Today Apple had a little announcement, they will start selling Beatles songs on iTunes. Its among the few Apple announcement that only focusing on adding new content, instead of new features or technology. And it raises the question on content versus distribution.
The ultimate is to have the best content on the best distribution channel(s). But the news of Beatles on iTunes shows how long it can take before adding the best content. Apple is the leading digital distribution platform for music in the world! Every record label, artist and group do everything they can to be selling on iTunes. Specially when you take into consideration how dominant the iPod is for mobile music players, and buy music on iTunes might be the only way to have your favourite artist on your iPod.
And its the same by looking at Spotify for example. Spotify is at its core a free distribution platform, that tries to acquire as much content as possible to attract new listeners (accounts). Which in terms increase the potential for advertisers, potentials subscribing paying premium accounts and finally getting songs sold through the service. A basic but interesting business model:
Expanding content catalog = Attracts more users
The more users = More content owner should want to have their content for new/potential consumers.
Improved reaching to potential customers/consumers = Better chance to turn into paying users.
Still its in some way contradicting. A content service is mostly attractive if the user base it huge. But to get a huge customer base, you need to have great content to attract new users.
It’s the same for us at GamersGate. To attrach new customers we need to have the latest games. But in order to get the latest game we need to constantly increase the user base, so all our partners and potential partners wants to sell their new games at our store. We see a lot of new competitors poping up all around us, but I can only imagine the difficulties for them to build a customer base from scratch. We started with a lot customers from the Paradox Interactive community as our best customers.
One interesting blog post discussing this is from GamesBrief, about Electronic Arts acquisition of mobile publisher Chillingo, the publisher behind Angry Birds. Read this great piece, discussing EAs shifting focus on acquiring user installbase/new distribution instead of new IPs/Development Studios. How EA got the installbase from the great success of Angry Bird through the Crystal system.
Its the same if we look at valuation of sites / companies like Facebook or Zynga. The increadible high valuation of those companies have nothing to do with technology, ONLY numbers of accounts/users. Without Facebooks 500 milion users, then the core service is only okey. Here the content (features/applications) isn’t the big USP attracting new users. When it comes to social medias, (most of the time) the amount of active users is what attracts new users!