2008-06-03

Apple is Now a Media Company


Disclaimer: the author of this post (me) owns Apple shares and plans on buying more.
 
Content Rules
Move over computers, cell phones and iPods, Apple is now a media company. Apple is the biggest source of purchased music in the United States. Apple is now even selling TV shows on iTunes France! Merde!
 
Pipes are OK, Pipes with Content are Better
A cell phone and cable companies know, there is some money in providing the pipes, but there is perhaps more money in providing content. All the major Canadian cable companies (Rogers, Cogeco and Vidéotron) and Bell (Satellite) have major investments in TV stations, radio and print media. They are media companies, no doubt.
 
The Virtual TV Station
Now Apple is basically doing the same. Whether you watch iTunes downloaded TV shows on your computer, TV (via Apple TV) or iPod, Apple takes a cut. Apple decides what content to make available, what to promote and what to charge. Same goes for music and movies.
 
Vertical Media Intergration with Virtigo
Granted, the vertical integration of Apple has its limits. You still need an Internet access. Preferably one that is relatively fast. So don't sell you shares of big media just yet (assuming they drank the vertical integration kool aid a few years ago). But since most (the vast majority?) of countries have domestic ownership requirements for cable and cell phone providers (i.e. broadband Internet providers), Apple has found a way to be an international media company without contravening those rules.
 
Publishing
Heck, even publishing has domestic ownership requirements (like in Canada). But Apple and its iTunes may soon leverage tablet computers to legally enter that field as well.
 
Anoying Governments and Their Ever Changing Laws
This could change as laws do from time to time. However, I doubt the government of Canada (or Quebec), for example, could ban iTunes and survive the wrath of the plebs, patriotic or not.
 
Steve Jobs Read the Text Book
And Apple has managed a partial vertical integration in the United States, France, United Kingdom, Germany, Ireland and Austria. These early adopter nations have telecoms companies that fork over part of their subscriber fees to Apple in exchange for iPhone exclusivity. In theory that is a major coup. In practice, Apple is still just selling phones with defered payments instead of the money up front. Apple also attempted vertical integration with WiFi in Starbucks, but to date that is more of a gimmick (and Apple doesn't own Starbucks, yet).
 
Vertical Integration Coup
A real coup would be limiting iTunes to one broadband Internet provider, in, for example, Russia, and reaping a share of monthly Internet subscriptions fees and a profit from each purchase of a song, TV show, movie etc...
 
Local is Often Better
Notwistanding government ownership requirements, there are major benefits to being local. Retail has few regulatory limits to world domination and yet there are no worldwide retail giants. When it comes to products, Coke and Pepsi are exceptions. There are very few world brands, even fewer world stores. If Apple was a Quebec company, for example, would it have the freeking Euro symbol appear when you press the dollar sign on the iPod touch's French Canadian keybord? No. Stupid mistakes like that can be costlyl and give locals a giant advantage (such as Bell which actually makes its music and Internet movie rentals incompatible with iPods and MacIntosh computers).

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