There are two more bits to the story that are worth thinking about: (i) what would you make if iPod's didn't exist but you wanted a movie playing device (ii) the startling business transformation story that is behind both iTunes and eMusic, and how un-British both of them sound...

First the technology:

a) I don't want "near DVD quality" - just like I am not greatly enamoured of the "near CD" quality offered by iTunes and the slightly higher bit-rate eMusic. I want as good or better than what I can get off a revolving piece of plastic, since I am paying for the privilege.

b) When am I going to watch a full-lenght movie on an iPod? Answer - in extremis. What I want is to download my movie and have it transferable to any medium I want to watch it on: my computer or even better one of those great big push-off five foot TV screens like my producer has in his bachelor pad for playing Xbox on. Now Steve Jobs previewed a Q1 2007 release gadget called an iTV (hint, Steve, that is not gonna be the most popular brand name in the UK, unless you want to confuse the viewers of a long-running soap with a cult gay following). This device is just really a wireless lan that beams the contents of the iPod to your telly at "near DVD" quality.

Well how about this as an alternative: you design a box that is basically a storage device; you make it little or large depending on whether it needs a lot of storage, a bigger screen or a longer battery life. You standardise the format for download at DVD quality or use media converter change into DVD format. And you put a plug in the back of it that will play it at that quality straight into my TV?

Second: the business transformation story. What Jobs has done is transform Apple, which was an ailing seller of niche desktops, into a business where a proprietory storage device sells at a massive mark up because it is the only way of buying something you want. If you think about it in analog terms: it would be like someone making shedloads of money from selling shop window space and the bags to carry your groceries home in, and the fridge to store them in. No matter how angry the digital Hizbullah of the hacking world get about this, you still have to tip your hat to Jobs for this.

And yesterday he was showing his mettle in the next phase of making that business work: the incremental improvement, the cutting of deals with major partners, the phase that does not really need to have the boss surrounded with attractive pop musicians but in which investment banks pore over the quarterly returns. One example of this is the - I had assumed cheesily unsuccessful - decision to bring out a pair of Nike trainers linked to an iPod. It turns out this has been a runaway success and that the boss of Nike had to get his own figures double checked because he didn't believe they were selling so many.

Now to eMusic. This was one of the first dotcoms. It sold MP3s. Its lunch was eaten several times over by other companies and it got taken over by Universal, who realised they were sitting on a business selling an open standard of music at a low price when what thye wanted to do was sell a copy-protected music at a high price. Cue, inevitably, the venture capitalists. They took eMusic off Universal's hands, moved it from San Diego to New York (ie from the edge of the civilised world to its centre) and wham, bam, within a couple of years it becomes the second biggest download service in the world. They got rid of most of the staff, ripped the original business model to shreds, installed a new one. There are a lot of challenges ahead for eMusic, not least the fact that 8,500 indy labels signed up only account for 30% of the 1.7 million songs in existence, and the big four record companies own the rest. However it is a business transformation story worth studying.

Finally on the Brit angle. There are about 3 million people in this country employed by firms owned by private equity, ie like eMusic. Private equity here is wildly profitable - and as CBI boss Rchard Lambert said last week very under-scrutinised by the media. The thing about eMusic, and iTunes for that matter is: it could only happen in America. In Britain the private capitalists are the entrepreneurs - but they still exhibit a greater penchant for buying and selling high-street fashion stores, carpet warehouses and the like. Or at the other end tiny companies based in university towns that specialise in turning fish DNA into something useful.


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