Platform Mediated Networks: iTunes versus Spotify (Technology of the Week – Team 37)
With Spotify taking over the future of the digital music market, is iTunes soon to become a mere legend? In the same way iTunes made physical CD stores go bankrupt, Spotify now aims to transform the digital music market and lead the streaming revolution.
Platform Mediated Networks
Both firms are delivering an online ‘marketplace’ for digital music, where on one side artists supply music, and on the other side consumers demand music. Therefore, we can deduce that both iTunes and Spotify are platform mediated networks. In particular, their value increases as the number of users increases, which is called network effects.
Technological Comparison
The battle between the platforms begins with their technological differences, namely in the audio delivery, audio quality, and the supported operating systems.
The main technological difference between the platforms is that of how they deliver music to their customers. iTunes relies on the downloading of music, whereas Spotify has introduced the streaming of music. Customers of iTunes can own the audio files, whereas Spotify’s customers can only listen to them. However, iTunes does require its customers to have an extensive memory space. In contrast, Spotify requires its customers to have a stable Internet connection. Hence, both have their (dis)advantages for customers.
With respect to audio quality, iTunes has an advantage over Spotify. Since iTunes offers its music in a higher quality (256 Kbps) than Spotify (160 Kbps), the customers will be more satisfied with their audio files. Hence, iTunes wins this battle.
For the operating systems that are supported by the platforms, we find that Spotify wins this battle. Spotify supports the following operating systems: Android, BlackBerry, iOS, OS X, and Windows. iTunes however only supports the latter three and therefore misses out on a large potential user-base.
Business Comparison
Both platforms also compete in business dimensions, which we consider next.
In terms of cost and revenue models, both platforms have a cost-revenue-ratio of 30% -70%. A difference can be found in the way they generate revenue: iTunes charges a price per song, whereas Spotify earns from advertisements and monthly fees.
Network effects are a specific feature of platforms, and are estimated based on the total number of users of a platform. iTunes offers 35 million songs, and has 800 million customers. Spotify, however, only offers 20 million songs, and has 40 million customers. Therefore, the battle for network effects is currently won by iTunes. Still, Spotify has larger growth potential than iTunes, as it only operates in 58 countries as opposed to iTunes’ 123.
As for business strategies, iTunes focuses on convenience for customers, whereas Spotify aims to enlarge the network effects by means of its social media strategy. iTunes cannot obtain a sustainable competitive advantage on this premise, whereas Spotify understands where the future of the digital music market lies.
Overall, whilst iTunes currently outperforms Spotify in most dimensions, Spotify holds a greater future promise. If iTunes wants to maintain its market leader position, it should recognize and seize the opportunities of the digital world.
Pricing Strategies: Versioning in Airplane Seating
In the last year I’ve traveled with 5 different airlines. Each airline offered some “pick your seat” functionality, and each charged extra for preferable seats. I take this as an excellent example of versioning as a pricing strategy. In this post I’ll examine the values that influence my choice, the options presented to me, and relate my decision to the cognitive biases identified in session 6.
Value 1: Price
This is the number one consideration when picking my flight. After finding the cheapest flight, I do not want to spend extra money on picking a seat.
Value 2: Legroom
I’m 198cm tall. If I sit fully upright in an airplane seat there’s barely enough room for the magazine in the seat pocket in front of me.
Versioning
I most recently booked a KLM flight AMS – NYC. This is the seat choice range I was presented with:
| Economy Comfort | Extra Legroom | Preferred Seat | Economy |
| €90 | €70 | €30 | €– |
| 27 remaining | 7 remaining | 24 remaining | — |
| Up to +10cm space | Up to +22cm space | Standard Space | Standard Space |
| Extra Recline | Standard recline | Standard recline | Standard recline |
| Front of Plane | Exit Row Seat | Best Economy Seat | Economy Seat |
Immediately I disregard “Preferred Seat”. It is more expensive and doesn’t give me extra legroom. Next I eliminate “Economy Comfort”. It is more expensive than “Extra Legroom” and doesn’t offer as much additional legroom. Now I have two choices; pay €70 for extra legroom or spend 8 hours hoping the person in front of my doesn’t recline their seat.
