I have to admit that I was disheartened to see the article in the New York Times, Group of Magazine Publishers Is Said to Be Building an Online Newsstand. My understanding from this article and others on the topic is that Condé Nast (publisher of Wired and other leading magazines), Time Inc, and other magazine publishers are working with Adobe to create a new “iTunes for Magazines”. It appears to be a complete platform of content, shopping site, digital rights management, and distribution to the rumored Apple e-reader due out next year.
This announcement comes at a time when we have an explosion of platforms for e-readers: the Amazon Kindle, the Sony eBook reader, the imminent Barnes & Noble Nook, and perhaps others. Users will not be able to read content bought on one platform on the other readers, which means consumers need to choose wisely — or hold off. In the case of magazines, there is already a great application and store at Zinio, that works great on PCs and tablets.
I am all for electronic distribution of content, and am glad to see the traditional media players get with the program rather than try to fight it. And I am all for competition; it makes our system work in the long run. But what is it with all these “platform plays” of late? When will people learn that it is often better to stick to what one knows and go with the prevailing technologies, rather than create a whole new platform?
By platform, I mean the proprietary links among the content, user interfaces, delivery methods, applications, devices, and so forth. iTunes is a platform play, and we can thank Apple for legitimizing the whole digital music industry with their design. Platforms can make real sense when (a) there are no other solutions in the market to which to attach, and (b) when it is necessary to control the end-to-end experience (as Apple argues) to ensure happy customers. Platform strategies in too many other circumstances are driven by the “not invented here” syndrome, a desire to keep or get a bigger cut of the revenues, a desire to have additional features, or a hope to become the dominant platform and force the competitors to deal on your terms. But so often platform strategies get in the way of what is right for the consumer and hurt the competitive position.
Consider the following examples:
- XM Satellite Radio and Sirius chose different technologies that required different equipment to decode the signals. As a result they confused customers who did not want to have to select one or the other, they spent most of their early years fighting against each other, and by the time they merged it was too late to save the category.
- Just about every wireless carrier created their own “walled garden” of content,applications, and commerce — and restricted user’s access to the outside world. Most consumers found the content in the walled garden to be inferior even to the hobbled access to content on the outside, and revolted. This led to a delay in the growth of the mobile internet, a waste of resources, and a growing consumer resentment of the wireless carriers.
- AOL fell into the “walled garden” trap with their internet service and were slow to open access to the web for their users. This strategy backfired. Now they are enjoying some success as a content provider.
- While Apple’s iPhone platform was a powerful driver of smartphone growth and almost single-handedly built the category, it is now under fire for being a walled garden in its own right. That is increasing the appeal of open platforms such as Google’s Android.
- In the U.S., the wireless carriers diverged in the 1990s into GSM and CDMA as distinct platforms. While CDMA is on the wane worldwide, and LTE 4th generation data will bring back a convergence, the U.S. consumers have paid a price for there being multiple platforms — limited roaming domestically and internationally, more expensive handsets, inability to move from one carrier to another, and devices locked into different networks.
Developing, winning, and sustaining leadership with a platform play is a very tall order. There is usually room for only one or two platforms to succeed in any given industry. My challenge to the strategists in the media industry is to weigh the pros and cons of joining an existing platform versus creating a new one. While winning with a new platform play might yield better results if it succeeds, my sense is that the time-adjusted, expected value of the platform play falls way short of going with the flow.