Entelligence: Time for Microsoft to tell a better Zune tale
By Michael Gartenberg 
posted May 22nd 2009 3:02PM
posted May 22nd 2009 3:02PM
Entelligence is a column by technology strategist and author Michael Gartenberg, a man whose desire for a delicious cup of coffee and a quality New York bagel is dwarfed only by his passion for tech. In these articles, he'll explore where our industry is and where it's going -- on both micro and macro levels -- with the unique wit and insight only he can provide.
A lot's been made of the new Zune commercial that Microsoft aired recently. If you have haven't seen it, take a look. Now don't get me wrong. I think there's a lot that Microsoft can do with Zune, but this ad doesn't quite do it for me. What's wrong? First, it took a shot at Apple that felt silly -- after all, most consumers don't spend $30,000 to fill up their iPod (how much did it cost to fill yours?). Even if that's the case, buying a Zune Pass won't fill up an iPod either. Second, it started to make a value play that's real, but stopped short of actually making it.
The ad was interesting as it begins the discussion of the value of the Zune Pass. That's important. The power of the Zune Pass lies at the core of the differentiation of their whole business model, subscription services vs. single song downloads. Microsoft needs to go further and explain how these two models can co-exist with each other. Up until now there were only two models for music, the free and ad supported stuff on radio, or music you bought or owned (or perhaps acquired elsewhere). Zune Pass and other similar services change all that. While consumers "rent" video content all the time from theaters, cable companies, Netflix etc, there's also a lot of other stuff sold on DVD. There's no reason for this to be binary -- rent or buy -- it's just never been applied to music and when it has, it's not been explained or marketed well at all.
Both models could easily exist side by side but the first step to making this mainstream is to educate and evangelize the market. Microsoft started to do that but didn't take it far enough. Rather than try to make the argument that filling an iPod costs $30,000, Microsoft should have focused on the value play for Zune. Oddly, they completely fail to mention that Zune Pass users get to keep ten songs a month, effectively reducing the cost of the
subscription to $4.99. In a commercial that was all about the value of the experience, to me it was a big oversight and something that should have been highlighted.
Microsoft also has a credible device story as well. Is the Zune story only about listening on a PC? Remember, devices still drive consumers to stores and services, not the other way around. Microsoft needs to keep the Zune hardware story alive. Somewhere in that commercial there should have been an actual Zune.
Zune can be a solid experience, but one that is still quite a distance from being in the position to challenge Apple's dominance in the field. Making a "financial" case about music value on the iPod was a waste of what could have been a good commercial, especially when there's a much better tale they could have told about the overall value of Zune Pass. Now is the time where Microsoft needs to step up and tell the real Zune story. This holiday will be an important focal point, and there's a large uphill battle that Microsoft needs to engage in if Zune is going to gain any traction in the marketplace. That involves not only telling a better story but introducing some very compelling devices that will resonate with the market beyond the current hardware. I'm not sure the market will listen much more to the words of Bill Gates, "I'm sure a year from now we'll do even better." At least they've stopped calling the iPod "The Model T of Music Players."
So, do you think there's a model here for subscription services? What's the Zune story you think Microsoft needs to tell?
Michael Gartenberg is vice president of strategy and analysis at Interpret, LLC. His weblog can be found at gartenblog.net. Contact him at gartenberg AT gmail DOT com. Views expressed here are his own.
The ad was interesting as it begins the discussion of the value of the Zune Pass. That's important. The power of the Zune Pass lies at the core of the differentiation of their whole business model, subscription services vs. single song downloads. Microsoft needs to go further and explain how these two models can co-exist with each other. Up until now there were only two models for music, the free and ad supported stuff on radio, or music you bought or owned (or perhaps acquired elsewhere). Zune Pass and other similar services change all that. While consumers "rent" video content all the time from theaters, cable companies, Netflix etc, there's also a lot of other stuff sold on DVD. There's no reason for this to be binary -- rent or buy -- it's just never been applied to music and when it has, it's not been explained or marketed well at all.
