Tag Archives: business

Memo to music corporations

If you don’t offer lossless downloads, you’re leaving money on the table. Here’s why:

People who are serious about music and buy a lot of it tend to be serious about sound quality. In my own tests, I’m able to distinguish lossless files from even 320kbps MP3s. Therefore, I’m very reluctant to buy anything but lossless music.

Right now, the CD is dying. Amazon is full of people selling their old used CDs. Even the used CD stores are going bust because not enough people want to buy the discs. Austin’s main used CD store recently announced it was going out of business, and when it’s not a viable business model in a town as full of students and focused on music as Austin, you know it’s not going to be viable elsewhere for much longer.

So, serious music fans want lossless audio. Stores are full of used CDs selling for pennies. You can see where I’m going with this, can’t you? We buy the CDs used for $3-4 including shipping, rip them, then give them to Goodwill, sell them used again, or pass them to a friend to check out. We get lossless audio for less money than you charge for a lossy download on iTunes, and you make no profit at all on the transaction.

But there’s another way. We don’t want to stiff the artist. We don’t want to have to deal with postage, packaging, ripping CDs, checking for errors, finding cover art, and so on. Offer us a way to buy lossless audio files for under $10 and we’ll probably take it.

So, ball’s in your court.

And to artists: My favorite way to buy music is FLAC files directly from you, sold via Bandcamp or your own Web site. Please bear that in mind when contract renewal time comes up.

Nintendo announces major losses

The news for Nintendo is bleak. Sales are down 50% year-to-year. They posted a first quarter loss of $327 million. They’ve dropped their profit forecast by 82%. And they’ve slashed the price of the 3DS 32% in dollars (even more in yen).

As a gamer with a DSi XL and a Wii, none of this particularly surprises me. Nintendo have made a series of disastrous mis-steps.

Problem #1 is that they gave up on serious gamers. In fact, it seems like they’ve given up on the Wii entirely. Looking at Metacritic’s game releases by score, broken down by year, is instructive.

In 2007, the Wii’s first full year, there were 19 “green zone” games (those with aggregate scores of 75 and above). The list included some killer games including Metroid Prime 3, Super Mario Galaxy and Super Paper Mario. I had a lot of Wii-related fun.

In 2008, 42 “green zone” games. In 2009, 64. But then in 2010, we were back down to 44; and at least half a dozen of those were WiiWare mini-games. Take out the sports game annual re-releases and suddenly the catalog was looking pretty thin; the Wii had already peaked. Now we’re in 2011, and there have been just 6 “green zone” games in the first half of the year. And none of them have been by Nintendo. (Nintendo in the USA has so little interest in the Wii that they haven’t even bothered to ship the much-loved Pikmin 2, even though it was localized into English for the UK. Forget about unlocalized games, they’ll never ship.)

Problem #2 is that the few decent games being released on the Wii are being buried under mountains of shovelware. Try walking into Gamestop and finding a copy of “de Blob 2″, for example.

Problem #3 is the 3DS. It’s a gimmick. I tried it, and I was unimpressed. Poor battery life, the 3D quickly fails if you play a fast-paced game and hence don’t keep the console in exactly the right position relative to your head, and it isn’t all that impressive when it works. The 3DS was also way too expensive, and had no good games that weren’t ports of games everyone interested in Nintendo has played to death before. (Yes, I liked Ocarina of Time. No, I wasn’t interested in paying $300 to play it again.)

Problem #4 is competition from mobile phones. The DS had made some inroads into the casual gaming space; even my mother has one. But that space is rapidly being taken over by smartphones.

Now, I happen to think that Nintendo could have competed in this area. What killed them was a combination of their utter inability to make the DSiware experience tolerable, and their inability to engage with independent developers and make it easy to develop for Nintendo platforms.

I’ve bought some DSiware games. Since most DSi owners probably haven’t, let me describe the experience.

First you have to find out which games are good. Forget about using DSiware’s own browser to do so, that just gives you a scrolling list of games in no useful order, with minimal information about them. The official web-based catalog is pretty much the same thing with screenshots; no reviews, no user ratings, so you’re on your own.

So you head off to Metacritic or read reviews. Suppose that you decide, as I did, that you want to buy the Jason Rohrer game compilation. Well, now you discover that it’s 200 points. So you go to buy 200 points of credit.

And then you find out that you can’t. Nintendo won’t simply sell you the game you want. You have to buy at least 1000 points of credit, which will cost you $10. Games cost anything from 200 to 1200 points, but 200 and 500 seem typical. So it was that I found myself sitting down with a notepad, making a list of games that I was interested and how many points they were going to cost, and then shuffling my selection until I had 1000 points’ worth.

