Quipble - Filed under 'words'

Open letter to Larry and the rest of Google's social overlords

9 Apr 2011
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tech words

Dear Google's social overlords,

Google +1 sounds interesting, but who am I doing this for? Currently +1 only links to my "Google Profile." No one looks at Google Profiles. I wasn't completely sure how to even access mine. I managed to find it quickly in the top toolbar across Google/Gmail, but I had to go searching nonetheless. It is still non-obvious.

Because no one looks at these profiles, I have no reason to share, and because I do not share, no one will look at my profile. It's a classic chicken or the egg scenario. Even beyond that, I and many others will question the point of sharing via +1 when everyone I know is already on Facebook.

Don't make the next Zune

Don't attack existing markets with high quality alternatives. Alternatives need compelling forces to alter behavior and existing usage. Case in point: the Zune. Microsoft's Zune was a fantastic mp3 player. By generation 2 and definitely by Zune HD I would argue that it was the best mp3 player on the market. It's too bad that 1) mp3 players were already passe 2) most mp3 consumers were previous iPod owners and were deeply ingrained into the Apple ecosystem. It's not enough to be comparable in an existing state of the market, because while you spent all that effort being comparable, the big and young guns were thinking about what's next, and you'll find yourself playing catch up all over again.

VCs love to abuse the phrase "skate to where the puck is going, not where it is." I don't know why they chose this phrase to express this idea. I thought only Canadians and Detroit/Colorado/Cornell cared about hockey? The "lead pass" is a common principle to almost all team sports. As the thrower, you lead the receiver by throwing the [ball] to where s/he is going. As the receiver you run to where the ball is going to be, you don't stay where you are. Basically, stay ahead of the curve, be a thought leader, and be a visionary. Easy stuff.

The reason this ideology is apt is because the web evolves so rapidly. In the web, invention doesn't just mean new ideas, it means new ideas replacing old ones. It means the supplanting of paradigms. Creative destruction is woven into the heart of the web. Value destruction is just as defining of a characteristic as value creation. By golly, that's exactly why Google is taking social so seriously.

So where is social going?

I repeat, Social wants to be Mobile.

The mobile web and the regular web aren't very compatible. The mobile web loads slower, yes, but it is technically smarter. It understands orientation, proximity and location and it can "see" and capture the world through images and video. And the big difference in interaction is that almost all of the mobile web is tangible [or at least is going to be, and that's what we're doing, remember? We are visionaries]. All of that loveliness that Apple orates to you about the iPad/iPhone can be applied to the mobile web. It's where technology gets out of the way, and you can just interact. Less friction, more social.

Luckily, you share custody of mobile.

If I were in your position and had the soon to be largest mobile OS in the world, I would absolutely take advantage of it. Your social effort should be deeply integrated into Android. When I say take advantage of Android, I do not mean just pre-install an app like Latitude or Places. Social should be a part of Android itself.

Android has a wonderful notification system that can be used to push all of these social notifications to users. Each Android phone is already linked to a google account so everything would already be unified.

The next big social effort should appreciate the beauty that is the mobile web. And should you Google social overlords decide to embark on the next big social effort, then that responsibility is yours.

If you're serious about her, then get exclusive.

You have so many services that are disparately social. Time to merge them all. Don't flirt around with a million different non-compatible implementations of social.

Google Reader, Calendar, Contacts are all examples of your products that contain social elements, that I would claim never took off socially. You can star things and share things in Reader but you can't +1? You can share notes in Reader, but you can't Buzz? It's all confusing and it's all disorganized. If you're seriously tying company wide bonuses into this next social effort, then this "next social" should be a part of all of Google. Actually that's not the reason that it should be. It should be because having different concepts of social is unsightly. Please make my web experience more beautiful.

Create a social experience worth sharing.

Social doesn't just mean being able to share. Social means wanting to share that you are sharing. It has to suck users in. It has to provide enough utility when used by a few, but become decidedly surreal when used by many.

What I think this means is concentrating on a few or even ONE specific thing that you do amazingly well. All the "likes" or "+1s" and data collection comes later. Being tracked online is the consequence that users accept, it's not what drives them to be social. Facebook did this exceptionally well with sharing photos, and Twitter with tracking celebrities. Find a niche, suck us in, and have a ball with our data once we're there.

Let's recap shall we:

Social wants to be mobile.
Luckily you have Android.
If you're serious about social, then get exclusive.
Create a social experience worth sharing.

Broad strokes, I know. Stay with me, Larry. More specific ideas will follow.

Social wants to be mobile.

The consumer web is making a comeback in a big way. So much so that the storied venture capital firm KPCB (Kleiner Perkins Caulfield and Byers) has specifically allocated portions of its war chest to the sFund (dedicated to social startups) and iFund (dedicated to mobile startups). Social and mobile are the two "next big things" in the consumer web. And guess what, they aren't distinct.

