There are many different ways to use digital content to one’s advantage. There are mobile applications, applications that are used on multimedia devices, and content that can be stored and purchased on the web.
Mobile applications are games or services that are downloaded or purchased from an application store and stored on a smartphone. The application then runs it’s specified function. This has been the most popular digital content resource recently. With the advent of the iPhone and other popular smartphones, application stores, or “app stores,” have been one of the most profitable areas of the digital content market. These applications range from simple games to services that monitor sports scores. In the early onset of Apple’s app store, Apple took 30% off the top of whatever an application’s developer charged for use of their application. In the first ten months, Apple generated $20-$45 million. However, many analysts are predicting that the app store will turn into a $1 billion revenue source for Apple. If $1 billion is for Apple, which only takes 30% off each application, then the vendors can get in on a lucrative market. Apple says the billionth application was downloaded on April 23, 2009 and there are as of November 2009, over 100,000 applications with two billion downloads in the Apple app store. An independent developer can have a desired application in as little as three months and can have enough income to build a developing team. Imagine what an established company with income and real money could do. MacResearch lists what it takes to have a successful application in the app store. They list:
• A large target audience, preferably every iPhone and iPod Touch owner
• An immediately-appealing app, to push the impulse purchase
• A low price, to help the impulse purchase... more
• A good icon and a good description, to help the impulse purchase... even more
• A well-crafted app
• Optional but recommended: a good marketing push in the first couple of weeks after launch
• Luck
• Money in the bank and/or a real job
With these criteria, a business can craft a model to successful development of applications I nthe app store. In the wake of this success, Verizon and Blackberry have released their own app stores that they are advertising heavily to compete with Apple. There are many opportunities in the mobile application world, but the key is to have a useful application that people want to use.
Another area that digital content is being used extensively in is in the multimedia world, such as the movie rental company Netflix’s partnership with Microsoft to bring their services to Microsoft’s popular Xbox Live platform. Xbox Live is a service Microsoft provides, at a one time fee, for their Xbox customers to connect and play video games together. This partnership began in Fall 2008 and benefits both parties greatly. Netflix gains access to Xbox Live’s twelve million members while Microsoft gets access to millions of Netflix members who may purchase a Xbox 360. Netflix experienced an increased profit margin of 45% with ten million more subscribers. Microsoft is seeking to make their game system a multimedia device that serves more purposes than just video games. They recently have integrated social networking sites Facebook, Twitter, and Last.fm into free downloadable applications. I believe agreements with Microsoft or Sony, with their Playstation 3, can benefit application developers if these companies see opportunity.
A third area for digital content is online marketplaces such as Amazon.com. Amazon.com started out as an online bookstore then they moved on to sell more than books to where they sell just about anything now. Amazon recently introduced the Kindle, a device that downloads eBooks from Amazon and other vendors that can hold 1,500 books. The Kindle is in direct competition with other similar devices by Barnes & Noble and Sony. The Kindle is also an application in the app store, which is finding more universal appeal on the iPhone rather than buying the rather expensive Kindle. However, the Kindle saves money for the company and the customer because everything is digital rather than shipping a physical book. Also, eBook sales are expected to reach 28.6 million units by 2013. Another area that is emerging is the concept of a digital content online marketplace. Some sites, such as tidwit.com, are intermediaries between artists and content. They take an artist’s content and sell it online for them for a cut of the profits. This makes a common hub for artists to sell and communicate about their art. No forerunner has really emerged in this area, so an investment here could lead to a product that becomes a household name like Amazon or eBay.
In conclusion, I believe there are many opportunities in the area of digital content. If T.A.P. has a specific area that they have expertise in, they should follow that. The app store seems to have the most potential; it is only growing larger and more profitable. Also, competitors see this success and launch their own app stores, so there are many opportunities in this area. The online multimedia applications would be agreements with specific companies that would be very successful, but they would have to provide a service that the agreeing company could see as being very popular. The final point, the online content marketplace, is a relatively untouched area that if someone could take hold and boost a company, they could have a huge advantage in that field like eBay and Amazon enjoy now. Basically, it all comes down to what content you have and what others perceive is the value of that content.
Reference List
TidWit - http://www.tidwit.com/WhatIs.aspx
http://www.mediafuturist.com/2009/11/the-future-of-digital-content-and-telemedia.html
http://www.instat.com/abstract.asp?id=27&SKU=IN0904509ID
http://www.msnbc.msn.com/id/25680004/ns/technology_and_science-games/
http://www.appleinsider.com/articles/08/06/11/apples_app_store_could_emerge_as_1_2b_business_by_2009.html
http://news.softpedia.com/news/App-Store-Applications-Barely-Making-Any-Profits-112589.shtml
http://www.apple.com/ca/press/2009_04/app_store.html
http://en.wikipedia.org/wiki/App_Store
The business model for iPhone applications - http://www.macresearch.org/business-models-iphone-applications