Will you buy potatoes on the Net ?

Once again we are hearing rumblings that online sales are killing brick-and-mortar sales. That story, if you remember, fueled the dotcom boom, which busted soon after.

Now many years later, people are more net savvy, there is a lot of stuff folks can buy online, but for a variety of reasons including technical and cultural, it may be again premature to talk about the imminent demise of the brick-and-mortar store.

Movie Gallery Inc., the second-largest U.S. video-rental chain, sought bankruptcy protection from creditors, citing increased competition from Blockbuster Inc. and Netflix Inc., according to a report from Bloomberg.

The point here is that Movie Gallery may have lost out to guys like Netflix, which save you the walk to a Movie Gallery store by letting you select online from a large repertoire. But the delivery of the DVDs is still done offline to the customer. So it is not a case of a brick-and-mortar play losing out to a pure online play.

A pure online play offering high quality, low-cost video downloads alone may not be as successful as Netflix, because that assumes large Internet bandwidth pipes to the home, which are not there yet across the US, and less so around the world.

In music too, don’t expect online music to wipe out the CD business. It is true that online music stores provide access to a much larger repertoire than a large brick-and mortar store can ever offer. But after the first flush of excitement over quick gratification, folks are going to take a long hard look at sound quality.

They will not only look at encoding bit rates, but at the encoding formats for downloaded music. These formats like MP3 are lossy, because to make files sizes smaller and manageable, they lop out a lot of music information that you would ordinarily find on CDs.

A lot of folks may go back to buying CDs if only because they offer better sound quality. A not-so-fringe benefit is that currently most CDs are not covered by DRM (digital rights management). I got back a week ago to buying CDs, after a downloading frenzy. The downloaded MP3 files were okay on a portable digital music player like an iPod, but the lossy character of the format really showed when the file was played on a home music system.

Finally, would folks buy potatoes and other groceries on the Net ?

I doubt it. Not a lot of folks buy vegetables without feeling them for solidity, consistency, and to spot out for those pernicious insects that tend to get to vegetables. They would rather go to the nearby store, or call up the store that has delivered reliably, quickly, and top quality stuff over the years. What is the buyer’s incentive to shift to buying online ?

Would folks buy art online, after taking a look at digitized images of a painting or sculpture ? Would die-hard shoppers give up the real-world shopping experience for clicks on a computer ?

Some categories like packed and branded products, we have bought and tried before, will most probably be purchased online. Coke cans for example, but certainly not designer wear, or furniture. Well known books by authors with impeccable credentials may be bought online if the store nearby does not stock it. Most people would still like to flick through the pages of a new book before they buy it.

Some of the conditions that proved the prophets of the online retail (etail) boom wrong in the late 1990s still hold good.

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Universal Music short on ideas to take on iTunes

Universal Music has plans to allow vendors of digital music players to bundle unlimited downloads of its music for free to users, according to a report in BusinessWeek.

Universal will make its money by charging the device makers for the monthly subscriptions to the music. Makers of music players and mobile phones may then have a decent chance to overthrow iPod’s dominance of the digital music player market, as they can package downloads from Universal’s vast inventory of titles, as well as potentially from Sony BMG Music Entertainment and Warner Music Group, the report suggests.

But the deal is not likely to be a threat to the iPod any time soon. I doubt users are going to buy a second tier device just for the free music, even if it is “all you can eat”. Music fans want the entire experience – that is a good player with excellent music.

Currently the iPod is perceived to be the best player, and a strong iconic brand as well. Users have put up with a lot of crap from Apple Inc., including its various proprietary locks, but that is because they love the iPod.

Consider the figures. Apple had sold over 100 million iPods from the product’s launch in 2001 to April this year. In contrast, for all its marketing muscle, Microsoft Corp. has sold only 1.2 million units of its Zune since November. Will free music downloads change that ? I doubt it.

It is also not clear whether Universal’s Total Music will be free of DRM (digital rights management). If it is, the music is more likely to be downloaded for Total Music devices, and end up getting played by iPods users who never paid for the devices or the music. To avoid that, device makers will certainly insist on some kind of DRM. That will most likely mean that this music won’t play on iPods, and yes the non-DRM music on iTunes will not play on these devices. Once again the outcome will be fragmentation and chaos.

Universal, Sony BMG, and Warner Music are better off setting up an online store for non-DRM music of their own, that offers the basement rates the companies are willing to offer device makers. That way, like eMusic, another digital music download service, the music labels will have access to iPod users as well as users of other devices.

