Jim Moore’s blog: Innovation, Strategy, Public Policy

The modular media revolution

What we all know:  A revolution has come about through the combination of broadcast and narrow-cast networks, inexpensive storage, blog-like sharing tools ands services, and end-user devices such as iPods, digital phones, small video players, and software for personal computers.

What we also know:  The revolution has forever transformed media.  Media content is now inherently modular, even if it is initially streamed, channeled, and time-bound during delivery.  As soon as the media is received by the individual user, it is converted to modules that are stored and indexed on local devices. Modules can then be experienced at any time by the user, and can increasingly be shared across communities of users.

Services such as Comcast are encouraging this revolution by distributing end-user storage and playback devices, such as the new Motorola Digeo system, as well as providing network-based storage and playback of modules, by way of the Comcast on-demand service.

Threats to traditional media business models

The module-making and distributing ecosystems are becoming rapidly more extensive, easier to use, and better integrated into daily life and experience.  Our daily world is changing fast.  The six o’clock local news on channel 5 in Boston is now dowloaded time shifted  by up to 20,000 users per night, using the Comcast on demand service.  It is no doubt TIVOed by many thousands of others.  Barrons has an article this week suggesting that conventional radio stocks are overpriced, and that the conventional “Kiss FM” radio station business model is forever damaged by extensive use of iPods for personal radio throughout the day.

Indeed, the modular world threatens current business models–especially old-school advertising inserted into the time stream between what used to be “programs” and are now modules, and new-school subscription models such as iPod and  XM and Sirius radio as well as cable-TV subscription levels.  Digital rights management is no solution, becauses digital-to-analog-to digital conversion can get around any restrictions.  And good digital to analog is key to user experience, so it can’t be compromised by the senders.  And analog to digital is getting better and better.

Resulting struggles for control and strategic leadership of the emerging new business ecosystems

Thus, expect to see new and strange struggles as services such as XM seek to control content and keep it from becoming fully modular–or to preempt the doityourself options by selling their own modularization systems and services–as Comcast is doing.

This will force “open  versus closed ecosystem” choices on the companies.  Services such as Comcast and XM can promote a platform as an environment in which others can develop new software and services and end-user experiences–and become the base for an ecosystem of innovation.  Or they can seek to provide layer after layer of innovation themselves–and keep both control and revenues.  The danger in scenario one is that XM loses control of its business world–and also that the RIAA and others would attack XM.  The danger in scenario two is that XM stifles innovation and stunts the expansion of their platform, and perhaps advantages Sirius as well as local digital FM radio and internet audio.

In this light, the recent decision by XM to stop selling its personal-computer-oriented radio adapter is of interest.  The story is summarized in a mock-Harvard Business School case study, below.  What has happened is that XM first opened up, and is now–at least temporarily–closing down.

XM radio’s attempts to shape its business ecosystem–resulting in contradictory moves to both promote and to supress personal-computer-based modularization of satellite radio content: A Case Study

Part one, opening up.

I’ve been waiting for this.  It lets you turn your PC into a TIVO-like service that can record from XM satellite radio, make MP3s and catalogue them–and then make them available for you to play at any time…

more about

Part two, closing down

Ah, but in the spy-versus-spy world of doityourself media, XM has quietly taken  the required hardware device off the market.  Of course, XM declines to publicly say that they have done so.  They just won’t fill orders–and the market for the hardware device is booming on eBay.  See the excellent slashdot summary.

Part three, contradictory action

In  the “famous last words” category–see XM’s site today, advertising the hardware:

XM PCR Developer Communities:

The XM PCR revolution is in full effect. Across the XM Nation, we’re excited to see independent developers creating fantastic new versions of the XM PCR software for a wide range of platforms including Mac OS X, Linux, and Windows. Windows: XtreMe PCR Macintosh OS X: MacXM Unix: XMPCR perl scripts Linux: xmd-xmfe Did we miss a developer? Let us know if you’re developing any PCR software. Case discussion What will happen next?  Will XM try to offer advanced modularization services itself–perhaps as an extension of already announced pause-and-playback features coming in the next round of radios?  By offering some of the desired functionality to end users, XM may be able to slow and cripple the doityourself movement.  What do you recommend?  What do you think would be the consequences? How will the doityourself community respond?  Will the doityourself community find that it is easy to modify other XM products so that the analog output can be captured and fed into modularization software?  Will the doityourself community be able to reach the scale to threaten XM’s business model and change industry dynamics? How might the market play out? If you were XM, what might you do to get out ahead of this entire trend? If you were a promoter of doityourself–what might you do?  As an individual? As an entrepreneur? Does Sirius have a strategic opportunity? It could get out ahead of this train, either by offering modularization features faster than XM, or by opening up its platform to innovators through offering a personal-computer-oriented adapter and working with software and service developers. What would you recommend it do? Oh yes, and what about the RIAA?  Do you expect them to weigh in? What might they do? Who might they take action to influence? If you ran the RIAA, what would you do? How might the doityourself community address the RIAA both now and in anticipation of the future? How might XM or Sirius do so? What might the Electronic Frontier Foudation, or the Open Software Foundation, or other activists do? What might be best for “the commons?”–and for those of us who are “commoners?”  Individual hobbyists, users and consumers?