In my last post, I outlined Apple’s business model, particularly as it relates to the higher education market. You can’t really understand why they have launched iTunes U without first understanding how they do business. And from what I’ve been able to see so far, iTunes U is exactly the opposite of what some fear it to be.
If you recall, Apple is focused on selling desktop and laptop computers to consumers. They don’t make significant money on the iTunes Music Store (iTMS). They make relatively modest amounts of money selling to higher education institutions. The do make significant money selling iPods, but they still see their long-term growth to be in sales of CPUs. The operative phrase at Apple for the items in their portfolio other than the computers themselves is “halo effect.” People who use iPods and the iTMS are more likely to buy Macs. Students and teachers who use Macs at school are more likely to buy Macs for themselves at home.
Now let’s look at iTunes U in this context. First of all, it’s not explicitly monetized. Apple is guaranteeing that it will be free until 2007 and has stated that they anticipate it will continue to be free thereafter. On the other hand, it probably won’t cost them much either. The vast majority of the software functionality already exists to support the iTMS. Given the volume of disk space and bandwidth they already purchase for the iTMS, the cost to them for iTunes U should be incremental. And they don’t really make money selling content anyway. So in the best case (such as the iTMS), they only could make a very modest profit, while in the worst case (such as the current free offering for iTunes U), they only suffer a modest (for them) loss.
In other words, in terms of its financial characteristics, iTunes U is a perfect halo effect vehicle. Apple isn’t sacrificing significant profit or suffering significant losses by giving it away. And because they’ve already made huge investments to support the iTMS, the cost of providing a multimedia distribution service to universities is far, far less than it would be for the universities to build up the same capability from scratch. For most institutions, setting up a distribution system for multimedia files would be cost-prohibitive. It’s not even a close call. For Apple, on the other hand, it’s very cheap. Whenever you can give something to customers (or potential customers) that costs you little but is worth a lot to them, that’s a golden brand-building opportunity.
But the question remains: Does iTunes U promote lock-in as part of the halo effect strategy? Consider the technical details of the service:
- iTunes U supports many MIME types: Contrary to the rumors, iTunes U does support MP3s. It also supports unencrypted AAC, which is an MPEG standard, as well as PDF and many other file types that you would typically transmit or play over the internet. (More on the implications of this in my next post.)
- iTunes U does not support DRM: The lock-in part of the iTMS that people usually complain about is Apple’s proprietary Fairplay DRM. Fairplay-encrypted files will not play on MP3 players other than the iPod. But iTunes U doesn’t support Fairplay or any other DRM. If you want to sell content to students, you have to establish a relationship like the record labels have with the iTMS. I didn’t get theimpression that Apple has any real interest in changing that state of affairs any time soon.
- Apple explicitly states that iTunes U is not designed to be a long-term institutional content repository: If you want to distribute, say, video files, then iTunes U is perfect for the job. But if you want to store video files, then you probably want to store much larger high-resolution source files than would make sense to have students download. iTunes U is a distribution mechanism, not a long-term repository. If you keep your source files in a repository, as you should, then you won’t have to worry about getting them out.
- Apple claims iTunes U has easy batch export: I didn’t see this myself, mainly because we didn’t have time. (My local rep has promised to give me a down-and-dirty hands-on demo of iTunes U some time soon.) But they claim to have one-click batch export.
- On your local computer, iTunes stores files in an open XML-tagged repository: If you want to get your files out of iTunes and into something else, it should be possible to write a utility to do so. Apple has done nothing to lock the files in.
All in all, I don’t see any sign that lock-in is part of the Apple strategy for iTunes U. That said, they make no secret of the fact that everything works better with iPods and Macs. For example, they have made no effort to make iTunes synchronize with non-Apple MP3 players (though now, with the advent of podcasting and RSS enclosures, there’s no reason why you couldn’t push iTunes U content directly to any MP3 player via any computer operating system). iTunes U will unquestionably be a better experience for Mac and iPod users than for others. But that’s a far cry from real lock-in. iTunes itself runs on Windows as well as Mac, and I suspect there would be a linux version as well if there were sufficient market demand. If your main goal is to distribute large files to (and from) students’ computers, then iTunes U looks like a sweet deal with no real strings attached.
It also has the potential to radically change the landscape for both the LMS market, the academic publishing markets, and student relationships to the class content. More on this in my next post.