Every time you glance down at your Apple iPod to scroll through your music collection, much of the data you are presented with comes from Gracenote's massive database of artists, song titles, and other text and metadata. When you search for music in Apple's iTunes client, the results are largely based on data from Gracenote. And, if you still buy or own CDs, when you slot a disc into a 'Net-connected computer and fire up iTunes, Gracenote is the service that presents you with the names and titles of the tracks.
Clearly, Gracenote's service is central to Apple's sprawling ecosystem of entertainment software, hardware, and services. So when I read the news that Sony is buying Gracenote for $260 million, I wondered how this will change the relationship between the two companies. Sony is itself a major player in the entertainment industry, and the two companies have several points of friction involving iTunes. They include pricing for iTunes music and competition for TV and movie downloads.
While there are alternative music databases that Apple could conceivably use -- a TechCrunch commenter called "Jack Bauer" points to the open source Musicbrainz project, AMG Lasso, and a database that Microsoft employs -- I doubt these products have the breadth of Gracenote's holdings. Gracenote dates back to the mid-1990s, when it was known as CDDB, and is the dominant service, thanks to its age and its connections with iTunes and other online music services. Over the years Gracenote has gained a reputation for using intimidation to threaten competitors and customers. Sony itself has some nasty history -- remember the Rootkit fiasco?
As for Bauer's claim that Apple could "easily" create its own database or switch to one of the Gracenote alternatives, that's a stretch. If it were easy, cheap, and made sense, Apple would have made a switch long ago.
Make no mistake: The Gracenote purchase does give Sony leverage over Apple that it did not have before. The question that has yet to be answered is whether Sony will play nice with Apple, or try to turn the screws a bit.
Ian Lamont is the author of The Social Enterprise blog on TheStandard.com. Comment below, or email Ian at ian@thestandard.com. Follow Ian's updates on Twitter at http://twitter.com/ilamont, or visit his personal blog. Ian's bio and disclosures are located here.
Comments
Hi Ian,
Thanks for writing an excellent article. I may have unique insight into this issue, so decided to send in this post.
From 2001 through 2003, my company, Rainbow Partners Inc., exclusively represented Gracenote in Japan, and closed license deals with all of the significant consumer electronics manufacturers in this market, including Sony. Licensees that we closed included nearly all of the leading companies in automotive, home a/v, portable a/v, and software in Japan.
Currently, we exclusively license Macrovision's AMG solutions in Asia for the consumer electronics industry. We compete directly with our former partners in the media recognition market.
In your article, there are several things that things I would like to comment on:
1. "When you search for music in Apple's iTunes client, the results are largely based on data from Gracenote."
This statement may be a bit misleading.
While Gracenote is the source for for simple metadata about music that is ripped from CDs within the the iTunes client, there are many others sources of metadata that you use within iTunes. For example, iTunes Music Store licenses the AMG database globally for use within its store. It also uses metadata supplied from labels, and some data that is created by iTMS staff, and users.
Furthermore, if you happen to have brought your digital music files into iTunes from another source such as illegal P2P download, or legal services such as eMusic, or ripped via other applications, the metadata source in many cases is AMG, freedb, Musicbrainz, Microsoft, the music labels, or others, as well as Gracenote.
Finally, many people edit the data in iTunes and create it themselves to correct issues with standardization, or missing key fields such as dates or genres.
So in iTunes, when you search for music in the iTunes Music Store, you are not using Gracenote, and when you search for music in your own collection, you use a combination of data from many sources that may or may not include Gracenote.
2. "...the open source Musicbrainz project, AMG Lasso, and a database that Microsoft employs -- I doubt these products have the breadth of Gracenote's holdings."
I am curious as to what it is that causes you to doubt the breadth of these products.
Microsoft's media recognition solution used in Windows Media Player includes AMG, user submitted data, and other data sources. This system powers 10s if not 100s of millions of users globally. It certainly is the equal in many respects to other solutions.
Our own solution, AMG LASSO, powers some of the most popular applications and devices globally including the PS3. We just announced today that Korea's leading portable media player company, Reigncom, has switched to AMG LASSO exclusively and globally. There are many other LASSO licensees, and the number is quickly growing.
freedb is used by many, many open source and commercial products globally, including widely used products.
Additionally, AMG data is used to enable most of the world's largest digital entertainment stores. iTunes, eMusic, Napster, Rhapsody, Amazon, and many, many more use AMG data to power their stores. The data is also used to enable portals and search engines such as Google, Yahoo!, and many others.