What does social even mean? Social at its core is simply communication. But, we can further segment that by differentiating between pure communication and contextualized communication. If you were curious, these are terms that I made up.

Pure communication is what happens when you call someone, text them, or message them. Only words are exchanged.

Contextualized communication is communicating around a certain external concept. In 2011 layman terms, I'm referring to "sharing." By sharing a video/picture/link with you I'm communicating without the need for words.

Ironically, in terms of human evolution, contextualized communication came before pure communication via grunts, and throwing sticks at each other, and literal, physical poking. Language came second. The web reversed that bit.

Pure communication wants to be mobile.

This is no surprise. We don't want to be constricted in our communication with people. This is why we have phones as our dedicated communication devices and computers that just happen to be able to communicate. But even making a phone call is often avoided in favor of sending a text instead.

Phone calls and emails bring with them formalities that will oppose the flow of communication. Communication is just that, a flowing exchange of ideas. Emails and phone calls, through no fault of their own, introduce friction that makes it harder to communicate. Emails have subject lines, greetings, farewells, and signatures. Phone calls bring an expectation to express more than just one idea.

Pure communication wants to be free and it wants to be mobile. Texting was a great solution, for its time, but costs are relatively exorbitant, character limits are simply limiting and delivery of texts are often slow. For these reasons and more, numerous services [GroupMe, Kik, Beluga, Text+, WhatsApp, BBM] have emerged to solve this problem.

Contextualized communication wants to be mobile.

By definition, we can only share what we experience/consume. Let's arbitrarily separate our consumption into 1) real life consumption and 2) digital consumption.

Already, smartphones have provided a mechanism to communicate our real life consumption. Smartphones have become the most ubiquitous digital cameras in our lives. Since they are always connected, they allow us to capture and share immediately.

The introduction of the tablet will completely revolutionize our digital consumption patterns. These are devices that are specifically tailored for consumption and media is slowly but surely being create specifically for them.

As we are increasingly consuming the physical and digital world via mobile devices, it's clear that sharing should also take place via these devices. And fittingly, we will then consume on mobile devices much of what people share via mobile devices.

Both component aspects of being social have clear motivations to become mobile. Pure communication wants to be mobile because of the freedom and the frictionless exchange of ideas. Contextualized communication wants to be mobile because we share what we consume, and our consumption is mobile. In conclusion, social wants to be mobile.

For those that think that Facebook won the social networking wars, you're absolutely right. They did. But the old construct of social networking is already getting dated. Social wants to be mobile. This next game is just getting started--though Facebook is starting with a huge advantage.

Let the Streaming Wars Begin.

26 Feb 2011
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media tech words

On Monday, Amazon officially opened up a streaming service for Amazon Prime members. Then yesterday came the rumor that Google was about to enter the fold with a streaming video service delivered through Youtube. That was quickly shot down. Regardless, the quarrel that Netflix and Hulu started is going to explode into a war with multiple more players joining. (I think Google will eventually, either though subscription or fully ad subsidized.)

Which services will win out? It's going to come down to accessibility, content and price. Can one service sign exclusive content deals? Or can one service provide a significantly better user experience? With those two being equal, price then takes center stage.

My personal biggest gripe with my currently-on-a-hiatus Netflix subscription was that I never really knew what was available. [Content] Most of the time I would search for something that I would want to watch, not find it, and settle for something else. As silly as it sounds, the "unlimited streaming" aspect gave me the confidence that I could watch anything (at least couple years old) that I wanted. That was far from the case.

The lack of having exactly what I wanted wasn't a dealbreaker, mind you. Netflix has a lot of content, and popularity does not equate to quality. I'm all for discovering great yet obscure movies. The problem was that the process of "discovery" was too cumbersome and time consuming. [Accessibility] How I longed for the ability to sort by Rotten Tomato ratings or IMDB scores. I don't for a second doubt that I could have gotten $8 of value out of Netflix, but the fact of the matter is that I simply did not. For what it's worth, I fully expect to be pulled back into Netflix within the next year or so. The reason: [Price]. $8 is less than the cost of a single box office movie ticket, and for guys movies always cost 2x the sticker price.

Speaking of value, Amazon has the benefit of being able to bundle the streaming subscription with its Prime shipping services. "Free" (in quotes because it requires a membership) 2-day shipping is one of the greatest things on the internet. If Amazon upgrades it's pitiful streaming collection to be somewhat comparable to Netflix it has won me (and everyone I preach to) over. Don't get me wrong though, this doesn't need to be a winner take all market.

If these streaming services replace cable budgets, there is ample room for multiple $8/month subscriptions. And in the scenario that competing services each have exclusive content deals, the services really start to resemble our traditional concept of "channels." This will all come together beautifully when we start consuming all these services via set top AppleTVs and GoogleTVs.

