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Friday, Sep. 7, 2007 at 6:26 pm

Blog Buzz: Customers Take a Bite Out of Apple, MTV Goes Website Crazy

By The Grok
September 7th, 2007

First up today, Lost Remote‘s Michael Gay reports that MTV Networks will finally give hit shows their own websites:

Over two dozen new websites are coming from MTV Networks, inlcuding stand alone sites for shows like “The Daily Show,” “The Sarah Silverman Program,” MTV’s “Engaged and Underage” and Nickelodeon’s “iCarly.” The Hollywood Reporter says will include video archives of every episode broadcast, and will post the new shows within hours of them airing. With these new websites, MTVN will operate over 300 websites. According to the report, the sites join a growing list of targeted Web sites that the Viacom property has launched in the past year in conjunction with its TV shows. Other sites include Comedy Central’s, MTV’s YoMomma.TV and and VH1’s BestWeekEver.TV

On the spot with other news, Lost Remote‘s Steve Safran hips us to a Variety report that…

[...] Apple is looking at cutting the price of iTunes TV show downloads from $1.99 to 99 cents:

But entertainment companies don’t seem to be rushing to embrace the idea. Indeed, the half-price plan may have contributed to NBC’s decision last week not to renew its current deal with Apple (though if NBC had simply let its contract automatically renew, the current price of $1.99 would’ve stayed in place).

“I remain puzzled by Apple’s pricing strategy,” Safran insists. “Why, when it has the ability to let all prices float according to what people are willing to pay, does Apple insist on flat pricing?”

Good question. An especially good one in the wake of what some — well, just us, really — are calling “Applegate”. You know, the news that they dropped the iPhone price from $599 to $399 overnight. Apparently, no good deed goes unpunished. Oh, how quickly people forget the endless pre-launch banter over how long it would take for the iPhone’s price tag to drop.

Beyond Madison Avenue‘s Danny has one of the better mixed critiques of “Applegate”. Not only is he upset with the price retraction, but Apple’s deal with Starbucks seems to warrant this double-shot of venom:

[...] Yes, Apple made some noise yesterday. Yes, they released the long-awaited iPod Touch. Yes, they pissed off somewhere near 1 MILLION of their most loyal customers by slapping them with a $200 “early-adopter” fee on the iPhone. But that’s not what I want to talk about.

I want to talk about one of my favorite companies…Starbucks (notice the seething sarcasm here) and the asinine decision that Apple made to partner with them. In case you haven’t heard, when you walk into Starbucks with your shiny new iPod Touch, a new button featuring the Starbucks logo pops up on screen. This nifty little “feature” will show you the last ten songs played at that Starbucks and gives you quick access to purchase those or any other song from the iTunes store without having to pay Starbucks for wifi access.

Let’s examine this…first off, it’s bad enough that Starbucks doesn’t just offer free wifi already. Heck, the NYC Parks Dept. has managed to offer free wifi. Second, and more importantly, what exactly is the end user getting out of this partnership? “Woohoo, I can spend money on iTunes while I sip my over-priced coffee!” That’s not a benefit. Sorry, but giving me the opportunity to spend more money on your products isn’t giving me anything at all. And if you’re not giving me something with a feature, then don’t bother including it. Apple, you of all companies should have this hard-wired into everything you do. In fact, you used to, but this is a pretty good sign that you’re slipping. Talk about a venture aimed to doing nothing other than sucking more money out of your consumers.

OK, the Starbucks WiFi point is pretty spot-on. But, seriously… Isn’t the iPhone price drop just a matter of perceived value? It’s hard to know if iPhone owners are upset that exclusivity has diminished among their ranks, or if they’re just mad at themselves for being wild enough to spend six bills on a phone that can’t even teleport you to far-away planets. Besides, anyone who already owns an iPhone has something better than money: $100 in Apple Store credit.

Kudos to Steve Jobs for owning up to his mistake, and for pulling the old “store credit” play. That’s enough loot to get a free iPod Shuffle. Or perhaps a gold-plated iPhone cozy with a hidden GPS transponder to locate the device if it’s ever stolen or breathed-on wrong.

[Catch Blog Buzz weekdays on — or subscribe via iTunes. Bryan Eisenberg & Robert Gorell host the podcast, featuring a rundown of the day's top stories from The Grok's Interactive Marketing Buzz.]

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Comments (8)

  1. I agree with most of your post, except for the bit about Steve Job’s “Mistake”.

    The pricing of the iPhone was a perfectly executed plan. Every single detractor of the iPhone has started by attacking the price point. By introducing a revolutionary device, Apple had to be prepared to deal with the possibility of the unknown. If they offered the iPhone at 399, they would have created more problems then they would have solved. Also, what is it worth to be the first person to have an iPhone.

    My brother has an iPhone, he even has a story about how a friend stood in line, bought it, and sold it to him, AT COST!!! What price tag can you place on this story?

    I do not yet have an iPhone, and I am glad that I can stop waiting. I have been in the technology field long enough to know how the game works. Anyone that is angry that they “paid too much” is only angry at themselves, and missing the importance of the value of their “investment”. I still have my first iPod. it is really cool. Of course it does not do photo, of course i does not have video, of course I spent as much on it as an iPhone now costs. But it is cool. It has the great honor of being the device that held a backup of my photos when both of my other backups failed me. There is no price tag for this kind of cool.