AMG is arguably the most ubiquitous entertainment data solution in the world.
3. "... Apple could "easily" create its own database or switch to one of the Gracenote alternatives, that's a stretch. If it were easy, cheap, and made sense, Apple would have made a switch long ago."
Until the very recent past, there was no other significant commercial alternative to Gracenote. Microsoft only makes its service available to its own systems. AMG's LASSO is only a few years old, and its first major customer was the PS3 which launched in November of 2006, a year and half ago. Freedb is GPL'd and is not a realistic alternative for many major CE manufacturers and software developers because of the lack of commercial support.
When Apple launched iTunes, it effectively had one choice. Recently it has several choices.
The facts that there were no realistic alternatives to Gracenote until recently, and that other companies such as iriver and others are making the switch recently, indicate that it may be easier for Apple to do similarly.
4. "Make no mistake: The Gracenote purchase does give Sony leverage over Apple that it did not have before."
IMHO, (and if I understand your arguments correctly) the leverage you mention is minor, if not insignificant in the bigger picture. The truly worrisome issue here is whether or not Sony will use its ability via Gracenote to monitor Apple iTunes and other competitor's devices and applications, and use this information to their advantage. Any media recognition service has this ability, but is not a significant concern if the supplier is independent. By becoming a part of Sony, this will become a concern for competitors in the industry. Certainly, an argument could be made that Sony supplies many hardware and software components to its competitors including Apple, however, none of these components give the insight into what consumers are actually doing with the product throughout its life cycle as does a media recognition service. I am sure that "Chinese Walls" will be erected to maintain confidentiality, but when push comes to shove, prudence may lead many Sony competitors to utilize alternative and "safer" solutions that are considered less risky.
It certainly will be interesting to see how this all turns out.
Looking forward to further discussion.
Sincerely,
Kevin
Jack Bauer here.
@ Kevin -- You rock. Nailed every point perfectly. I'm sorry you had to work with Gracenote before and Macrovision now but at least you are irrefutably authoritative on the matters at hand. Let us know the next time you are in California. I'll be at CTU LA.
@ Ian Lamont - No offense, but you are basically all wrong.
1. As I posted on Techcrunch and Kevin articulated so well here, there are plenty of options out there for Apple. In fact, every option is waiting for them (build their own, partner, acquire, etc.)
2. Sony BMG provides plenty of music to the iTunes music store. Sony Pictures provides plenty of movies to the iTunes Movie rental store. Sony hardware components are included in many of Apple's hardware devices. Seriously -- if Sony wanted to turn the screws, don't you think they already have ample ammunition and would have done so? Do you really think the now-finally-once-and-for-all-commoditized CDDB is their secret weapon against Apple? And don't think Sony doesn't know how to turn those screws. Just ask Toshiba! It is rather obvious: Gracenote tricked Sony into thinking their non-CDDB assets were somehow vital to Sony's future.
As a side note, If you had done a little more homework (google is your friend) you would have noticed that the executive in Sony's press release announcing the acquisition is a former Apple engineer. Maybe time to make some news reporter-esque phone calls and let us know if there is any water at all being held by your theory?
Thanks for the comments, Jack and Kevin. One of my sources was Gracenote itself -- specifically, the claim here that "when iTunes consumers search for information about an artist all of that information comes from Gracenote. " Is it true? I doubted it too, specifically based on my own experience editing metadata, which is why I wrote "largely" in my original post.
Kevin, regarding your second and third points, Gracenote has a years-long lead over the commercial competitors, and, as you note, there haven't been any "realistic alternatives to Gracenote until recently." I have to question how the competition can catch up to Gracenote, in terms of matching the breadth of holdings. If you have data that quantifies the holdings of the different services, please feel free to share.
The point you bring up about Sony monitoring iTunes is a serious one, and should be given credence, not just because it's a multinational corporation that already wields enormous power, but because of the poor lack of judgment it showed with the "rootkit" software.
Lastly, Jack, if Apple wants to change services, or build their own, of course it can done. But I want to question your statement that it can be done "easily" -- you seem to have some insights here, I'd like to know exactly what you think is involved.
Also, are you claiming that Sony doesn't have any leverage over Apple with the Gracenote purchase?