Both models could easily exist side by side but the first step to making this mainstream is to educate and evangelize the market. Microsoft started to do that but didn't take it far enough. Rather than try to make the argument that filling an iPod costs $30,000, Microsoft should have focused on the value play for Zune. Oddly, they completely fail to mention that Zune Pass users get to keep ten songs a month, effectively reducing the cost of the
"Zune can be a solid experience, but one that is still quite a distance from being in the position to challenge Apple's dominance in the field." |
Microsoft also has a credible device story as well. Is the Zune story only about listening on a PC? Remember, devices still drive consumers to stores and services, not the other way around. Microsoft needs to keep the Zune hardware story alive. Somewhere in that commercial there should have been an actual Zune.
Zune can be a solid experience, but one that is still quite a distance from being in the position to challenge Apple's dominance in the field. Making a "financial" case about music value on the iPod was a waste of what could have been a good commercial, especially when there's a much better tale they could have told about the overall value of Zune Pass. Now is the time where Microsoft needs to step up and tell the real Zune story. This holiday will be an important focal point, and there's a large uphill battle that Microsoft needs to engage in if Zune is going to gain any traction in the marketplace. That involves not only telling a better story but introducing some very compelling devices that will resonate with the market beyond the current hardware. I'm not sure the market will listen much more to the words of Bill Gates, "I'm sure a year from now we'll do even better." At least they've stopped calling the iPod "The Model T of Music Players."
So, do you think there's a model here for subscription services? What's the Zune story you think Microsoft needs to tell?
Michael Gartenberg is vice president of strategy and analysis at Interpret, LLC. His weblog can be found at gartenblog.net. Contact him at gartenberg AT gmail DOT com. Views expressed here are his own.
Since when did Spencer Pratt start doing Windows Zune commercials?
Since his creepy flesh-colored beard bought a Zune.
yes, you watch Joel McHale on "The Soup" too. excellent!
Isn't that Sam's brother on the TV show Reaper?
" It's reality show clip time!
When iTunes embraces the subscription model it will be hailed as the next great innovation to music since the iPod.
Nobody will thank Zune for making that happen.
Sure, the ad has it faults, but the subscription concept is the only winner against the idea presented in the very first post.
Agree, All they have to do is flip a switch, but they will be worshipped for it.
you're wrong. No one will ever embrace a subscription service because we will never like the idea of renting music. This is a horrible idea, and I think it would just drive people to use torrents. I like to own my music, not just have a library of rented songs.
There's nothing in the subscription service model that says you still won't be able to purchase music you want to own.
People made the same argument you made when they introduced the video rental store, and people embraced that much the same way they will embrace a music subscription model. It's just going to take the right marketing (the whole point of this add).
Even with the video rental services, people still buy movies (and much to your point, they still steal them too). At least with the rental services H-wood is getting paid.
@David, why would it drive people to torrents? No one said it would be the only option, it's just an option.
The reason is because the population of people that own an iPod or an Apple music playing device is far greater then Microsoft and the fail Zune. So people will latch onto it more. And Apple will prolly think of a better way to do it. Apple's PR is much better then Microsoft's is. Look at the last two major products released by MS, Vista and Zune, Both were on the Top 10 Worst of the respective years. So, until Microsoft gains better PR and pays attention more to what people want don't expect to see anything to astonishing.
Video rentals were much different; It wasn't all-you-can-rent subscription service. And physical media vs digital is also very different. Apple incurs the same amount of network cost whether they "sell" you a song, or "rent" you a song, as the cost to stream it to you isn't any different. You don't "return" anything to them that they can then re-rent to someone else to lessen the cost.
Whether or not it is a viable sales model for Apple ultimately depends on how many songs they expect a person to download per month (I think it's been calculated it costs them $.05 - $.10 per song just for network and admin costs), and how big a piece of the pie the Music companies would be taking out.
