Yesterday, I compiled my list of the five most welcome products for digital audio that came out in 2009. Today, I'm following it up with my list of the year's five biggest digital audio duds.
An image from the infamous online commercial for Songsmith, Microsoft's reverse-karaoke software.
(Credit: Microsoft)Zookz. The breathless pitch got me interested: a mysterious online service was getting ready to compete against subscription-based download service eMusic. But where eMusic limits users to a set number of downloads, this mystery service would offer unlimited music and movie downloads. How could this be? Wouldn't users just download all the material they wanted then cancel their subscriptions? How could content owners let this happen?
The trick: Zookz was based in Antigua, and according to the company, this meant it wasn't subject to those silly little things known as U.S. copyright laws and royalty rates. Unfortunately, the country of Antigua didn't agree, and days after the public beta launched, Zookz disappeared into the digital ether with a promise to refund subscribers' money.
Jango Artist Airplay. I liked Jango's online radio service back when it launched in 2007. This year, in what looked like a desperate bid for new revenue, the company launched a service called Artist Airplay, in which bands could pay for placement on appropriate Jango stations. While Jango's CEO tried to tell me this was a reasonable new marketing opportunity, I saw it as a new form of the old pay-for-play deal that beginning bands often fall for.
With regular marketing, everybody pays more or less the same amount for the same class of services and the music sinks or swims on its own merits. With pay-for-play, artists buy exposure. There's only one problem: the resulting conflict of interest drives discerning listeners--including people who might actually pay you for your music--away. Jango Artist Direct may not be as stark as those pay-to-play "showcases" and "band battles" where all the audience members are other bands and their friends, but I believe it's better for beginning artists never to start down this slippery slope. Then again, I thought users would never be ignorant enough to click on search advertisements in massive numbers, which is one reason why Sergey Brin and Larry Page are multibillionaires and I'm not.
Vevo. As long as we're talking about Google, let's talk about YouTube, which the search company owns. It's a great source for music videos, and its APIs have formed the basis for music-finding apps like Muziic and TubeRadio. Users love it. Unfortunately, the companies and artists who own the copyrights to many of those music videos don't love it--the videos are expensive to produce, and the ad revenues from YouTube and other online video sites are scanty to nonexistent. Google is also lukewarm about music videos on YouTube, finding that the cost of policing copyright and complying with take-down notices is more than the money they can earn from selling ads.
In December, two record companies--Sony and Universal--joined together with Google in a new joint venture, Vevo, to address the problem. This was supposed to be a back-end business-to-business kind of deal, where YouTube users wouldn't know (or care) that certain videos were actually being provided exclusively by Vevo, which would sell short video advertisements to run before them. Unfortunately, the glittery launch party drew undue attention to Vevo's own site, causing its servers to buckle under the load. The entire episode left music fans scratching their heads.
Songsmith. The idea wasn't all that bad. Karaoke is fun. Making music on computers is fun. So why not, reasoned some Microsoft researchers, create a program that fills in audio accompaniment as users sing. Unfortunately, the $29.95 price and unbelievably mockable promotional video turned Songsmith into an Internet laughingstock. Later videos featuring Songsmith's accompaniment to the vocal tracks of songs like Queen's "We Will Rock You" and Van Halen's "Running With the Devil" highlighted the silliness.
CMX. In August, reports broke that the four major record labels were considering a new type of "digital album" format that would include album art, lyrics, and extra content. There was just one problem: Apple was already building its own competing format, code-named Cocktail and eventually released as iTunes LP. I think the entire concept of a digital album is weird anyway: I'm not convinced that lack of album art is a big reason why users are buying singles instead of albums. (The real reason is the Chumbawamba factor, or the fact that a lot of albums contain only one or two good songs.) And iTunes LP doesn't exactly seem to be taking off, although some of the extras--outtakes and videos--are actually quite valuable. But creating a competing format that wouldn't be supported by Apple? That's just plain dumb. To be fair, we haven't heard anything about CMX since iTunes LP launched. Here's hoping this product is killed before it's ever born.
Open University's marketing message on iTunes U.
(Credit: Screenshot by Jim Dalrymple/CNET)The education-specific channel of its iTunes Store, launched in 2007, has reached a new milestone, recording more than 100 million downloads, Apple told CNET on Friday.
According to Apple, one of the most popular areas of iTunes U has been that of the United Kingdom-based Open University (iTunes link), whose learning categories include Arts and Humanities, Business and Management, Childhood and Youth, Health and Social Care, Law, Psychology, and Science. The academic institution says it caters to at least 150,000 undergraduate and 30,000 postgraduate students, more than 25,000 of whom live outside the U.K.
