“The original big dog in digital music has turned into a pussycat. Roxio’s reincarnation of Napster as a subscription music service has produced millions of dollars in losses, shakeups in the executive suites, and now job layoffs, according to the San Jose Mercury News. A spokeswoman said the company was ‘eliminating redundancies in the organization,’ and did not specify the number of jobs cut, the report added,” Frank Barnako reports for CBS.MarketWatch.com.
“Part of the reason for troubles at Napster may simply be that the online music business is tough. Profit margins are slim. Napster appears to be the fourth largest music service with an estimated 90,000 subscribers, the report said. Insiders at two of the major music labels told the News that Napster sells only about 25 percent of the tracks that Apple Computer’s iTunes Music Store does. ‘I think it’s a very competitive market with very ugly economics,’ commented Steven B. Frankel, managing director of Adams, Harkness and Hill, a Boston investment bank,” Barnako reports.
Full article here.
david vesey,
Unfortunately, we are talking about consumer electronics. The barrier of entry can’t be too high or else nobody but select few will buy it. As evidenced by other gadgets, cheap sells. Good enough is fine. You can see it in things such as DVD players. The way I see it, iPod is somewhat an aberration, but being perceived as cool help.
Many of the gadgets are cheaply made in China with low quality parts. Most designs are copied from successful models to reduce R&D. You can expect the moment Apple invents something new, others will produce it in no time. To be honest though, I don’t know how Apple managed to prevent copies of iPods to be made all this time. Again, I see it as an exception to the rule.
Nobody sez: “Unfortunately, we are talking about consumer electronics. The barrier of entry can’t be too high or else nobody but select few will buy it.”
Then let me clarify. In this case the barrier of entry is talent, vision, and good taste. Not only did APPLE design software, excellent hardware, and a superior shopping experience, it also realized IT COULD BE DONE. And the iPod is not a $10,000 tube amplifier. It’s affordable.
Half the barriers that prevent companies from being as cool as APPLE are put up by the competition themselves. They clip their own wings rather than trying to fly. They insist that mediocre is better than best.
6 months before, the legal music download market was stalled, now it’s hot. APPLE proved it could be done. The Model T was an exception, too. Everything NEW is an exception.
DV
DV — I think Nobody misunderstood your point about “barrier of entry”. You were talking about companies deciding to enter the market, while Nobody is talking about consumers buying the product. I think HP’s decision to partner with Apple proves your point, tho. Too much money for R&D, creating the means of manufacture, supply chains, etc.
Besides, it’s kinda cool to think that “What’s good for Apple is good for America” (get GM outta there!).
finelinebob sez:
“Besides, it’s kinda cool to think that “What’s good for Apple is good for America” (get GM outta there!).”
Well, I do know that what’s good for APPLE is good for me. The aside about GM is sad but true (and I’m from Detroit). 40 years ago you could look to Detroit, and other mass consumer centers of production for very cool stuff.
Why is it that just after the turn of the century we have no really wonderful contemporary architecture, popular music, fashions, automobile design, or even HAIRCUTS?
As far as I can see APPLE is doing just about the best work out there. Well, the new Bugatti’s are REAL NICE.
But there was a time when your old man could buy a sport shirt, the latest chevy, and a barbecue grille without even LOOKING at it. And chances were it was pretty cool.
I’m sitting on my bed surrounded by technology. Digital cameras. An APPLE CUBE, my iPod, and right in the middle is a Kensington wireless Expert Mouse Pro. It’s a wonderful lttle device. But it HURTS MY EYES to look at it.
APPLE seems to be single-handedly moving the ball forward in consumer technology and design.
DV
Actually I was talking about both. A high barrier entry (in costs) for a company to enter a market raises a high barrier entry for a consumer to buy the product. I agree that with capitals required to build products such as jet engines, not many can play in that area. Jet engines are not something you can buy like a bicycle. But with consumer electronics, you can’t create something that requires massive amount of capitals because then you have to price it as such to a very limited market.
Then david vesey said “In this case the barrier of entry is talent, vision, and good taste.”
But unlike capitals, the result of talent, vision, and good taste is easily copiable. Maybe with lower quality, but still it won’t be a barrier of entry. All it takes is for someone with a vision to see it and then everybody sees it as obvious. As you pointed out, Apple came out with iTMS and suddenly everyone and his dog have a music store. None of them matches iTMS quality and ease of use, but that does not stop people from buying, which brings up my original point: good enough sells.
What is needed from Apple is to keep moving forward, to keep making the digital convergence possible. It makes a shifting target for the competitors. When there are so many pieces working together, customers can just use Apple’s products making it harder for a single-product companies like MusicMatch to compete.
At least, that is my 2 cents.
“Why is it that just after the turn of the century we have no really wonderful contemporary architecture, popular music, fashions, automobile design, or even HAIRCUTS?”
I guess I am just very opinionated today. I think because these days all is very specialized. Even in a specialized field, there are further specializations. There are not many “renaissance men” today.
FINALLY! I’m not alone. Others are starting to ask the same questions I was asking months ago with regard to BuyMusic and the other music download sites and their fuzzy “sales figures”. This is the first hard evidence that only serves to further my assertion that they were all dying a slow painful death, but I want more! Give me more numbers! Anyone care to share any info they know about ACTUAL sales figures for BuyMusic?
It’s hard to get numbers since some are privately held companies. Others, well, just don’t want to make a fool of themselves and certify that Apple crushes them. Dump WMA and curse Gates 3 times in national newspapers and I will symphathize with their problems, until then “Yeah, bring it on!!”
It’s hard to get numbers since some are privately held companies. Others, well, just don’t want to make a fool of themselves and certify that Apple crushes them. Dump WMA and curse Gates 3 times in national newspapers and I will symphathize with their problems, until then “Yeah, bring it on!!”
Sorry for the triple post. I kept getting an error message.