Ownership of music, movies and software slipping away

First it was physical media that was threatened by the shift to digital, now it’s ownership of entertainment and software.
Consider the music business. For decades, physical ownership of music ruled, first with LPs and cassettes and then CDs. Then Apple changed the game when it launched the iTunes download store in April 2003.
Fast forward to today and iTunes sales are dropping as consumers switch to ad-supported and subscription streaming music services like Pandora and Spotify.
Why own the music when streaming is so convenient? You can access your favorite music from multiple devices without the hassle of finding your copy.
In the movie business, DVD sales are down as more consumers sign up for Netflix, Amazon Prime Instant Video and other subscription streaming services.
Once again, with streaming, people don’t have to load their personal copy of a video into a consumer electronics device. They just search from a menu and hit play.
Another benefit of streaming video vs. DVD is not having to slog through all those trailers, ads, piracy warnings and menus you get before you can actually watch the video you want. With streaming, it starts when you hit play.
However, a drawback is the likely disappearance of special features like deleted scenes, movie documentaries and director commentaries.
Computer software also is shifting from buy-and-own to monthly subscriptions. Microsoft, Adobe Systems and other software companies now offer to rent PC software applications as opposed to buy-upfront licensed software. This is part of the shift to cloud computing.
Amazon.com even has a subscription electronic book service called Kindle Unlimited.
It all sounds like a good deal, but consumers might end up paying more for software and entertainment content this way.
Also, if you don’t own something, you have less control over it. Some of the content you like could just disappear when a service loses the rights to it.
Plus, you usually need an Internet connection to access your content.
As with all new things, there are tradeoffs.

Digital culture timeline: Major events in the transition to pure digital media

The other day I wrote about mourning the loss of cultural businesses – those selling music, movies, books and video games.
Here’s a timeline of major events in the transition of entertainment from a retail business to an online activity.

Music

October 1982: First music album on Compact Disc (CD) released.

June 1999: Online music file-sharing service Napster launched.

July 2001: Napster shut down by court order for copyright violations.

October 2001: Apple debuts the iPod portable music player.

April 2003: Apple opens the iTunes store for legal music downloads.

December 2006: Last Tower Records store in U.S. closes after bankruptcy liquidation. At its peak, the chain had nearly 200 stores in 21 states.

March 2009: Virgin Megastores announces plan to close all of its U.S. record stores.

News articles:

The Graying of the Record Store (New York Times; July 16, 2006)

A Broken Record Store: Industry Icon Tower Is Bankrupt and on the Block (Washington Post; Aug. 23, 2006)

For Tower Records, End of Disc (Washington Post; Dec. 11, 2006)

Record stores closing in U.S. at record rates (Associated Press; March 30, 2008)

Retailing Era Closes With Music Megastore (New York Times; June 14, 2009)

Rough Trade and the future of the record store (Wired; May 27, 2010)

‘I Need That Record!’ Film Explores Plight of Indie Record Stores (AOL; July 27, 2010)

Movies

October 1977: VHS videocassette tapes introduced. VHS became the dominant home video format in the mid-1980s after a protracted format war with Betamax.

October 1985: Movie rental chain Blockbuster opens its first store, located in Dallas.

March 1997: DVD optical disc format introduced to U.S. market. It would become the most popular movie rental format in June 2003, surpassing VHS tapes.

December 1999: Netflix debuts its subscription DVD-by-mail service. The company now has 15 million subscribers nationwide.

May 2004: Redbox installs its first 12 machines, at McDonald’s restaurants in Denver, after two years of testing. Redbox now has 23,000 kiosk locations nationwide. It rents movies for $1 a night.

January 2007: Netflix debuts its online streaming video service, but only to PCs initially. It started streaming to TVs, first with the Roku set-top box, in May 2008.

March 2008: Online streaming video service Hulu is launched. Hulu is owned by the parent companies of ABC, NBC and Fox.

May 2010: Video rental store chain Movie Gallery announces that it will close all of its stores. At its peak, the chain had 4,700 stores in North America.

News articles:

Video rental stores fading to black (The Boston Globe; Feb. 23, 2010)

Hollywood Video Closes Doors (Wall Street Journal; May 3, 2010)

It’s A Wrap: Movie Gallery To Close All U.S. Locations (PaidContent.org; May 4, 2010)

A Timeline: The Blockbuster Life Cycle (Forbes.com; May 18, 2010)

Analyst: Blockbuster’s Last Gasp to Occur in 2011 (Gizmodo; July 11, 2010)

Blockbuster Hangs On For Dear Life (TheStreet.com; July 29, 2010)

Video games

1978: Space Invaders arcade game debuts, ushering in the start of the golden age of arcade video games. It’s soon followed by Asteroids, Pac Man, Donkey Kong and others.

