A digital music executive recently told me, “The elephants are increasingly angry at each other.” I laughed, but quickly realized this was more than a cheeky metaphor. Hyper-competition among tech giants is shaking up the digital lives of consumers. And in an ironic twist of fate, music, an oft-maligned business in Silicon Valley, may set the tone and pick the winner(s). Music is one of the most fundamental features that can determine the success or failure of a technology platform (yes, as a CEO of a social music startup, I am extremely biased this belief). The platform wars are heating up fast: So how did we get here? And where will we go?:
The consumer tech giants are getting all up in each other’s business.
Google, Apple, Facebook and Amazon are juggernauts who thoroughly dominate their categories—search, hardware, social and commerce. But advances in mobile computing and growth in social are blurring the lines between their businesses and setting them on a collision course: Think: Fire vs. iPad, Google+ vs. Facebook, Spartan vs. iOS vs. Android, everyone’s app store vs. everyone else’s app store.
How are markets won? It’s the platforms, stupid.
The biggest challenge all four face is whether they are better off competing, cooperating or some combination of both, depending on the business line. Consider this: I access Facebook on my Macbook Air using the Chrome browser, use Google Maps extensively on my iPhone, and (used to) listen to the Amazon Cloud Player on my (now deceased) Android. The giants provide many complementary services that make my life easier. But basic interoperability is no longer a competitive strategy or a compelling value proposition to users.
All the giants know this, so they’re building more powerful and sticky platforms to create sustainable advantages. But the definition of a platform is getting fuzzy, as is the relationship between different platforms. They now span desktop operating systems, mobile operating systems, app markets, and browsers, and some of these platforms literally live off of others. This interdependence demands some level of cooperation, but doesn’t curb anyone’s hunger for growth.
What are the key success factors for platforms?
In the sage words Tony Hsieh, it’s all about “delivering happiness.”
If your platform makes a users’ life easier, you create value and win. For the four giants, that means providing the best functionality and compatibility with features and utilities that users won’t give up (i.e. anything with high switching costs like email, social media profiles and media collections). Restricting access to a competitor’s platform is a dangerous game, which all the giants play on some level. And the challenge for each is how to optimize the value of a platform vis-a-vis the benefits of control vs. the downside of missing features and services.
The Most Important Front of the Battle May Be Music
While consumers may feel overwhelmed by the tech giants’ competition for their digital mindshare—I certainly do—no company can vertically integrate your entire digital life. There will be big wins and devastating losses, and these will likely be related to the most core utilities of any platform: communications and media content.
Communications will always be fragmented across calls, texts, group messaging, social media messaging, tweets, and so on. But media is more top-heavy, thanks to the long tail theory. And the “socialization” of media consumption makes shared platforms increasingly important to consumers. Additionally, content owners and distributors are finally realizing that access to their media can make or break a platform. As such, they’re now acting like power brokers in the tech world. On some level, content is still king!
Music may be the most social (and intensely personal) form of media, so it’s no surprise it’s the centerpiece of Facebook’s master plan, as well an important page in the others’ playbooks (Google Music, Amazon CloudPlayer). But even in Facebook’s new Open Graph platform that feeds the media-dominated ticker, music services are still siloed: Spotify activity only feeds back into Spotify, and the same goes for Rdio et al. Does this really advance the “socialization” of media? Further, the two most dominant music services, iTunes and Pandora, are conspicuously absent from the Facebook platform.
Strategic politics, privacy snafus and Sean Parker’s musical ambitions aside, there’s many important issues still on the table: Can Facebook’s music platform stay relevant to users without the dominant music utilities? Can Spotify compel users to switch music platforms through Facebook compatibility? How will Apple respond to a direct attack against the cornerstone of it’s ecosystem, which drives sales of its high margin devices? Will iOS 5 accommodate Spartan in a meaningful way? How will Google and Amazon get back into the music conversation? These questions might seem provincial on the surface, but the impending answers may well determine how the tech giants compete or collaborate in the next land grab for mindshare and dollars.
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