Apple Pings Facebook With ITunes-Based Social Network

A Network for Music Discovery, and a Potential Rival in the Making

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SAN FRANCISCO (AdAge.com) -- Even Apple, which lives in a bubble of its own device-centered success, can't resist the lure of social networking. Today, CEO Steve Jobs formally thrust the company into the social-media fray with an iTunes-based network, Ping.

Apple's new music-focused social network Ping will have familiar elements such as friends, photos and privacy concerns.
Apple's new music-focused social network Ping will have familiar elements such as friends, photos and privacy concerns.
Why would Apple want to get into social networking? It's where consumers are spending most of their internet time, and Apple has millions of iTunes customers as an instant revenue stream. "We think this will be really popular very fast because 160 million people can switch it on today," Mr. Jobs said during his keynote, where he also announced a version of iOS 4 for the iPad and a new $99 version of AppleTV, with 99-cent TV and $4.99 movie rentals.

But the creation of Ping thrusts Apple into an entirely new market, one dominated today by Facebook, with Google on the outside and peering in eagerly. Mr. Jobs said Ping will have all the social-networking features we have come to expect, such as friends, photo and video sharing, and of course privacy gradations. But the biggest angle for Ping is the way it's centered around sharing and shopping for music. With the latest software update, every single user of iTunes -- those 160 million customers -- could turn on Ping today.

"The ambition for Ping is not to compete with Twitter and Facebook; they just want you to buy more," said Forrester analyst James McQuivey. "Even if the existing customers buy just one or two more tracks a month because their friends recommended them, Ping is a huge success for Apple."

Because customers are buying, and Apple isn't dependent on ad revenue, the tech company is not as concerned as Facebook and Google with how much time consumers spend on the service. "Because Facebook's revenue stream is based on advertising, the measure of success is the length of time users remain in Facebook," Mr. McQuivey said. "But Ping's revenue stream is iTunes, not advertising."

Built into Ping's features -- among them what you would expect, such as what your friends are listening to, where your favorite musicians are performing -- are many "Buy" buttons. This purchase feature is already at least one step ahead of Facebook, which has a fledgling Facebook Marketplace that has not shown much movement. Facebook sells Facebook credits for use in the Marketplace and games, but compared with iTunes, that revenue is spare change.

MySpace has used music discovery and its network of music fans and artists as its last bulwark against obsolescence. If, as Mr. Jobs hopes, artists begin congregating on Ping, it could accelerate MySpace's decline. Mr. McQuivey says he sees new artist discovery beginning on YouTube, then going on to iTunes or Amazon, bypassing MySpace altogether. For artists that don't have music videos, they or their fans tend to upload songs to YouTube along with static images. In this sequence of discovery, Ping is more of a competitor to YouTube.

Privacy could also be an issue for Ping, given that Apple has some pretty sensitive information on iTunes customers, including credit-card information, past purchases and, well, what's on their iPods and iPhones.

Because many users will have already shopped on iTunes before, Ping can be much more direct and honest that it will use this purchase information to try to sell them more product. With the Genius feature, iTunes has already been suggesting music purchases based on users' music libraries. EMarketer analyst Debra Williamson said she has reviewed Ping's privacy policy. "It says that you should not opt in to Ping ... if you don't want others to view [your] activity on iTunes," she noted. "Ping users are automatically marketed to."

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