Ping: Apple's Newest Cash Cow

Apple recently unveiled Ping, the computer giant’s first official foray into the world of social music networking. Unlike other social networks, Ping plays within the iTunes ecosystem, allowing users to “follow” artists for updates, exclusive content, tour dates, etc. And “follow” friends to see their iTunes activity. That last part, the following friends, keep an eye on that. It could be big.

Ping is a game-changer

Contrary to what Ian Paul at PC World thinks, Ping will be a quite succesful cash cow for reasons I’ll list below. Paul attributes his prediction of failure on the fact that Ping is a closed ecosystem/walled garden with no external (read: web-based) alternative. While that argument certainly has merit for social networks like Facebook, Twitter and MySpace, I highly doubt that Apple entered the world of social music networking with the intent to take visitors outside of iTunes, where all of the items for purchase (and your Credit Card, natch) are on file. Other writers chime in with their own assertions that “Ping is not a Facebook or MySpace killer.” To that, I say “duh.” It’s obviously not Apple’s intent to make Ping more than a lifestream of updates from artists you follow and purchases and downloads from friends. If Apple scales the service larger by opening up the Ping API for developers to integrate with Twitter, Facebook, LinkedIn, et cetera, great. If not, I’m sure they’ll be happy to hear their cash cow mooing.

Ping is a cash cow

Sunil Gupta, the Edward W. Carter Professor of Business Administration at Harvard Business School, wrote on the powers of social influencers within social networks in a paper, “Do Friends Influence Purchases in a Social Network?” (May 2009). The study found that there is a significant and positive impact of friends’ purchases on the purchase probability of a user, and that “moderately connected” users exhibit a “keeping up with the Joneses” behavior. Gupta found that, on average, social influence translates into a five percent increase in overall revenues. Five percent! Given that Apple is the largest music retailer in the world, if even a fraction of the 160 million registered iTunes account holders participate, the opportunity for exponential revenue growth could be staggering.

Ping beat Facebook, MySpace and Google to the punch

Kara Swisher, of All Things Digital, interviewed Apple CEO Steve Jobs shortly after the Music Keynote Event. She asked why Facebook was not a part of Ping’s initial rollout, and received a surprising response: Facebook wanted “onerous terms that we could not agree to.” Onerous terms? Sounds like Facebook is a bit upset they couldn’t roll out a music service quicker. — It would be nice to at least see Twitter integrated to help spread awareness of some of the cooler opportunities Ping will begin to afford users.]]>