Thursday, July 29, 2004

Since when has choice been a bad thing for consumers?

First things first... I recently started working for RealNetworks and all my posts represent my personal thoughts, and don't represent the company. Ok, with that out of the way....

I was recently baffled when I read Peter Burrows' article on how RealNetworks' new Harmony technology is bad for consumers. For those of you that don't know, Harmony is technology developed by Real that allows users of the new Beta RealPlayer to load hundreds of devices, like the iPod, with music purchased at the Real Music store. What this means is that the thousands of iPod owners out there now can buy music from a company other than Apple itself.

Mr. Burrows argues that this additional choice is bad for consumers because Apple's control over the music service and hardware allowed for the creation of a great customer service that resulted in the explosion of the digital music market. I will concede the point that this closed architecture created a great consumer experience, but does that mean that every tech architecture should always stay closed? Should IBM have never opened up the PC? Should BestBuy start selling their own DVD players that will only play DVDs bought at BestBuy?

History has shown us that it is typically a closed architecture that helps to bring a new technology/product to the masses, because closed architectures are good at creating strong consumer experiences. History has also show that market forces over time break these systems open because as the market and technology mature, a closed system is no longer necessary to create a compelling user experience. In addition closed systems are typically more expensive than an open system because a single company is typically not able to sustain an advantage at every component in the architecture. Therefore it is inevitable that over time the closed systems that helped to establish a market must open up to help really grow and mature the market. Should the company that controls the closed system be able to dictate the pace of an entire industry? Should that company be able to lock their customers into their products as long as they would like?

Fundamentally Real is simply trying to offer consumers more choices when it comes to purchasing their digital content. Before Harmony, if spent $300 on an iPod, the only legal music service I could use to fill my iPod was iTunes. So lets say I spend $1,000 on filling up my iPod with music and in 3 years I want to buy an portable music player from iRiver... all of a sudden I realize I can't take the AAC files I bought from Apple to my iRiver... does that sound right? Now with Harmony, when you buy your music from Real you can load that music on ANY of the hundreds of portable devices that the RealPlayer will support. No more lock in! At the same time, no company is forcing you to buy music from Real or use the Harmony service (like you were forced by Apple to use iTunes).

So I ask you... how is this bad for consumers? This is clearly good for consumers. This is choice. This is free markets at work. This simply good for everyone who believes that consumers shouldn't be locked in.

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