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The Future of Personal Media

The coming year will see, among other things, more Web-based software applications, an explosion of personal videos online, and a change in the business of digital music.

Last week, we wrapped up the past year in personal media technology. Now we’re asking: What lies in store for the next 12 months? Here are a handful of noteworthy developments we expect to see in 2006.

A tough year ahead for Sony. Sony is ending 2005 on a sour note with the recent scandal involving its digital rights management-enhanced CDs opening users’ computers to possible malicious activity (see “The Root of the Problem”). That public relations fiasco isn’t going to make it easier for Sony as it continues its move to compete in the movie markets. Its next major movies – into digital cinema projectors for movie houses and the next generation of DVD players for the home – are expected to take off in 2006, and Sony has a position in both. Unfortunately for the company, its key products – 4k projectors and Blu-ray DVDs – may be technically superior to the competition (2k projectors and HD-DVD), but each is late to market and more expensive than its competitors. Not good signs in a consumer-driven marketplace. CEO Sir Howard Stringer made righting the company’s electronics division one of his top priorities when he took over in 2005, but the company still has a huge mountain to climb.

Ajax cleans up the Web. Asynchronous JavaScript and XML (“Ajax” for short), is one of the hottest online technologies right now, allowing for such groundbreaking services as Google Maps, Gmail, and Writeboard, by letting Web-based applications function as if they existed on an individual user’s desktop. Although the underpinning technologies behind Ajax have been around for years, the rapid adoption of broadband has made the possibility of moving applications to the Web a reality.

Stewart Butterfield, founder and CEO of online photo site Flickr, credits Ajax with allowing his site to “capture all the social activity around online photography and build a community. Ajax reduces the amount of friction for people to interact with photos.” In layman’s terms: it helps the Web respond more quickly by reducing the stress on servers by calling specific information needed for a Web page. Amazon.com introduced an Ajax-based customer product rating system in 2005 – and saw the number of product ratings increase exponentially. In 2006, look for more large players to experiment with this technology.

Cracks appear in Apple’s iTunes shiny armor. There’s no slowing down in sight for the iPod music player – Apple’s flagship product. However, online music sales through the company’s iTunes Music Store (ITMS) will begin to come back down to earth in 2006. Several factors will contribute to this correction, most importantly, price corrections. We should see the increasing appearance of variable pricing in the ITMS, where new music costs significantly more than the long-standing $9.99 album price. Until there are significant discounts for deep-catalog music, to offset the price increases in new music, music fans will be angered.

What’s more, New York Attorney General Eliot Spitzer may have a substantial effect on pricing models with his inquiry into the pricing of online music – an investigation that may affect the entire business model.

Also, after years of fighting with consumers and file-trading networks, the major labels may be ready to embrace new distribution models. Because the rise in independent music, which now accounts for 18 percent of total music sales, is directly tied to the genre’s use of the services such as free music blogs, peer-to-peer networks, and message boards, major labels will likely react, by seeding blogs and boards with free music to get fans interested in new releases.

Telco companies get ensnared in a domestic eavesdropping scandal. If the scandal involving the current administration’s efforts to listen in on America’s communications gains momentum, look for the role of U.S. telecommunications firms to be examined, many of whom have already been outed as compliant in monitoring U.S. citizens. So telco execs will likely appear before U.S. Senate hearings, to further explain their position, and possible complicity, in the affair.

A video search company is acquired by a major player. As more media companies put their video assets online (in many cases, for free), look for Yahoo, or even a major, offline-based media company, to purchase a video search site in 2006. Truveo is a good bet, since it’s one of the best of the lot. Although Google has already launched its own video search service, its search accuracy and the types of pages searched fall short of standalone companies.

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