Apple Finds the “Key Logs” in the Music, Video and Wireless(?) Industries

January 17th, 2007

Ok, I will admit that I have spent a week scanning stories (ever more quickly) about the iPhone and trying not to get sucked up in the hype. The phone looks beautiful, it will probably work reasonably well, and successively better and at lower price points with each generation. That part is not very exciting.

What has me interested is comparing the (perceived) relationships between the iPhone and the wireless carriers, and the iPod and the music and video content studios. It makes me think of something I once read about logging.

In the heyday of the logging industry, timber would be cut and floated downstream to sawmills. Frequently logs would pile up into a logjam and experts would be called into determine which logs needed to be freed to release the entire jam. The handful of logs tying up the entire bunch were referred to as the “key logs” and the people who could find the key logs were extremely important resources in the logging industry.

In the modern era, logjams are metaphorical and sometimes only visible as such in hindsight. Looking back to 2000, the music industry had clearly gotten itself stuck behind a rights-based logjam of sorts. At risk of losing a big piece of its harvest to piracy, the industry was unable to figure out how to let consumers buy music online. Apple’s iPod and iTunes store may not have broken the jam completely, but let the industry bring a bunch of its timber downstream and earn revenue from music sales. Studios are slowly allowing iTunes to do the same for video content.

In a similar way, the wireless carriers have created a logjam of wireless services. Consumers want wi-fi/wireless connectivity and access to services that aren’t necessarily offered through the carriers. The carriers have consumers locked in to the wireless networks with little or no ability to work around the jam. Thus, consumers pay $2 for a ringtone from Cingular, but $0.99 for the entire song on iTunes. To date, no handset manufacturer has been able to break the jam and give consumers what they really want- fast, inexpensive internet access to online content.

This is where the iPhone comes in. Time will tell whether reality lives up to the promise, but Apple is saying that the iPhone has built-in wi-fi as well as Cingular Edge support. That means I could use Edge to get online (slowly) from just about anywhere, and jump to a wi-fi network for a much better online experience where wi-fi services are available.

At least for me, the winner there is likely to be T-Mobile, since it runs the most reliable wi-fi networks around where I live and being able to get online from my iPhone *and* my laptop would be enough for me to spring for a T-Mobile wi-fi account.

That’s the short term, though. If I am writing this then Cingular and every other carrier must have figured it out as well and are working on their own wi-fi networks. Here’s hoping that if nothing else, the iPhone will break the online access logjam created by wireless carriers, allowing consumers to get fast, cheap connectivity and the carriers to find a new revenue stream.

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