1985: Nintendo’s NES console along with breakout hit game “Super Mario Bros.” fuels the home video game market.

1995: Software retailer Babbage’s begins a series of mergers and acquisitions that lead to the creation of GameStop, the largest specialty retailer of video game software. Its acquisitions include Software Etc. (1995), Funcoland (2000) and Electronics Boutique (2005).

2002: Microsoft launches its Xbox Live service for online multiplayer gaming. An updated version of the service for the Xbox 360 console, launched in November 2005, added game and video downloads.

News articles:

As Blockbuster Falls, Is GameStop Also Doomed? (Seeking Alpha; March 18, 2010)

New GameStop CEO’s Half-Baked Plan to Avoid Blockbuster’s Fate (BNet; July 22, 2010)

GameStop Is Bulking Up to Battle New Rivals (Bloomberg BusinessWeek; July 22, 2010)

A Game-Changer for GameStop? (The Motley Fool: July 30, 2010)

Books

November 2007: Amazon.com debuts its Kindle e-book reader. The first-generation product cost $399.

April 2010: Apple starts selling its iPad media tablet. The entry level model costs $499.

July 2010: Amazon.com unveils its third-generation Kindle, which starts at $139.

News articles:

Borders Seeks e-Book Strategy (Seeking Alpha; May 9, 2010)

Barnes & Noble Planning Big Push to Increase Nook Sales (New York Times; July 29, 2010)

Kindle to Go 'Mass Market' (Wall Street Journal; July 28, 2010)

Photos (from top): Gerosa Records in Brookfield, Conn.; Blockbuster Video store; Space Invaders arcade game and screenshot; and Amazon.com’s third-generation Kindle e-book reader.

What will happen to cover girls when magazines go digital?

Being the cover subject of a magazine is a big deal. It’s a major achievement for models, actors, business people, politicians and others of importance.
But it’s becoming less of a big deal.
As magazines decline in circulation and more people read articles and look at photos online, the future of magazine covers is in doubt.
Getting your face on a magazine cover means widespread exposure. Your photo is seen on newsstands nationwide, perhaps worldwide. It is something you can hold and admire, even frame for posterity.
But declining readership of magazines is a fact. (See Silicon Alley Insider chart “Nobody Wants To Buy Magazines Anymore.”) And publishers now are hoping that they can transition their paper magazines to electronic readers, such as Amazon.com's Kindle and Apple's iPad.
Going from a tangible product that can last for years to digital ones and zeros that can be erased in a microsecond will greatly diminish being on a magazine cover. Add to that the fact that digital magazines aren’t displayed on newsstands in public.
In the past, being the cover girl for Vogue and other fashion magazines meant that a model had made it big. Being the cover girl for men’s magazine Playboy had a different sort of cachet.
CoverGirl is even the name of a popular brand of cosmetics owned by Procter & Gamble.
Last week, Sports Illustrated made a slash about Brooklyn Decker landing the coveted cover of its annual Swimsuit Edition. (Examples: The Huffington Post and New York Post.)
SI is likely to continue to make a big deal about the Swimsuit cover, even as the magazine fades and transitions to digital.
But will it still resonate with the public?
I have my doubts.

This is the latest in a series of articles called “The Failed Promise of Digital Content.”

Photo: Cover of Sports Illustrated’s 2010 Swimsuit Edition featuring Brooklyn Decker.

Tablet computers and online paid content schemes offer hope for print media

Two developments have given the beleaguered print journalism industry reason for hope. Both involve the potential to sell news articles and features to consumers in digital form.
They are tablet computers, such as the one Apple is poised to announce next week, and website pay walls to access content, such as the New York Times is planning.

Light at the end of the tunnel

After a couple of years of unremittingly bad news, 2010 has offered a ray of hope for the print media.
The New York Times Co. announced Wednesday that it plans to charge for access to NYTimes.com content at the beginning of 2011. It plans to institute a metered business model, which will offer users free access to a set number of articles per month and then charge users once they exceed that number. New York Times home delivery print subscribers will continue to have free access to NYTimes.com.
The Financial Times has a similar metered business model for its online content.
News Corp.’s Wall Street Journal restricts full access to its content to paying subscribers.
Newspaper executives are hoping that news junkies who have abandoned paid newspaper subscriptions will be willing to pay up for digital content.
Another potential bright spot for the news industry is the emergence of e-readers and tablet or slate computers for consuming written content. Amazon.com’s Kindle e-book reader got the ball rolling by offering newspaper and magazine content.
Apple is widely expected to trot out a tablet computer on Jan. 27 that will act as an e-reader, mobile Web browser and more. Apple hopes its tablet will do for newspapers, magazines and books what its iPod did for music. In other words, it wants to revitalize those markets by creating a new business model and a new experience for consuming old media.
Another bit of good news came when Editor & Publisher resumed business this month under new ownership. E&P restarted Jan. 14, just two weeks after Nielsen closed the print and online publication, known as the “bible of the newspaper industry.” The new owner is Duncan McIntosh Co., an Irvine, Calif.-based magazine and newspaper publisher.

