Music price comparison site

6 08 2009

comparedownloadscreenshotThe internet is filled with dozens of sites that let you compare prices of things like car insurance, utilities, credit cards and even meerkats. Such sites are popular since they allow the consumer to get the best possible deal without the hassle of going to each individual store and comparing prices. Well, there is a new comparison site, imaginatively named Comparedownload.com, that allows you to compare the prices of music downloads from different stores like 7digital, Amazon, Tesco Digital, We7 and iTunes.

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Comparedownload.com is the first website in the UK that allows music fans to compare the price of music downloads and seems to have stumbled upon a gap in the market that seems so simple and obvious now that its mentioned. The website’s founder, James Bott, says that it was the frustration of having to search through different sites for the cheapest price for music downloads that lead him to develop this website.

 

According to the International Federation of the Phonographic Industry (IFPI), only 5% of total music downloads are done so legally. This means that there is a huge market for legal downloads if the other 95% are tapped into. If the market potential for online downloads is indeed so huge, why has it taken so long for a site that allows the consumer to compare prices of downloads to be launched? And that too this isn’t a venture by some business seeking to exploit a gap in the market, but the result of someone’s frustration and need.

 

Maybe its because there aren’t enough sites selling music legitimately that have huge catalogues that can be compared. The reason for that is perhaps that its too hard for sites trying to sell music legitimately to bring all the record companies together and convince them to allow a website to sell their songs. And if the website doesn’t have a wide collection of songs, customers will obviously not come. The other quick and simple alternative is file sharing, which of course is illegal.

 

There is of course another alternative, buying a CD. But what if you only want one single, and not the whole album? Also, it’s a lot less convenient than downloading music. CD sales, according to the IFPI, dropped by about 15% last year. Of course, the music industry will be quick to put the blame for the drop on illegal file sharers who want to listen to music, but pay nothing for it. But I don’t think that all those who share music do so because they are heartless or get some sort of pleasure by “stealing” someone’s work, as they are often portrayed. I think it’s a bit hasty to attribute the drop in sales of CD’s to online file sharing. Maybe its because the way people view music and the way they want to obtain their favourite music is changing.

 

Recent surveys suggest that an increasing number of people who previously got their music from file sharing are switching to legitimate music streaming sites like Last.fm, We7 and Spotify. But the business models of such music streaming is completely different from those of the music companies. Music companies want to charge the consumer for each individual download and control how many times the music is moved around whereas music streaming sites view the delivery of music as a service that would allow revenue to be generated by displaying relevant ads and through sales of complementary products like merchandise, tickets to gigs, etc. The biggest hurdle again for such streaming services I think are record labels that may need a lot of convincing to let the sites stream their music. Many are sceptical about streaming sites generating significant revenue that would compensate for the drop in CD sales.

 

To a certain extent, I think that it’s fair to say that the music companies are victims of their own greed and their inability to view the internet as a means of diversifying rather than viewing it as a threat to their business. There are a huge number of online retailers selling all kinds of things from books to computers and they have been operating for quite some time now. Yet, the number of online music sites are still quite low and only now beginning to increase. No wonder then that although you can buy pretty much anything on the web, it’s still relatively hard to buy music legally. It must be so hard to get them all on board and agree on particular business model that it takes somebody with utter determination and nerves of steel with financial backing to achieve a deal. Imagine the kind of problems that Steve Jobs must have faced of convincing each and every record company to make their catalogue available for sale when Apple was planning to launch the iTunes store.

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Can BingHoo really take on Google?

30 07 2009

Bing ScreenshotMicrosoft and Yahoo announced a strategic alliance which will see Microsoft power Yahoo’s search engine using algorithms from its Bing search engine while Yahoo will oversee the management of Microsoft’s advertising space.

This may be good news to businesses and organisations that buy ad space with search engines. Microsoft and Yahoo have very little share of the online search market individually, but together, they might have a share which may make it worthwhile for marketers to buy ad space from Microsoft-Yahoo.

