Podcasts - Small videos, big profits

Remember when the term 'MP3' signified a scurrilous, geeky activity? Now they've cleaned up their act and gone corporate, propping up profits at one of the world's best-known companies. But Apple's music business won't grow forever. So, as always in tech, the question is - what's next? The answer seems, to the greater public, as forlorn, nerdy, weird and grey-market as MP3s ever did - Podcasts. It's going to be up to Apple to bridge that gap in public acceptance from niche market to mainstream. They'll take on this task, because Podcasts represent a far greater opportunity for Apple than music has been.

This article speculates on what Apple's next big thing will look like, and what it will mean to the company - and our culture. It addresses most or all of the frequently cited concerns regarding a product of this nature. (Be sure to check the bottom of this post, where we have a series of links related to this subject.)

Yesterday's New York Times' Circuits pointed out that 'Podcasts' are not broadcast wirelessly, like the television or radio broadcasts we're familiar with. From that remark, we sketched this concept for a new iPod product category. What's significant about this new product is not that it embodies video (Apple's plan to release a 'video iPod' is an open secret now), but in how that video product is created, paid for, and delivered. Considering the "vanity press" quality of many current Podcasting efforts, few now believe that Podcasts will be as important to Apple's future as iPods are to its present. We believe Apple sees this 'different', and plans to introduce a product and services along the lines we're describing here. For want of a better name, we'll call this device the iPod Video.

Form factor: With a product as wildly successful as the iPod, Apple will not want to stray far from a well-accepted look-and-feel. Yet, since all new iPods now have color screens and photo-display capabilities, there is a need for differentiation in a high-end product. Our design keeps both needs in mind.

Below, you'll see the modest sacrifice in usable scroll wheel area that we exchanged for a meaningful increase in display size (it's 1/3 larger than white iPod models). We did this by moving the selection button from the middle of the scrollwheel to just beneath it. We placed a subtle, fading grey detail around the button to connect it visually with the scrollwheel, and to be somewhat consistent with the previous placement (which had surrounded the white button 'target' with grey). This makes the button look less 'naked', and makes the controls feel warmer and more holistic. The grey is painted inside the plastic shell, just as the white color is, so that this subtlety won't erode with use. We also slightly darkened the perimeter of the scrollwheel, to visually compensate for its reduced size.


The center area of the wheel has been reduced to the size of a pencil eraser. It now has no function except a tactile one - it helps guide the finger where it needs to go. Since Podcasts generally run longer than MP3s, users will do less scrolling and more screen-gazing with this iPod. It's a good trade-off.

The icons around the wheel were not reduced in size from current iPods, but we did remove the only English word ('MENU') on what has become an international product. We replaced it with a generic 'screen shape' with lines suggesting menu choices. In addition to the international factor, we removed the word so that the iPod Video could be operated with either hand without being 'upside down' (software options allow the display image to be flipped).

(Note: The scroll bar shown at the display's right would not appear in most Podcasts. It would come and go as dictated by need, as it does now.)

Podcasts that resemble broadcasts: There was an article and a related list in today's Times on Podcasts. So there's no need to explain Podcasts here, for anyone requiring such an explanation. Apple's influence in support of Podcasts is beginning to be felt, as Hoboken' Rock City's Mike C. has reported. This influence is only at its most nascent stages, and is the key to this product's success.

At the beginning of this piece we noted the Times' explanation that 'Podcasts aren't broadcasts'. In consideration of the increasing demand for wireless products, we concluded that this device's success would hinge on its ability to be as wireless - and as independent of any computer - as possible. We believe Podcasts should be more like broadcasts, and we believe Apple needs to be as much a Sony-type consumer electronics maker as possible.

Our goal is to make this a product that can be configured once, then never attached to a computer again if the user so chooses. (A user can do that now, of course, if the user is content to stick with the initially chosen music forever.) We note that many cottage industries have emerged to meet the musical set-up and maintenance needs of iPod users. Our conclusion is that users want to play more, maintain less.

There are several ways this can be done. One is for the iPod Video to have built-in cellular or satellite radio capabilities. Cell is more feasible. The device would update subscribed Podcasts during off-peak hours (free nights, weekends) on a user's cel plan. This could be overridden by a user who wants to grab a Podcast on the fly, and is willing to pay for cell time to get it (an incentive for wireless services to support this product).

A simpler means to this end is to build internet connectivity into the iPod Video's charging station. While charging, the user's subscription preferences (stored on Apple's iTunes site) would govern a search for subscription updates, downloading as needed. (Downloads could be interrupted partway, to be concluded at the next charge, just by removing the device from the dock.) An avatar chosen by the user ('Hello Kitty' is shown here) would ask simple questions on an interactive touch screen, updating preferences as needed. (The avatar is 'smart' enough to learn from the user's reaction to its questions, as well - if the answer is consistently 'No', it asks different questions, or asks only rarely.)


Such interactive capabilities are one reason this new breed of iPod would be strikingly different from its predecessors. This model is essentially the first that complies user patterns, saving lists of frequently played Podcasts and music which are uploaded to the user's own computer and/or to Apple as the user desires. This data has many uses - comparisons can be made with respected users with similar tastes, to unearth new music suggestions which are sent to the user's avatar. (Re privacy concerns: offering such information is opt-in, and user info would be encrypted.) WIth all parties opting-in and pre-approved, and with avatars attuned to user's moods, these communications via avatar can have a powerful impact, strengthening the user's bond with the device and driving sales.