More than 175 higher-education organizations currently provide content to iTunes U, including Princeton University, University of California at Los Angeles, Harvard University, the Massachusetts Institute of Technology, Oxford University, Norwegian University of Science and Technology, and Yale University.
Apple was engaged in a bidding war with Google when it acquired music service Lala, The Wall Street Journal (subscription required) reported on Friday. That helps to explain why Apple agreed to pay $85 million, a sum that I (and others) believed was far too much for a down-on-its-luck start-up.
What has surprised some in the music sector, however, is that Apple is considering a plan to create some kind of streaming-music service and is turning to Lala's managers to help oversee the new offering. Sources in the music industry I interviewed Thursday gave varying descriptions of what position Bill Nguyen, Lala's chairman and founder, will occupy at iTunes. But virtually all of them said he and his staff will have plenty of influence over the service should Apple decide to go ahead with the plans.
One of the technology sector's most unlikely rags-to-riches stories may be unfolding before our very eyes.
Consider that Apple--the undaunted music powerhouse that altered the way people buy and listen to music and that will likely generate $2 billion in iTunes sales this year--is now seeking help from a group that cast about the digital-music sector for years, swapped out business models multiple times (without ever finding a profitable one), and basically did little to distinguish themselves.
If you're just looking at Lala's performance in the music sector, this is like the New York Yankees' taking advice from the minor leagues' Lehigh Valley IronPigs.
The big question is what can Lala possibly teach Apple about digital music?
From car sales to tech riches
Apple and Lala representatives aren't talking, but here's the first thing you should know about the deal: Nothing is set in stone yet. The Journal reported that the plans are in the earliest stages and may get altered. My music sources said that Apple has not spoken to any of the four major labels about changing their licensing agreement, which Apple would need to do before launching any new service.
To understand what Google and Apple may see in Lala, one must start with Nguyen, the company's jovial founder.
The son of Vietnamese immigrants, Nguyen (pronounced "win") is charming, wild about surfing and is well known as one of Silicon Valley's smoothest communicators. A so-so student who attended but did not graduate from Houston Baptist University, Nguyen started out selling cars but cashed in big in 1999 when he sold Onebox, an e-mail technology company, for $850 million.
Since then, he has started several other companies in addition to Lala, including Seven, a Wi-Fi software firm.
Eric Schmidt's Google charges were trying to get their hands on Lala, but Apple got the company instead.
(Credit: Greg Sandoval/CNET )He is very close to Eddy Cue, the revered Apple exec who runs iTunes. What may be most important about Nguyen is that he has long had plans to take down the MP3 format. (In Apple's case, the company uses the unprotected AAC format) He has often said that MP3, the digital audio format embraced by so many music fans, is on its way out. He believes downloads have outlived their usefullness and that in the future, consumers will store their music in the cloud instead of on their hard drives.
"Will you ever (in the future) use an electronic device if it's not connected or doesn't have a browser?" Nguyen asked me a year ago. "You've got to face it, there's nothing you don't do in a browser."
Palo Alto, Calif.-based Lala started as an online marketplace where users arranged to swap CDs with each other. Lala then began streaming music to Web-enabled devices. The company would scan a users' computer hard drive and then enable the person to access the same songs--provided Lala had the rights--via the Web.
According to a report in The New York Times, Lala had concluded that it wouldn't reach profitability anytime soon and approached Apple in the hopes of making a deal.
The end of iTunes downloads?
The natural conclusion to make here is that by acquiring Lala, Apple may be laying the groundwork for a move away from the traditional song download. If this is correct, it would be stunning in that Apple has built a retail empire by selling downloads.
If Apple is preparing such a plan, that would suit the music industry just fine. Plenty of people at the top four labels have long been uncomfortable with unprotected music files. The major recording companies favor formats that protect music from being copied and shared. Label executives have also said that selling individual songs isn't a good business as the profit margins are small and it's a not a model that can't grow. Nguyen's ideas appealed to many at the music labels, particularly those at Warner Music Group, which invested $20 million into the company.
In May, Warner announced that it had to write down about $11 million of the Lala investment.
Some of the music execs I've talked to say they see a world where music buyers will leap at the chance to buy a song for life. In a world where music is stored on the servers of big companies, a consumer never has to worry about losing a song library to a broken hard drive or lost music player.
Of course, consumers would likely pay a premium for this life-time ownership and cloud-based service, but many in the industry feel that the public is ready for that kind of offer.
By all appearances, Nguyen could be the architect of this vision at iTunes.