Steve Ballmer said that this partnership would give users a real choice in a market dominated by one company. In other words, he hopes this deal will allow Microsoft and Yahoo to challenge or perhaps even end Google’s dominance in the online search market. That’s really weird coming from the head of a company that has enjoyed unrivalled dominance in the operating systems market. Not only that, it also has a big slice of the web browser market with its Internet Explorer and also the office applications market with its Office Suite. So, he shouldn’t be complaining about users not having a choice since anybody who buys apc has a copy of Windows thrust upon them since it is pre-installed. Only those with enough technical know-how really have a choice since they are able to install a Linux distro.

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Maybe he is complaining because Microsoft hasn’t got the bigger slice of the online search market. And if its offering choice that Steve Ballmer is after, I think the users already have a choice and make a conscious decision to use Google and since price has nothing to do with it, as they all are free to use, it all comes down to quality and brand awareness of each product. In a way, by Microsoft partnering with Yahoo, it is perhaps reducing user’s choice since Yahoo Search will now be a repackaged version of Bing which is really Windows Live Search with some make up on.

So, once Bing starts powering Yahoo’s search results, how will it exactly challenge Google’s dominance? Will users suddenly start using Bing and ditch Google? That’s the same as asking if a large number of users will suddenly start ditching Microsoft’s Windows in favour of Google’s Chrome OS.

I think that the problem is more to do with the image of each brand. Google is synonymous with online searches. So much so that the act of searching something online is commonly referred to as “googling”. In the same manner, Microsoft’s Windows is almost considered to be an integral part of the computer. So much so that many users that buy netbooks that come pre-installed with Linux OS prefer to do a clean install of Windows XP.

So, if Microsoft and Yahoo really want to take on Google in the search engine market, they should perhaps focus on a marketing campaign to inform, remind and reiterate to the users what their brand stands for. Something along the lines of Microsoft’s “I’m a PC” campaign which was meant to be an answer to Apple’s “Mac and PC” ad campaign.

Overall, I think this partnership will not be that beneficial to Yahoo in the long term, it will only be beneficial in the short term as a survival strategy. For Microsoft however, this could be a chance to diversify and depend less on its traditional business model of charging users to use their software and start focusing on providing applications online and generating revenue by displaying advertisements. This is even more important since Google is slowly encroaching into Microsoft’s territory by offering free, albeit with less functionality, alternatives to Microsoft’s Office applications and have recently announced the launch of their own operating system, Chrome OS.

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RIP FSA?

22 07 2009

FSA LogoGeorge Osborne, the shadow chancellor, said that the Conservatives planned to get rid of the Financial Services Authority if they were to win the next general election. Under their plan, the FSA would be renamed to the Consumer Protection Agency and would be responsible for consumer issues while the Bank of England would have overall power and would also be responsible for monitoring and regulating the banking sector. This move would abolish the tripartitie system consisting of the FSA, the Bank of England and the Treasury which was set up in 1997 by the then chancellor and now Prime Minister, Gordon Brown.

Leaving the pros and cons of such a policy on one side, I don’t think it’s right to announce definite plans of what would happen to the FSA if the Tories were to win power. That is because it diminishes FSA’s authority now when it is trying to regulate the banking sector as nobody will then take them seriously because everybody knows that the FSA’s days are numbered.

Think of a CEO that announces that he is to step down after a year and names his successor. Who do you think will hold the real power now, the CEO or the person who will succeed him? A leader with a sword over his head doesn’t have any significant power as everybody in the organisation will listen to the new guy who will eventually be in power.

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Rather than really bring about a change in the banking regulation, it seems that by announcing their plans, the Tories are trying to earn some political brownie points by taking advantage of Gordon Brown’s unpopularity.

Even though it may be obvious from the numerous polls and the general sentiment amongst the public that the Conservatives are going to win the next election, it does not mean that they have won the election and are in power. The mainstream media are increasingly interpreting the phrase “if the Tories win the next general election” as “when the Tories win the election”.

The thing is, whether we like it or not, Gordon Brown is still the Prime Minister and the problems plaguing the financial sector have to be dealt with now, by those who are in power now. By announcing that the FSA is doomed and the media hanging on to George Osborne’s every word, it affects the authority that the people in power have when they try to be though with those running the financial institutions.