    Apple is moving at an incredible rate of speed. Apple is honoring their customers that have invested in the coolest technology on the planet.

    The “mistake” you speak of is [imho] a master cult leader in action. Every person that I have spoken to has listed price as the number one reason why they do not own an iPhone, number 2 on the list is AT&T, and the exclusive deal.

    Almost everyone knows someone that has an iPhone. Everyone that has an iPhone has revelled in their exclusivity, as everyone around them has realized that they are sitting on a fence. This fence was held up by a pricetag, and that leg is broken.

  2. James,

    Perhaps “mistake” was a poor choice of words (I wrote today’s podcast), since I was really referring to how it’s been covered in the press thus far. It wasn’t my intent to reiterate that point. The only mistake people seem to be making is to over-analyze what Apple’s done. To me, this is genius on all accounts.

    It seems silly to me that the stock closed down today, even. People freak out over ripples like this and fail to see the big picture. Apple once again dominates the conversation with the best word-of-mouth-driven PR machine out there: its products.

  3. Robert,

    I think that you are correctly reflecting some people’s view of the price cut. Name one successful product that has a 2/3 drop in price 2 months after the launch. I hope that people give the idea of “mistake” a second thought.

    Right now, AT&T has worked out their activation problems, and the production pipeline is ready to put out some iPods.

    I have friends in Europe that are on the edge of their seats right now. The discussion is who is going to provide the service for the iPhone.

    I appreciate your response.

    About the stock price, money is only one way to measure progress. The price jumped up 20% when Jobs announced the press release, you are right- people freak out and throw money in all directions.

    Innovation is the key to the cult of Apple. -Genius,(as you said) – making a partnership with starbucks that Microsoft should have been able to land.

    -Genius, a board member of Disney, (Owner of ABC) setting his ringtone to “give peace a chance” for when NBC calls!

    I think that every one who believes in innovation loves it when the big bad companies of the twentieth century get smacked around by the power of permission, our power of choice.

    Everyone who saw the keynote, watched it because they actively sought it out, they chose it.

    The “finger tips” videos have been viewed 15 million times? -Genius

    I was at a clients office today, they had the radio on. I had to go to their office because their database runs on an access database engine that uploads to their web server. Don’t get me wrong, I enjoy seeing them face to face. I cannot honestly remember the last time I have been subjected to three hours commercial radio. I have not realized how bad it has become. I was “shocked and awed”.

    There are a lot of companies freaking out. Any company that increases my power of choice and respects my permission gets my vote. I hope they freak out enough.

  4. James – I think “mistake” is the perfect word. From a financial standpoint, you’re right on. It was a perfectly executed plan to wring every last penny out of the early adopters and then to attract the masses shortly there-after by chopping the price by 1/3.

    BUT, and this is a huge but, this is, IMO where the “mistake” lies. Think about who those early adopters were. They’re the Apple fanatics. The people who line up every time a new product is released because they want the latest and greatest. They’re the people who convince every PC user they know that it’s wrong to use a PC. The early adopters are the life-blood of Apple’s brand, despite their small percentage of the market. And pissing them off is a BAD thing, no matter how you look at it.

    Especially for something as stupid as money. For every $200 extra you made on them (or $100 as the case may be now), you’ll grab an extra $1000 when they buy a new computer once a year instead of once every 2 years. I think “mistake” is putting this lightly. Lucky for Apple, they have a strong enough, fanatical enough user base to survive it relatively unscathed…this time.

    However, that’s been talked about a ton. I’m not really saying anything new or groundbreaking here. I AM, however, annoyed by the Starbucks partnership. Starbucks is past its prime. It’s days as a Purple Cow are long since over. They’re on every street corner and their once glorious commitment to the experience doesn’t hold water in the slightest anymore. And, on top of that, this partnership doesn’t do any good for anyone other than Apple and Starbucks. How often have you been sitting in Starbucks just itching to buy whatever song is playing?

    By the way, thanks for the link!

  5. Danny – I think your argument for it being a mistake is compelling. I wonder if “unscathed” is correct. Brand erosion rarely occurs all at once it’s more like Chinese water torture. As Apple expands its customer base beyond the traditional hard core fan base they will have less good will to call upon.

  6. Bryan, you’re absolutely right. I use “unscathed” rather lightly, but in fact they haven’t escaped unscathed no matter how many people they’ve placated by offering a $100 refund. There are already articles popping up about Apple as the next M$, and other questioning Apple’s motives as a company. These statements would have been blasphemy a couple of years ago. But then came the move to a more mainstream Intel chipset, and suddenly you’ve got Apple fanatics running (gasp!) Windows on their shiny new MacBooks. Add to that the slew of quality control issues that their newest lines of computers have been through, and you’ve got the makings of a company taking a sharp turn toward the mainstream market.

    Your comparison for brand erosion is right on. I think we’re seeing the beginning of it, but because its a long, slow process, it’ll probably take a while for us to see what really pans out.

  7. [...] you heard about Applegate? This past weekend there were interesting comments by Danny from Beyond Madison Avenue in regard to our coverage of Apple's $100 refund policy. [...]

  8. Great post guys!

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