Apple Makes You Pay For Piracy Without Making You Pay For Piracy

I was reading this bit of news about Apple’s newly launched iTunes Match – touted in the article as “more than just a cloud storage system for songs that fans buy legitimately through iTunes.” What really intrigued me was the value proposition and how Steve Jobs sold it: essentially, Apple has succeeded in making you pay for music piracy without making you pay for music piracy.

What do I mean by this?

Aside from offering to freely distribute new and old iTunes purchases on all of a user’s devices, the Apple impresario unveiled “iTunes Match,” a $25-a-year service starting this fall that will scan users’ devices and hard drives for music acquired in other ways, store it on distant computer servers and allow them to access it anywhere.

The service acknowledges a well-known fact — that most music on iPods, iPhones and iPads was ripped or swapped. Apple reached a deal that gives recording companies more than 70 percent of the new fees, addressing a dark secret that has crippled the music industry, and provides them with some economic payback.

Where Apple is able to identify and match songs from its 18 million-song database, it will transfer them into the user’s iCloud, a storage area housed on servers, including those at a massive new data center in North Carolina.

This is exactly the kind of creative strategic thinking that is lacking in so many businesses and brands today! No wonder we are faced with “more of the same” despite so many new brands coming to life these days. In fact, innovation is highly rewarding:

Industry observers said the new service could translate into big bucks for both Apple and the recording companies.

Apple has about 225 million credit card-backed accounts on iTunes. If only 10 percent signed up for the convenience of accessing music they hadn’t bought there, it could turn into more than $500 million a year in new revenue, said Jeff Price, CEO of TuneCore Inc., a company that helps independent artists sell their music on iTunes and other digital music outlets.

The best thing is that consumers get the sense that they’re paying for convenience, not for things they already own, he said.

“It allows for revenue to be made off of pirated music in a way that consumers don’t feel that’s what they’re paying for, and that’s what I find fascinating about it,” Price said.

Read the full article here (and also learn just how much “better” Apple always tries to make things).

The Golden Circle – Simon Sinek (TED.com)

In this great TED.com talk, “How Great Leaders Inspire Action“, Simon Sinek introduces a simple concept, called The Golden Circle which explains why leaders/organisations are successful the way they are.

My key takeaways:

• Great leaders/organisations communicate in this order: WHY –> HOW –> WHAT.
• People don’t buy what you do, they buy WHY you do what you do.
• The goal is not to sell to people who need what you have, but those who believe what you believe. Hire people who believe what you believe. Work with people who believe in what you believe in!

Enjoy the talk!

How 10 Brands Came About

I’m currently doing some thinking on “brand storytelling” (more on that as it comes), and thought this was an interesting article via Graphic Design Blog on how 10 brands originated. It got me thinking about the evolution of a brand – from what it originally was to where it is today. If anything, it also makes for great introduction fodder during presentations!

Cool facts about how brands came about:

Dilbert’s Scott Adams: How Steve Jobs Successfully Managed iPhone4’s “Antenna-gate” Controversy

I’m often amused and surprised that some of the best business insights I’ve ever come across are from cartoonists (although, maybe I shouldn’t be!). In following the iPhone4 “Antenna-gate” controversy, I came across Dilbert’s Scott Adams positing a very interesting observation on how Steve Jobs successfully managed the controversy for Apple.

Basically, he applied what Adams called the “High Ground Maneuver“.

iWindows?

 

What is Apple’s core business in the personal computing industry?

Does Apple rely on its hardware products (i.e. “Superior technology” like its iMacG5) or software products (i.e. Mac OS X)? I think most Mac users will tell you that it’s the “whole package” – both its hardware and software working seamlessly together to create one hell of a user experience (I know, I’ve tried one).

Unfortunately, Apple suffers at the hands of the ubiquitous PC-based Windows OS. Apple Mac users are happy to be “counter culture” but as I remember reading somewhere – “never mistake Mac users’ enthusiasm for Apple’s 22% market share” (Apologies to the accuracy and veracity of this quotation. Please help me find the source).

Which brings us to the latest move by Apple: The Apple Boot Camp for Intel based Macs. Here’s the pitch for it:

Boot Camp lets you install Windows XP without moving your Mac data, though you will need to bring your own copy to the table, as Apple Computer does not sell or support Microsoft Windows. Boot Camp will burn a CD of all the required drivers for Windows so you don’t have to scrounge around the Internet looking for them.

(By the way, I like the whole “Boot Camp will burn a CD of all the required drivers for Windows so you don’t have to scrounge around the Internet looking for them.” Awesome user experience – an Apple hallmark)

I’m not entirely sure this will work.

From a business point of view – it looks like it makes sense. After all, Apple is not here to do charity – they live or die on their profit margins. So what can you do but go after the mass market, right? And if the bulk of the market uses Windows OS, then let’s have Apple machines work with Windows.

Yet, I’m already wondering how it will adversely affect and alienate Apple’s core consumers. After all, there are Mac users who already see Microsoft and Windows as “the enemy” – so does this mean their beloved Apple is sleeping with the enemy?

I also wonder whether this will have an effect on Mac’s software development. Will they now churn out half-assed solutions ala Microsoft in order to keep the market hungry for more? Will there still be any initiative for Mac to churn out great software that will cause users to make the switch? After all, this does seem like a bit of a sell-out – “If you can’t beat them, join them.”

Maybe Apple hopes to entice users by using Windows on their machine first – then eventually winning them over to a Mac OS. Or maybe it will result in nothing but the status quo – the only convenience being afforded to those who already use two machines anyway: a Windows PC and a Mac.

However, I think most users are like me: We’d love to use a Mac (after experiencing one) – but it’s just that our environment is just too immersed with Windows. So we just go with the flow. We are not tempted by a Windows-operating Mac since clone PC models are so much cheaper.

Of course, that brings another thought to mind. By doing this Apple will lose its niche – the distinct awesome user experience. The draw of Macs was the fact that you could only use Mac software on Macs – and they were made perfectly for each other! It was, as I said earlier, one hell of an experience. I don’t want to “enjoy Windows” on a Mac. It’s rather pointless, don’t you think?

So where does all this lead us? I think it’s a great thing that Apple is doing (very thoughtful of them!) – but I doubt it will cause a great revolution of more people turning to Apple’s machines (i.e. increase market share). People do like choice – but once they’ve made that choice (like for Windows), they tend to get rather comfortable, contented… and resistant to change.