Regardless of Lala's shortcomings, the company created something good enough to lure Google and Apple, two of technology's most successful companies. That alone isn't a bad resume.
And when you look at the $85 million purchase price, Nguyen engineered by far the best exit in the the battered digital music sector in at least a year.
There's something else to keep in mind about Nguyen; he recovers from spills quickly, usually in time to catch the next big wave. Hang 10, Bill.
Apple's purchase of streaming music service Lala reportedly represents a shift in the company's iTunes strategy. The aim: Make iTunes more Web friendly.
The Wall Street Journal reports that Apple is looking to give consumers more ways to access and manage iTunes without a download of the software.
The larger questions: Does Apple need to rethink the iTunes model? Is Apple missing a shift to Web listening habits? Can iTunes, the largest music service around, be getting tired?
Those questions can be answered with one word: Yes.
Read more of "Does Apple need to refresh iTunes? Probably at ZDNet's Between the Lines.
Two prominent technology writers are reporting vastly different stories about what Apple paid for music service Lala.
Peter Kafka, from The Wall Street Journal-owned blog All Things Digital, cited anonymous sources in a Monday report who said Apple plunked down $80 million for Lala. In a story published Tuesday, Michael Arrington at TechCrunch cited his own sources who disputed that price and said Lala was acquired for $17 million.
I wish I knew who was right, but my reporting came up with nothing solid. I will say that from the second I heard Kafka's number I was skeptical. After covering the shutterings of Ruckus and Spiralfrog, as well as the sales of Imeem, iLike, and Lala, I can say that the $80 million figure is way out of line with valuations of other companies in this sector.
Lala's service isn't significantly superior to Imeem or iLike, but those companies, according to Arrington, sold for $1 million and $20 million respectively. Lala scanned users' computer hard drives and enabled them to access music libraries stored in the cloud. The benefits of this were complicated and tough to sell to consumers.
I reported on Friday that one reason Apple is interested in Lala is to get its hands on the music service's payment and fulfillment technology, which could save it big money, according to my sources. The company's management and engineering team are well thought of in both music and tech sectors.
Combine all of that and you're still a long way from $80 million.
We still don't have a single profitable player in digital music of any note. The sector is rife with closures and high overhead. There isn't any standalone digital music service, other than iTunes, worth that kind of money.
We might get the truth one day, but don't bet on it. Remember, Apple is in control now and the company distributes information like the Kremlin. One thing we can do is wait to see what Apple does with its Lala assets.
Apple has acquired struggling streaming music service Lala, an Apple spokesman told CNET News on Sunday.
Apple spokesman Steve Dowling confirmed the acquisition but did not disclose the terms of the deal or what the company intends to do with the 4-year-old Lala. The company scans users' hard drives and creates a duplicate music library that owners can access from Web-enabled devices. The company also sells songs for a dime each.
CNET News reported Friday that Apple was close to finalizing the sale and that one of the reasons Apple was interested in acquiring Lala is to obtain some of the company's payment and fulfillment systems, which a source with knowledge of the talks said could save Apple money.
However, it's unclear whether Apple may also be planning to launch some kind of streaming-music or so-called cloud storage feature.
The New York Times reported that Apple was approached by Lala after the company concluded that reaching profitability was unlikely. All Things Digital reported that Lala was acquired for a sum that meant a loss for its investors.
If things keep going this way, pretty soon there won't be any digital music space to cover. Many of the players around a year ago are gone: Ruckus and SpiralFrog closed. MySpace is gobbling up iLike and soon Imeem. Apple got Lala.
The frontrunners now appear to be Pandora, Amazon, Spotify, MySpace Music, Last.fm (owned by CBS, parent company of CNET) and Zune's Marketplace.
To this point, not one of them has generated the kind of market share to challenge iTunes.
Alec Baldwin fans needn't worry that Comcast will soon pull "30 Rock" or other NBC Universal shows off the Web.
The entrance of NBC Universal's office building at 30 Rockefeller Center.
(Credit: Greg Sandoval/CNET Networks)Comcast managers said Thursday, following the company's announcement it had acquired a controlling stake in NBC Universal, that it will be business as usual at Hulu, the joint venture operated by NBC Universal, News Corp., and Disney.
Ever since rumors of the acquisition began to swirl in September, questions were raised about whether Comcast would try to kill Hulu to discourage cable customers from dropping their subscriptions. Some critics of the deal said Comcast could also limit access of NBC Universal's TV shows and films to other popular distributors, such as Netflix and iTunes. It appears that some of this may happen and some of it may not.
During a conference call, Comcast executives said they anticipate that some content will appear online at Hulu, and other shows will appear on TV Everywhere, the Hulu competitor that Comcast, Time Warner, and other cable companies rolled out last summer.