Not out of the woods yet

Instituting pay-for-content business models is iffy with online news, however.
People have gotten used to getting news for free online. There are multiple sources of news online, so readers might dump a fee-based site for a free service in a heartbeat.
Also, bloggers and news aggregators might do such a good job summarizing the news on pay sites that readers won’t feel they have to pay up.
Asked what they would do if their favorite news site suddenly began charging, 74% of respondents in a poll by PaidContent and Harris Interactive said they would “find another free site.” Some 8% would use the site’s free headlines only. Just 5% said they would pay to continue reading. The rest weren’t sure what they’d do.
E&P columnist Steve Outing wrote a thought-provoking column on the subject titled “Your News Content Is Worth Zero to Digital Consumers.”
MarketWatch and WSJ.com writer Brett Arends had a pretty gloomy assessment of the industry in his article titled “Will the news survive?” He points out the challenges facing news media firms trying to monetize their online content.
His article included a chart, reproduced by Silicon Alley Insider, showing that newspaper employment has collapsed in the last 15 years, with employment now at the same level it was in the mid-1950s.
More than 15,000 newspaper employees lost their jobs in 2009, according to media industry watcher News Cycle.
At least 142 daily and weekly newspapers shut down in 2009, a nearly threefold increase over the number of titles succumbing in the prior year, according to Alan Mutter at Reflections of a Newsosaur.
More ugly stats: In 2009, 275 new magazines were launched while 428 ceased publication, according to MediaFinder.com.
Here’s to hoping that 2010 will yield some more positive statistics for the news media.

The best and worst of CES 2010

Best technology demo

Cisco Systems gave a kick-ass demonstration of a living room video conferencing system under development during a press event at the 2010 Consumer Electronics Show.
The networking gear maker showed how its home telepresence product would offer more than just video chat with distant friends and relatives. Cisco executives provided a slick, live demo of applications such as home health-care consulting and distance learning with a math tutor.

Worst technology demo

LG Electronics demonstrated its living room video conferencing product that uses Skype, the popular online voice and video communications service for PC users.
Unlike the flawless Cisco home teleconferencing demo, the LG demo was plagued with blurry, herky-jerky video and an annoying audio and video delay. The event speaker and the person on the video screen kept talking over each other. They could barely get a word in because they kept stopping when they realized the other was speaking.
LG blamed a poor Internet connection for the lousy service quality, but the speakers didn’t look like they rehearsed the call. A big turnoff for the product. Not a good experience.

Worst managed press event

Coming into the show, Plastic Logic had one of the most anticipated new products, an e-book reader called the Que proReader. It's been billed as a potential Kindle killer.
But the company’s press event at CES was a mess. For starters, the venue was terrible. Plastic Logic tried holding the event at its booth on the floor of the Las Vegas Convention Center before the exhibits opened for the day.
But the floor was noisy and the press had to stand for the lengthy presentation. Plastic Logic CEO Richard Archuleta took forever to get to the point about the Que proReader, spending way too much time on the background of the company and the technology. What the press really wanted to hear about was pricing and availability for the Que and its standout features.
For a device that’s supposed to display electronic newspapers, Archuleta buried the lede.
Plus, the presentation suffered from technical glitches, like microphone feedback and poor audio and video.

Best managed press event

Palm put on an excellent press conference. It was well paced and had a plethora of newsy announcements, led by the new Palm Pre Plus and Pixi Plus smart phones for Verizon Wireless, available later this month.
Palm also introduced its mobile hotspot technology that will turn the Pre Plus and Pixi Plus into mobile Wi-Fi routers. The app can provide wireless broadband access for up to five Wi-Fi enabled devices, such as notebooks and netbooks.
Palm CEO Jon Rubinstein and his team did a fine job detailing improvements to Palm’s smart phones and pointing out their advantages over other devices on the market. (Over-the-air software updates, support for the Adobe Flash Player in the browser, etc.)

Best celebrity cameo

Singer Taylor Swift’s performance of “Love Story” at Sony’s press conference was a show highlight.
The 20-year-old singer-songwriter helped kick off the Sony event and was filmed in 3-D for the occasion.
You can watch the performance here.

