It’s the same old world, with a technological twist…

Whilst we are on the subject of new media, incumbents and pretenders, Richard Waters notes the dynamic of this process with an erudite round up of the way Apple has used online and offline strengths to build a near unassailable hold on the online market:

It has poured money into advertising, turning the iPod into one of the fetishistic objects of the age.

It has also been able to rely on two things that often characterise technology leaders: network effects and technology lock-in. Buy an iPod, and there is a good chance a friend will let you download all his or her iTunes music to your machine – not a bad network effect, even if of dubious legality. The lock-in comes from the digital rights management (DRM) software that lets the iTunes music store and iPod feed off each other.

History shows that technology leaders, once established, are seldom dethroned by direct competition. It usually takes a shift in business model, or in a technology paradigm, before that happens.

When changes like that do occur, the news for the challengers is surprisingly good. Very few companies that dominate one era of technology go on to dominate the next. Just think of Sony’s Walkman. A company that thrived on its engineering prowess – based on its skill in miniaturising analogue technologies – was left high and dry when the digital era arrived.

Sony is an excellent case in point. It’s proprietorial approach in a networked age earned it brickbats from locking people in and preventing them from sharing content. Apple made a virtue of the capacity to share and now has 85% per cent share of the digital music market. All of its rivals are now desparately playing catch up.

As Jeff Jarvis says of the seismic changes in journalism in today’s Media Guardian, “It’s not a new world. It’s the same world but it just keeps changing, with new opportunities and challenges, tools and competitors”.

  • joeCanuck

    Mick
    check out this link. http://spiralfrog.com/about.aspx

    I think Apple are going to be badly hit.
    This new site will give free legal downloads if you’re prepared to put up with advertising.
    Somewhat like the Google business model.

  • Mick Fealty

    Interesting. Here’s a report on the state of play so far:

    Universal would not comment publicly on its deal with SpiralFrog.

    However, a source familiar with the agreement said the record label received an upfront payment, in addition to a share of the advertising revenue generated by the service. Universal’s deal with SpiralFrog is initially for just one year, though Universal may look to extend it if it proves viable.

    Battling back after years of Internet-fuelled file sharing, record companies are looking for business models that offer them revenue for their music. Meanwhile, more and more content-based companies are starting with the hope that widespread availability of high-speed Internet access will mean that more and more dollars will shift from traditional media to the Web.