I once worked for Gracenote, and even I will say that it's untrue that *all* iTunes data comes from Gracenote. I don't believe that you were misled, but rather I think you or the person you spoke to may misunderstand. By "search" they probably assumed you meant "CD lookup"; in Gracenote parlance, a "lookup" is a type of "search". With respect to CD lookup, all the iTunes data comes from Gracenote. As for the iTunes store, that's Apple's own data. When music is submitted to the store for sale by the rights holders, they provide the metadata to Apple for use in the store. Cover art downloaded by iTunes, I believe, comes from AMG.
This is basically the only music metadata supplied by Apple/iTunes. It is misleading to say metadata "in iTunes" comes from other sources - it doesn't. The metadata in your *music* may come from any source you choose, if you rip/buy using something other than iTunes or the iTunes store. Implying that iTunes uses freedb as a data source simply because you can import songs tagged by some other app with freedb data is misleading at best. FUD at its finest.
Gracenote has stated in its press release that it will be run as a separate entity from Sony. It should be no stretch to understand why. Undermining customer relationships to further some competitive agenda on Sony's part would potentially be very damaging. Anyone can license CD technology, or Bluray, etc, be they Sony competitor or not. Why should Gracenote technology be any different?
I find this discussion fascinating.
@ Pre GN said:
I don't believe that you were misled, but rather I think you or the person you spoke to may misunderstand.
The author specifically references his source above as the Gracenote website which clearly states,
"when iTunes consumers search for information about an artist all of that information comes from Gracenote." (emphasis added for clarity). The official Gracenote website description is the source of the misinformation.
@ Pre GN also said:
Implying that iTunes uses freedb as a data source simply because you can import songs tagged by some other app with freedb data is misleading at best. "FUD" at its finest.
Could you clarify and specifically refer to the implied statement to which you are referring? I have read, and re-read the posts above and I am unable to discern any misleading statements nor FUD.
@ Pre GN also said:
Anyone can license CD technology, or Bluray, etc, be they Sony competitor or not. Why should Gracenote technology be any different?
CD and Blu-ray are both examples of industry wide standards with associations that have multiple participants. Gracenote is to be a 100% subsidiary of Sony America, not an industry standard nor an association. Gracenote's business is miniscule in the Sony scale of things. The "customer relationships" that may be potentially damaged are insignificant if Sony thinks they may get the upper hand in the much larger electronics industry competition.
Whether or not Sony actually has designs to spy on their competitors, I have a hard time believing that Sony's competitors will be so naive as to let Sony into their products via the trojan horse that is Gracenote. It is too easy for them to change to another supplier to alleviate the very real potential risks.
The likely outcome of all of this is that Gracenote will be absorbed into Sony as an internal resource, and no longer used to support any but the most inept Sony competitors.
I agree, it looks like the website is whacked. Someone who didn't know what they were talking about apparently wrote that. It's only fair to say that CD lookup (CD search, as some put it) results come entirely from Gracenote. Gracenote is also used in part to determine cover art, though I understand Apple only uses it as a fallback when they can't figure it out on their own.
As for the rest here, think whatever you like. It would be really really stupid for Sony to ruin Gracenote after spending a quarter billion dollars on it. If they only want it to service Sony, they could have spent a whole lot less building their own or funding Gracenote to provide them with special services (which they did to some degree already). Time will tell, of course, but I certainly don't take any predictions from Gracenote detractors like you and the others here (except Ian). You guys aren't exactly a font of impartiality...
@ Pre GN said:
Sony to ruin Gracenote after spending a quarter billion dollars on it.
Becoming an internal resource at Sony will hardly "ruin Gracenote." Sony is a large company and can use Gracenote for its own products. This is hardly ruinous as you characterize.
Also, Sony has a less-than-stellar track record with technology acquisitions. The $65 million dollar purchase of Grouper comes to mind as a typical example of Sony over-paying and under-performing in this space.
What makes you think that Sony will do any better with this acquisition?
And what makes you think that Sony can or will somehow prevent competitors from changing to alternative suppliers?
@ Pre GN also said:
You guys aren't exactly a font of impartiality...
I, for one, am attempting to have respectful debate which is the purpose of this forum. I also hope this debate would be intelligent. Your lack of response to inconvenient questions, and crude attempt to deflect the debate with unfounded accusations of partiality and "FUD" demonstrate that you care for neither respectful nor intelligent debate. It is reminiscent of religious and political argument, and indicates partiality of your own.
Personally, I am neither a "Gracenote detractor" nor supporter. I am interested in Sony and its network strategy, and have been so for years. My interest in Sony is my reason for participating in this discussion.
If you would like to continue this discussion in a respectful (and hopefully intelligent) manner, I request you do so while toning down the innuendo.
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