Name-your-price Radiohead album averages $8
Wow. 1.2M downloads of “In Rainbows” in the first week. And I ventured a guess of $5-6 avg. per unit sold, but the average was $8/each! Higher margin for the band than a record contract, and significantly higher volume (1.2M units in the first week is more than the last 3 albums combined). No doubt the PR boost from their innovative experiment helped with the volume. Over time it will be interesting to see how sustainable a model like this is. Seems like something that any band with a large and established fan base should consider.
Yahoo and MSN’s search behavior belies Google’s weakness
Compete.com has an interesting post on “navigational search”. In a nutshell, navigational search happens when you type “amazon” in a search field instead of just typing amazon.com into your browser. What was intriguing was how Yahoo and MSN users perform navigational searches nearly 2X more frequently than Google users.
Why is this? I think it’s the same answer to the question a lot of Googlers ask: who in the world still uses MSN and Yahoo to search? The answer is something that sometimes surprises the Google fanboys. Yahoo! Mail and Hotmail each have 5X the users that Gmail has. All of those Yahoo and MSN users are captive to their legacy email accounts and a lot of them just use Yahoo/MSN search because it’s there. Navigational search is a bit easier for some than typing in a URL. When those same users come to Google, they’re generally really looking for something. Some may even enter “Google” into the search bar on Yahoo so they don’t have to mess with the URL bar.
If this theory is correct, Google would love to be where Yahoo/MSN are at on this metric. Google is king of search, but long term competitive advantage requires that your users/customers have higher switching costs. If Google has an achilles heel, this is it. Their installed base needs to be more firmly installed. Gmail may continue to gain share, but it’s still not enough. They need to dominate social networking. We’ll see if Google’s November 5 announcement brings any hope for them.
Facebook taking on LinkedIn
It was only a matter of time before Facebook made a run at the professional crowd that LinkedIn has dominated. While I’m sure LinkedIn is not excited about this, I wonder how effectively Facebook can overcome the branding association it has of being a “social” network. LinkedIn is unabashedly about making professional connections, including those senior to you. Facebook is more peer-oriented.
Time will tell if the current trend in Facebook’s growth in the 35+ demographic continues. Personally, I think that’s the key to legitimizing Facebook from a professional standpoint. I think that most of those in the 35+ demographic are more interested in professional networking rather than social networking, and it will take a critical mass of professionals with seniority to legitimize Facebook as anything other than a social entertainment vehicle.
Shameless self-promotion
I can’t resist posting coverage from HackingNetflix on a recent product my team launched at Blockbuster (Widgets and enhanced RSS feeds). I see this is as a small (but symbolic) win in a concerted effort to break Blockbuster Online out of Web 1.0.
Radiohead’s new album has infinite price points
Bold move. Radiohead lets you name your price on their new album. I’d like to see the pricing data after this experiment is over. I think there will be a lot of freeriders, as everyone expects, but I wouldn’t be surprised if a few generous benefactors partially offset the effect. Kevin Rose over at digg gives a useful suggestion:
I really wish I could preview the album (even streaming) before deciding how much to spend. So, I just bought the ‘download’ version for $0.00. If it’s good, I’ll go back and buy it again for $15. If it’s just OK, I’ll go back and give them $5. I really like this idea.
I hope this phenomenon is accounted for when they assess the experiment. Unless they give a free streaming preview, a lot of people will do what Kevin Rose is doing: pay nothing just to hear it, then decide how much to pay afterwards. That may be fine in the end, but every person doing that makes the free rider issue appear worse (unless they factor that out). I just hope this is accounted for when Jonny Greenwood tabulates the results and presents them in the quarterly Radiohead board meeting. If not, then the word “bollocks” will be tossed around a lot, and possibly worse.
Hey Radiohead…I know you’re reading this blog, so listen up: I would like to help. Forward me the transactional data from this experiment and I will do a full free analysis, complete with PowerPoint slides. Don’t let Jonny do it, he has music to make. And whatever you do, just don’t let your webmaster do it, he’s on crack.
