Now with video: Forrester Announces the Death of iTunes again
Sigh. First it was Josh Bernoff at my corporate alma mater Forrester Research predicting the death of iTunes, now it is James Mcquivey. Daniel Eran Dilger does a nice job of taking apart James' argument again this year, so I won't do that again (see here if you want to read my article from last year). The basic story: just because the networks have rebelled doesn't mean Apple will fail to sell a ton of video content, any more than the availability of free TV prevented HBO from being hugely successful.
But just as I said last December about music, analysts have to be very careful about extrapolating proprietary data into any type of "Death of iTunes" scenario. After all, you're talking about the third largest retailer of music in the US. It's not like Apple has no clue about how to sell digital media. Further, just because Apple charges money for video when the networks don't doesn't mean they will fail. Apple's success in music was also discounted by analysts because it was competing against free P2P downloads. And somehow, DVDs have done very well competing against ad-supported free TV for about 20 years.
There's one big problem with free TV shows: consumers don't value them at all the same way they value things they pay money for. That's why the Motorola, the provider of seemingly free mobile phones to AT&T and other carriers, is replacing its CEO, while Apple, selling phones for list prices of $400, is making money hand over fist. No, it doesn't make sense to an those schooled in least-cost economics. But then again, who said consumer behavior had to make sense?
One final note: if you want a great reference to prove to you how little consumer behavior actually correlates with economics and other rational decision-making, read Robert Cialdini's classic book Influence: The Psychology of Persuasion
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Full disclosure: The author is long Apple Inc. at the time of writing.
But just as I said last December about music, analysts have to be very careful about extrapolating proprietary data into any type of "Death of iTunes" scenario. After all, you're talking about the third largest retailer of music in the US. It's not like Apple has no clue about how to sell digital media. Further, just because Apple charges money for video when the networks don't doesn't mean they will fail. Apple's success in music was also discounted by analysts because it was competing against free P2P downloads. And somehow, DVDs have done very well competing against ad-supported free TV for about 20 years.
There's one big problem with free TV shows: consumers don't value them at all the same way they value things they pay money for. That's why the Motorola, the provider of seemingly free mobile phones to AT&T and other carriers, is replacing its CEO, while Apple, selling phones for list prices of $400, is making money hand over fist. No, it doesn't make sense to an those schooled in least-cost economics. But then again, who said consumer behavior had to make sense?
One final note: if you want a great reference to prove to you how little consumer behavior actually correlates with economics and other rational decision-making, read Robert Cialdini's classic book Influence: The Psychology of Persuasion
.Full disclosure: The author is long Apple Inc. at the time of writing.
posted by Carl Howe at
11:18 AM
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