As a consumer, you'd love to have the choice. But looking at it as an investor, I highly doubt that Apple would go subscription; more likely they'll simply wait until Microsoft's ZunePass and Best Buy's Napster realize it's not a profitable market model, and there's only so much money you can lose from it before you give up.
@ wichsenstar13: Fair points, but that's what the video rental market has evolved into - an all-you-can-rent subscription service. Look no further than Netflix putting Blockbuster into Chapter 11. There's no need for the music model to start back where the video rental market started. They can simply pick up on the best business model and adapt it to today's consumer interest.
I'm pretty confident that the first company to put Netflix in Chapter 11 will be the movie rental service that allows for downloads (not streaming) of HD flicks in the same or similar model as Netflix is today (no more than 2 at a time, the next one starts when you delete the current one, etc.). Unless of course Netflix is the one to do that....
As far as all the downloads and administration costs, that's all hearsay that I'm not privy too, so I'll have to take your word for it. But instead of streaming - if it's a one time download and the user plays it from their home computer as is the $15 Zune model, I don't see how the costs can be some much more than how youtube stays in business with constant streaming and simply ad support. I'm not willing to buy into that argument just yet,
Why does everyone scoff at paying a monthly subscription to unlimited music and 10 free downloads and yet people all over pay money every month for satellite radio? The models are different. The Zune Pass is a great deal because you get to listen to whatever the hell you feel like and get some of your faves to keep. You also have the option of buying the rest any time.
@Vansmack:
Blockbuster was running in to trouble long before Netflix started becoming popular. People were renting less thanks to the deep discounts in DVDs that the Big Box retailers like Best Buy were giving.
And Youtube isn't even close to profitable. Google keeps them afloat as a hobby. $470m, is what they expect to lose this year.
http://www.businessinsider.com/analyst-youtube-will-take-half-a-billion-off-googles-bottom-line-this-year-2009-4
@David - What about Cable? Short-sighted, highly-opinionated people said "No one will ever pay to watch TV..."
Guess what: you're wrong. Whether or not a subscription service succeeds to the degree you're looking for, you back yourself into a corner as soon as you speak in absolutes like that. "No one will ever..." ignores the fact that many people already do, and that future tastes are nearly impossible for people deeply involved in the industry to predict, let alone some 'tween in his step-dad's den.
The thing you have to realize about a music subscription service like the Zune is that it targets a specific kind of user - someone who enjoys exploring music and finding new artists, bands, genres. It isn't for everyone, and that's precisely why they still sell songs (or better yet, buy them from Amazon). But $15/mo and $10/mo worth of songs to keep, DRM free? That's a good deal for SOME users. Not all, and apparently not YOU. But YOU aren't the only market segment.
Don't think of it as renting music. Think of it as paying for access to a vast library of on-demand music, where you can pull down any of millions of tracks, at any time, at no cost. As a Zune-pass subscriber, I was recently introduced to "MGMT" by a friend. I went and downloaded the complete discography. Guess what it cost me? $0
Nobody should thank MS/Zune since it wasn't their idea. There were services like Rhapshody (and didn't Napster eventually do it?) doing subscriptions awhile ago.
As a long time iTunes user (bought a song the day the store opened), I was skeptical about the idea of renting your music. I want my music to go with me everywhere I go and if money gets tight, I don't want to have to erase my whole collection to pay the bills. Still, I tried it out a week ago and I love it! It's great to come across something I'm somewhat interested in and just hit "Download Album" and have the whole thing for free. Sure, I can torrent it too, but it just feels better to do it legit.
I think the Zune app itself is very clunky and hard to manage large music collections which I would say iTunes does very well. The iTunes Store is also much better at letting you browse for music. The odds of stumbling on something on the Zune store is much less likely.
Overall, I like the service and am debating whether to keep using it past the trial period. I wish the tunes could play on my iPod because there's no way I'm dropping a few hundred bucks on another music player.
@vansmack, you do know Zune Pass isn't the first service to offer this model either, don't you? Rhapsody and Napster (among other, smaller ventures) have been doing this for years.