NPD survey on HD media (check date for expiration)
Many blogs and researchers are quoting the NPD Group’s survey which concludes that there’s very low intent to purchase High Definition discs players. Read the fine print and you’ll see the survey was conducted three months ago. Three months is a long time in the early stages of this format battle. Not least because HD-DVD standalone players were $299 at the time of the survey whereas they are now $234, or $199 if you’re willing to buy an open-box special. At this stage, a 3 month lag makes a fairly large difference. Player sales should also be a leading indicator for HD format media sales, especially when you consider cross-elasticity (i.e. it’s a fairly safe bet that a 30% reduction in price on an HD-DVD player would likely lead to a >30% increase in volume for movies purchased). This discussion will be a lot more interesting in early 2008 after the holiday season has seen a couple of months of sub-$200 prices on HD-DVD players.
On a visit to Costco this weekend, it was clear that marketing messages are extremely confusing concerning HD media. I saw a number of classic, standard definition DVD players with “HDMI” “1080p” and “High Definition” stickers plastered all over them. Usually in small font they would add the word “upconversion”, which really means you’re sending a low-resolution signal to your High Definition player and trying to fill in the gaps. But it’s not HD. It may take some education to overturn the barrage of misleading marketing messages related to HD.
The living room device I need
Vudu + Freevo + Pinnacle + USBTV = Dream Device.
- On-demand HD movies with media storage via Vudu
- Free over-the-air HDTV via Pinnacle
- Free DVR and media player capabilities via Freevo
- Portability with your video to play on any computer or TV via USBTV [combined w/ Pinnacle capabilities]
- The best part: no more monthly $70 cable bills
Comcast needs to practice Vudu
Vudu, the “high-speed video store in the living room” may strike some as just another fledgling attempt at putting yet another device in your living room. The concept is not new. But it is noteworthy for addressing 2 gaps in the incumbent cable/sat/telco video VoD solutions: 1) Vudu appears to have a reasonably good software/hardware user experience and 2) It utilizes peer-to-peer technology to legally distribute content.
As a consumer, I’m thinking why would I buy another $400 box for my living room? Why can’t the Comcasts of the world offer something like this for the $12.95 monthly fee I’m paying them for a crippled Motorola HD-DVR?
If Comcast had any common sense, they would look at this and think: 1) my software/hardware consumer experience stinks and has never been a core competency, and 2) my infrastructure constraints remain a bottleneck to delivering true video on demand, and peer-to-peer technology could really provide some leverage. Question for Comcast: Why not acquire Vudu (or strike a licensing deal) and ramp up your undifferentiated offering?
Is Blu-ray a shoe-in to win the format war?
A research firm recently predicted that Blu-ray would still emerge as the winning format even after Paramount/Dreamworks have moved to HD-DVD. Still 58% of the studio market share is devoted to Blu-Ray exclusively, with another 19% offering both formats.
Although this still paints a pretty picture for Blu-ray, it’s a VERY supply-oriented argument and neglects the demand side of the equation. Most consumers do not follow market share breakdowns of the studios, and they’re largely unaware of the capacity/technological differences favoring the Blu-Ray format. What they are aware of (if they’re in the market for a player), is that HD-DVD players are $239 while Blu-Rays start at $350. If this $100+ pricing gap doesn’t narrow, the Blu-Ray format will depend almost entirely on PS3 sales which, while significant, cannot win the format war alone.
Another significant point in the analyst report concerns the long life physical DVDs still have in the road ahead:
DVD will still be king in 2011 — and “the revenues are not going to come from digital [delivery] for four to five years”
Music to Netflix and Blockbuster’s ears.
Guru predicts end of TV as we know it
Vint Cerf, a Google VP who also helped develop the Internet in the 70’s, recently predicted:
Increasingly [TV] is going to be almost like the iPod, where you download content to look at later.
That’s fine for 2011, Vint. But in the meantime, my bets go on the established living room players (Comcast, Time Warner, DirecTV, etc.) whose agreements with established content producers threaten the introduction of an open content system. Internet-based TV is a disruptive innovation and until someone can introduce a device that en masse replaces the cable boxes and DVRs (as iPods replaced CD players), there is very little traction for Internet-based TV. And as far as the established players go, VoD still has large bandwidth and content issues to overcome before its many prophesies are fulfilled.
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