Music is mainly purchased through aggregators like iTunes and Spotify who charge a hefty tariff. You need a comprehensive catalog to convince users to commit to a payment relationship.
In-app payments on iOS and Android are the one place where paid snacks exist at scale. They have been wildly successful, quickly becoming the dominant business model for games, replacing up-front payments and banner ads. (There are individual games that generate over one billion dollars per year from in-app payments.) Outside of games, entrepreneurs have started building interesting new products that wouldn’t have been viable without in-app payments.
And yet, under Ballmer, everyone at Apple would be working so hard, and be making so much money, both for themselves and for Apple’s shareholders, that they would ensure that Apple never again reinvents consumer computing.
See, if Steve Ballmer were the CEO, Apple would make more money, but they would slowly but surely become irrelevant. Just like Microsoft.
Ballmer did exactly what our capitalist system dictate he do: he maximized profits to the benefit of Microsoft’s shareholders. The implications of suggesting he was a failure are far more profound than most of his many critics likely realize.
Lastly, the disruption of the TV will empower a new entertainment platform like no other. When you think about devices like smartphones, tablets, and PCs, we understand them to be largely computing platforms. Of course, elements of entertainment take place, but so do levels of creativity and productivity. What the three platforms I mentioned have in common from a computing perspective is a software development kit (SDK), enabling software developers to write relevant applications for these computing platforms. What excites me about the disruption of the TV is the prospect of an SDK for the TV. It would transform the TV, for the first time ever, into a platform that smart developers can write unique new applications for. We have not yet even scratched the surface of this idea. Those who have the most to lose when TV gets disrupted need not fear piracy; they should fear the SDK. When developers can take advantage of a platform, the possibilities are endless.
Fear the SDK.
Netflix has long puzzled the traditional TV industry by refusing to give out ratings for its original shows, despite the fact that House of Cards, in particular, seemed to have turned into a hit, both loved by critics and audiences alike. But the company has been dismissive of this kind of feedback, with Chief Content Officer Ted Sarandos telling me earlier this year that the absolute number of people who tune into a single episode doesn’t matter all that much. “When you say 10 million people watch a show, that really doesn’t tell you anything,” he said when I met him at an industry conference in February. Instead, Netflix is looking to cultivate dedicated niche audiences, and is paying very close attention to the ways its subscribers are interacting with each piece of content. If they watch en episode of a show, are they opting to watch the second one as well? If they go from watching a movie to a TV show episode, does it fit into a pattern that lets you predict about what they’re going to watch next?