Fourth of a Series of Blog Posts from Maremel’s White Paper: Opening Pandora’s Digital Box

One core challenge is how new habits will affect the long-term economic value of owning product.  Jeff Zucker’s 2008 concern of finding ways to make money online to that “we do not end up trading analog dollars for digital pennies[i]” has proved quite valid.

Challenge:
Meaning and Need of Owning Digital Media

In the music and book spaces, consumers and content platforms have been renegotiating what it means to “own,” “borrow,” and “buy”:

Music

Music already has faced this conundrum and, in perception, lost. The business has shifted to singles; units have increased, rising to 1.6 billion music units in 2011.  331 million of those were albums, down from 943 million CDs at the peak in 2000 (RIAA).

In the music space, streaming with Pandora and Spotify is retraining young consumers that they don’t need to own music.  They instead can access it in an ad-based model, whenever and wherever they want.  With Spotify and other services, they also gain the connected ability to search and curate with others as well.

Meanwhile, 2011 was the year of the music locker for old libraries.  New services have launched, trying to train consumers to come into their ecospheres:

  • Google: Google Music launched in 2011, where you can “discover, buy and share music, wherever you want, whenever you want” and “rediscover your own library by creating an Instant Mix.”  It acknowledged the relationships between music and clogging our hard drives: “With your music saved online, you have even more space for all the other things you love.”
  • Amazon: Amazon’s CloudDrive, launched in 2011, offers 5 GB for free and bills it as “your personal hard drive in the cloud,” where you “never worry about losing your files again.”  Their pitch is a fear of loss across a broader set of media.
  • Apple: With its launch of iTunes Match, Apple upped the game in November 2011, with a $25 a year service that not only “lets you store your entire collection,” but also since “most of your music is probably already in iCloud…all you have to upload is what iTunes can’t match.  Which is much faster than starting from scratch.”
Books

The book sector stands at a different point.  In the U.S., the book market has shifted to a digital purchase model very quickly, with Amazon selling more Kindle books than it sells hardbound or softcover already.  The book world stands between two digital ecosystems—Apple and Amazon—acting like splinternets in that users and content creators need to fit into these closed systems.

For example, by choosing Kindle as my book purchasing mode, I need to play by their ownership rules.  I feel I own my Kindle books, though my ownership rights are limited and it is “in Amazon we trust” to maintain access if I have a hard-drive crash.


Games

Games have been available through the cloud for some time.  In 2005, G-cluster (Gaming Cluster) launched its first commercial deployment of cloud gaming in Europe.  Steam came into the picture later, providing instant access to more than 1,800 games to its 35 million active users. Gaikai further expands cloud gaming in deals with EA, Wal*Mart, Eurogamer, and Capcom.  OnLive recently launched mobile cloud-based games.  The desire to play a complex game across platforms has driven a variety of SaaS solutions over time, challenging due to many games’ heavy processing and visual graphics needs.


Big File Media

For television series and movies, this question is at a turning point.  DVD sales have dropped 46% from their 2006 peak, according to IHS Screen Digest. Individual households own vast libraries of content that they have paid good money for, and will be looking for transitional solutions.  Consumers’ time, however, can be spent instead in new streaming tools that do not care if they already own a piece of content.



[i] Brian Stelter (2008, January 29). “Forest Fire:’ Zucker Sees Strike as an Opportunity for Change,” New York Times.