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My question is, why do we need this format at this time? I went out to industry observers with this question. Admittedly, there is a pre-existing installed base of multimedia phones, and computers as well as in-car sound systems. However, as David Sidebottom of Futuresource Consulting said, while there are several mobile phones with the capability to play the cards, many people don’t use the slot, and others don’t even realize they have the capability. “There is a consumer behavior mission which will be a big sticking point,” he said. This is not the first time card technology has been explored. Going back four or five years ago, Sidebottom said it might have been a good transition for disc to digital, “but now digital media has developed so much, people can just rip a CD and sideload to their mobile phone or to their MP3 player or download directly.” While he feels the time has passed in terms of possible consumer interest, he said the technology is being explored because the price of the cards has fallen so much. "Last time around, card prices were price prohibitive. The memory card market, like the optical disc market, is becoming increasingly commoditized. Price pressure is intensifying. SanDisk has good brand awareness and they are looking at alternative ways to extend revenues from related sources.” The reason I wanted to write about slotMusic is because it is a physical format. I called several industry friends to see if that factor peaked their interest as well. Not so much. Many said it wasn’t something they were even considering. I went to Sony DADC to try and get comment. They sent me to Sony Music, who sent me to SanDisk, who never returned my call. So I’m really not sure how committed anyone is to the format. As for the record labels, they have nothing to lose. If the product shows revenues, everyone’s happy. Sidebottom said, he’s not sure if replicating the cards is an opportunity for replicators, but he didn’t think it to be a threat either. Cost for replicating these cards is high compared to replicating a CD. Secondly, getting the product into the stores could still be complicated. Rod Streeper, Customer Operations Director at Entertainment Distribution Company, said his company has been watching the SD card plans with interest, but at this time, they are choosing not to get involved in the manufacturing. “At launch, the volume will amount to less than a tenth of a percent of the CD volume in the U.S. this year. In addition to manufacturing costs, the fundamental problem is the SD format has weak supply chain issues including audio quality versus CD and lack of consumer familiarity with the format. The last can be overcome with time and money thrown out at a consumer education campaign, but it already has the buzz of half-hearted support by its backers.” Steve Nazarian, director of sales and marketing for Spinergy, has an even stronger opinion. “Speaking as a replicator/duplicator, we want no part of it. In short, the new format is a dog with fleas.” The greatest reason the format won’t take hold, he said, is that it doesn’t add any function or quality to the options already available. Like Sidebottom, Nazarian said, it is a plus not to have to buy a player, “but you have to use your phone and you need to know how to do that.” Another announcement that came out during the same week revealed that Toshiba Corp. and NCR Corp will invest $35 million in MOD Systems. Consumers will download digital video content to Secure Digital (SD) cards and portable devices such as mobile phones through kio sks and other self-service devices deployed, integrated and maintained by NCR at retail stores, airports, quick-service restaurants, and other outlets. Toshiba will develop dedicated set-top boxes for the service, and develop and market high-capacity SD cards for the system, improving the speed of downloads in the future. Sidebottom said MOD’s model is probably a little stronger than the slotMusic model. It can almost work as a rental model; getting the content and erasing it when you’re done watching. Brick and mortar stores are the dominant distribution channel for content that is sold. I’ve actually heard that 75 percent of movies purchased are bought on impulse. No one actually confirmed that number, but most everyone I asked said it sounded right. “Content does two things for a retailer,” said MOD’s Anthony Bay. "It drives store traffic. It also increases the gross profit of every visit. If I can get you to impulse buy a couple of movies while you’re in the store, it didn’t cost me to get you there.” Sidebtottom added that the MOD Kiosks could perhaps be made available in non-traditional media outlets such as a cellular stores. However, “there are significant investment costs associated with these kiosks in terms of training and maintenance." One again, there is no easy yes or no answer. What catches on with consumers has often been a surprise. Perhaps what is most significant with these products is that people are still thinking about physical formats and are not yet ready to go 100 percent digital. No one knows what will happen this holiday season, but perhaps with the worldwide financial crisis, physical media will have a good year. Traditional, reasonably priced, CDs and DVDs may be the answer for presents this year. Only time will tell. Debbie Galante Block (debgalante at comcast.net) is a freelance writer based in Mahopac, N.Y.
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