Just when it seemed super-designer Jonathan Ive was fully in control of the happenings in Cupertino, along comes the new iTunes 10 with Ping. There are few companies on a consumer electronics product tear the likes of Apple, but it’s easy to forget the sheer market power they have exerted over the music and application download market with the cloud’s most powerful platform: iTunes. And with their 30% cut on every dollar that runs through the funnel, they are literally printing money.
So does it really matter that Ping 1.0 sucks? No. Does it matter that its promise alone is likely the deathblow to MySpace’s last great hope? No again. Does it matter that iTunes has more than 160 million users in 23 countries? Yes. And does it matter that every one of those accounts has a payment type (a credit card in most cases) associated with it? Hell, yes!
In an era where social networking sites struggle mightily to figure out a monetization strategy, it’s all about audience. If you’re Facebook, you can kill on advertising based on 500M users where 95% login monthly. You’re even big enough to create your own ecosystem that spawns billion-dollar companies like Zynga. Or if you’re Foursquare, you can still be trying to figure it out with *only* 3M users. And many are still building their audience while revving their product during Series A funding cycles.
But if you’re Apple, you just recruited a 160M strong sales force that earns you 30% on every sale. And best of all, the purchase mechanism has proven to be absolutely seamless/addictive. Billions of dollars of revenue 99¢ at a time – and you pay NOTHING for it, not even the paltry 2% affiliate commission available to resellers today. Layer one of the greatest ecommerce stories in history over the top of something as social (and personal) as music, and you’ve got a winner.
Let’s look at the facts: one-third of new iTunes upgrades have turned on Ping, which added up to more than 1 million users is less than 48 hours. And Ping is always right there in iTunes, so today’s underwhelmed user can be tomorrow’s rabid fan as soon as Feature X launches. Make no mistake, big brands like Apple and Facebook have much wider latitude with customer value propositions than your average startup.
So what does Apple need to do to sharpen up Ping? The first move is rollout the API love. The story of Apple being spurned by Facebook in the 11th hour over ‘onerous terms’ was quick news, but a Twitter hook would be instant success. Look at the best-of-the-best feature from clients like Brizzly, Twitterific, TweetDeck and the official Twitter client, and then cook ‘em right into the Ping UI. Personally, I'd kill every other Twitter client off all my devices and consolidate instantly. Originating a social media update on Ping that could be pushed out to Twitter, Facebook, Foursquare, Gowalla, etc. would be a powerful place to be.
Recommendation One: Apple should buy Twitter now for five billion, and Evan and the team should take the money.
Why: First, Evan Williams would be a massive compliment to Jobs in the coming years--perhaps even a succession candidate (at least on the product side). Second, social networking threatens to move Apple’s cheese, and Jobs don’t like anyone threatening his cheddar. Third, Twitter as a unifying brand across Apple’s product line would simply be an organic integration. (It’s been occurring anyway).
Once the Twitter integration is complete by whatever means necessary, Apple can easily set out to productize every music feature us tune geeks can think of – or already have an app for. What about SoundHound’s audio analysis tool that identifies artists and songs? What about Pandora’s or Last.fm’s streaming mixes (although one could argue the Radio feature in iTunes is a poor excuse)? What about music creation apps like Atlanta’s own LaDiDa or the latest darling Seline HD? And if you don’t think Apple’s spanky new billion-dollar data center in North Carolina won’t end up streaming pay-to-play content across devices and across the globe, then you underestimate those crazy California kids again…
It’s not the current state of Ping that should scare anyone in music; it’s the relentless pursuit of greatness from Cupertino. They will rev often and hard, and if Apple TV proves nothing else: they don’t kill off underperforming products – they remake them to be sexy years later (again, think monstrous data center streaming endless paid content). This ain’t gonna parallel the story of the Nexus One or Kin. Ping 1.0 may blow now, but remember when your poor iPhone was only 2G, or when your iPad didn’t have a camera? Oh wait…