What's clear is that this is a big market and a big opportunity. And all of the tech heavyweights are going to weigh in. Even Microsoft, who looks like they're sticking with the Xbox for living room domination. Sidenote: I really hope Microsoft plans on entering the tablet market soon and in a big way. No, Windows 7 does not count.

In other news the S&P500 lost 1.8% for the week--while Netflix dropped ~10%. Isn't a little bit of competition lovely?

The new, extended Apple Tax

21 Feb 2011
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media tech words

Previously, I opined on how Apple was really fighting for the consumer with their new in-app subscription policy. I may not have been completely clear on that. While demanding that content providers offer subscriptions through iTunes/Apple =fighting for the consumer, taking 30% of all subscription revenues = taking care of business.

There has been a big backlash over this 30% figure. It's not too foreign of a concept as app developers are no stranger to having 30% taken off the top of all their sales. This really isn't a question of right or wrong or Apple being the evil big business. There is nothing ethically or morally wrong about charging 30% for operating in their app store. The question is whether or not it is a smart business move.

To me this ultimately comes down to two questions:

-Will content publishers all flock to Google and whoever else decides to enter the market (we're waiting for you Palm and Microsoft) and cut off Apple?

-Will this force prices out of the range of acceptability for consumers?

In order for Apple to change its policy it needs to feel threatened enough to react. This will take big guts and an orchestrated effort to pull off. Essentially all the big content providers will need to back Android and refuse to distribute via iOS. In essence, having an iPad would then be similar to buying a TV that cant watch network TV. It would be a real deal breaker for many. Would this ever happen? What's the probability of picking a lemon Starburst out of package of Fave Reds?

The 30% tax was announced with magazine and newspaper subscriptions in the headlines.

Record companies faced a similar scenario when they were very unhappy with Apple demanding $0.99 song downloads through iTunes. Boldly, the record companies.... stomached the price enforcement. Or at least enough of them did to keep the iTunes ecosystem as the top dog. Business models were forced to shift. Just like how the traditional concepts of album sales were thrown out the window, Apple is laying to rest the notion that publishing companies get free access to customer information to market the daisies out of you, . Not until Amazon and Walmart arose as legitimate competitors did Apple bend it's pricing policy.

Again we are faced with a similar predicament. Established media companies feel as though they are being bullied by Apple's pricing policies. And as long as just enough of them comply with Apple (hello News Corp) then Apple will come away looking smart and savvy.

Publishing companies have no choice but to accept their circumstances. Not only is growth in traditional subscriptions dying out, but each iPad user is already a convert to the dark (digital) side. These days non-tech savvy consumers simply need to mosy on over to the App Store to see apps like Flipboard and Pulse atop the most downloaded charts. A taste of the free and increasingly iPad friendly content is all many will need to stop them from shelling out for paid offerings from "big name" publishers.

Streaming subscription services are the true main characters.

With all due respect to publishing companies, I feel the issue of greater concern is what the 30% cut will do to streaming media subscription services, such as Hulu Plus, Netflix, and [blank] music streamer that ultimately arises, that aren't as easily substituted. If Apple demands their 30% is a $7.99 Netflix unlimited streaming plan even feasible still? These services have 3 choices:

1) leave the app store

2) stomach the price increase

3) pass on the marginal cost to the consumer

Scenario 2 kills profitablitiy, and 1 & 3 have worrying effects on the top line. Even if Netflix raised the price to $9.99, thats still less revenue in their pocket after Apple's cut chops it down to $6.99. Are consumers willing to pay more than $10 for a Netflix subscription?

Apple also added a very important and stifling detail: the in-app subscription price must be the same as the regular advertised price. This is a wonderfully veiled tactic to encourage users to use the in-app method and allow Apple to take their 30%. If streaming companies want to survive, they're going to have to pass on their 43% cost increase to the consumer. And if they want to comply to app store rules, they will have to coincidingly raise their traditional subscription prices outside of iOS. Potentially, Apple just made everything 43% more expensive to consumers. There are probably ways around this, such as "discount codes" that can be applied outside of iOS. But the MSRP is the MSRP, and it sounds like any service that stays in the app store will require a higher MSRP to stay alive.

This also forces streaming companies to ask themselves if it makes sense to charge Android users a different price than iOS users. While Apple can enforce iOS and traditional subscription price uniformity, I can't imagine that they could also regulate prices on other platforms. Would saving a couple dollars a month per subscription be enough to sway users towards Android and put enough competitive pressure on Apple to lower the 30% rule? I think ultimately subscriptions will be cheaper on Android than iOS. As different platforms, Android and iOS really are disparate markets. Just like prices for goods in Europe are often higher than the US due to the VAT, so will prices for subscriptions in iOS due to the "Apple Tax." Each market essentially is a level playing field with distinct pressures. While price uniformity across platforms seems to make the most initial sense, with sufficient competition in Android, I would expect prices to largely mimic iOS save for the extra 20% that consumers have to pay to Apple.

