As a whole bunch of you have been submitting, apparently Apple yanked Grooveshark's iPhone app after receiving a complaint from Universal Music, one of the record labels who has sued Grooveshark, and is claiming that it has not properly licensed the music. Grooveshark has argued for years that what it's doing is legal, but multiple record labels have disagreed. Still, Apple wants to keep the major record labels happy, so bye-bye Grooveshark. Perhaps they should explore creating a web app and putting it on something like the OpenAppMkt, since that's outside of Apple's control...

Back in 2003/2004, both the music and the mobile industries became infatuated with ringtones. These short snippets of music were selling for 2.5 times (or more) what a single (full) music file was selling for, and the market was growing rapidly. Of course, some of this was due to incredibly shady practices, such as tricking people into thinking they were buying a single ringtone, when they were really signing up for a monthly subscription. However, from the very beginning of the ringtone revolution, we were amazed at how many folks in the industry talked about ringtones as a savior. As we pointed out in 2004, it wasn't hard to predict that ringtone sales would peak and fall. First of all, it would become increasingly easy to take music that people had from elsewhere (authorized or not) and convert it to a ringtone, and secondly, it wouldn't be all that long until unauthorized ringtones became easy to set up as well.

But the industry has a way of overhyping a fad that's happening "now," and betting it will be its savior.

And, of course, exactly what was predicted way back when is now coming true. The ringtone market has been on the decline for a few years now, as people realized they didn't need to pay exorbitant prices for a tiny snippet of music anymore.

This is why we should think carefully whenever we hear people claiming that "app stores" are the new saviors of various content industries (or, for that matter, the mobile industry). While app stores are a bit more defensible than pure ringtones, it's likely to still face the same basic trajectory, as people realize that apps are just data, and there are increasing opportunities for more open solutions to route around locked-down versions. People seem to think there's some sort of magic in "apps," but they're really just the same sort of digital content that has been hard, economically, to monetize long term. There are ways to do it, but simply assuming that apps alone will be the answer is likely to end in disappointment.

In all of the fuss, hype and obsession over the iPhone/iPad app store, people seem to forget that when the iPhone first launched, it had no app store and no ability for third party developers to create native apps. Instead, Steve Jobs suggested the high quality Safari browser on the iPhone meant the end of native apps, as everything could and should just be done in HTML. And yet, a year later, Steve Jobs totally changed his tune, the iPhone app store was launched, and suddenly this obsession with everything "apps" began. Of course, the media industry fell in love, because they thought that they could regain an element of control, thanks in part to Apple's incredibly arbitrary iron fist over what got into the store.

And yet... in all of that, it seems that many people forgot that original promise of apps all just being created in HTML. Indeed, if you look beneath the surface, you would realize that many iPhone apps really are just made in HTML and then compiled into being native iPhone apps. Using HTML alone, you can access many of the phone's features and certainly create all sorts of apps. But still, there has been general anger over Apple's mercurial gatekeeper activities. Back in January, we noted that Google had remembered the ability to create apps via HTML and had simply routed around the App Store. It made us wonder why others weren't doing it too.

While there have been a few "independent" app stores for the iPhone, they've all required jailbreaking the phone. And while that's now officially legal as per the Library of Congress, it's still not something your everyday iPhone user wants to do. So I've been somewhat fascinated by a new offering that's launching today called OpenAppMkt, which effectively creates a brand new app market for iPhones all via HTML (both the openappmkt app itself, and all the apps in it are HTML based). The experience is very much like the regular app store, with the small exception of having to tap the "add to home" button: While many of the initial offerings in the OpenAppMkt are free, it does let developers charge for their apps as well. Effectively, this is an entire "app market" for the iPhone that simply routes around Apple as a gatekeeper, and there's really not much that Apple can do to stop it. And, of course, since the apps in the OpenAppMkt are just HTML, it likely won't be difficult for OpenAppMkt to extend this to other platforms as well, such as Android (even though Android's much more open market means that there's less of a reason to developers to use OpenAppMkt for Android).

Overall, this fascinates me for two reasons. First, it's good to get more people realizing that HTML is already pretty damn good at creating app-style experiences, without having to create special compiled code and, second, it's a really clever way to totally route around Apple as a gatekeeper (without requiring a jailbreak), and is a reminder that even on "closed" systems, openness will often find a way.

Earlier this year, we pointed to an excellent Danny O'Brien blog post comparing the media's mad dash for the iPad as a "savior" to the media's similar mad-dash to CD-ROMs as a savior. I'm reminded of that after Tom Teshima pointed us to Michael Gartenberg's review of Wired's well-hyped iPad app, where he, too, notes the similarities to CD-ROMness:

In the mid 90s, a friend of mine was involved in a project to recreate magazines like Time on CD-ROM for the multimedia PCs of the era. The results were pretty cool, but the CD-ROM versions of the publications hardly replaced their print counterparts. Content has since moved from optical disk to the web, and now the allure of tablet devices has created a market for specific newspaper and magazine apps -- the number one paid app for iPad is a digital version of Wired, which sold about 1,000 copies an hour the first day it was launched. While it's a much better effort than some of the other efforts, more than anything Wired for iPad shows the weaknesses of media apps and demonstrates how the tablet remains a still-imperfect medium to deliver this type of content.