Cognitive Biases in Play
Relativity – Price: In comparison to the high end “Economy Comfort”, “Extra Legroom” looks like a deal! I get extra legroom and save €20!
Relativity – Space: “Extra legroom” has 22cm extra space! It doesn’t tell me how much legroom “Economy” has, or how much “Extra Legroom” has. It just tells me that one has more than the other.
Anchoring: KLM lists their most expensive option first. As I read the table from left to right my first impression is €90. My perception of the prices of the rest is first influenced by this information.
Decision
I booked an economy seat. I paid €650 for the flight, and couldn’t justify spending more than 10% of the flight cost on a more comfortable seat. In the end my first priority was on low price, and the versions offered by KLM did not justify a higher price. I really hope the person in front of me doesn’t recline…
Technology of the Week – Group 40 – PlayStation vs. Xbox
We conducted an analysis on the differences and comparisons between PlayStation and Xbox. Both are Platform Intermediated Services, which can be defined as ‘Products and services that bring together groups of users in two-sided networks’. PlayStation and Xbox are gaming consoles that bring together game developers and gamers. Both need the console, which is provided by a third party, to fulfill their needs. These platforms have lately become much more prevalent.
The first game console was released in the 70’s. The second generation was different because those were 8-bit home consoles. After that generation the consoles started to advance rapidly. The third generation was introduced in 1983 and the Sony PlayStation was introduced in the fifth generation consoles in 1995. Those days, big competitors were Sega and Nintendo. Microsoft entered the market with the Xbox in 2001, the sixth generation of game consoles. Playstation2 sold better than the original Xbox, but in the seventh generation the Xbox 360 performed better than the PlayStation 3. The eighth generation is the final generation so far with the PlayStation 4 and Xbox One.
Both devices have some strengths and some weaknesses. For the PlayStation the first strength is that it focuses primarily on the gaming functions and less on other media functions. It has a simple user interface and games are installed fast. The games and system update automatically. It’s online network, where gamers can play online against each other is called PlayStation Network. It has a much stronger fan base than Xboxes version, Xbox Live.
However it also has some weaknesses. The games of previous versions are not compatible with the PlayStation 4. A user has to subscribe to PS Plus in order to play online which costs him extra money. The online platform is also not as good as Xbox Live.
The Xbox is a completer home entertainment device which offers the latest entertainment technologies. Here it becomes evident that Microsoft made the Xbox, because they have long term relationships with hardware providers for their other products, which they can also use for the Xbox. The game console can also be controlled with gestures and voice, through the Kinect 2.0 technology.
The Xbox One however, comes with a higher price: 100 dollars above its competitor. Xbox Live has only 50 million users whereas PSN has 110 users. Microsoft has never really made profit of the Xbox. They had to price the first version very cheap in order to penetrate the market. The second version had many errors due to hardware problems and the last version simple does not sell good enough.
In conclusion, both consoles have their own strengths and weaknesses. In spite of that it is very hard to make profit in the video game console industry. Microsoft manages to make profit with their wide range of other products but Sony is facing continued struggles in recent years and is selling and reducing multiple departments. In order to gain benefits from this Platform Intermediated Network both companies should focus on complementary products.
Could Inspire be the new LinkedIn?
Everyone knows LinkedIn, nowadays with over 300 million users it has become the go-to platform for networking in the business world. This might change with the new startup called Conspire. I guess you haven’t heard about it yet, but maybe in the future you will use it.
Conspire has a new approach for how to meet people. It starts by connecting your email-account (and in the future also with other platforms like Twitter and Facebook). They will analyse the data to see how well you know other people. By analysing the data it will find the strongest path of connections between you and the person you want to meet. This chain of connections is not based on whom you know, but how well you know them. The relationship graph will be updated in the background so you can always see how the most reliable chain of connection between you and the person will evolve. It also lets you keep tabs on your connections, letting you explore your volume of email, average response times, most frequent contacts and a list of people you’re losing touch with.
