A delightful conspiracy
By Matt RosenbergThe United States is suing Apple and several major book publishers in an antitrust action. The complaint is straightforward: Apple and the publishers conspired to increase profits by fundamentally changing how books are sold. Instead of the wholesaler-retailer system, where the final seller adds the markup of his choice, Apple would be a sales agent charging a fixed markup and the publishers would set prices. Because the publishers and Apple worked together on the pricing framework, they avoided free market competition and have sustained otherwise-untenable prices.
It strikes me that in the end, the public may benefit from this conspiracy. The government alleges, “This change in business model would not have occurred without the conspiracy among the Defendants.” I say we’ll be better off with an agency model for selling digital books—as long as there’s no ongoing price fixing, of course.
The wholesaler-retailer model is a poor fit for digital sales. There is no one managing factories and warehouses. No one has to pay up-front for inventory, then see how much he can sell it for. The “local” market reaches as far as your copyright laws. The model just doesn’t apply.
I see the digital sales world as having three basic roles: creator, formatter-distributor, and recommender-promotor. Creators write a story or record a song, but the work needs to be fixed in a useful format and sold. The formatter-distributor provides the format (if competing standards exist) and makes the output available for sale. A recommender-promotor markets the product, or helps consumers find products they want.
We can quibble about my model, but getting it exactly right isn’t important here. What matters is that the public benefits most when creators have market power. The goal is the continued existence of the written word, right? The formatter-distributor is critical, but is only a means to an end. Perhaps 200 years from now the words of stories will be loaded directly into our brains, to be experienced without using our eyes to read them. Amazon Kindles will be long gone, but we will still need writers. If creation loses its value because of greedy intermediaries, the public will suffer grievous harm. Creators must publish or perish on their own terms.
So yes, the conspiracy at issue here seems truly disgusting. But if it turns out to be the thing that saved us from Amazon controlling the entire book industry, we should all be grateful for it. I only hope that any resolution or settlement preserves the agency model while eliminating the price fixing.
iTV Touch?
By Matt RosenbergMy response to the recent noise about Apple revolutionizing the TV: Apple finally brought computing to your fingertips. Why would they send it back to the other side of the room?
A big screen spewing impersonal content is the opposite of an iPad. For a shared computing experience, AirPlay Mirroring is a great solution. What exactly is this great need that people desperately want Apple to meet?
I don’t believe anyone’s television complaints are about functionality. The issue is content availability. When most movies and shows can be licensed for streaming at reasonable cost, providing a good access mechanism will be the easy part. If it ever happens, TVs will still be just another screen anyway.
Schism
By Matt RosenbergApple’s shifts and transitions over the last decade were traumatic for many. With each, there was outcry from those who love Apple’s products but could not keep up with Apple’s latest offerings. As disruptive as the moves to Mac OS X and to Intel were, I don’t think they produced a schism like iCloud will.
Before, keeping up was mostly about cost. Sometimes a critical application was orphaned on the old platform, and upgrading was only possible once its functionality became available elsewhere. Mostly, as long as you could afford a new Mac or a new iPhone you could enjoy the latest Apple goodness.
With iCloud, it’s not enough just to buy a new gadget. You need connectivity: broadband connectivity, preferably without meaningful usage limits. You may get a breath of iCloud without broadband – push notifications, email, and calendars don’t need a fat pipe – but you will not gain access to the inner sanctum.
Apple are not just aware of this – it’s at the center of their plans. Consider Lion’s sole official upgrade method: a 4 gigabyte download. According to Steve Jobs, there will be no other way. That’s tough for a lot of people in the United States and Canada. With large land masses and limited provider choices, broadband is often unavailable, limited, or absurdly cost-prohibitive. A substantial number of existing and potential Apple customers cannot fully participate in this new era of computing.
Back to the outcry: I have had difficulty responding to people who complain about an Apple transition. I searched for a way to say, “if you can’t afford it, you’re not a customer Apple wants.” But that seemed to paint Apple with undeserved malice. Seeing the possibilities of iCloud, I think I understand better. As absurd as it sounds about a public company, I don’t think profits are the ultimate goal for Apple (by which I here mean Steve Jobs). Profits are the means to execute a vision. Apple will not turn aside or wait for stragglers. A critical mass of customers for their vision is finally available, and the day has been seized.
The rest of the world eventually catches up to the Apple Way. Broadband availability and service levels continue to grow (though the entry price doesn’t seem to drop much). Most of those left behind now will get to rejoin eventually. For now, unlike with Apple’s past transitions and disruptions, iCloud will create a tall divide between those happily skipping towards the future and those who cannot.
Soul
By Jesse TaylorI don’t know about you, but when I watched the WWDC 2011 keynote from Monday, Steve was looking like he’d been through hell and back. From personal experience, I can tell you the treatments for whatever ailment he might have, is definitely full of crazy “we’re going to bring you to the brink of death” type procedures that would tear the toughest of people down. What does it say about the CEO of a company, to go out and give a presentation to the world and in that condition? (not to mention to put up with the Cupertino City Council the next day.) It’s something that Steve mentions during Keynotes when thanking the individuals at Apple, Customers, and Developers at large: it’s called Soul. Hat’s off to you Sir, we’re all praying for you.