So when you read the headline “FSA warns banks over long-term bonuses” in the Financial Times, you don’t picture a strict headteacher warning a student, but instead picture a lion without any claws or teeth in a zoo letting out an inaudible whimper rather than a ferocious roar. If the regulators and policy makers have no authority, how is the change to be brought about. It’s no wonder then that some of the financial institutions, which not less than a year back, were on the brink of collapse and some even went to the government cap-in-hand asking for financial help are now announcing record profits and are still trying to pay bonuses even when the so called “bonus culture” has been criticized by the regulators, the prime minister and the chancellor for hastening the speed of the financial mess.

Sure, its necessary for the public to know the policies of each party to enable them to make an informed decision about whom they will cast their vote. But for a political party that is desperately trying to distance itself from the negative publicity from the MPs expenses scandal and hoping to win the next general election, it doesn’t seem right when it tries to capitalise from its opponent’s unpopularity and kicking him while he is down.

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Google’s new operating system

9 07 2009
Google Chrome Source:Google.com

Google Chrome Source:Google.com

Google announced on its blog that it is going to launch its own operating system next year based around its web browser, the Google Chrome. The Google Chrome OS will initially be targeted at the netbook market. It will be open source and based on the Linux kernel. Since it’s a Google product, it’s going to be free as well. The blog claims that the new OS will be light weight and more focused on getting the user onto the internet within seconds of booting up rather than waiting minutes for the computer to load.

This step is perhaps the next best logical step for Google since the online world is its home ground. Right now, it depends on other providers providing the user with a platform-the OS and the browser-to get onto the internet and access its services. It solved part of the problem last year by launching its own web browser with the hope that it would come together with all its online applications to provide an integrated experience to the user.

So, an operating system that is oriented for the internet would be ideal for a netbook since such devices with low processing power are likely to be used for things like accessing the internet. However, totally depending on the internet to provide all the functionality assumes that the netbook would be constantly connected to the internet. The most popular method of accessing the internet through a netbook is by using a dongle that connects to the internet via the mobile 3G network. Although such dongles can be obtained cheaply through deals, which include the dongle and the netbook, such deals have incredibly small download allowances. Since there would be a lot of exchange of data with the internet, the download limit would be quickly reached. So, Google should not only work with manufacturers to get its OS onto their devices, but also with the telecommunications companies and explore new ways of providing cheap internet access with huge download caps where the cost is subsidised by advertising-Google’s main business.

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The news media are referring to Google’s announcement as “Google taking on Microsoft”. I think that’s a bit premature to think that Google’s new OS,which depends on cloud computing, will offer all the functionality and applications that Microsoft’s operating system, which largely depends on software hosted locally, can provide the user. Especially since all we have from Google is an announcement, and not an actual product that can be tested, compared and bench marked.

That is not to say that Microsoft shouldn’t be worried about Google’s OS. That’s because currently, users that want Windows on their netbooks are offered Win XP and not Vista. The other alternative is a Linux based OS. Most users prefer XP although its expensive and old because they are familiar with the user interface and have apprehensions about switching to an unfamiliar system. That is why Linux distributions, most which are free and some of which already offer a light weight OS some as small as 50Mb, do not have many users since they are seen as being complicated and “techie”. But with a popular name like Google attached to it, it wouldn’t take long for these apprehensions to go away and for users to start switching to Chrome OS.

It would be interesting to see how Google goes on to monetize its operating system. Microsoft of course gets its revenue by charging a huge price to those who wish to use its operating system and so does Apple to those who wish to use its OSX, although its not so pricey. Linux distributions depend on a community of developers and some organisations get their revenue by providing support to businesses that use Linux operating systems and also by providing customised solutions. Google will obviously fall back on its core competency-its advertising business. That’s how it currently generates most of its revenue, by advertising to those that use its products.

Like in most cases, at the end of the day, it all depends on how Google execute their plan. If they become complacent and start thinking that anything that has the Google brand attached to it will become popular, their OS may not turn out to be a Windows killer. It will be interesting to see what the end product looks like when the beta version is released later this year.

And if any of its previous products are to go by, expect the Google Chrome OS to be in beta till the year 2020.