"Comcast is too deep into their Internet-related investments for me to believe that they are hoping to clamp down on consumer enjoyment of NBC content," said James McQuivey, a digital-entertainment analyst for Forrester Research. "They have spent far too much money buying companies and developing infrastructure to suggest they are going to make it a 'my-way-or-the-highway' distribution scheme. It would be absolutely foolish to buy an expensive property like NBC Universal and then cut the legs off of it."
Hulu's freedom
Okay, so Hulu won't disappear once the acquisition--which still needs government approval--is finalized, but Hulu fans are concerned about how the site will develop. Many had long hoped that the service might one day offer a better selection of full-length feature films and past episodes from hot TV shows. Now, Hulu offers only a smattering of films, and to watch episodes of a TV show from a prior season, a fan must plunk down for a DVD.
Most importantly, Hulu fans want to continue watching without paying subscription fees, which has been discussed publicly by some of Hulu's backers, including Jeff Zucker, NBC Universal CEO.
Free content was the promise that made consumers so giddy about Hulu and YouTube not that long ago. Cable subscribers were thrilled by the possibility that they could watch the best shows and films without having to pay fees. The NBC Universal acquisition is just the latest sign that this dream might be in jeopardy.
Paul Gallant, an analyst at Concept Capital's Washington Research Group told The Washington Post that Comcast could "harm consumer welfare by preventing Internet video from becoming a viable cut-the-chord threat."
"It's a little bit Pollyannish to say 'I can cut cable because everything I want is on the Internet,' because it isn't," McQuivey said.
The big knock on Hulu and other legal video sites is their selection of films and TV shows is still pretty poor. Under Comcast ownership, Hulu will unlikely be unable to change that. More probable is that Comcast will use NBC Universal's content to sweeten its offering to paying subscribers.
"The goal of Comcast is not to make it hard for people to get content," McQuivey said. "The goal of Comcast in the future is to make it really easy to get content and that's what people will pay for.
"In the future, Comcast isn't going to say 'Here's 500 channels delivered to one set-top box,'" he continued. "In the future, they'll say 'Hey, you know that subscription you're paying us every month, that buys you red-carpet access to the best content. No matter what you want to watch we have the license to it. We're going to deliver it to you online, to your game console, to your connected television or Blu-ray player.'"
But what about Netflix and iTunes? Doesn't the Comcast-NBC Universal deal put them in a position of competing with a major supplier?
Is Netflix friend or foe?
Netflix looks less like a DVD-rental business and more like the Web's version of a cable company with each passing day. For more than a year now, Netflix has streamed movies over the Web to anyone who pays the company's subscription fees. CEO Reed Hastings raised the stakes in the competition with cable companies by partnering with set-top box makers and TV manufacturers to create systems that enabled Netflix customers to watch streaming films on their flat screens.
Jumping to the TV set was huge for Netflix. No longer latched to the PC, the company was now threatening cable companies on their home turf. But if content is king, then Netflix was offering only a duke.
Just like Hulu, Netflix offered cable subscribers a cheaper alternative. Just like Hulu, Netflix's library lacks new and hot titles. Without the best content, the cable companies still hold an advantage over Netflix. Since Netflix is now a direct competitor to Comcast and other cable companies, it will be interesting to see what kind of terms the Web's No. 1 rental store gets from the new NBC Universal?
As for Apple, it's highly unlikely that Comcast will tinker with NBC Universal's arrangement for digital download sales at iTunes. The very public quarrel between the companies over pricing in 2008 is behind them.
In that case, Apple gave NBC Universal more flexibility over pricing. Apple CEO Steve Jobs has shown respect for Hollywood's lucrative practice of giving exclusive film access to certain distribution platforms over specified periods, called "windows." Jobs is also purveyor of the Web's most successful video-download store, so the relationship will likely remain unchanged.
But McQuivey sees a potential problem for Apple should the company decide to broaden its video business.
Apple could become an over-the-top pay TV provider," McQuivey speculated. "Apple should say 'You buy an Apple TV from us and pay $28 a month and we'll give you access to this number of downloads and all of this TV-network content for free. They are one of the few companies that could really create this amazing little business model of mixing Internet downloads with Internet streaming with over-the-air HD broadcast...Lets be honest, Apple users have fairly shared tastes and as a result it would be easier for Apple to serve its customer base this way than it is for, say, Comcast. Comcast has to offer the world, where as Apple only has to offer what's cool."
It should be noted that in every scenario McQuivey discussed, he mentioned price. In his vision of the digital future, Internet distribution looks a lot like cable.
