solution, either by inventing a new, better media player (the hard way) or by making your service seamlessly work with the iPod (the soft way)
- Make sure that your system provides a straight forward interface, consistent, with a no fuss user oriented experience and design
- Here comes the tricky part. Add something valuable to the service, something Apple does not provide. In other words, make it better than iTunes. That involves ability to listen to what people ask for and expanding your service according to their needs, not the ones of entertainment corporations. Innovation is a tough one, I know, but Apple has proven it works well
Innovation doesn’t always mean you have to find a new feature, or invent a new product. Sometimes things are encountered by the people using your product. Just take a look at how Apple integrated podcasts. They did not invent them, but they recognized the importance of podcasts as soon the trend emerged from its grassroots grounds, and made it a consistent part of the iTunes experience, in a very elegant and seamless way. Did I mention the word podcast has been added to the Oxford Dictionary last summer?
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