Business

Oh my goodness, Fake Steve Jobs says everything there needs to be said about the Android announcement. I started this thought on Twitter, but didn’t take it to the depths it needed to be taken.

Here’s the point: It doesn’t take 34 companies to build an open platform (just ask Steven Frank). By definition, if you create an open platform, anyone can use it. But Google knows if they created a GPL’d Linux OS for mobiles that no one would care, not just because it isn’t their own proprietary brand (and therefore wouldn’t rake in licensing dollars) but because most of these guys already have Linux-based OSes and it’s not that revolutionary an idea anymore.

More importantly, it takes hardware and an infrastructure to do mobile. Unlike a computer, say an Apple I, that you can build in a garage, program and run locally, a phone needs broadcasters, relays, and all the good stuff that is already owned and controlled by seriously powerful folks. Google didn’t even talk about a mobile hardware reference platform that the OS would power, something that could have unlocked an open mobile platform FOR REALS.

I don’t see a consortium developing Linux, I see one organization. I also see a lot of businesses taking it and creating their own profitable distributions of Linux, and opening up their own refinements back to anyone else running a different distro. But it’s mostly one group and one visionary pushing the message and driving it to places it needs to go. And with the hardware problem solved, anyone can build their own PC box and load Linux on it—it’s messy, painful but it can be done. We simply can’t do this with mobiles.

In a way, this announcement feels like Google has just given up. Gone are the grand schemes of cutting out a wireless band for free and open devices (even though the “open access” US 700MHz auction is still going ahead as planned) and in its place are associations and consortia to keep the big networks and manufacturers interested and let Google have a piece of the pie somehow.

The power is still very much in the hands of companies like Verizon and Samsung, and for an organization as powerful and game-changing as Google, this is just plain disappointing.

I think the first line in the Android FAQ summarizes the disappointment perfectly:

“Android is a complete mobile phone software stack. It includes everything a manufacturer or operator needs to build a mobile phone.”

For everyone else, it’s just another cell phone. Woo.

Daring Fireball does a good job of covering the problems with iTunes ringtones, particularly in how Apple failed to make the “format” truly user-friendly, even while making them much friendlier than they are in most places:

Apple’s own special way of doing ringtones is this: You can only use songs purchased from the iTunes Store; you must pay an additional 99 cents on top of the price of the song itself; only a small subset of the songs at the iTunes Store are eligible; and, if you decide to create a second ringtone using a different segment of the same song which you’ve already paid for twice, you must pay for it again. But you do get to pick which segment of the song to use.

This “special way” seems fair only when compared to the ringtones offered by competitors, which, as Jobs pointed out in his keynote, typically sell for $2.50, which price includes only the ringtone snippet, not the entire original song itself.

Having worked with the record industry for several years here and there, I would pin the pressure on ringtones on two unfortunate realities of the business.

The music industry is a marketing industry

Even if you are an indie-label who claims to be doing it “for the music,” at best your job is still to tell people about those artists. To say “any person who plays music has the right to earn a living doing it” is a very noble thing to say (and why people always go to labels with the idea of “fixing” them) but that doesn’t map to talent. A lot of people know how to play musical instruments, and marketing is very expensive, so you must either be a) sellable or b) sellable and a Genius. Making something sellable is always about working supply and demand into your favor as much as possible, and geniuses are hard to come by. If you’re going to survive as a business, you’re going to have to get very good at actively selling artists.

The thing is, ringtones are the labels’ only opportunity to bring the market dynamics of singles back. Currently you can lead into an album with a pre-release and a few key tracks, but once that album is out, it’s out, and all the tracks with it. But carefully timed releases of singles, with the right marketing behind it, was the stuff that kept an old album fresh and up on the charts for longer than the average consumer’s attention would allow it to be. Done right, they are events.

More importantly, like singles, they are additional purchases on top of the album. Once Apple and iTunes made buying one track a part of the purchase of the album as a whole (particularly with “Complete My Album”), that extra revenue was lost. But sustaining an artificial barrier between a track and a ringtone of the track keeps that model alive.

Creating an artificial scarcity of a product, combined with big press when that scarcity is alleviated, is often what marketing is all about.

The music industry was built around performances, not recordings

Much of what the industry does is still rooted in what it was doing when it was formed — being a representative for live musicians in a new industrial age where mechanical reproduction threatened their livelihood. If you were a song writer and your sheet music was being turned into player piano rolls, or you were the piano player who was being replaced by said player piano, the industry and its representatives were meant to protect your interests and give you fair compensation when that machine was installed, its rolls were sold, etc. etc..

Today, the idea that a ringtone is a separate performance can be true in a certain conceptual sense, but it’s not in a modern sense, not in the way that the average person thinks about music today. (It’s not like we could have had a live band play follow us and play music when the phone rang.) But to the industry, the music is the attraction — it’s what draws you into the store, it’s what makes you tune in to that internet radio station, it’s what keeps you in the bar, it’s what makes you buy that phone even. They are performances that other businesses are using to make money, so hey, where’s their cut already?

(While the iTunes license should specifically cover the performance rights of the tracks, the question is did the previous license cover playback on phones, or did they have to change the terms to add ringtones, possibly to incent the labels to renew their contracts?)

Problem is, the music industry spent decades trying to get people to consume music as a ubiquitous commodity — The newest release! The exclusive remix! In your car, at the diner or from the movies! — but now it’s paying the price as technology has finally gotten to the point where their product really can be bought and consumed like a commodity — massive repositories, instant access, playable anywhere and in practically anything.

The ringtone, like many other RIAA products, is an attempt to keep the status-quo as long as possible, even though most analysts might say those days are already over.

I am tangentially news today. Yeehaw!