Analysis: Importance of Ping to Apple

At Apple’s annual fall event, the company introduced a brand new service in the latest version of iTunes aimed at getting people to discover more music and interact directly with the artists. Called Ping, it’s been described as social network for music.

Apple wants to connect its iTunes customers through their music choices and in the process, encourage them to buy more songs. They are expected to talk about the music that they like, concerts they’ve been to and all the artists behind the music.

Ping is an important piece for Apple. The company knows that music recommendations are more highly regarded by its customers if they came from their friends or their idols than some algorithmic calculations and it surely recognizes the popularity of Pandora and Last.FM. While comparison was made immediately with Facebook and Twitter, it’s Last.FM and perhaps MySpace that will be Ping’s direct competitor.

Last.FM has an app and a plugin for iTunes called Audioscrobbler that tracks all the songs played on the computer and on Apple’s mobile devices and uploads them to their servers. Users of Last.FM can decide whether to share their music with their friends or keep them private. It lets you discover music from your friends’ profiles and suggests others who may have similar tastes in music as you do. It also makes suggestions on what artists you may like based on the songs you listen to and share.

Apple’s Ping looks like it aims to do exactly the same thing except everything will be done within Apple’s network instead of someone else’s. This ensures any purchase decision will benefit Apple directly and leaves out the middlemen.

As far as artists and idols are concerned, Apple wants Ping to be their home base on iTunes where they can interact directly with their fans. This poses danger to MySpace, which in an interesting twist is run by News Corporation, whose FOX network is a launch partner for the new AppleTV service.

The already declining service is going to face a difficult time with Apple’s Ping which almost immediately has 160 million strong user base should they all decide to join up. That number comes from Apple’s registered customers in 23 countries.

A stumbling block for Ping is that it’s only available in countries where Apple sells music through iTunes. North America, Europe, and Australia are Apple’s primary market for this service, however, social networking is coming to a saturation point in those regions. The largest and fastest growth rates are in Asia where Apple’s iTunes Store only sells apps for iOS devices.

On the other hand, it’s Apple we’re talking about here. They can come in to a saturated market and reinvigorate the industry, just look at the iPod and iPhone. When they entered their respective markets, there were established players and a set preconceived notion about the products. Apple went in and tore down those ideas.

Also, music piracy is so rampant in Asia, passing 80 percent in some countries, it may be a futile exercise for Apple to enter those markets at this point. Given the cost of one song in iTunes can equal one entire album in certain markets, it may not be an attractive market to be in.

Another point for Ping is that music may well be an entry point. Apple can say Ping is all about getting music fans to come together and talk about their favorite songs and concert experiences but Apple also sells and rents TV shows, movies, apps, games, and books through iTunes. Who’s to say Apple won’t expand Ping to include those aspects within a year or two?

It’s almost inevitable that Apple will expand Ping in that direction, getting people to talk about the latest episode of particular TV series, the latest movies, apps, and the like. Ping is undoubtedly geared towards more consumption and specifically to get people to buy more content. Apple has a direct interest in ensuring people talk about everything that’s available in iTunes Store.

Having these discussions on Apple’s own network provide them with a significant leverage over their content partners. Apple will be able to gauge the sentiments in social media discussions should they have some sort of analytics software running within Ping and what and how things are being discussed on Ping may be reflected directly on sales figures on the iTunes Store.

Ping may well be the key to getting more content providers to sign up with Apple’s iTunes services.