The waters get a lot murkier once we consider that Apple is also in the digital media business with iTunes and the very likely scenario that they finally offer a streaming subscription based iTunes. Perhaps Apple sees Hulu and Netflix as unncessary middle men. Why go from content --> Hulu/Netflix --> Apple --> consumer? Apple already has relationships with content providers--time for some disintermediation. Now we realize though that the playing field isn't level if Apple is competing on its home court. In this situation, Apple is engaging in some anti-competitive policies as they clearly don't have to deal with their own 30% and consequently could easily undercut the competition. I am no legal scholar, and while I can confidantly describe this hypothetical as simultaneously "anti-competitive", acute and cunning I cannot pass judgement on its legality. Still for what it's worth, it would greatly surprise me to see the Department of Justice/FTC interfere while the "market" at question is so nascent.

On the Hot-Crazy Scale, Apple is in good shape.

Apple is jumping a bit to the crazy side on the hot-crazy scale (see video below) in demanding a 30% share of subcription revenues. You really need to have watched the video I linked to understand what I mean. Now we consumers get to decide if their products hot enough to withstand the backlash (if any). If recent iOS App Store vs. Android Market revenue numbers are any indication, $1.7 billion and $102 million respectively), they definitely are. Also remember that consumers aren't aware nor could they care less about Apple's 30% or Google's more publisher friendly response. All that they know is that the iPad recently added one-click subscriptions (sweet!), while true Android tablets are yet to exist. While Apple was kind enough to allow app-developers until June to institute the new in-app subscriptions, it also allows them to sell tens of millions of iPad2s before publishers/streamers react. By then, there will likely be too much gravity towards iOS for anyone to scare Apple into slimming down the 30% tax. (Prediction: if it gets lowered, I say 20% is the floor).

Make no mistake about it, the iPad and iOS are truly disruptive technologies. They're disrupting old media and new media alike.

In-app subscriptions will be a catalyst for Apple TV.

15 Feb 2011
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media tech words

Today Apple announced a new feature for iOS devices that has me all riled up: in-app subscriptions. Although there are a lot of contentious issues with Apple's subscription policies, the really exciting part is what this foreshadows. I think subscriptions will be huge--for Apple TV.

Media execs have a right to be upset over being forced to manage their subscriptions through Apple. Losing 30% of their revenue to Apple is no small matter. In addition to that, media companies miss out on highly valuable customer data and are often begrudgingly persuaded to price their products at Steve Job's whim.

While I understand the misgivings that media execs have, boy am I thankful that Apple is fighting for the consumer. Amazingly, this is what Apple has become. The leader of the people, the populist conglomerate. They fought the big mobile networks, they fought big record companies, and they will fight big media. [I'm not completely serious here, don't worry.] Subscriptions via iTunes [when will that name change] are just much simpler and easier to manage than traditional subscription systems. Two pet peeves that I have about the internet are "magically" being subscribed to email lists and having to separately sign into innumerable services. Apple gets rid of both (at least within their ecosystem).

Newspaper and magazine subscriptions have been a long time coming. But I see this more as an intermediary step. In my opinion, subscriptions are ultimately meant for video.

An Apple TV with support for apps and subscriptions would represent a true alternative to cable. Instead of channels, we would have apps. An HBO, Showtime, or ESPN (drool) could create "apps" that users subscribe to. These "apps" will have have on-demand content and access to the live feed. Maybe there will be a specific storefront for this "subscription video" and still call them channels. It really doesn't matter. Either way, the words "go to ESPN" will be understood all the same.

The most important part is that it is so beautifully simple. So simple that it would work. Simple for the users because subscriptions over iOS will enable the dream. This dream, of course, is having on-demand tv and choosing the channels we actually want to pay for. Simple because almost anything has a better UI and less lag than what cable boxes currently offer. Simple because the concepts are familiar: users would cycle through these "apps" like they cycle through channels.

Simple for the content providers because they won't need to cannibalize their revenue base to provide online video. They can charge iOS users the same amount they charge cable companies. In fact, with all the recent battles between networks and cable companies over distribution deals, networks can skip the middle man (per se--Apple will always get its 30%) and go straight to the consumer over iOS. Or at the very least, they can use it as leverage.

With the release of in-app subscriptions Apple has truly flexed its muscle in daring to command a 30% cut for providing the platform for media companies to distribute content. As other platforms finally release products and gain momentum, expect content providers to try to leverage them against Apple. In the near future (~2 years) however, also expect Apple not to budge as they are such a strong force in the market that its absurd to ignore them, regardless of whatever percent of sales Android ends up taking. In the meantime, I fully expect Apple to extend their content partnerships into video and turn Apple TV into their next big product.