At LinkedIn you will have a lot of connections you have never met or spoken to. This means you may not even know who some of the people are in your LinkedIn network. Conspire wants to understand who knows each other but also how strong those connections are.
Do you think Conspire will have a chance to become the new LinkedIn?
Sources:
Safe and Easy in the Cloud – Tresorit
With recent scandals around Apple’s iCloud services being hacked, the question arises: Are cloud services truly safe enough to store personal or even business-related data? And even if they are safe from outside attacks, what stops the provider to take advantage of the data stored on their servers? Tresorit, a Hungary-based startup company claims to have the safest solution yet, powered by user-side encryption processes.
So how is it different from any other mainstream cloud service out there?
While using the same level of safety as Dropbox regarding storage and transfer of files (AES-256 bit encryption, SSL/TLS transfer), Tresorit claims that the prime issue regarding the safety of data in the cloud is actually not it being hacked by outside parties, but the inefficiency of barriers that would stop the provider peeping into data uploaded into their cloud. This breach would be made possible by the encryption process used by most big companies, namely server-side encryption which practically means that the encryption key is to be found somewhere at the provider’s side. Of course, this could be quite easily mitigated by the user, through encrypting the uploaded files themselves. But as cloud storage is mainly used for collaboration, it would be quite a hassle.
Thus Tresorit has introduced an integrated system for encrypting files on the user’s computer, enabling them to effectively control who can decrypt and access the content. As both encryption and decryption are done on the client’s side, the company claims that not even they can see the content of uploaded files. Further key selling points of Tresorit are that one can practically share any folder on the computer (as opposed to the single folder of Dropbox), and also set unique permitted access levels to shared files and folders.
The creators of Tresorit are quite confident in the safety of their product. Actually so much, that they offer USD 50,000 for anyone who can hack into their system. Their confidence seems well-based, as for the 468 days the challenge has been open, none of 900 hackers (including MIT and Stanford) has managed to take the prize.
So what do You think? Do you generally trust the safety of the cloud? Or would you feel safer using a solution like Tresorit?
Sources:
http://weestro.blogspot.nl/2013/11/goodbye-dropbox-hello-tresorit.html
http://lifehacker.com/the-best-cloud-storage-services-that-protect-your-priva-729639300
Swift – Elegance over Cs
Apple’s new industrial level programming language has received appraisals for being as easy to type as a scripting language. For some, scripting languages cause a small frown on the face and an automatic reply something along the lines of “scripting languages such as Javascript are not real languages” or “any language like Python which is not strongly typed is bounded to failure in the long run”. The good news is Apple has done what they do best, which is design an interface around tested and state-of the art IT concepts in computer programming in a marvelous way. The documentation is like a crystal – you can look clear through it and when you test it out, it’s solid! The bad news is that my C#, C++ and Java buddies are too conservative to try it.
Apple has a reputation of going out of its way to make life ‘different’ for their users and developers. While going against the current of other competitors, from the strict protocol to upload an app on the store, to holding the App market restricted for a number of years (unlike the Android App Market), and even moving the ‘close’ button to the left side of a window, it seems that global trends such as freemium and crowdsourcing are finally being considered by the Tech Giant down to its core – software loved by its users.
As hardware is getting better at passing performance testing and software is becoming more elaborate by trying to include more of the world every year than ever before, some old-school developers have sunk into a state of desolation. The dread of learning a C-based language, sometimes even to the extreme of the awfully quirky expressions of Objective-C, has made upcoming developers scratch their head in dismay.
Graphical methods for producing prototype applications such as AppInventor2 from MIT, or Code.org are great appetizers for the uninitiated…”But we are initiated, aren’t we Bruce?” Bottom line is that there will generally be a compromise between choosing a simple-syntax, slow operating programming language such as Python and a strongly-typed object oriented language such as Java, C and other.
In fog of confusions that is developing for the web, front-end or back-end, mobile or desktop, I can give a strong recommendation for Apple’s new Swift programming language. It holds the promise of cross-platform integration like never before. An IOS developer will be virtually unrecognizable from a OS X developer, while the characteristics of the language carry on ‘Swiftly’ from old-school C developers, to newly initiated or upcoming developers. Apple has breached the gap by offering free professional IDE (Integrated Development Environment) software for all Mac users.