Wired's efforts, like the CD-ROM efforts of the past, by has some cool features. A video clip of Toy Story 3 graces the cover and there are various interactive features, but more than anything else, it feels like a scanned in copy of the paper mag. Although navigation is better than most iPad magazines, it's still never clear when a screen should be scrolled down or just swiped horizontally.

Gartenberg notes that the iPad version is, in some ways, a worst of both worlds. It's not like the website, which is easily shared or emailed or discussed with others. Most of that functionality is effectively missing, which is really quite limiting for folks who are used to sharing the news as a part of experiencing it. Second, it doesn't allow physical notations or markup the way an actual paper magazine does -- or, again, the ability to easily share the magazine with others. You could share your iPad, but that's not quite the same thing...

He then goes on to point out the ridiculous economics. We've already seen other media publications come out with crazy pricing, but Wired unfortunately followed suit, and it makes little sense given the economics involved (which, Gartenberg points out is ironic, given editor-in-chief Chris Anderson's last book on "Free" in business models:

Even worse, the price point is hard to swallow. Charging the full cover price for a digital magazine makes no sense when I can subscribe to the paper edition of Wired for a year at a much lower cost per issue -- especially given that there's no paper, ink, shipping or distribution charges. Given the lack of flexibility, I'd assume there would at least be some incentive to get me to make the digital purchase, and even more so in light of the fact that the bulk of the content is already available online at Wired's website for free. It's ironic that Editor-in-chief Chris Anderson famously wrote a book called "Free" -- the Wired iPad app is the perfect case to try out some of those business models.

Of course, the obvious retort is the damn thing sold like hot cakes when it was released. The real question, though is how sustainable will that really be in the long term? As more people realize how much they're paying, they may wonder why. And I'm still confused as to why publications like Wired hype up all these special features for the iPad... but don't offer the same functionality on the web -- which they easily could.

Trademark law, when used properly, serves an important purpose in making sure that consumers are not made worse off by being tricked into buying lower quality products and services under the belief that they're actually coming from someone else who is trusted. But in the age of the "ownership culture," where too many people have tried to twist trademark law away from its true origins to make it appear to be a quasi-"property right," you get too many cases of people using trademark law to actually make consumers worse off.

Take for example this story, sent in by iamtheky about how the University of Texas is trying to stop some former students from making an incredibly useful iPhone app for UT students, called iTexas, by claiming it infringes on their trademark on Texas.

The makers of the app, Mutual Mobile, have made a bunch of successful iPhone apps, but UT got upset last year when the company introduced the UT Directory, which put a much more useful interface on (you guessed it) the UT staff and student directories. After the University complained, the company felt that perhaps the use of the school's colors made it look like an "official" app, so they agreed to fix that part. When the company launched iTexas, it made sure that it didn't have the school's color scheme or do anything to make it appear as the official app. But it did make the app a lot more useful:

A free download, the app retains the searchable directory but also lists menus from different cafeterias across campus, tallies students' dining-card and Bevo Bucks balances, delivers class schedules, shows campus maps, and more.

This sounds like a great and rather useful app. Exactly the sort of thing that the University should be encouraging, not just because it would help some alumni succeed, but also because UT students would likely find the app quite useful. But, that's not the way UT officials think, apparently:

On Feb. 1, the Mutual team learned that UT had raised another objection to its latest app, specifically to the use of the word "Texas" in the name. "As this name is confusingly similar to the Texas [trademark], UT objects to such use," reads a notice sent to the Apple app store by attorney Wendy Larson. UT's board of regents began trademarking university properties back in 1981. A list of protected trademarks appears on the university Office of Trade mark Licensing Web page; alongside more specific trademarks such as Bevo and Lady Longhorns is, simply, Texas.

Lesson learned: don't try to make life better for UT students without first paying the University.

One of the things I didn't get a chance to discuss in my recap of Midem was that there was definitely an undercurrent of people thinking that "apps" are the "answer." There were a bunch of app companies there, and they were swamped with interest, and lots of people seem to be looking at Apple's "success" with the iPhone app market as a chance to regain control, and with it, something to charge for directly. While I don't think many people were expecting apps to be "the answer," there was certainly an impression that apps are going to be a big part of the future. As I've made clear in the past, I'm pretty skeptical that this sort of app madness is really sustainable (or all that lucrative). There are a few reasons for this:

