Saturday, December 05, 2009

Apple on Demand?

Apple the pioneer of the digital music download is reported by Bloomberg to be in talks to acquire online music-streaming service Lala. Why would someone so dominant with their iTunes offer want Lala and does it indicate a potential shift in how music is consumed?

The Lala service has over 8 million tracks and enables you to listen to any track or album for free but only once. After that you can buy the track for a 10 cents and can access it at any time at your convenience. So instead of buying it and owning it you effectively rent it perpetuity. Obviously the 10 cents add up and its easy to see the business model being successful if consumers accept the change of ownership to rental subscription. The model differs to that of others such as Spotify who charge by the month for their premium service and enable you to access any track at any time and build your own playlists.

Both Lala and Spotify also allow you to buy a download.

So is the ‘world’s most popular online media store’ broadening its range of offer and realising that the online streaming on demand model has a broad appeal? Are they merely saving some money by buying the technology and its members and folding them into a broader and deeper iTunes one?

What is clear to us is that the world of the cloud computing and online media on demand service is becoming real. This changes how we store, service and consume media and importantly changes the economic models that the consumer has long been educated to live with. Gone is the physical ownership and my library is on my shelf model and in comes the ‘click and get it’ on demand at anytime in any place one. There are potential pitfalls to ownership – ask anyone with betamax, VHS, 8 track, audio cassettes etc. There are pitfalls to the on demand world which is totally reliant on the economic sustainability of the service. Therefore the hybrid mixed model would appear to offer the best of both worlds today and a platform for radical change tomorrow.

The obvious question is that of books and whether the same changes will appear. The answer is a simple yes and that they are already happening. The impact is both significant and as yet little thought through but the opportunity is clear and players such as Google are clearly seeing it today. The one saviour is that any streaming service could offer up any media. This means that there will be some battles ahead but that there is no reason why the likes of iTunes or Spotify or Google Editions can’t be one stop media on demand services.

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