How do you get 835 million Indians to want the internet?
With 1.2 billion people India has the second largest population in the world. From all those people, an esthonishing 69% are not connected to the internet. You might think that the reason is a lack of connectivity, but the primary reason is that many Indians don’t know how the Internet could be of value to them. Therefore, Internet.org started a contest for app builders around the globe to build an application that convinces Indians to use the internet. The particular solution in this contest should target farmers, migrant workersm women and students. Winning the competition will be rewarded with a price of $250,000. (Internet.org, 2014)
The underlying motive, according to Internet.org, is that using the Internet could improve those peoples lives. For example, they would have access to valuable knwoledge that could help them finding a job. This is a valid argument, but there might be more to this initiative than just making the world a better place. For the contest, Internet.org started a partnership with a well-known company in the social media segment called Facebook. You may wonder what the actual reasons for Facebook’s envolvement are. Merely corporate social responsibility? I beg to differ. When Facebook is responsible for potentially getting over 800 million people online, they might profit greatly by adding millions of users to its network. (Tech Crunch, 2014)
Facebook is not the only company trying to profit from increased connectivity in development countries, by starting initiatives that sound like they are charity projects. Google recently launched Project Loon: a project that involves launching hot air balloons into space to increase worldwide conncectivity (Wired, 2013). Similarly, one can doubt Google’s motives.
Whatever Facebook’s reasons are, Indian individuals and India as a country can benefit from increased connectivity. Perhaps the fact that Facebook, or Google, are benefiting at the same shouldn’t really matter. Do you agree?
Sources:
Internet.org. (2014). Internet.org Innovation Challenge: India. Opgeroepen op 10 11, 2014, van http://www.internet.org: http://www.internet.org/innovationchallenge
Tech Crunch. (2014, 10 09). Internet.org Offers $1M Prize For Apps That Make People In India Want The Web. Opgeroepen op 10 11, 2014, van http://www.techcrunch.com: http://techcrunch.com/2014/10/09/internet-innovation-challenge/
Wired. (2013, 08). The Untold Story of Google’s Quest to Bring the Internet Everywhere—By Balloon. Opgeroepen op 10 11, 2014, van http://www.wired.com: http://www.wired.com/2013/08/googlex-project-loon/all/
Is the solution for grid electricity storage the new Holy Grail?
Grid electricity storage or large scale energy storage is the collective name for all methods that enable us to store large amounts of electricity inside the power grid. This is a very important and valuable process because it mediates the required energy production between peak and off-peak hours.
Only recently this phenomenon has become a problem, because back in the old days we stored energy in the form of fossil fuels like gas or coal. Evidently this made grid electricity management a fairly easy job because these resources where always available. But In today’s world where we are conscious about the amount of harmful gas we emit into the atmosphere energy generation can no longer be sustained through ways that harm the environment. Therefore`the production is shifting from fossil fuels towards clean and renewable sources.
But this also means that storing and managing energy in the grid is becoming a much harder task! Because now we can’t just turn on the generators, we depend on highly intermittent sources of energy. And this makes the need for efficient and large scale storage of energy all the more pressing!
Currently one of the only viable and “green” solutions for energy storage is hydropowerwher. this techinuque involves harnessing the force of falling water and feeding it into the power grid. This ancient method of energy production however is very location dependent and can’t be used everywhere.
of course there more solution available and other solutions are being researched, even as we speak the capacity of flow batteries is being increased. And in Germany they are experimenting with a cycle where excess energy is used to split hydrogen and oxygen. The hydrogen created in this process can then react with CO2 to generate methane, which can be stored. This process however is not efficient yet. (more information in the references “CO2 methanation”)
The bigger question that I would like to focus on in the conclusion of this article is the following, what if the Holy Grail for electricity storage is not in grid storage at all! What if the answer to storing huge amounts of energy is not finding a new way to store it all in one place. But finding a way to efficiently store and produce it locally.