I understand there are folks who want to buy their music. Fine. Zune lets them do that. Napster lets them do that. Rhapsody lets them do that.
Evidently this simple concept is beyond the ken of most iTune afficiandos. Here's the second item beyond most fanboys: with zune, you can download 10 tracks per month absolutely free. Why this is so difficult to comprehend baffles me.
You pay a monthly fee for subscription music. Correct- you don't own it. Upside? You can buy it for .89 or .99/track. Sound familiar? Finally, that subscription allows a person access to millions of songs ... now. I probably listened to 20 plus hours of new music this month, on the go. Cost? $15. How many actual tracks did I buy? None. Didn't listen to anything I wanted to keep "forever."
I won't even mention tunebite.
I thought Apple had that in mind already... where have you been hiding?
Why you all keep talking about music subscription services as if Rhapsody or Napters didn't existed... I am amazed.
If you are talking innovative, 10 songs a month for free is not business innovative, it looks like a promo to me, ok, permanent, ok, really cheap/DRM free, but as you said it is a implicit price discount. What will be really innovative is to let user move the songs to devices for the price of the subscription as if the device were user's own "CDN", local cache, or whatever... who is to blame? I don't know, maybe content owners/distributors, maybe us for not telling them to frack off
In the future, when permanent mobile broadband becomes a reality, this will not be an issue anymore, subscription will be the only thing you need, without wanting to keep songs (unless you want to keep them for future generations)
BitTorrent is da bomb. :D Screw paying for single song downloads or zune passes. You can also get your mp3s (not flvs) from YouTube. ;)
No-one gives a fuck about your reasoned argument. It's an advert.
Now can we look forward to your critique on the bullshit that Apple come out with in their Mac vs PC ads.
you forgot to add "dear Engadget"
This. When Engadget starts doing a point by point teardown of the Mac Vs. Pc commercials, I'll start caring about their commentary.
Oh God yes.
You want to talk about BS in advertising, let's talk about those Mac vs. PC ads.
F**k Apple.
Best. Comment. Ever.
How ironic that it is on one of the....... Worst. Articles. Ever.????
Holy fuck, you guys need to calm down and go cash your checks from MS.
Yea.
I don't understand the carelessness or I guess fanboyness of this article. From day one, Apple spews out overly exaggerated negatives of Vista and PC's, its ridiculous. Even, things that are blatantly false.
Microsoft doesn't need your stupid advice on how to make commercials. They are the 3rd largest company in the world by market value. They pay people who actually know what they are doing to worry about that.
Know your role.
Useless.
You guys don't really understand the idea of a column / editorial, do you?
Dear Engadget,
Hasn't this been posted already? Oh yes, it has, stop beating a dead horse.
http://www.engadget.com/2009/05/11/microsofts-latest-ad-itunes-is-crazy-expensive/
This is the SECOND time that Engadget has posted about this. Do I hear a butthurt Apple fanboy? Why are you even having a fit about this ad? It's not like it's going to reach the amount of people that the Mac vs PC ads do. Rather than getting all mad and angry about the advertising habits of Microsoft, why don't you turn around and look at your beloved Apple ads. They way more slanderous this little ad or any of the other "get a pc" ads. I've said it before, and I'll say it again, get your shit straight Engadget.
One mroe thing, you guys should fire Michael Gartenbeg, he is a biased Apple fanboy that has no place on a blog like this. Then again, probably 80% of your writers and readers are Apple fanboys.
yes we do, we just understand that your minions FAIL at it.
The real "problem" with Mac ads is that they make the long standing
DOS driven FUD a 2 way dialog instead and they take advantage of
many of the things that the audience know to be true as a matter of
personal firsthand experience.
Apple managed to tap into the zeitgeist and hit a raw nerve.
The best Microsoft responses exploit the truth.
This Zune thing is just a bit of shark jumping...
Nice post mark!
Dear Engadget, Here is your answer to 10 free songs.
http://www.youtube.com/watch?v=iZ_R0PJUF7s&NR=1
@ Joshua
Then there's no need to reply to our comments. When people write such trash, you should expect people to react like that to an editorial because other people have their own commentaries too.