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50% Income Tax

24 04 2009

alistair-darling-budget-2009The increase in the rate of income tax for the high earners seems to be the most talked about topic of this year’s budget. The tax applies to all those who earn £150,000 or more. Add to that the National Insurance contribution and it equates to more than half of one’s salary. The aim of this rise, according to the chancellor Alistair Darling, is to contribute to the Treasury coffers to make up for the huge amounts of public sector borrowings, £175 billion this year itself.

But it looks like the aim of this move is to gather support from the majority of the public who seem to hold all those who earn huge amounts of money responsible for all the mess that the economy is in. A poll by the Times newspaper shows that 57% of the respondents back this increase in tax. The accountancy and tax experts will definitely see a rise in business since they will have many clients asking them to look for loop holes allowing them to dodge the tax. And who will then pick up the bill? The hard working majority of course.

A lot of measures have been introduced in the budget to help people, like the scheme for the 18-25 year olds, £2000 car scrappage scheme, ISA allowance, etc. But its one thing to announce something and another thing to actually implement it.

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But, its not whats in the budget that’s important, but what wasn’t included in the budget. If the money coming in is less than the money going out, it may be OK to borrow money in the short term to cover that deficit. But somewhere along the line, cuts in spending will have to be made. There is no clear indication where those cuts will be made.

To make a start, how about the MPs themselves cutting back on the expenses that they claim from the tax payer. I mean claiming back 88p for a bath plug, how ridiculous is that. Its like almost mocking the tax payers. It is understandable that an MP from, say Newcastle, should be able to stay in London when performing his duties and expect the tax payer to pay for that. But that doesn’t mean buying a second home and pocketing the profit made from it. Its means lodging in a hotel during the stay. And if the MPs really care for the taxpayers, why not take a pay cut? Its not a lot to ask. Many workers have taken a pay cut in companies so that their colleagues can keep their jobs.

The Treasury estimates that it will spend £119 billion of the £671 billion on Health services this year. How about asking those who drink excessively and then take up the resources of the NHS when their bodies cant take it to pay for the service. How about allocating resources to curb rising obesity so that money doesn’t have to be spent on treating illnesses arising from it. Distributing garden tools and seeds across the schools would provide physical exercise and free produce as well.

People who currently receive help paying their fuel bills could be provided with subsidies allowing them to purchase energy efficient appliances such as electric kettles. This would reduce the energy used which would reduce the bills which would reduce the amount payed by the Government. Subsidies over 50% could also be provided to buy solar panels which would make homes thatreceive fuel allowance self sufficient which means that they wouldn’t be requiring the help from the Government.

There are many other ways that the money can be spent efficiently by the Government. Asking a group of over-paid Government consultants isn’t going to help, ask the public for ideas. I am sure that a lot of constructive ideas will emerge.

In hindsight, if the Government had spent their money wisely when it was coming in and saved for a rainy day, there might have been a bit of buffer that the Chancellor could have used. We instead ended up with no savings and a massive hurricane instead of a rainy day. The budget doesn’t seem to be based on sound economics, but on hope and a prayer. If the Chancellors own figures are to be believed from last year, we should be in a recovery sometime soon. But instead, we are still in a deep recession. Yet, he hopes the economy will grow by 3.5% in two years time. How? Manufacturing is affected despite the weak pound and the financial sector is not as big as it used to be. Who will then lead the recovery?

Even if the figures are somehow achieved, it is still better to plan for a slow growth and be pleasantly surprised by the massive growth than to plan/hope for massive growth and then get it spectacularly wrong.

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Market Research

9 04 2009

the-apprentice-home-gymWatching the candidates of The Apprentice talk about themselves misleads one into feeling that not only are they the best, but that they are the best of the best of the best when it comes to running a business and that Sir Alan Sugar should feel lucky that they are willing to work for him. Yet, when it comes to doing a task, they forget the most basic of business concepts.

As seems to be the norm these days, the task involved designing a portable piece of fitness equipment for, surprise surprise, the cash strapped consumer. It was clear from the beginning that the whole task was about the product. It is no surprise then that team Empire, which came up with a Gym-in-a-box idea failed to sell even one unit to two of the three retailers they pitched to. The candidates failed to realise that the perfect product isn’t one that tickles their own fancy, or one which their family would like to buy, but one which addresses the needs of the consumer, hence filling a possible gap in the market.

