Apple, iPods, Network Effects & Interoperability

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4 Responses

  1. Chris says:

    Currently there are little or no reasons to interoperate with other systems so Apple can get away with propreitary systems. Once all-in-one sysetms become more popular (DVRs, Tivos, phones,PDAs etc) Apple will start paying a price for not playing nice with everyone else.

  2. jeff says:

    It was conservative corporate cultutre that froze out the mac , spilling over to home choice buying to be compatable with the work pc etc.

    Different market, different buyers different drivers (thank goodness)

  3. Frank says:

    I have to say, I don’t get it either. You’d think that they’d want some sort of interoperability–or at least a diversity of music sources other than iTunes.

    My only guess is that Apple is trying to be the Amazon of music sales. Amazon leveraged a dominant distributor position into good relative “bargaining power” with big publishers. Therefore, they got to force many copyright owners to agree to innovations like “Look Inside the Book” (See Wired article “The Great Library of Amazonia), or “used book” sales on the same page as new book sales.

    Apple appears to want to become the dominant distributor, so it can force the music industry into lower prices….or at least get a bigger “cut” of sales. There have been some dust-ups over this already–apparently the industry wants to sell at higher, various prices (like $2 for the new single, $1.19 for old backlist stuff) than Apple’s $1-for-all scheme.

    So if there’s one good thing about Apple’s exploitation of network effects, it’s their potential to reduce the extraordinary market power the recording industry cartel has achieved via mergers (4 companies now own over 90% of songs). Just think of Apple as “single payer music care,” driving down music prices the way single-payer health care systems monopsonistically reduce health costs. On the other hand, who knows how much of the price reduction goes to consumers, and how much to Apple.

  4. bill says:

    Other analogies for Apple:

    The iPod is the new MTV.

    Apple is the Microsoft.