@Irwin:
Going by your reasoning, Engadget being the MOST popular tech blog in the world by readership, really doesn't need your stupid advice on how to give stupid advice.
Know your role.
Useless.
"You guys don't really understand the idea of a column / editorial, do you?"
We are well aware of what that is.
What we are looking for is for you guys to show some real balls and do the same thing in regards to Apple.
The shame is that we already know that this site would rather down a bucket of bleach than poke at Apple in any way that would endanger their access.
"You guys don't really understand the idea of a column / editorial, do you?"
About as much as your team understands unbiased reporting, Joshua.
Geez - defensive much?
Maybe my reading comprehension skills aren't up to snuff, but what I got from this article is that microsoft has a great idea on their hands that COULD challenge apples dominance. This article just points out that the ad isn't doing justice to what they have.
As a side note, they probably don't write articles on the lies told in mac vs. pc ads, because those ads are effective at slanting opinion towards mac's supposed strong points. In the article writer's opinion, the zune ad doesn't showcase the strength of microsoft's proposition enough.
@ Joshua Topolsky:
This is a blog, not a newspaper.
As a person who does not steal music, I was very happy to get a Zune - several actually. I have three computers and three Zunes filled with thousands of songs, and I pay only $14.95 a month - barely more than the price of one CD.
Most of the people I know with iPods fill them with music borrowed (stolen) from friends or downloaded (also stolen).
I a shocked that the Zune has not received a better reception - as a player is is reasonable, and the subscription model is perfect for honest people without an existing huge collection of CDs. Alas, that may be a small demographic.
> Most of the people I know with iPods fill them with music borrowed (stolen) from friends or downloaded (also stolen).
.... I hope you do not mind that I steal that phrase from your comment? Or should I pay you as a copyright owner??
Do you by chance work for RIAA? Who else after all spreads such B.S.
Hey Dummy plagiarism is stealing too.
Nice name btw.
As a person who doesn't pay for his music, i was also glad to get a Zune after my iPod broke. A friend recommended zune to me and I thought, "Heck, I'll try it out and probably return it in a few days." Now, my 16gb Zune is my main player (I also have a nano fatty), mainly because of the wireless sync feature. I didn't realize how much I hated plugging in my Zune every time I download music (about 5 times a week).
I think i saw an iTunes Pass today...
I didn't notice there was no hardware in the ad. Since he talks with his hands, he might as well hold a Zune in one of them.
No hardware in the Switch commercials, either (at least, not seen with the "actors.") And they talk with their hands. An awful lot.
The switch commercials have one goal: get someone to consider a Mac just enough to get them into the store so that the sales reps there at an Apple store can work them over. That's it. It plays to the emotions in that regard, and let the sales reps do the value proposition sale (since it will be somewhat personal).
You will notice that the iPhone commercials play more to showing off the value proposition of the device. They want you to consider one because it can do X/Y/Z, where most owners of non-smartphones have not seen how good the experience on a mobile device can be yet, and so need to be sold on a smartphone as well as the iPhone itself.
Engadget is arguing the same point here with Zune: they need to argue the value of the rental service before people understand why it should even be an option, and they should be linking it with the Zune device.
pointless flame bait much?? hit count getting low?
Quite frankly it doesn't take much anymore around here to get people fighting about stupid shit. I understand people that people are passionate about their tech of choice but seriously guys. Aren't you all getting tired of this? (Engadgeteers included though you guys get money from the refreshes and the clickthroughs so you probably don't care) It's getting old when any post about Apple or Microsoft has a hundred hujillion comments and about 100 of them are actually contribuitng anything to the conversation. As fun as it used to be to comment and start some lively banter and joke around with stuff like this, it's just old. The horse is dead. Go back to your basement bedrooms and Let it be. Let it be.
So do you apply the same reasoning when you need a new car, or groceries - they would be free if you steal them.