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New Zune players to compete with iPod

Microsoft Corp. unveiled three new models of its Zune player, including two versions with flash, which will ship November for the holiday season.

The company has also launched an online music community called Zune Social. Taking a leaf from Apple Inc.’s iTunes and Amazon.com’s new digital music store, it is also offering more than 1 million songs on its Zune Marketplace that are not protected by DRM (digital rights management).

Microsoft however has an uphill task battling against the iPod. The company has reported sales of 1.2 million Zune devices since November last year. That is a lot less than a total of 100 million iPods sold from 2001 to April this year.

The company announced three new models of the Zune portable digital media players: a black Zune 80GB hard-drive model with an estimated retail price of US$249.99; an ultraportable Zune 4GB which is expected to retail at $149.99; and a Zune 8GB, costing $199.99. The last two models are flash models.

The new Zune devices feature the Zune Pad navigation button, with its touch-sensitive surface, Microsoft said in a statement late Tuesday.

Consumers can flick their thumbs over the pad to fly through lists of songs or albums or to fast-forward through picture slide shows or videos, it said. For those who need to pause, advance or adjust the volume on the device without looking, they can also navigate the Zune Pad using physical cues by pressing on the four sides or the center of the button to adjust the volume or choose the next track, according to Microsoft.

The new devices also offer wireless synchronization over the home wireless network, and new software that automatically imports broadcast content recorded on Microsoft Windows Media Center for Windows Vista Home Premium or Ultimate, so consumers can sync them onto their Zune media player and watch them on the bus, in their car or wherever they want when they’re out and about, Microsoft said.

Existing Zune owners will automatically receive new software features, the redesigned PC and device software and access to the new Zune Marketplace when the products and software are released to the public in mid-November.

The new Zune players have some nice new additions, but is not a dramatic makeover from the earlier Zune devices, according to analysts. Zune also does not have as strong a brand as the iPod.

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Amazon.com gets onto MP3 music bandwagon

Amazon.com Inc. has launched Public Beta of Amazon MP3, a digital music store, signaling competition for Apple Inc.’s iTunes, and eMusic, the two big players in the digital music downloads business.

While iTunes predominantly uses a proprietary DRM (digital rights management) for its music downloads, eMusic offers music downloads in the MP3 format, without DRM protection. Downloads without DRM come without copy restrictions and controls, and can be played on any audio device supporting the popular MP3 format.

Amazon MP3 has over 2 million songs from more than 180,000 artists represented by over 20,000 major and independent labels, the company said in a statement. The downloaded files can be played on any audio device, Amazon said on Tuesday.

Most songs are priced from 89 cents to 99 cents, with more than 1 million of the 2 million songs priced at 89 cents, the company said. Songs on Amazon MP3 are encoded at 256 kilobits per second, which gives customers high audio quality at a manageable file size, according to Amazon.com.

Most large music labels have shied away from MP3 downloads, which is the reason why eMusic sells mainly music from independent labels. To make headway in this market, Amazon.com will have to introduce music guides and expert reviews to help users choose good quality music. The term independent labels has often come to mean amateurish music generated by out-of-garage operations, a problem many users encounter currently on eMusic.

Only Universal Music Group and EMI Music Publishing, among the big labels, are currently offering music at the Amazon.com store.

Amazon.com announced in May that it would open an online digital music store later this year, and also said that the music would be free of DRM controls. The company also invested in August in a music download firm called Amie Street Inc.

The MP3 music can be downloaded from Amazon here.

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eMusic’s foray into audiobooks may help aspiring writers

eMusic’s entry into the audiobooks market may help aspiring writers get an audience, though most of the top book publishing houses may stay away from the digital download site.

Starting September 18, audiobooks will be available from eMusic at a price of US$9.99, which is lower than the price for audiobooks at competitor Audible Inc. The music download site will likely try to further offer bargain prices on its audiobooks as it has done with its music downloads.

As eMusic uses the MP3 format and does not support DRM (digital rights management), it will very probably not have support from most of the big publishing companies, a problem that it faced with most of the large music labels, which shied away from offering their music on its site.

eMusic’s strategy around MP3 and DRM did not hurt the company. It is now the second largest vendor of online music downloads after Apple’s iTunes. That was because eMusic focused on small labels and aspiring musicians who were ready to trade DRM for an opportunity to feature on a popular site. Its low price also attracted a large number of users.

