Content As A Service

Alan McGlade:

Steve Jobs Was Wrong -- Consumers Want To Rent Their Music, Not Own It

It's taken me a while to wrap my head around services like Rdio, Spotify, and Beats. I saw the value in them, but they didn't appeal to me. Why would someone want to rent their music? Here is what I finally realized. We've always rented music. We've always rented movies. We've always rented games. The purchasing system has just changed.

Let's look at movies. When I was growing up, we rented VHS tapes from Blockbuster or purchased them from a local retailer. Do I have any of those now? Even if I did have them, I would still need a VHS player. Even if I had a VHS player, I'd need a TV with S-Video or RCA inputs. The TV I bought recently only has HDMI. Did I own the VHS tapes I purchased? Sure, for a time. They are useless to me now. Even outside of the lack of playability, I wouldn't get to enjoy the HD versions. Our VHS copies didn't last forever. New technology came along, and we paid to get new copies.

Let's look at games. I purchased a lot of games growing up. I owned a NES, Genesis, Dreamcast, N64, PS1, PS2, GameCube, and Xbox. If I had kept all my systems and my games, would I still be able to play them? Some of them would probably still be working, but a lot of them would have died off by now. I paid $50 for a game, but that didn't promise me a lifetime of enjoying that game. I played it for a season and then I moved on.

We've actually been doing it with music for years. How's that tape collection working out for you? What about that CD collection? Can you play that in your new Mac that doesn't have a CD player? Even digital media has a shelf life. We've moved from 128k songs from iTunes with DRM to 256 AAC iTunes songs. Do you think this is the end for digital music quality? As time goes along, formats will change and devices will change. You might own a lower quality version, but what about the new HD format that goes along with those fancy new bluetooth headphones that someone is probably working on? You'll want to upgrade to new copies of your favorite albums.

Content as a Service (CaaS) is the future. I think Netflix really primed the pump for people being willing to pay for a monthly content access fee. At $9/mo, you get a decent back catalog of movies, a really nice TV show inventory, and a really nice selection of kids shows. Why do I care about owning a movie that I'll watch one time? Why do I need to own season 3 of Breaking Bad? I'll probably watch it 1 time. CaaS is also key for discoverability. In my testing of the Beats Music service, I've discovered some new artists based on some of the recommendations. I probably would not drop $10 on an album that Beats recommends to me, but I'll certainly add it to my library and listen to it later. I know that if I hate it, I am only out a little time. With Netflix, if a movie stinks, I can turn it off. If I rent it from iTunes, I'll be out the $5. A-la-cart pricing for media basically kills discoverability. People will go with what is safe when they are having to make a conscious decision about what to buy.

I've been starting to read comics in the past few weeks and one of the things I've discovered is that comics are expensive. Some new releases on ComiXology are $4.99 for a comic that will take me 20 minutes to read. If the series is on issue 20, I know that it would take me $100 to catch up on top of the ongoing fee for new issues. I signed up for Marvel Unlimited and was given access to a large digital library of comics. At $9.99/month or $69/year, I can read as much as I want without fear of going broke.

If the CaaS model spreads to every industry (books, first run movies, etc), you won't have to worry about missing out on new formats or features. Your monthly fee gives you access to that.

As content creators, we like to think that our work stands forever. Sadly, it doesn't. New content comes along and replaces it. People simply want to be entertained. Whether its new music, new movies or new comics, people want entertainment. Subscription based pricing allows for better discoverability, the ability to catch up on old content without spending a fortune, and hopefully more fans of our work. At the time, Steve Jobs was right when he said consumers want to own their music. Like everything in life, things have changed. People now want a buffet of content for a reasonable monthly fee.