theReformed

A quick follow-up to the challenge MySpace is serving up to Apple with their music service, as I wrote about previously (reference: http://www.thereformed.org/2008/04/07/myspace-gambles-big-on-lost-cause/). As I stated before, I don’t believe MySpace will be able to capture a significant market share in an industry which is experiencing innovations per quarter from the company who established and arguably perfected the vary model industry leaders are salivating to get bigger a piece of and the major economic downturn (an obvious recession.. if it looks like a duck…) which is hitting consumers in the pocketbook. What this brief article addresses is the sheer, implausible numbers game that a small fish such as MySpace is facing in a private pond thats home to a big hungry shark.

(NOTE: Updated to reflect the correct number of iPods sold by Apple, to also include iPhones which are capable of playing music, according to their report released in late April.)

Upon doing some quick research on the scope of MySpace’s endeavour, I came across some interesting analysis. MySpace claims it has over 100 million users - that doesn’t necessarily mean that they all convene over MySpace Music, but that does lend credit to the idea that they have a sufficient userbase to challenge Apple’s iTunes on…. if it were true. ForeverGeek produced a detailed, albeit unofficial, breakdown of MySpace’s inevitably flawed and potentially deceitful claim/myth in their article “Debunking the MySpace Myth of 100 Million Users” (reference: http://forevergeek.com/articles/debunking_the_myspace_myth_of_100_million_users.php“), disavowing the validity of the idea that they’ve got a larger share than in all actuality. The numbers computed actually add up to a lofty 43 million persons (not counting multiple accounts per person), give or take.

Apple, however, obviously gathers their user data in realtime. On April 3, 2008 it announced in a press release that it has reached over 50 million users, which might inveritably only be corrected for accounts inactive if it hasn’t been already (reference: http://www.apple.com/pr/library/2008/04/03itunes.html). Supporting that service number, it is widely acknowledged that the innovator has sold over 110 million iPod units (as of September 2007) worldwide since it’s inception. Although the market is being saturated by them, it is predicted that Apple will still boast up to approximately 10.5 million 10,644,000 iPods and 1,703,000 iPhones were sold for the quarter. A number like that must include fallover/rollover from previous models, but we can definitely expect that a large percentage of that are new owners/users to the iPod/iTunes marriage such as is mentioned in Tom Krazik’s smart article “Apple’s spring lacks pizazz but should be solid” (reference: http://www.news.com/8301-13579_3-9927415-37.html?tag=nefd.lede)

Apple’s success with this marriage is due to their productive symbiosis. Software for hardware for consumers who demand a intuitive user experience to access music for recording industry label’s profit bottomline for artists who in need a online software solution to distribute their content to a mass audience who has hardware to listen… it is it’s own ecosystem and with any good ecosystem there are natural deterrents engrained in it in an attempt to prevent anything from upsetting that ecosystem. MySpace had better put on it’s boots and dig in, because Apple isn’t going to let territory go without a fight. A D5, Steve Jobs on stage established that for years they were very poor at partnering with other companies or entities to achieve goals. In no certain words, he indicated that is no longer the case and we can be sure that Apple’s talent is sourcing the next generation of entertainment distribution somewhere… As I said in my last article, I’d put my bet on the rival social networking site Facebook, but that remains to be seen. If MySpace expects to gain ANY ground in their fight for dominance, they’d better target more than one playback device, partner with both big labels and indie labels to distribute and it would behoove them to develop their own lossless playback format or enable support for Apple’s own. They’ll have to significantly undercut Apple’s rates, which will hurt either their target audience coverage or their pocketbook by taking the hit and now they’ll have to dance for the movie studios since iTunes has successfully moved into movie rental/ownership through their service. SnoCap is riding the coattails of MySpace, garnering the attention of their target audience to boost a profit… it a temporary solution to a non-existent problem. MySpace will need to wake up from this relationship in order to gain the margins in their favor.

On top of the hype is the confusion or ignorance to MySpace’s ‘innovations‘ in the field of music. Melissa Chang (The Standard) seems to have hastily proclaimed that, “MySpace was the first such site to empower musicians, making it simple (and free) for any band or artist to create a Web presence complete with streaming music, an upcoming tour schedule, and a way to enlist “fans”… (reference: http://www.thestandard.com/news/2008/04/04/how-myspace-music-could-beat-itunes)”. Perhaps Melissa has seemingly forgetten such iconic sites like MP3.com, who developed one of the original, plausible models of online music distribution on the Internet without cost to the user?

I find this evolving situation all so captivating and I look forward to seeing where this challenge propels the industry and associated consumer market. Due to the fairly convincing facts, Apple stands to lose virtually nothing and MySpace stands to jump on a failing bandwagon to overtake the godfather of music services via the Cloud. The reign won’t be permanent, I am sure of that we can all agree - this effort, however, will not spell the end.