Broadband services are about to hit the wall.
The easy sales have been made. The small percentage of people who are motivated to get DSL or cable modem service for their homes, businesses, or home-based businesses have it, are getting it, or soon will have it, using satellite if nothing else.
The question providers must now answer is how to get beyond the early adopter stage of the market. You’re asking Joe and Jane America to pay $50 per month (plus installation costs) for faster access to what they may already get for free. That’s a cable price in a price-sensitive market.
What’s needed, obviously, is a “killer app,” a breakthrough application that will motivate people to buy now. Twenty years ago, we were talking spreadsheets and word processors. Ten years ago, we were talking multimedia. Five years ago, we were talking email and web surfing.
In 2000 (when it was easy to be euphoric) we assumed that services like Napster would be the killer app. One of the great untold stories of last year is how the entire PC industry came to depend on Napster as “the next big thing.” I bought two Hewlett-Packard PCs over the holidays that advertised on their chassis how you could “burn your own CDs” with them.
Unfortunately real killer apps have business models, and Napster (like all peer-to-peer services) didn’t. Sure, there were promises and possibilities. But the software was free, the services were free, and the music was free. The technology industry expected that PC and networking sales would fuel a new boom, but as we all know by now, the copyright holders didn’t cooperate.
The coming year will witness a complex Kabuki dance between the producers and consumers of music. They’ll be looking for a business model both sides can live with. The consumers feel burned by the industry’s attitude, but they want to cooperate. The industry, however, is suspicious of consumers’ attitudes and thus reluctant to cooperate.
Ironically, it may be the problems of another industry, the movie business, that could spur cooperation from this industry. Theaters and movie companies are being hammered these days. Theater chains are restructuring and even considering bankruptcy, largely due to technological changes. When you can get theater quality from your big-screen TV and a DVD, why pay $8 for a ticket and $5 for stale popcorn?
Unfortunately, the marketplace Kabuki doesn’t put money into anyone’s pocket. Rock musician Prince (a.k.a. Rogers Nelson of Minneapolis, Minn.) is trying not only some of the more interesting experiments in this area but some of the best coverage as well.
While the musical Kabuki continues, there’s no killer app for broadband. No killer app means fewer new customers. Fewer new customers means less attention to all the other kinds of broadband offerings you might want to develop, meaning less venture capital for that development and less money all around.
Anyone who can shortcut this process deserves a medal. If you can do it, I’ll be glad to pin that medal on you personally.
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