Apps and the Mad (Middle) Men

Kevin Rose (Digg.com) posted this on his blog: "This will change everything" Apple is throwing again one of its regular "Event" this September, and aside from the highly anticipated iPod line revamp Kevin and others are speculating that Apple will launch a revolutionary product that will turn AppleTV from an hobby ( Steve Job quote ), to potentially one of the strongest revenue streams for the Cupertino company."

Apple TV is currently running a streamlined version of FrontRow, a viewing application to playback iTunes files on a home TV; what Kevin is forecasting is that the new AppleTV will instead run on a new version of iOS (currently running on iPods, iPads and iPhones ) and will introduce the concept of "product based Apps" instead of "iTunes centered playback".

This is a revolution because it will allow content producers the possibility to create their own Apps for streaming shows directly to consumers, bypassing the traditional local distributing companies. So in theory I can buy House MD episodes ( produced by Fox ) without having to subscribe to an OSN Network package. In all honesty, I don't want to pay for a bundle of channels I am not interested in. I want to decide how and where I watch my content (TV, my iPad, my computer) rather than it being restricted to my television and digital decoder.

Content producers will eventually prefer to pay a small cut to Apple (and directly interact with their audiences ) rather than selling entire seasons to local broadcasters and have them generating revenues through their advertisement. Apple is also intensely working on their iAd solution that will give Apps producers the opportunity to generate extra revenue through targeted advertisements.

Apple has already revolutionized the music industry and there is no doubt they are willing to do the same with the TV business. The main opponents to this new model are without question the local telecoms and broadcasters who are the "middle-men", "the one-stop-shops" of the industry. They have been surviving for years by simply redistributing (usually old) programs produced by principles. The only other player that can suffer from this innovation is BitTorrent, but then again, this is something that content producers will also see as a great opportunity.

Here's a simple analogy: Instead of going to Carrefour to buy groceries, you'll have a range of Apps, each specializing in its own specific product. These Apps will then give you the possibility to purchase products directly from them and have it delivered to your doorstep. It is really looking like we are moving towards an economy where big conglomerates that offered one point of sale for a vast array of products (in Carrefour I can buy onions and a big chainsaw, if I need one) to an economy where producers can go directly to consumer via an App and cut out the middle men. Mass distribution is becoming more and more accessible over the web (Just look at viral content); therefore, the added value will be in the expertise that niche providers have to offer.

The local media industry will then need to change accordingly and only FTA ( Free To Air ) broadcasters will survive either via government subsidizing ( Dubai Media Inc ) or via specific revenue generating models ( MBC ) that are still somehow sustainable because they target emerging markets with limited access to technology.

Pay per View will be strong for live events ( sport, the Oscars etc..) where the Apps model still can't work due to bandwidth limitations, but for all other content where the live component is irrelevant, consumers will prefer to purchase single programs rather than having to subscribe to a entire packages.

The App model allow independent producers to bypass the existing local media landscape and self publish themselves directly to consumer. As I type these letters, there are thousands of A list music artists that put their music on iTunes and don't pay a single cent to Virgin and other mass distribution outlets.

This is a fantastic opportunity for Middle Eastern based independent producers. No more knocking on the office doors of the VP Pf Acquisition as the only entry point.

Also this will push local telecoms to start looking into content production rather than acting as simple pipes to distribute data and I am sure Etisalat and Du are already looking into this avenue.

Some might argue why people would buy a product via an App when they can acquire it for free on file sharing platforms? In 2008, Kevin Kelly posted an entry on his blog listing eight things that are better than free, and one of them was "immediacy"; I totally agree with him.

Why we still see masses of people going to watch movies in theaters when they know that if they wait a little time they can download the movie for free (or buy it cheap via a DVD lady) ? It is not simply because we want to enjoy the experience on a big screen or share a night out with friends, it is because we want to be the first to see it so we can then share our opinion with our peers: we want to be the first to know, that's part of being human.

The same psychology will work with Apps : I am ready to pay a premium to be the first to see an episode of Dexter perfectly knowing that I will be able get it for free after two weeks. The proliferation of social media tools will also foster this behavior. I will not only be able to tell my close friends how the last Entourage episode went, but also share it with my entire extended (Facebook, Twitter) family.

So, locally who is against all this? The middle-men. Those who have centered their media business on monopolizing the distribution chain. Its time to reinvent themselves and start producing original, home made content. Either this or they will be destined to disappear while we, the consumer, become the winners of this revolution.

We will be able to buy what we like and enjoy the content on our terms.

So, Apps anyone?