It’s only my first day using Lala and I’m totally hooked!  The business model and the tight execution is very impressive.  The ownership and delivery model is simple, yet elegant:

• Download DRM-free MP3s AND get unlimited right-to-stream for 90c per song
• OR pay 10c per song for right-to-stream only
• You can import your entire existing library and gain right-to-stream for every song, regardless of how you obtained it
• You get to 1 full play for any songs you don’t own

If and when they add streaming over cellular, it’ll make an absolute killer app…(commentary about wireless capacity to come)

Whether it is Lala, or some other venture, I think this is the first step towards content-as-a-service.  I’ve written before that the proper content business model of the future is selling a right-to-access, not a transfer-of-possession.  Commercial transactions around the possession of a good is an archaic metaphor to physical goods, and it worked well back in the days when physical delivery was the primary means of distribution.

More to come.

The new iPod/iPhone is the funnest ever, even challenging the DS and PSP.  Who would have thought that an Apple product would threaten Nintendo and Sony?  Or that video game consoles will take on DVRs, and even move into content distribution to compete against the likes of Netflix?  Xbox Live and Playstation Network are getting more social, brewing a new kind of “living room social networking” which budge into Facebook and Myspace territory.  Now Rockband is selling millions of 99c tracks.  And Wii Speak is pushing VOIP on to the console.

Unforeseen competition

The nature of competition is changing…and you can’t quite tell who will be your competitor tomorrow.  In the simpler days, determining your competition was a matter of identity.  If you sell PCs, then your competitors were the other guys who sell PCs.  But these days, you are more likely to get killed by substitute competition than direct competition.

Today, many once disparate products really perform one form of computing or another.

Xboxes, mobile phones, PCs, DVRs, while these were all originally different devices serving different use cases, their capabilities have expanded dramatically.  And so with a bit of excess functionality (really excess computational capacity) devices can easily span to neighboring uses.

Let there be light…and electronics

Jeff Bezo’s TED Talk on the evolution of electronics is an interesting comparison.  Originally, electricity was brought to our homes by the same guys who made light bulbs: GE.  They fronted the capital to lay down the first electric grid…but they didn’t have electronics in mind.  To them, they were bringing lighting, not electronics into homes.  But innovators caught on to something, and said “wait, this stuff isn’t just good for lighting, but is a generic resource for may other uses!” (dramatization). And thus came all the non-light bulb electronics as we know it today.  This is a kind of “over-the-top” innovation, because the new products are agnostic to the underlying platform…that is, the electricity delivery infrastructure.  The same horizontal shift is happening today.  With the multitude of computing devices already in place in people’s living rooms, offices, and pockets, innovators are wondering “wait, this stuff isn’t just good for gaming/productivity/voice/video, but is a generic resource for many other uses!”

The three settings of computing

Most of the computing activities which we perform are inherently cross-setting…having different incarnations on the desk (PC), the living room (consoles and set-top boxes), and on the go (mobiles).  When we talk about IMing and social networking, we need to stop picturing ourselves hunched over a desktop/laptop, and wonder if that activity would work in our palms or in the living room.  Same with voice, and gaming, and every single other use-case.   We can look at every computing activity and ask whether it makes sense in a different usage setting, and thus different form-factor.

There is already a lot of energy being focused on shifting common desktop activities on to the mobile, e.g., email, social networking, surfing, and even light gaming.  But I find the living room setting to be the undervalued 3rd setting—though that isn’t true of gaming console makers themselves, who are plenty aware of the opportunity.  With all these computer-like boxes already deployed in millions of homes with excess computational resources, one must ask:

Why do people rarely check email, fetch the news on websites, get the weather and traffic via their TVs in the living room?  After all, pre-internet, the livingroom+TV setting was the primary conduit for this information.

Really a small problem

TVs were always made for long-range viewing in a open & shared space.  We’ve long had the ability to make tiny TVs for a more personal desk-top experience, yet that form factor never took off pre-internet, so it couldn’t have been a technological constraint.   I think the livingroom+TV setup is infact the most natural way for us to casually engage in lightweight content.  If the livingroom+TV setting feels more natural, then why did these activities shift over to the desktop?

I suspect that while the internet provides the advantage information on-demand vs on-a-schedule, it also requires user input.  However our approach to user input, the keyboard-mouse combo, requires a resting surface and fixed objects!  That complete kills the whole open space + free roaming usage model of livingroom+TV.  The other input option is this TV remote, which fails in an entirely different way.

I believe livingroom computing is big, and that the one unsolved hurdle is small.  All it takes is a good user-input model!

…and a good onscreen UI too, though consoles are already doing a decent job.

My friend’s post made me ponder what brick and mortar record stores will look like in a future dominated by digital distribution (if brick and mortar still exist…)   I find walking through a good record store to be a enjoyable experience, with images and sounds passively hitting the senses as I wander around premise.  By passive, I mean one is bombarded by content not specifically requested.  Various songs are playing across different corners or rooms; and the walls and shelves are filled with visual content.  All of this is capable of passively influencing consumer behavior.  Contrast this with online stores today, where content is actively pulled via a search bar or preview list.  Without passive influence, I find that it’s much harder to discover new content, which is both less engaging for the consumer and provides fewer sales leads for the business.

To a many technologists, content discovery is the art of harvesting and distributing social information; however I think physical environments are equally powerful discovery and promotion channels

And that is exactly the opportunity lost in the likes of Amazon and iTunes stores.  Not enough promotion!  iTunes has that measily front page that brings at most a couple artists.  Why do we have to discover music in front of a computer?  We hear music in bars, restaurants, clothing stores, noisy room mates, and definitely at record stores.  In fact I’d argue those are more natural settings of music consumption, where listen mindset is is already open to outside influence.

The new digital brick and mortar

So what exactly could a record store do in the post-CD world?  They could be experience destinations—like art galleries filled with objects, images, and sounds.  But unlike art galleries, this is still primarily a sales outlet, where display must actually leads to sales.  Sales is where technology kicks in.  We need converged mobile media devices that can interpret physical input and link experience with actual SKUs.  This is the high-tech equivalent of grabbing the physical CD off the shelf.  Lets say one store’s design idea is to have those sound-isolating dome speakers, one way users can link what they hear to a purchseable product is to have their mobiles listen to and identify the song.  If you wish to convey more than song information (entire albums, artist bios) then RFID and 2D barcodes could work.  Users could scan their phone against readers adjacent to the “art” objects to pickup meta information.

Now onto the check out.  The most direct approach is to have users buy through their mobile interface.  But you risk users going to a different online store, especially a discounter and thus invalidating all the investments gone into building a cool store.  The store has to design a in-store payment process that is easier and faster for users than signing into the competing store on their mobiles.  I think it involves somehow preventing the meta-data from interacting with outside applications until the checkout has occurred.  Unfortunately this is the furthest I got in my brainstorm for now!