Coolest new devices

My favorite new products at the show were:

Sanyo’s Eneloop bike. The $2,300 bicycle features an electric motor to assist in pedaling. The bike, which has a lightweight lithium-ion battery, would be great for city commuting and suburban riding. (Sanyo is owned by Panasonic.)

Evolution Robotic’s Mint automatic floor cleaner. The Mint dusts and mops floors with the press of a button. It uses popular cleaning cloths such as Swiffer and Pledge dry and wet cloths to remove dust, dirt and spills off your floor. Available this fall, the $250 device is likely to give iRobot’s Scooba some serious competition.

Tivit mobile digital TV receiver from Valups. The $120 device allows you to watch local broadcast digital TV shows on your Wi-Fi enabled smart phone or notebook computer. Available this spring, the portable device is smaller and lighter than a deck of playing cards.

Photo credits: LG Electronics booth at CES 2010 by CEA; Taylor Swift at Sony press event by Wired.

Decorating your home without books

If electronic book readers like Amazon.com’s Kindle and Sony’s Reader are the beginning of the end for paper books, it will have a big impact on how people decorate their living rooms, dens and home offices in the future.
Lots of people have bookshelves lined with hardcover and soft cover books in their homes. They look great and give homes a stately, intellectual feel. Homeowners can boast “Look at all the books I’ve read,” without saying a word.
But in the future, with books more readily available in digital form, having a ton of bound books might seem archaic.
So what are home decorators going to do without books to fill shelves in studies and other rooms?
Maybe the transition to digital books will be a boon for the knick-knack industry. People are going to want to fill those shelves with something. How about ceramic chickens? My sister in Indiana has a bunch.
The above photo shows the cover of the book “House Beautiful: Decorating with Books” (2006) by Marie Proeller Hueston. The book’s subject already seems dated.
As fellow blogger Laura Heller at Tech Bacon noted earlier this year, “Decorating with Books” is for sale at Amazon.com with a bit of irony.
Below an image of the book’s cover on the Amazon.com product page is a note to shoppers to tell the publisher: “I’d like to read this book on Kindle.” Click on the link and your request for a “Kindle Edition” of the book is passed along to the publisher.
Like that's gonna happen.

Future of electronic books difficult to read

The failed promise of digital content – Part 4: Books

The transition from paper books to digital books sounds like a great proposition.
School kids won’t develop back problems from carrying backpacks overloaded with thick textbooks.
People who move won’t have to go through the laborious task of packing box after heavy box of hard-cover and soft-cover books. (Unless they’re collectors.)
Fewer trees will have to be cut down and ground up to make paper.
The advent of electronic book readers like Amazon.com’s Kindle, Sony’s Reader and other devices means that people can store hundreds of books (as well as newspapers and magazines) onto the memory of a portable device. That will make vacation travel lighter for many. It also will reduce the clutter in many homes.
But the future isn’t entirely clear for digitized books.
First you have to buy the e-book reader, which isn’t cheap. Amazon’s market-leading Kindle 2 costs $299. Sony last week lowered the entry-level price for its cheapest e-book reader to $199.
But that doesn’t include content. Digital best-sellers typically cost $9.99.
In the future, will reading be limited to those who can afford digital book readers?
My concerns with digital books have to do with open standards, the role libraries will play and the availability of older content.
Sony made a smart competitive move when it decided to adopt the open Epub format. Sony’s adoption of Epub means that owners of its Reader devices can acquire books from many sources, even public libraries. Open standards also mean the ability to share e-books among devices, such as an e-book reader and a smart phone.
I can only hope that Amazon.com will follow suit.
Many public libraries will let users “borrow” a digital copy of a book for free for 21 days. But libraries have to purchase licenses for those copies, so they’ll have only a limited number of copies to hand out. Still access to digital books through libraries is a very good thing.
It will be interesting to see how libraries balance purchasing digital books vs. physical books. With paper books, they have something to show for their money and to stock on shelves. With digital books, they have only virtual items stored in computer memory.
Another issue is older content. This includes works in the public domain; orphan works, where the owner of the copyright is in question or can’t be located; and old copyrighted works.
Just as with music, movies and TV shows, copyright holders may have little interest in digitizing works where there isn’t an easy payback.
Google has stepped in to fill this niche by digitizing libraries, but its involvement has been highly controversial. Critics don’t want so much content controlled by one corporation. Proponents say Google is the only hope for scanning millions of books and creating a comprehensive digital library because it has the financial resources and the commitment.
(See article “Google Book Search - Is it The Last Library?” at The Register.)

Photo: Sony’s Reader device family

Previous articles in the series “The Failed Promise of Digital Content”:
Part 1: Music
Part 2: Video
Part 3: Newspapers and magazines