Both teams failed to conduct even basic market research to help them develop their product. Team Empire should have realised that creativity wasn’t their strongest bit and rather than sit around the table bouncing useless ideas of each other, they should have sent two people to the local gym to talk to the members there about the kinds of products they would like to buy and what price they were willing to pay for it. Another team of around two people could have scoured the internet looking at the products that their competitors were selling at that price level. After all, the task was about designing a product for consumers who were finding the gym membership too expensive and were looking for low cost alternatives. Who better to ask about the product than those who are going to buy it in the end.

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Their lack of research was also evident in their pricing strategy. It felt as if they had just closed their eyes and picked the figure of £29.99 randomly for their product. At that price, there are numerous alternatives in the market which are certainly better looking if not better value for money. Even the promotional material, including the pictures, looked like something that came out of a secondary school student’s Media Studies project.

Although team Ingnite failed to do any market research either, they still won the task and were offered a deal of exclusivity by John Lewis. One of the reasons why their product succeeded was perhaps because it was simple. Their opponents product was a case of “Jack of all Trades, Master of None”, like a new mobile phone which offers to make you a cup of tea and take your dog for a walk. Ignite’s product was also more pleasing to look at and truly portable.

Two days to come up with a concept, build a prototype and pitch a product is indeed a tall order and both the teams did that with a lot of patience and commitment. Was firing Majid the right decision? Its not for us to decide. After all, this isn’t a talent show, its a long job interview and Sir Alan should keep those whom he feels would be right for his organisation.

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Ryanair

28 02 2009

ryanairRyanair, it seems, is very good at attracting negative publicity every time it comes up with a cost-cutting measure to “decrease the air fare for all its customers”. Its latest one is a plan to charge its passengers £1 for each time they want to use the in-flight toilet.

It doesn’t look as if it really makes commercial sense for Ryanair though. After all, it doesn’t give free drinks on board its flights, passengers are expected to pay for them. That means that consumption of liquids is decreased in the first place, which means less number of people would be using the toilets anyways. Or as Rochelle Turner from Which?Holiday pointed out, passengers may end up buying less over-priced drinks on board because they will then be charged to relieve themselves of it. This would make the move counter-productive.

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I am sure it would cost a considerable sum of money to install a coin slot machine in each of its toilets on each of its flights. How many £1 paying people would it take for them to cover that cost? And if the whole idea is to lower the air fare, how much would it lower it? Its not as if the maintenance cost of the toilets depends on the number of times it is used. The toilets would cost the same if they were used ten times or just twice. The only variable cost, if Ryanair is really counting its pennies, would be stuff like the toilet paper and soap. So why not just save their passengers the hassle and the negative publicity and offer them for free, like what all airlines do currently?

Ryanair’s spokesman was quick to reassure that they had no immediate plan to implement this, but felt that their move was justified since passengers were already used to paying for toilets at bus and train stations. Well, toilets at bus and train stations are used by more people than a toilet on a plane. And in addition to generating enough revenue for maintenance, another reason why passengers are charged at stations is to discourage misuse of the facilities.

Last week Ryanair announced that by the end of this year, it would be replacing the check-in counters at the airports with manned baggage drop-in area. All customers instead would be expected to check-in online. According to Ryanair, about 75% of its customers are checking-in online currently. In that case, it does make commercial sense to get rid of check-in counters since only 25% of the passengers are using it. The cost saved on staff could genuinely help reduce the fares.

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Ryanair is by now used to being in the news for all the wrong reasons. The most recent one being its staff engaging in an unpleasant exchange with a blogger who thought he had found a bug on Ryanair’s website. Rather than apologize to the blogger, Ryanair instead said that they had no time for “idiot bloggers”. Idiot or not, that is not the best way for an organisation to talk to its stakeholders. Of course, this all wont result in passengers suddenly switching Ryanair for another airline. Far from it. In these though times, more people would be attracted to the cheap price and not the customer service. Still, those within Ryanair that come up with the cost cutting measures should spend some time now pondering over their public relations.

“Spend a pound to spend a penny” said Michael O’Leary yesterday. If they don’t learn where to draw the line for the cost cutting, it may end up being “Penny wise and Pound fool” for Ryanair.

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