Amazon Cloud and Apple icloud – Fighting the Music Lovers Need to Store Music

Amazon and Apple have announced their plans to turn the digital music world upside down by offering music on a “cloud” model, where purchased songs are not stored on an individual consumer device, but stored on Amazon or Apple servers to be accessed by the consumer anywhere. A good overview and comments in Knowledge @Wharton Today Blog

The benefits of cloud music storage and access look appealing – no more syncing multiple devices like laptops, tablets, handhelds, phones, etc. These devices will now connect to with each person’s collection on the cloud server for instant access and synchronization.

One concern for this new approach is that it fights a basic consumer insight I have observed. Music lovers want to acquire, own and store their own music. They want it accessible and untouchable. While having one’s own music stored on a cloud is virtually the same, it is different than physically building and storing your own collection.

Let me start by saying that purchasing and storing one’s own music is actually illogical from a cost benefit perspective for the following reasons:

• There are already subscriber services which will allow access to vast selections of music at small monthly rates. While not for downloading, any song is available at your command.
• Newer radio formats (Pandora, Satellite radio, digital cable, internet radio, etc,) have multiplied, each with the ability to customize your listening experience to very specific tastes. Again, you can listen but there is no download.
• Purchased music has a shelf life. I don’t actually ever listen to Springsteen’s Born to Run album anymore. Younger listeners still have their Hanson’s and Boys to Men hit singles from the 1990’s even though they no longer listen to them.

However, despite the illogic of purchasing and storing a lot of music for individual consumption, it is in music lovers DNA to want to own, and keep with them, their own music. The cloud is therefore a scary proposition for many because the big company may one day decide that they want to change the rules and your music could vanish. Unlike in business, where cloud software makes good financial sense, consumers may not be rational in this regard. Cloud ownership starts to feel like renting music even though you do own your collection in the cloud. And what happens when the cloud people realize that not all that music in your collection was purchased through them (or at all).  They might ask you where you got it. Hey, that’s my song, leave me alone. Get off of my cloud!

To the music lover and collector, the right to own and store your music in the safety of your house should be written into the constitution, like gun ownership, or free speech.  consumers want to own certain things even if alternative models are more efficient.  Personal music storage is partly illogical, yet a strong motivator in music sales. My bet is that Amazon and Apple learn this lesson quickly.

The Decline of the Netbook–Selling Less for Less

There was an interesting  article in the New York Times about Netbooks.    (Thanks for sharing, Larry)
Netbooks Lose Status as Tablets Like the iPad Rise 

Remember seeing that little netbook in the big box electronic store? It is the $250 laptop alternative that lets you surf the web and do some cloud computing without the size, and weight of a standard notebook (laptop) computer.  Of course the price was also great with the potential of opening up many more users to computing (think kids at school, or less affluent parts of the world, etc.).
 
This device, when introduced, really put a scare into the notebook industry with the result being a drastic reduction in the price of a notebook computer from an average of over $1,000 a couple of years ago to less than $500 today.

The manufacturers of the first netbooks picked up one very strong consumer insight.  Consumers want portable technology that is lightweight and accomplishes the basics pretty well.  But as the NY Times article states, sales slipped this past holiday by –38% versus last year.  So what happened?  The answer to this question can be found by looking at  consumer insight, marketing and competing technology. 

For consumers, electronics purchasing decisions are based on a clear priority.  First comes “cool and wow” (lots of features, applications and great product design).  Only after that does the price factor become important.   Certainly you hit the jackpot when you offer “cool and wow” for cheaper, but only after the coolness has been widely accepted.  For a while, the netbook was legitimately cool.  But it was soon seen a product of tradeoffs – sort of a “less for less”.  That, unfortunately, fights the consumer priority order and is is not workable in the fast evolving world of computing. 

From a marketing standpoint, there was no interest in dialing up any cool features with advertising buzz around these devices either.  The dilemma for the manufacturer is obvious - if you market this product to anyone, you are taking a potential notebook purchaser and downgrading them to a netbook.   Can anyone think of any cool applications (apps) for these machines?  Personally, I think that it would not have been hard to tout potential unlimited access to all your business software, gaming, file sharing, Skyping, etc on the net.  Isn’t that what an iPad is anyway? Just seemed like the industry had no interest.  

The final nail in the netbook strategy came from competing technology.  Ebooks, and Ipads and the beginning of the so called “slate” screen interface have made the netbook (and soon laptops) out of step.  These newer interfaces will soon replace the “flip open” screen technology in the years to come. And the consumer will be asked to pay top dollar for these newer interfaces.   If you understand the consumer priority of purchase decisions (wow first, price second), consumers will be happy to pay.

“Yay Cloud”

Nielsen Wire (a blog I follow on the right) reported that Windows 7 Cloud advertisement by Microsoft was the most remembered of the week ending 10/31/10.

http://www.youtube.com/watch?v=Lel3swo4RMc

I like the ad by Crispin Porter & Bogusky.  I am not a techie either.  It captures a real slice of life for the PC absorbed, upwardly mobile traveler.  It brands the concept of “cloud” computing.  Cloud computing is, basically, being able to tap into news, video, and many of PC business applications over the internet – and not have them reside on your computer, but in the “cloud”.

Microsoft wants to own the term “cloud” (not yet a household word).  The tricky part is trying to bring the concept of cloud computing to the average PC user.  Who is average?  Younger PC users are highly into video and entertainment, business users are into workplace business tools (MS Office).  Microsoft has chosen to highlight the younger generation in this ad with a concept of being able to go to the cloud to pull down your favorite recorded TV show.  I love the interplay of the people and the TV show (celebrity probation - beating each other up). But it looks an awful lot like surfing the internet.  

The reality and benefit of cloud computing is having MS Office products no longer residing  on your desktop (you paid for them when you bought your last computer).  No more out of date software, security issues, viruses, upgrading, etc.  Remember, the user base of MS products is HUGE – hundreds of millions of users, likely bigger than all of their competitors combined (although you wouldn’t think that from the Google and Apple originated trash talk).  While internet- based PC software may be on the boring side, this advancement just might make it a bit more interesting.    

A lot has been written (as it always is in the tech world) about the business model of non-installed software – moving to either “free-over-the-web” or some type of subscription service.  Microsoft knows that the future – especially for small business - is on the web (think Google Gmail, calendars, etc).   And they are moving in uncharted waters with a subscriber versus installed business model.  This may have implications on Microsoft’s profitability.

I think they are on to something here even if it affects their business model.  As the “Cloud” concept becomes mainstream, Microsoft will move quickly and forcefully to take ownership to life across a broad spectrum of media.  Microsoft is moving…...to something bigger for all of us …..To the Cloud!