Then you need to enter your credit card details on the DSi. No buying from the web using a computer with a keyboard, no keeping the credit card on file. Then your account gets credited with the points, and you can actually buy the games—which of course means that you have to use the horrible DSiware scrolling list interface to find them.

Overall, the process is painful when compared to Android or iOS. So much so that if you’re a casual gamer, you’d be mad to use DSiware unless there was a platform exclusive that you absolutely had to play.

Problem #5 is online gaming. I tried it on both the Wii and the DSi. It was a horrible experience on both. “Friend codes” are a usability disaster, there’s no web integration, and most games lack the ability to just go find someone to play online with. And I’m comparing it to PSN and Steam; not to Xbox Live, which I’m told is even slicker than the networks I’m used to. So Nintendo completely missed the Internet and online gaming trend.

So in summary: Wii hardware sales are dead, there are no good Wii games selling in big numbers, the DS has been announced to be obsolete, there’s competition from smartphones, and nobody is buying the 3DS. The only thing keeping Nintendo afloat is DS software sales, and since big N themselves have lost interest in the DS and are trying to move everyone to the 3DS, that won’t last for much longer either. I’m betting Nintendo’s executives are pretty nervous right now.

What’s on the horizon? Well, the one big Wii release planned for this year is Legend of Zelda: Skyward Sword. Assuming it ships, and assuming it sells as well as Twilight Princess, 10 million copies at 45% profit on a $50 game won’t even be as much revenue as Nintendo bled in losses in Q1. And those are some pretty damn optimistic assumptions.

Will the 3DS suddenly sell now that it’s $170? Hard to say, but my gut reaction is no, based on the fact that the design issues remain, and there’s still no must-have software. If sales do ramp up, it probably won’t be until Christmas, and that’s if Nintendo can deliver a dozen or so really good games by then—and I don’t mean shipping Mario Kart and Star Fox again.

Finally, there’s the Wii U. That won’t ship until 2012, and even when it does, Nintendo have lost the goodwill of serious gamers at this point. I predict that people will take a wait-and-see attitude like they have with the 3DS.

With all that in mind, I’m actually surprised that Nintendo are predicting any profits at all this year. I’m no professional pundit, but I expect them to make an overall loss this year.

Join the T-Mobile Rebel Alliance

So, AT&T have announced that they want to buy T-Mobile? That doesn’t mean we have to go down without a fight.

Yes, it’s time to start writing letters. Real letters, because a single written personal letter is far more effective than clicking a bunch of online polls. (Sorry, Credo and MoveOn, but it’s true.)

The first address to write to is:

United States Department of Justice
Citizen Complaint Center
Antitrust Division
950 Pennsylvania Ave., NW
Room 3322
Washington, DC 20530

The above is the complaints division of the DOJ team that will have to approve the deal.

Next up is the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights. They say they’re going to take a close look at the implications of the deal, so let’s make our voices heard.

I plan to write to John Cornyn, since he’s my Senator; and Al Franken, since he’s awesome and seems like he might actually care. Here’s the address:

U.S. Senate Committee on the Judiciary
Subcommittee on Antitrust, Competition Policy and Consumer Rights
224 Dirksen Senate Office Building
Washington, DC 20510

Or you could use your senator’s regular address. The main thing is to get writing.

Later on the FCC will undoubtedly open a docket for public comments on the proposed deal. They have a web-based system for comments, I’ll post instructions for that when I hear that the docket has been posted.

Some things you might want to discuss in your letters:

  • The fact that AT&T is the worst-rated cell phone provider according to Consumer Reports, coming dead last in every single category.
  • The observed effect of AT&T’s merger with Cingular, which was also promised to improve things for consumers.
  • How much your bill will go up, percentage wise.
  • The fact that the US will only have a single GSM provider.
  • The difficulty of switching providers when all three networks use incompatible technical standards.
  • The fact that every T-Mobile customer will need a new phone–with a new 2-year contract.
  • The fact that AT&T lock down their Android phones.

Oh, and proper salutation is “The Honorable Senator Smith”, though “Dear Senator Smith” will probably do in these days of informality.

Macmillan vs Amazon, Round One

According to Huffington Post, after the iPad launch Walter Mossberg cornered Steve Jobs to ask a pertinent question:

Mossberg asks why users would want to shell out $14.99 for an ebook on the iPad, when they can buy ebooks for Amazon’s Kindle for $9.99.

