Brian's Brain

In my last post, I requested your ongoing feedback on this blog, and for you to not only punch holes in my views on various technology issues but also to offer up your own views on those same issues for public perusal. Ok, time to stoke the fire. My upcoming cover story in the June 9^th issue of EDN will be on the current status and future trends of the digital audio industry. In short; Apple versus everyone else! I've done some digging already and have a whole lot more research planned in advance of filing the first draft of the article mid-next month. I'd also like to incorporate what I learn from all of you in response to this post.

I previously shared some of my thoughts on this topic in a post I made to Maury's blog On The Verge, right after the MacWorld Expo and before Brian's Brain was born. It really cracks me up every time I see some clueless pundit attempt to blindly extrapolate past history in the Macintosh-versus-Windows wars into some prediction as to how iTunes-versus-Windows Media will play out. The key difference, in my mind, lies in the fact that inevitable hardware improvements and compelling new-and-improved software applications encourage new computer purchases every few years, thereby creating regular opportunities to switch. Conversely, it's abundantly obvious that the vast majority of consumers aren't beating down the doors for 5.1 channel high resolution audio a la DVD-Audio and SACD technology; they're perfectly content with 25-year-old Red Book Audio CD quality two-channel tunes (heavily lossy-compressed. I might add).

My point? Once someone's bought their audio CD, they'll only buy it again if it gets broken, scratched or is otherwise unplayable. Do what I do (rip them to a home media server then safely store them in a hall closet) and they last 'forever'. Once you've ripped them to a chosen format and bitrate, and tagged them with album, track, artist and other information, you'll strongly resist going through that tedious process again just so you can use an otherwise incompatible audio player. And if you buy your music from the iTunes Store (or from an alternative online merchant like Musicmatch, MSN Music, Napster, Sony Connect, or RealNetworks Harmony), the DRM lock puts an even stronger stranglehold on your options. What are you going to do, re-purchase all your iTunes tracks from Napster so you can switch from an iPod to a Nomad Zen Touch, or visa versa? C'mon.

At the beginning of this month, Apple announced that they'd passed the 300 million track download threshold for the iTunes Store. Sounds ominous for anyone competing with Apple, doesn't it? I'm not sure how to interpret this datapoint, though. I just checked the US Population Clock at the Census Bureau website, and it says 295,662,647 people. That's only one track per person in the US (and remember, the iTunes Store isn't a US-only phenomenon). If everyone in the US had one iTunes track in their possession, I'd argue that Apple had done one heck of a job with marketing themselves...but that they didn't have a defensible lock on consumers. One track is only $1 to replace, after all. Conversely, what if every iTunes Store customer is like my wife and I, with a 10,000 track library (in my case, near-exclusively ripped from audio CDs we own, with a small percentage of music bought and downloaded from online sites)? 300 million tracks divided by 10,000 tracks per person equals only 30,000 customers; again, not a significant enough percentage of the US population to guarantee long-term success.

My guess, though, is that reality is somewhere in-between those two extremes....there are much more than 30,000 iTunes Store customers, and each of them on average has just enough purchased and DRM-locked content in their possession that their wallets (and spouses) would mightily complain if they tried to kick their iPod habits. Therefore my comment in the On The Verge blog post that 'Microsoft and its partners such as Creative Labs and iRiver had better get moving, and soon'. I see three ways that they can turn the tide:

Sigh.....the 7,000 character limitation bit me again. See iPod Predictions II for the rest of this post.