Apple Computer Inc. and Audible Inc., which is a large online site for downloading audiobooks, both use DRM technology. The DRM in downloads from iTunes blocks their use in devices other than the iPOD or iPhone.

Opposed for ideological reasons by a large section of Internet users, DRM is also found to be cumbersome by many who would like to rip CDs as often as they need to, and play the downloads on a variety of devices. Music companies, in particular, are seen to be using the online download route to curb the misuse of purchased music. Some of these restrictions are a far cry from the freedom still available to users to rip and mix, and copy to various devices tracks from traditional music CDs.

eMusic may hence be planning a re-run of its strategy with music. They are likely to aim at smaller publishers or aspiring authors some of whom may to start with just focus on audiobooks, rather than more expensive print editions of their books. eMusic has emerged as a filter for people looking for music, and now audiobooks, beyond what is sold by the big brands.

As I mentioned in an earlier blog post, while promoting lesser known artists, and now authors, eMusic will have to do a much better job than it is doing now in selecting talent, making its recommendations, and generally playing as a mentor to its customers.

eMusic will offer more than a thousand audiobooks from major audiobook publishers including Blackstone Audio, Hachette, Naxos Audiobooks, Penguin and Random House, with hundreds more to be added each week, it said in a statement. Subscribers will find regular reviews of the books by critics from top newspapers and magazines, it added.

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iPod and the end of conversation

I am walking down a busy street, when I hear someone say “you jerk are coming in my way”. I turn around ready to do battle, only to be terribly disappointed to find that this lone man is busy talking on his mobile phone. I enter the local MacDonald’s and there is a couple with three kids. The man and his wife each engrossed in conversation, not with each other, but on their mobile phones.

Funny we talk so much to folks at a distance, without a word for those around us.

Can’t blame folks for this. There is so much you can do with your handheld devices that you have to prioritize your time. Do I plug in my earphones to hear music or a an audio download, or listen to the wife whining endlessly about household problems. Or do I pick up the BlackBerry and catch up with my email, or do I call up a friend about the car he wanted to sell, or the latest videos in the mall, or…….

The options are limitless. And Apple Computer Inc. just added to those possibilities of cutting out socializing by adding video games to its new line of iPod Nano devices. The new Nano, available in five colors, features a 2.5-inch, or 6.4-centimeter, screen for watching movies and playing games like a Sudoko program developed by Electronic Arts, said the International Herald Tribune in a report on Wednesday.

Can’t blame Apple for putting out attractive new products in the market. It is not the job of companies to worry about your wife and children and friends getting cut out of your new electronic life. The popular wisdom is that they have to be driven by the profit motive, even if that means us walking around wired with a variety of gadgets exchanging information with one another and with gadgets around the world on wireless technologies like Wi-Fi or cellular.

Time to tame the beast ? You will have to find the answer. I have got to run and watch this super movie I downloaded on my Nano, after I have grabbed it from my four-year old daughter. Get off the BlackBerry son, I am expecting a call !

Instant Happiness

Fie those who don’t change with the times; who will cling to their youthful dreams and precepts, who still worry about the meaning of life, about the disappearance of the decent and civil in human society, about ennui, about……..

For change is upon you, a change begotten, we are told, by the magic of capitalism and materialism. Too long has your soul, your real soul, been starved of experiences that matter, of personal music on an iPOD, of instant access to people and things the world over, of jungle trips in five-star luxury, of the opportunity to travel the world in safety and luxury organized by your travel agency.

So drop your antiquated dreams that served you badly, only generating anxiety and an existential angst, drop those authors like Sartre, Camus, Marx, or Heidegger. They have had their time. They never changed the world. It was capitalism that changed the world. It was capitalism that made jeans – that symbol of counter-culture protest in the 1950s and 1960s – an expensive perk of corporate success. So what if they changed the meaning of the jeans from a counter-culture protest to a more manageable and colorless symbol of something casual to wear with your Nike shoes ?

Let your hair down and enjoy the fruits of the revolution laid out for you by Madison Avenue. You are no longer into buying goods but experiences, and life styles. If your existential concerns still nag you, you could take a shot at instant spirituality. You don’t have to leave your job, or forego your expensive car, and it is exotic. And by the way, your heart need not bleed for the poor, to go to heaven. That was a Marxist hangover, in fact a proof that Marxism never outgrew its Judaic Christian messianic roots.