Steve Jobs’ retort: ‘Well, that won’t be the case.’ Mossberg presses him on whether that means Apple’s prices will go down, or Amazon’s will go up, to which Jobs offers a cryptic, non-committal, ‘The prices will be the same.’

On Friday, this exchange was explained. Macmillan demanded that Amazon jack up the prices of e-books to $14.99. In response, Amazon stopped selling Macmillan books. That includes all books from Tor and Forge, the science fiction and fantasy publishers.

As it happens, next month’s book at the book club I go to is published by Tor. I went to buy a copy on Friday, not knowing about the dispute. I had seen it available for Kindle before, and wondered why it was no longer available.

Then I shrugged, and bought a dirt-cheap used paperback copy instead. If Amazon had given in and upped the price to over $10, rather than refusing to sell it, I’d have done the same.

The thing is, a book is something I rarely read more than once. There are so many good books out there, I feel like it would be crazy to re-read when I could read something new to me. Hence $15 for a book is expensive entertainment, compared to $15 for a CD I’ll listen to many times, or $3 for a movie rental.

I suspect that I’m not unusual in this respect, and that Amazon have done the market research, and concluded that DRM-crippled e-books are never going to sell for more than $10–particularly not when you can pick up a paperback for $5 including shipping. Rather than devalue the Kindle and allow other publishers leverage to introduce their own disastrous price increases, Amazon is playing hardball and opting not to sell Macmillan books–which is their right in a free market, isn’t it?

Apple did the same thing with the music industry, pushing them to keep prices at 99¢ per track. Later, the big music companies were allowed to increase prices in return for dropping DRM. Everyone loved it when Apple forced prices down, but this time there are some angry voices.

John Scalzi is one of them. He’s pretty angry at Amazon. Reading between the lines, I think he’s pretty angry at his publisher too, for trying to sell his books at a price he doesn’t think most people will buy at. Meanwhile, Cory Doctorow proposes the iTunes Music Store solution: allow publishers the freedom to set prices however they like, if they drop DRM and abusive EULAs. (Sounds good to me, as it makes the problem somewhat self-correcting–if publishers jack up the prices too high for the market, copyright violation ensues.)

I can understand why Macmillan’s authors are upset by what Amazon have done, but fundamentally, I think this is a very simple problem: Macmillan has decided to set its prices higher than Amazon thinks it can sell books at, so Amazon is choosing not to sell Macmillan books. If you’re an author published by Macmillan, I think the people you really need to be directing your ire at are at your publishing company, for attempting to raise prices in the middle of a terrible recession. In the mean time, well, I guess I’ll buy your books used.

Why people pirate music

The Beatles have released the original mono mixes of 11 of their albums on CD (plus a compilation of singles) for the first time. The mono mixes were the only ones actually supervised by The Beatles and George Martin, and often differ from the stereo mixes (done by some namesless studio engineer as an afterthought). General fan opinion is that the mono versions are better.

So that’s the good news. The bad news is, you can only buy the mono releases as a boxed set. Worse, the MSRP is $298.98, an eye-watering $25 per album. Worse still, they are only making a single run of copies available, and they’re already sold out many places.

But they’ll still act outraged when the set gets heavily pirated, won’t they?

How to be a CEO

In case you haven’t been paying attention to the Chrysler saga, here’s a brief summary of some recent events.

March 17:

Chrysler Chief Executive Bob Nardelli today called for a second round of funding for the company’s financial arm that would enable sales to customers who otherwise can’t qualify for loans.

In an interview with CNBC, Nardelli also said he wants "some kind of decision" from the president’s task force on the auto industry by March 31 on Chrysler’s request for an additional $5 billion to fund operations.

April 21:

Top officials at Chrysler Financial turned away a government loan because executives didn’t want to abide by new federal limits on pay, according to new findings by a federal watchdog agency.

April 30:

Chrysler filed for bankruptcy protection Thursday and announced it will temporarily halt most of its vehicle production while it completes a deal with Italian carmaker Fiat designed to revive its tattered fortunes.

Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.’s finance arm. The new GMAC will get government support. Chrysler’s base of dealers would also be pared down.

So, how’s that bonus now Mr Nardelli?

May 5:

Whoever replaces Chrysler Chairman and Chief Executive Bob Nardelli will have to oversee a complex rebuilding of Chrysler with Fiat engineering and U.S. government money – and might not earn more than $500,000 a year doing so.

I guess that’s why CNBC named Nardelli one of the worst American CEOs of all time even before he took over at Chrysler.

