The Firehouse

It’s strange that nobody has yet analized the reasoning behind Apple’s new Genius feature. The official version is that Genius will recommend you music you may like based on what you are already listening to, and can create playlists of similar music to the one you are currently playing on iTunes or your iPod. This in itself is great, but – I was already getting recommendations for similar music to that I purchased on the iTunes Store.

The Genius license agreement reads thus:

When you opt-in to the Genius feature by checking the box below, Apple will, from time to time, automatically collect information that can be used to identify media in your iTunes library on this computer, such as your play history and play lists.  This includes media purchased through iTunes and media obtained from other sources. This information will be stored anonymously and not associated with your name or iTunes account.

On a first look, it seems that Apple collects your iTunes music collection information, regardless of the source (iTunes Store or ripped CDs, for example), and sends it annonymously to Apple’s servers, where the Genius algorithms do the magic. However, the next line on the agreement is this:

When you use the Genius feature, Apple will use this information and the contents of your iTunes library, as well as other information, to give personalized recommendations to you.

Now…they just said that all Genius collected data is stored anonymously, and not associated to my name or iTunes account, but now I will get personalized recommendations based on this very data – how does this actually work? How is the output of the Genius algorithm sent to me, if the input data is not matched to my iTunes account? It seems at least a bit weird. Tinfoil hats on standby.

On a grander scale, Genius is…well…genius! Apple is now going to collect statistics on what millions of people have ripped or downloaded from P2P networks for free. They can use this data to put pressure on studios – for example, say they see particular songs being sold more on iTunes than downloaded or ripped, they could ask the studio for a bigger cut of the revenue. They can also use this data to orient the music store content based on what people are listening to most.

If anyone knows exactly what the “network settings” are, feel free to comment. This was pushed to my iPhone by iTunes a few minutes ago, without further explanation.

While analyzing the future of WiFi against the expanding 3G networks, it seemed curious that AT&T recommends using WiFi while abroad, and even Apple seems to really love WiFi instead of EDGE.

My theory is that Apple is itching to release the next generation of the iPhone without carrier lock-ins such as the current AT&T deal. They know very well they can sell a 3G version with a better camera and maybe GPS for $800 to $1000 in Apple stores, and people will queue to take them off the shelves, to then stick whatever SIM card they want in it. They could then be smart and have per-carrier features like Visual Voicemail, which doesn’t bind them to the operator, but gives subscribers a slight edge over “plain” iPhone users.

Apple will continue promoting WiFi on the iPhone and iPod touch for two reasons: it’s way cheaper and way faster to get iTunes content onto them over WiFi (a couple of movies will bust most 3G “flat” fee plans, and take eons to download). With the reported ‘edge cache’ for iTunes media deployed at Starbucks, for example, it only makes sense to promote WiFi as the access technology of choice.

WiFi also knowns no boundaries, and is the only cost-effective way to use data while roaming abroad – remember all those horror stories of four-digit roaming data bills after the iPhone was launched? Would never happen using WiFi. With the new Exchange integration coming with firmware 2.0, many more business travellers will want to tap into WiFi while abroad without having to pop open the laptop. In my opinion, it all points to a long life for WiFi, alongside mobile access technologies such as 3G and WiMAX/LTE.

Looking at how Universal Music Group has decided not to renew their contract with the iTunes music store (which is by the way the third largest music retailer in the U.S., not just online, but globally!), I predict two things will happen:

1. Apple will offer a subscription-based model, where you pay a weekly or monthly fee, and can download as much as you want from their catalog. Right now, iTunes imposes the price they buy their music at, and it has been patently obvious that many labels were not at all happy with the $0.99 a song pricing scheme.
2. UMG will see their music pirated like no other label. If people cannot even get their music from a convenient and easy to use source, for a one-could-argue reasonable price, they will find ways to get it from other sources. There are alternatives to piracy, such as MP3Search.ru, which provide songs at $0.19 a piece, DRM-free, and they have a very extensive repertoire (albeit sometimes not as complete as iTunes’).

Will this prediction come true? It depends on how much it would hurt iTunes to lose Universal, and I think it would hurt a lot.