Technology and content rowing the same boat

The first quarter 2011 Apple made a profit of $26.74 billion $6 billion. An impressive 17% of that is from their latest product, the iPad. Having followed Apple”s reports for some years it struck me just how unimportant content distribution is for them. In economic terms at least. 

The iTunes store counts for only 5% of Apple”s over all profit revenue. In the light of that fact, I have a hard time understanding why they are upsetting content providers by increasing the areas where they take a cut of the revenue.

It”s obvious that Apple, and other tech companies, are using content to sell hardware. And damn, they are good at making us buy new products each and every year.

Hook and bait

It”s obvious that the main objective of dealing with content for Apple, and tech companies in general, is to boost hardware sales. These days you can”t hear a mobile executive talk without mentioning the importance of building a ecosystems for content to sell handsets.

The fisherman needs both a hook and bait to catch a fish. The fish is too smart to go for a hook without bait, like customers with tech products. And the bait without a hook is a fiesta for the fish rather than the fisherman, kind of like being a fish in the bay of pirates.

When looking at the media landscape we can see that everybody want to be the hook. The hooks are owning the customer and the ecosystem in which they interact. That means they can control price, pace of releases and the right to set the . 

The media industries were used to being the hooks. That changed many years ago. Fair enough I think. It’s just about creating those alternative hooks of income streams yourself.

To many the question of being a hook or bait is emotional. Everybody sees their work as the center of the media landscape and want the rest to obey to their wills.

Stop making life hard for each other

Even though content distribution stand for a small percentage of Apple”s overall profit revenue they are making life hard for content producers by changing the rules of the game. Most recently they announced that for publishing companies to sell their subscriptions inside applications, they will take a 30% cut. It”s still uncertain whether that counts for music apps like Spotify as well.

The content side is making it equally hard for tech companies that want to develop new media platforms. Music labels, film studios and book publishers can arguably be said to make it a nightmare to license their products. This instead of acknowledging developers and engineers to be their best buddies to create new ways of providing content to customers, and eventually help them make money they badly need.

Interdependant relationship

We need to understand that technology is nothing without content and content would be nothing without technology. Technology and content for sure has an interdependent relationship.

For a long time the content producers had the upper hand, right now the technology providers act like they have it. But in the long run they both need to cooperate to keep prospering.

A comment