Last December, I posted excerpts of an IRA interview with Michael Whalen, an award winning composer and new media observer. In this week’s issue of The Institutional Risk Analyst, Michael reviews his predictions of last year and discusses how he sees the future of media. Long excerpts but very interesting and thought provoking. Full IRA interview is here.

  • It seems that about 100% of what we discussed has come to pass or is in process, and then some. We were talking about the eventual end of television networks, film companies and the continued radical upheaval of the music business. It is certainly the case that network television is ending as we know it. While we have not seen any of these media companies fall over and die – the erosion in all of television and broadcast media in general in just 10 months is alarming.
  • I think the biggest single factor that has changed since we spoke last year is that major media companies and especially the television and cable franchises are no longer pretending that things are “OK”. (…) the total number of people watching programmed broadcast television is less than half of what is was just 10 years ago. The level of desperation out there is amazing.
  • In the face of these actions, income streams everywhere are drying up. Look at how new ventures like Oprah’s OWN network (launched just a year ago) has been a financial disaster since day one. News Corp’s (“NWS”) failure in launching their digital magazine “The Daily” and the continued trouble for media institutions like the New York Times (“NYT”) are but single examples of an ocean of trouble for media. (…)

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Long but interesting excerpts of IRA interview with Michael Whalen. Full interview here.

Michael Whalen, an award winning composer and new media observer, talks about the outlook for the business of creating and delivering content.  Michael is IRA co-founder Chris Whalen’s younger brother. Ten years ago, Michael saw that Apple was getting ready to take a monumental step by shifting its business away from just computers and software towards mobile devices. In 2001, concepts such as iTunes and the iPod made it look like Steve Jobs and the management at AAPL were crazy or at least losing “confidence” in their core business. Now 10 years later, their gamble looks like genius.

The IRA: How do you view the AAPL strategy going forward, especially with the apparent decision to let Droid handset take overall share? Is AAPL still well advised to keep proprietary control over the hardware and not allow third-party produces to make handsets that run the AAPL OS? 

I think handicapping the handset/mobile device market with just a hardware conversation is short-sighted, frankly. In my opinion, the near-term future is all about content streaming. The profit margins in these handset devices is so small that staying in the game will be very tough if you are not already in it and buying your way into the market may not pay off because the margins might not cover the cost of entry unless you are hugely successful. For investors interested in AAPL, watch what they do with their huge new cloud-computing center in North Carolina. As already reported in the media, this facility is going to go far beyond simply turning iTunes into a streaming subscription service. AAPL is going to start to be very visibly aggressive with all that cash they have and this location is but a bell weather of other centers and a very interesting future that is unfolding.

(To read about Apple’s cash, see CASHING IN WITH CASH)

So, to ask the same question from a different perspective, will AAPL push all content to all devices or just the iPhone/pod/pad? Maybe layers? Your reply suggests that the hardware origin no longer matters, even for AAPL.

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