According to McQuivey, "All of these Internet delivery solutions are going to face some kind of reckoning over the next couple of years. It shouldn't come as a surprise that Hulu is going to evolve to include some kind of pay model."
Sony is planning a new online store a la Apple's iTunes, but with a few twists.
Announced at a strategy meeting in Tokyo on Thursday, the new service will hawk music, movies, books, and other downloadable content geared for its various electronics, including TVs, mobile phones, music players, and computers.
The service, which Sony aims to launch next year, will link the company's devices and digital content that it produces--setting it apart from other online stores.
"That's the kind of combination that I think is not seen anywhere else," Kazuo Hirai, Sony executive vice president for networked products and services, said in an interview with the Associated Press. "That I think is where our core competence lies, and that's a differentiator for Sony."
Hirai also spoke about the new service with BusinessWeek, saying that it won't just sell products but also tap into social networking by letting people upload their own photos or videos and connect with each other.
"It's not just access content, stream it, and enjoy," Hirai told BusinessWeek. "What are your friends watching right now? There's a screen that says all the programming that's available. It highlights all the things that your friends are watching, for example. It's a community experience."
Called the Sony Online Service for now, it will model itself after the company's successful PlayStation Network, a free service that has captured 33 million registered users who download movies, access social networks, and grab games for the PS3 and portable PSP console. Hirai said that gamers will be able to access the new online service directly through their PlayStation Network accounts.
Of course, Sony has been down this road before in 2005 with its late Sony Connect music service. The aborted iTunes clone was done in by internal politics and a failure to connect with consumers, forcing the company to shut it down in 2007.
But with a new, more cohesive management team put in place by CEO and president Howard Stringer, Sony is hoping to avoid the in-fighting that helped kill Connect.
Sony needs a shot in the arm at this point. Though the company pioneered the portable music concept 30 years ago with its Walkman, it has struggled to compete in the Digital Age. Continuing a string of quarterly losses, Sony took a $292 million net loss in its recent second quarter. Despite cost cuts and layoffs, the company is projecting a total loss of $1.3 billion for the full fiscal year.
Apple quietly launched a new preview service this week that makes it easier for users to view its iTunes music library from the browser.
Dubbed iTunes Preview, the new feature allows visitors to view iTunes content from their browser without being forced to launch iTunes. Previously, when a Web user received an iTunes link, they needed to open iTunes to view its content.
As part of the launch, Apple has updated links in iTunes to redirect to iTunes Preview. When a user copies a link in the software and pastes it into the browser, they will be brought to the song's individual listing on Apple's Web site. The feature is especially handy for those who don't use iTunes, since they can now view an individual song without being forced to download the software.
Aside from individual music listings, iTunes Preview also allows users to sift through artists and albums based on genre. Each individual listing displays all the songs in an album, the album art associated with it, its cost, and other content typically found in the iTunes store. The page also includes a link to the iTunes store in case the viewer wants to buy it. That said, there aren't any song previews in iTunes Preview; users will still need to go to iTunes to hear them.
iTunes Preview in action.
(Credit: Screenshot by Don Reisinger/CNET)For now, iTunes Preview features music. There's no telling if Apple will add more content over time. If you want to check it out, copy an iTunes link from within the software and paste it into your browser.
(Via AppleInsider)
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
(Credit:
The Beatles)
No, the digitally remastered Beatles catalog hasn't come to Apple's iTunes. But it has come to an apple-shaped USB device.
Retailing for $279.99, the collection will be released December 8 in North America, three months after the September 9 release of the remastered set of the band's albums (as well as The Beatles: Rock Band video game). The apple shape is in reference to Apple Corps, the Beatles music publisher--which in the past, you may recall, sued tech giant Apple in a trademark dispute.
(Credit:
The Official Beatles Shop)
When the release of the remastered Beatles catalog and Rock Band game were announced for September 9, 2009 (the band has a song called "Revolution 9"), speculation arose that a concurrently scheduled Apple Inc. announcement might bring the catalog, still unavailable for digital download on the Web, to iTunes. That didn't happen. But with the release of the USB collection, the albums are available in non-CD digital form for the first time.
In addition to MP3 and FLAC versions of 14 stereo titles, according to a release, the 16GB device contains "all of the remastered CDs' visual elements, including 13 mini-documentary films about the studio albums, replicated original UK album art, rare photos and expanded liner notes."
Correction 10:45 a.m. PST: This story initially misstated the release date. It is December 8 in North America. Also, the type of lawsuit Apple Corps filed against Apple Inc. has been corrected. It was a trademark dispute.