I find this a very interesting string of thought, not only would this solve the grid storage problem.(because the only reason there is a need for grid storage is because we want to be able to supply everyone in their need for energy at all times) But this solution would also empower the private individuals and instead of letting them depend on the giant energy companies they would dependent on themselves and their community.
So in sum the real question here is, what do you think is the Holy Grail of supplying the energy demand under the current social protocol? Continuing research on new large scale grid storage solutions or localized energy storage and production? Because one thing is certain, we can’t go back to fossil fuels!
references:
http://www.bbc.com/news/business-27071303
Will the bank card replace the ov-chipcard?
After the disappearance of the paper train ticket the OV chip card may be next. Customers of the ABN AMRO bank will be the first people in the near future to check in at the public transport with their bank card. The bank plans to equip three million cards with the new technology. The NS is currently performing the first test with this new system. If the current tests run without problems a test group will be selected and further plans will be made.
To check in people will need to have a NFC chip and a minimum balance of 10 euro’s. The NFC (near field communication) chip is already implemented by ING and ABN AMRO cards and allows people to conduct transactions wireless (the system can be used at the Spar on the campus for example). It enables a two way communication between a bank card and another payment system. The current maximum transaction is 25 euro’s.
The new form of payment may become a financial hit for the NS. The current transactions are performed by Trans Link Systems, in which they are currently the largest shareholder (68 percent). The entire system and firm may become redundant this way.
This new system may come in handy for tourists who don’t own a OV chip card. They won’t have to buy a card anymore which will lower the huge amount of complaints the NS receives per day. The way our wallets look like today will change completely within the next years.
The big question is how long this new payment system will exist. They currently also equip smart phones with this NFC chips. Rabobank doesn’t participate in this new IT project and expects payment through telephones will be the next big thing.
Do you think the OV chipcard will disappear within the next three years?
http://webwereld.nl/beveiliging/82983-ns-test-bankpas-in-plaats-van-ov-chipkaart
http://webwereld.nl/beveiliging/81120-ns-passeert-ov-chipkaart-als-betaalmiddel
http://webwereld.nl/beveiliging/78039-contactloos–pinnen-vanaf-2014-mogelijk-bij-ing
Did Technology made us all lazy and dependent?
How long was it since you last looked at your phone? Seconds? Minutes? Hours? Do you even recall the numbers of your friends you call on a daily basis? I cannot even remember the last time I was offline for a whole day. Nowadays our lives are so convenient due to all the technology we have everything seems to be so easy. Everyday you work with your favorite devices so much you probably cannot do without them. So honestly lets face it, did we all become lazy due to our devices?
Happy Birthday cards.
Earlier days when your best friends birthday was coming up, you went to the store to pick out this amazing birthday card. Later on you would go home and write the best birthday wishes to him. After sealing the card with a stamp you returned to the post office and posted the card to let it be delivered a couple of days later on his birthday. Now you just write a short happy birthday on your friend’s Facebook wall, maybe even attach a funny looking birthday picture that you found on Google. All this is now done in less then a minute where it used to cost you a couple of hours.
I know every place in the world.
GPS provides information to you from places all over the world. It is literally impossible to get lost. In the old days where you had a map to find your place this is no completely replaced with services like TomTom, Garmin and GoogleMaps. A lot of divorces probably never would have happened since the discussion whether or not woman read the map upside down is not more relevant. It wouldn’t surprise me if boy scouts train to use the GPS over determining your position on basis of the stars and the moon.
Can laziness ends human interactions?
Is it possible that in the future we don’t have any physical contact with people anymore. Do we rather Skype or Facebook them than to meet up for a drink? Are we doing everything just by the simplest of clicks or do we get up and live our lives just a little like the old days. Try spending your days without using laptops, tablets or smartphones, just go out get lost or buy your friend that birthday card and post it. There is so much more than Technology.
Sources:
http://www.want.nl/bizar-er-zijn-meer-devices-op-aarde-dan-mensen/
http://www.lifehack.org/articles/technology/has-technology-made-lazy-and-dependent.html
Information Strategy 
Recent Comments