Building a Podcasting industry: The Times' articles' noted the 'homemade' quality of many of today's Podcasts, and this is where Apple can have a major impact, by enabling Podcasters to build viable businesses. Apple could do this primarily by selling and inserting paid advertising into Podcasts. Advertisers would be supplied with Apple's Podcast ratings, including popularity (number oif downloads), subject matter, and listener feedback. Apple would collect fees, insert ads, and pay Podcasters. Users could still search for Podcasts without ads, although it's likely the successful paid Podcasters would attract a greater audience despite their ads. There could also be an option to pay for Podcasts that otherwise would contain ads. Marketplace forces will determine ads, lack of ads, and prices (or lack thereof) of podcasts.

Apple entered the music business, and (it's been suggested) redefined it. But it didn't create something that wasn't there (i.e., some musicians had made money from their craft long before Apple came along). With Podcasts, Apple (like eBay before it) is on the verge of enabling a whole new type of small business. And probably a few big ones.

Types of Podcasts: We often hear about 'talk-radio' Podcasts, 'pirate radio' Podcasts, and music videos being touted as the basic programming for a handheld video device. We've also heard that no one wants to watch a DVD on a screen this size often enough that it's probably true. The lack of compelling programming for small video devices is often cited as a warning against expecting an iPod-like audience for them.

For the record, we've never believed feature-length films were the killer app for a video device this size. Nor do we see music videos or talk radio as sufficiently compelling to move the sales needle in an iPod-like fashion. What needs to be understood is that a new type of device demands a new type of programming. The first wave of Podcasts are pointing the way. But there is more to come - and much of it already exists. It's just not in 'Podcast form', yet.

There is a wide variety of material already available that would make ideal Podcasts, having already proven their mass appeal. For instance: Millions of daily viewers watch Podcast-size movie trailers online. It's time to package these trailers in one place, perhaps with commentators, and offer them as Podcasts. There is a great deal of creative Flash work being done today - here is one outstanding piece that was done to promote a film. Such material should be packaged as, say, a 'best of Flash' Podcast. We have seen some great slide shows and group photo efforts on Flickr which would be wonderful Podcasts. There are many possibilities well-suited to this medium. Sponsored 'How to' videos for simple tasks (fixing a sink), for example, could be downloaded the moment the sink leaks. (Unlike your computer, an iPod Video device can be held in one's hand while underneath the sink tackling the problem.) Video greeting cards, sent by friends to your avatar's attention, would be a big hit. What's required to bring a burgeoning Podcast industry to fruition is solid support from Apple, and there's every reason to believe that the company understands this.

Then there's the sort of stuff that 'everyone' will have on their iPod video. A few years ago, Apple did a 'what's on your PowerBook' ad campaign. Expect some similar marketing for this new device - but this time, it'll stick: Cell-phone movies of the cat. Baby pics (forwarded automatically to grandma's avatar as soon as they're available). The company's big PowerPoint presentation. (No one's going to put together a big company presentation and mothball it anymore. Employees will be obliged to carry them around and learn their talking points.) The boyfriend, the vacation - all the pics that used to go in a wallet, and more. Google maps - interactive and animated (and sponsored by AAA), in a package including street images, places to eat, etc - all created to order just by using Google's "Podcast this" feature. ('Podcast this' buttons will take their place along 'email this' and 'print this' buttons, wherever site information repurposed into Podcast form exists.)

The interactive potential of this new product suggests many other new uses, such as shared databases and games. (The standard inclusion of cellular data transfer would facilitate this, although it is not essential for the product's first iteration. Workarounds could include addons allowing 'live' net access in WiFi zones.) Just as no one today uses a computer without internet service, no one's iPod should be an island. The product that has drawn barbs for creating a society of isolated Zombies is about to start a process that will bring people together.

Advantage, Apple: By giving away software tools that enable easy Podcast conversions from Flash, PowerPoint, HTML, iMovie, iPhoto, etc., and bundling this software with new computers, Apple can hold sales steady right through their transition to Intel chips. Many observers contend that, as the Intel transition approaches, sales will slow (no one wants to buy a computer that's about to be discontinued). The creation of a significant Podcast audience, and the tools to reach it, will arm Apple with compelling products that will trump concerns over its impending transition.

{Daring Fireball posts a related article on Apple's embrace of Podcasting. Always On quotes Steve Jobs on the video iPod: "It's not on the horizon." But Om Malik quotes a couple of major media sources proclaiming the very opposite. Forbes improperly, but predictably, focuses on music videos as the 'killer app' for video iPod devices. The generally-prescient Robert Cringely ponders the video iPod (second half of the post). Home Upgrade particularly appreciated Cringely's piece. Droxy, the Digital Radio Blog, is very concerned that Apple won't 'get it' and will let the big boys dominate Podcasting. MacWorld plays up the Apple-vs-Microsoft angle. CNET and ZDNET follow the bread crumbs. Some are speculating that Apple will buy this company. New Media Marketer discusses advertising in Podcasts, while the Wharton School considers whether Podcasts can be profitable. And our more technically adventurous readers may be interested in making 'enhanced' podcasts.}

More about Podcasts: A satirical video from David Pogue, an article from The Washington times.

{UPDATE: Apple launching video iPod next week?}

Categories: iPod, Design