Coffee business

A gourmet coffee company that roasts in the Austin area is seeking info about businesses in Austin that can bottle their delicious iced toddy drinks. If you have any suggestions or contacts, e-mail me or post a comment and I can pass on your info.

Hell hath no fury like a phone company scorned

When I moved to the USA, one of the first things I did was get a cell phone. I was going to be living in a big city, rothko was working in a different part of town, we needed to coordinate things–it seemed to make sense. We went to Omnipoint, got a couple of phones, everything was good.

A few years later, Omnipoint were purchased by Voicestream. We got a phone upgrade. Still no trouble. Later still, Voicestream were purchased by T-Mobile. Another phone upgrade came and went.

Finally, we moved to Austin. I started looking for new phones, as ours were a couple of years old. The requirements were simple enough–quad band, Bluetooth for the car and for sync with the Mac, iSync support.

T-Mobile had zero quad band Bluetooth phones. None at all. On the other hand, IBM had a discount deal with Cingular, who offered some good phones. So, we were seduced to switch providers after 7 years with T-Mobile and its ancestors. This time a contract was involved. And before long, Cingular was purchased by AT&T.

Our contract finally expired last week, and we decided that on balance, we preferred T-Mobile. For starters, AT&T’s bills are utterly incomprehensible. You’ve probably read stories about iPhone users getting 200 page bills. Well, ours aren’t quite that long, but they’re just as impossible to decipher.

Then there’s the pricing. With discount, AT&T isn’t ludicrously expensive; but they really, really overcharge for SMS, web and e-mail. Plus, rothko has perpetual problems with dropped calls.

I saw a good deal at Amazon.com on the BlackBerry Curve. It meant a 2 year contract with T-Mobile, but I was willing to take that risk to get a good deal. I ordered two phones, 2 years of family plan service, 2 years of unlimited e-mail and web. I wasn’t expecting any problems.

A while later, I got an e-mail from Amazon saying that I needed to call T-Mobile to confirm my information. I did so, and was told that I needed to fax them a copy of my Social Security card, driver’s license, and a recent utility bill.

Fax? In 2007? Apparently, yes, a company that sells e-mail and Internet access doesn’t actually have e-mail itself. I scanned the requested documents, found an online fax service, and sent everything off.

A few hours later, I got another call. The woman on the other end of the line explained that I had been misinformed. What I actually needed to do was travel to the nearest T-Mobile store and have them fax in the information.

Annoying, but no big deal. I figured they were just being extra careful. So that evening, I drove to the nearest store and had them fax everything in. I took the transmission receipt home with me. The next day, I called back to check the status of my order. After a few minutes on hold, I was told that I had been misinformed yet again. A fax wasn’t enough; I actually had to go to the store and have them confirm the information in person.

By now, I was starting to get annoyed, but I decided to humor them. I drove to the store again, and explained the situation. The store called T-Mobile, who told them to fax the information. So they faxed it again, and confirmed that the fax had been sent.

An hour later I called to check on my order. After a few minutes on hold, I was told no. They were refusing my order. If I wanted service with T-Mobile I would have to pay full retail price up front for the phones, and then pre-pay for service.

So basically, all that jumping through hoops had been a total waste of my time, as they had never been going to give me contract service in the first place.

I explained that I had been a T-Mobile customer for 7 years, and could prove it. (I still have copies of old paid bills, because I’m that kind of person.)  No dice.

So, I’m still with AT&T, and I’m wondering what to do next. Part of me still wants to switch, but part of me wonders if I should, given the amount of dicking around I’ve received trying to become a T-Mobile customer again.

Unfortunately, there isn’t a third option. Thanks to industry consolidation, the US only has two GSM providers. So I can’t say “Screw you, I’ll go with the good guys”, as there aren’t any good guys.

I wrote a letter to T-Mobile customer service, but I haven’t sent it yet. I don’t honestly know if I want a 2 year contract at this point. Maybe the best thing to do is to buy a couple of unlocked phones from somewhere else entirely, then go to T-Mobile and just get a couple of SIMs and sign up for service with no contract.

Public service announcement

Are you a concerned parent wondering where you can buy toys that aren’t made in China, and are guaranteed not to be tainted with lead?

Buy LEGO. It’s all still made in a factory in Denmark, not China. It will expand your child’s mind, not damage it.

If your child is too young for regular LEGO, there’s Duplo. For an older child, there are LEGO railways and LEGO Technik.

Also not made in China: Playmobil.

[NYT article]