Internet imperialism – Every company makes a play for every other company’s territory

Over the last few months, there has been a rather unprecedented amount of competition for consumer attention in a couple spaces among the major players in the tech/consumer web industry. Companies respond to success in an industry by trying to compete immediately, and the same goes for space where they think consumer attention might shift to next, all in a giant game of follow the leader. To spice up this post, I’ll predict winners. Let’s start with music:

Entrants into the internet music space:

Pandora (old)

Grooveshark (old)

Spotify (old/new)

Amazon with Cloud Player (last 6 months)

Google with Music Beta (last 6 months)

Apple with iCloud (last 6 months)

turntable.fm (last 6 months)

Somebody forgot to tell all the tech companies that the music industry is dead. (note: Music isn’t dead, it’s probably more vibrant than ever. It’s just not gonna make people the kind of money it did in 2001.) It’s not a distribution problem just waiting to be solved either – it’s a price problem. People are now accustomed to paying $0 for music, and that will not change no matter how many social tweaks and ease of access manipulations tech companies throw in. Look at Pandora – unless the law actually changes (the DMCA specifically), Pandora utilizes every currently legal feature that a company can use streaming online music. Pandora is the pioneer of adaptive, social, internet music access, which is where all of the current tech companies getting into the space would like to head, and Pandora hasn’t yet turned a profit, and their IPO was less than a success, currently trading $2 dollars below what they opened at.

Despite this, news came that Facebook is looking to enter the internet music space, possibly as part of a collaboration with Spotify. This plan would make Facebook a competitor, presumably, to prior entrants Apple (iCloud), Amazon (Cloud player), Google (Music Beta), and, of course, the entrants with many months head start, Pandora and Grooveshark. Nobody has yet found a way to make this space profitable – It’s almost impossible, because record labels still demand extremely large licensing fees despite the year-to-year declines in revenue they’ve faced in the internet era. Eventually the labels may jump on board and try to replicate something like a how social games monetize, letting users access music for free and charging for content associated with the music rather than the music itself, but because the industry was so comfortable for a while there selling CDs for $15, it may take a while for the industry to adjust.

Who will come out on top? My winner: a tie between iCloud and TURNTABLE.FM. iCloud is what Mom will use to put music on her newest device, and what most consumers will use to get music. Apple just has too much of a lead in music to lose here – Apple has an established presence in the music industry with the ipod and itunes, and they already have partial licenses. Turntable.fm, though, could be wildly successful as the greatest music based social game ever (sorry, Night Club City). Imagine if Pandora got every user to pay $5 a month for sweet clothes for their avatar DJ, which the DJ knows everybody on their channel can see? They can sell ad space in the form of special chat rooms (clubs), and by giving out special promoted avatar gear. Zynga proved the virtual currency model works, and it’s Turntable.fm’s race to lose at this point.

Entrants into the app market space:

Apple with app store (old)

Google with Android (old)

Facebook with their Facebook applications, but no official “market” (old)

Blackberry with whatever they call their app store (old)

Amazon with app store (last 6 months)

Google with Chrome app store (last 6 months)

Microsoft with Kinect SDK (to come)

Facebook with “Spartan” (to come)

The app store entrants haven’t all been so fast, with Facebook and Microsoft still to come, but the competition is clearly there. Google’s running two app stores, sort of, with Android obviously being a huge hit and challenging Apple’s dominance. Apple is far in the lead at this point, with Amazon and Facebook looking to play catchup in the mobile space. Facebook has complete dominance on laptops and non-mobile computers, at least when it comes to games, which, as it turns out, is where a whole lot of the money is (see Zynga).

Who will come out on top? My pick: Apple and Facebook. Apple for mobile, where they already have a huge lead, and Facebook for non-mobile, where they also already have a huge lead. There is some chance Google+ will start to pressure Facebook for social games, and might even be able to work a bit of the Android apps into Google+, but that’s a ways off and Google might want to think twice before letting the unfiltered nightmare of Android loose on their tightly controlled social network.

Local Deals:

Groupon (old)

Living Social (oldish)

Google with Google Offers (new)

Amazon with Amazon Deals (new)

Facebook with Facebook Deals (new)

Movement into this market has been a bit slower for the tech giants, with Google and Facebook still basically in Beta versions of their deals platforms (Google only offering deals in Portland), despite the fact that the deals industry clearly makes money as compared to the music space. Groupon has a big lead, but it’s less important in this space, because businesses just have to say yes to one of or all of the other deals offerers for Groupon to start losing their market share. Groupon did a great job getting millions of people to sign up to receive their daily emails, but Groupon now isn’t getting much love in any mobile application I use, at least, and Amazon, Facebook, and Google won’t let their users see Groupon ads over their own Deal service ads if they can help it.

My pick: Amazon Deals. Sounds weird, but hear me out – a year ago, 90% of consumers only had their credit cards on file with 1 of the companies listed above, and it was Amazon. Amazon has a great history of reducing friction between the seller and the buyer (1-click checkout), they have established relationships with thousands of businesses who already use their infrastructure to sell full price items, and setting up deals can be easily integrated into that system. Of Google, Facebook, and Amazon, Amazon may have a smaller number of total users, but ALL of Amazon’s users are looking to buy something when they log in, compared to a small fraction of Google and Facebook users who are looking to do the same.

I’ll cut it off there. There’s probably a bunch more I could detail; I’ve already covered Google+ v Facebook in another post, everybody is making a move into photo sharing it seems, and mobile games is a topic I love and might touch on similarly in a future post. But mark my words on Amazon Deals, it’s gonna be HUGE.