Fates of Owned Media vs. Newly Purchased Media
Will it be worth the consumer’s while to convert old to new? Time and convenience have been trumping cost in many instances. iCloud from iTunes, for example, provides clean tracks to replace ones you already have in your physical storage for the cloud.
UltraViolet, in the film realm, has approached this transition with a mixed package. Buy a DVD and gain rights to using the content in any mode, including online. The fine print on the online is for a year, with rights then to be renewed for an undisclosed sum of money.
Consumers, with available freemium storage space over 5 GB now, are being trained by the marketplace to not pay for digital storage. Will users pay a premium to store their digital stuff, or judge whether they will use something a second time?
Other forces are training consumers to “borrow” content, for one-time use. Video on demand has not performed as many early analysts predicted a dozen years ago, but provides a single-use option with much less revenue to the studio or producer. The TV Everywhere initiatives by many of the cable companies, including HBO Go, are training consumers for subscription-based extensions into the mobile world from their video services. Netflix’s 24 million subscribers (3Q2011) and Hulu’s 1 million premium subscribers are all following the call of renting a package of experiences. All of these services provide robust ways to not “buy” anymore, with a strong connection and even tethered in many off-line environments.
Usage Models for “Buying” Versus “Renting”
Questions of ownership may have more to do with usage models instead of media segments. Products may need to address different aspects of the consumer relationship, especially need for multiple sittings to consume the content (e.g., books, games, and classes).
Ownership may make sense across multiple users (e.g., family media ownership), who may not be sharing all of their media subscriptions.
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.
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 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.”
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 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.
If we believed ads and websites in 2011, eager consumers are ready to connect everywhere and anywhere. Consumers and content service providers face challenges in their transition to cloud-based archiving of owned media content:
Discovery within My Own—and Other’s—“Digital Stuff”
In the physical home, old CDs and DVDs get shoved into the back of the shelf, given to friends, or sold at yard sales. Some consumers have built 300 DVD collections, and a few have had software that helps them know what they own and where they have put it. Search has been visual, scanning the covers or spines of the collections. Concepts of discovery of our own content, as well as what to do (and IF we should pay) for old “stuff” will bring consumers to question what they need in terms of long-term access to “owned” content.
- Books: Discovery and sharing—even with physical storage—has become a bigger challenge with large libraries. A variety of social cataloging web tools have grown to help with abundant book libraries. Within the book space, a variety of tools are available, including aNobii, Shelfari, BookJetty, weRead, Goodreads, and LibraryThing. Some combine information on consumers’ physical library, recommendations from the community, and possible purchase of new digital books.
Consumers face a growing challenge of digesting their owned media. With electronic books and other media files, the physical problem escalates. Book storage online already raises the question of title-level metadata and sterile taxonomies. For example, Kindle’s iPad software shows titles, authors, and cover art images to scan through, with no ability (yet) on the iPad App to search or “folderize.”
- Music: Music has extended social curation and discovery with abundant new streaming SaaS offerings. Data-rich new challengers in 2011—including Spotify, MOD, and Rdio—launched their curation offerings into Facebook’s connection-rich platform. Turntable.fm brought individuals out as live DJs, sharing mixes and songs live on Facebook with friends and strangers.
- Video: With video, 2011 and 2012 spurred the launch of a whole new breed of SaaS tools having to do with shared media curation of the television viewing experience. Cloud co-viewing tools continued beyond GetGlue to Yahoo’s mobile IntoNow, which compares the audio of what you are watching to identify and share taste in television programs. Tunerfish, a Comcast offering, reminds users that their favorite show is on tonight as well as lets them connect to discuss the program.
Ownership may not be to one IP address or individual. For example, I don’t own most of my content. My family owns most of my CDs and DVDs in a shared cupboard in my home. We have a shared hard drive, and are building new digital home storage as we speak. Ownership, however, is shared. Even my Netflix account is shared, with my 14-year-old running the queue (much to my chagrin).
New digital services have been dealing with this issue. Audible, for example, delivers “purchased” audio books, which means rights to listen on- and off-line to audio books on their service on a variety of devices. The service allows use of up to 5 devices, which can be reset at any time. Barnes & Noble permits digital book lending for up to 14 days, but only once. UltraViolet, which has launched a multiple mode ownership system with Paramount, Universal, Sony, Warner Bros. and Lionsgate, is another example in the video realm. That new service permits up to six users in their Terms of Service agreement. They have begun to release “Horrible Bosses” and “Green Lantern” (both Warner Bros.) since Oct. 2011 for home consumption under these rules; we’ll see if they change over time.
Offline and Online Use
Mobile bandwidth can be expensive for consumers to use for connecting to their own media, so Wi-Fi has become a welcome alternative for connecting mobile devices with rich media content. Consumer storage has had to assume that you are not sitting at someone’s computer in a robust broadband work environment. Users want to be able to fill their tablets or smartphones as a transport bucket for this week’s reading, listening, and viewing – at least under the current models of mobile monthly bandwidth contracts.
Commoditization of Services, Migration, and Survivability
Meanwhile, IaaS and PaaS will allow new systems to launch, cannibalizing existing systems and putting them at business risk. Pure storage, with limited barriers to entry, can be a race to the bottom in terms of both service and pricing
Competing with Freemium
Many digital consumers have become trained to seek freemium business models, which give them a fairly large bucket of storage for free with extended product abilities and storage for a certain amount per month. Dropbox, which has gained market share with its integration with the iPad, provides 2 GB for free, with more storage given for referrals (up to 5.5 GB), and even more for pay or for organizations. Amazon’s CloudDrive is free for 5 GB, while Microsoft’s SkyDrive offers 25 GB for free.
Device Abundance from the Consumerization of IT
Increasingly, many consumers have gained the attitudes that their device is their stronghold and they have the right to use it for work and home. Publishers for mobile have been working on this question for years, and entire ecosystem layers have stepped into media platforms to digest digital output into the various carriers and devices.
Per the Betamax Case in 1984, users have the right to make a personal copy for their own use and time shifting. Questions repeat as to who owns what with what rights to digital copy, on what drive in what location. As noted above, different companies are setting different rights rules as to cloud-based media. As a consumer, the pitch seems to be rights to my stuff anywhere, everywhere, and all the time. Start-ups, especially in music, have been pushing back on the physical-media based licensing structures while trying to launch readily on IaaS backbones.
In music, Echo Nest has launched a PaaS that connects licensing rights with new music platforms. So far, however, it only has EMI (which now has been sold) as its core. 220 young start-ups so far have launched new SaaS services based on this Echo Nest PaaS licensing-fluid platform.