1. Very, very, very few apps make very much money. We've been suggesting this for a while, and the numbers seem to support it: there really isn't that much money being made directly on selling apps, even on the iPhone. Sure, lots of apps may be selling in aggregate, but very few individual apps make very much money.
2. Apps are still loss leader/low-margin leaders for hardware makers, and they know it. Sure, Apple wants app developers to be happy, but first and foremost it wants to sell more hardware, which is where it makes its money. And it knows as well as anyone that the more powerful the device is, the more reasons there are to buy the hardware. That means the hardware makers actually have incentive to push the price of apps down (or encourage free apps). This pressure will only get stronger over time.
3. Apps can be copied too. This is the one that seems the most obvious to me, but seems to get very little attention from those who believe totally in the app revolution. Apps are still digital files and they can (and are) copied regularly. Thinking that putting everything into an app is an easy response by itself to unauthorized copying is a bit short-sighted.
4. Future standards will break down some walls. While it won't happen that fast, and probably won't happen in all areas where apps exist, things like HTML 5 will certainly break down the walled gardens found on various app stores. Yes, native apps give a better user experience for now, but web standards will get better and better and allow more to be done via the web, totally bypassing any app gatekeeper (and paywall), just like Google did with Google Voice on the iPhone. We've seen this before. The desktop used to be ruled by client-side apps, and then lots of those apps went (or are in the process of going) web-based.
5. App overload. While there is a group of folks who constantly get new apps, an awful lot of people get a few apps, get themselves comfortable and then never go back to buy another app. There are really only so many apps most people need, and once they have them, there's little reason to keep getting more.

This isn't to say that anyone should be ignoring the app space, or that there's no money to made in apps. It's just that the folks acting like it's going to be "the way" that things are done in the future are going way overboard. It definitely still makes sense to have some sort of app strategy and to play in the space somehow, just not to bet everything on it. And some apps can certainly make money, but a key might be to focus not on selling the app itself, but on using the apps to provide a scarcity. For example, I've heard good things about the new This American Life iPhone app, though it's mainly because of the convenience it provides over alternatives for now. Alternatively, you could see apps that drive people to other scarcities doing quite well. But focusing on just selling apps because that's the next big thing? Might not be the best strategy for most...

I was just recently suggesting that the massive focus on "apps" and "app stores" may be a red herring, as eventually many of those apps can be built via the web (especially as HTML 5 moves forward), without having to go through any kind of app store approval process. So it's worth noting that, in fact, Google has done exactly that with its Google Voice app for the iPhone (doing so because of problems getting a client-side app approved by Apple). While the app is still rough around the edges, it should be a reminder that there are ways around the app store, and web-based apps have plenty of potential.

It's amazing how people see one semi-successful concept and suddenly everyone has to pile on. The iPhone's app store has certainly been a success -- much more in terms of making the iPhone more attractive than for most developers. But it has all sorts of people thinking that "apps" are in again, and we're seeing app stores pop up in a variety of different places. The latest is Amazon's Kindle, which hopes to make the ebook reading device more valuable with more apps.

It does make me wonder, though, if people are betting too strongly on app stores, and not recognizing why it works so well in some areas. I also wonder if focusing on apps and app stores is going to make people miss out on the fact that web-based apps (that don't need to go through any app store) may overtake client-side apps. We've already gone through this on the desktop, and one by one, web-based apps have come along that match (or sometimes exceed) the functionality of client-side apps, leading many to turn away from client apps altogether.

Separately, adding another app store to another device may only serve to confuse (or annoy) some users. If you have an iPhone and a Kindle, and there are the same apps on both, which are you going to use? It may depend on the app, but my guess is that in most cases the phone is going to win out over an ebook reader.

A few folks have sent in the news that Australian mobile operator Optus appears to be completely blocking access to paid apps for owners of Android phones. Apparently people have been complaining about this for a while, and Optus has been mostly silent on the matter, only stating:

"Optus is currently working with Google to provide an Android application store to our customers, and we are optimistic it will be available soon."

Except, of course, it shouldn't require any permission from Optus at all -- which is leading to reasoned speculation that Optus is blocking access to paid apps in the Android app store because Optus wants a cut of the revenue. This is typical of mobile carriers who keep wanting to believe that they're the tollbooth everyone needs to pay. Instead, the more likely result is just to drive mobile phone users to other carriers.

Among people who really, really want to believe that there's a huge market out there for selling content directly, the iPhone App Store has recently become "Exhibit A." The thinking is that all you have to do is slap together that perfect Steve Jobsian user interface that just makes it so easy to buy, and people will start forking over their money. It was part of David Carr's argument when we debated newspaper micropayments. Except... there really isn't that much evidence to support even the claim that the iPhone App Store really sells that much. We were a bit skeptical of the early reports that people claimed offered "proof" that people would buy all sorts of apps. Then, earlier this year, we suggested that it was an early warning sign that so many apps on iPhones were never used at all or were used once and abandoned. Basically, that meant that people would test stuff out when they first got the phone, but sales would likely dwindle after that. More evidence was provided by an analyst firm that figured out how little money Apple was making from app sales (which is fine -- Apple is in it just to sell hardware, but it suggested that app sales weren't quite as amazing as people were claiming).

Newsweek is presenting some more evidence -- albeit anecdotal -- that the iPhone App Store isn't making very many people very much money at all. There are, certainly, a few folks at the top who are doing okay, but for most people there just aren't that many sales -- or the cost of getting those sales greatly outweighs the revenue that came in from them.

This isn't to say that the iPhone App Store is a failure. In fact, I'd argue it's been a huge success in making the iPhone significantly more valuable. But as evidence that there's a huge market out there of people willing to pay for content if it's just packaged up nicely? There's just not enough there to be convincing.