Have you seen anything like that already, where developers have said, well we thought about doing it this way, but we're going another way?

PR: Too early. The phones aren't even out yet, user experience hasn't occurred yet. I would say July, we'll get a lot of feedback once these games come out with push notifications. The other thing that's kind of interesting, by the way, is that OpenFeint is working on cross-compatibility, because if I have a 2.2 iPhone and you have a 3.0 iPhone, and you send me a social challenge, in my app on 2.2, it won't show up as a push notification, right, because I don't have the 3.0 iPhone. So we are support the concept of push notifications in the plumbing and infrastructure of OpenFeint, however on a 2.2 phone, whenever the user next opens the app, they would see a screen that is an OpenFeint screen that would have a notification saying "you've got to beat my score," as opposed to seeing it on the iPhone icon, as a number, like the Mail thing, where it says you have notes waiting for you.

So I think as a user experience, the jury's still out, because the platforms are just getting ready, right? So the key here is to say that we're going to make it trivial by continuing our tradition, which is no servers, very easy to integrate, and some big games will launch in July with push notifications and then we'll go from there.

I think, to a certain extent, the same thing will happen on the microtransactions side. It already has happened with Xbox Live -- I don't know if you remember the story of horse armor, where everyone says "how can you release a different graphic and ask us to pay for it?" Have you seen examples yet of how developers want to use microtransactions? Are they aware of that danger or are they fearful of that at all?

PR: So I think the obvious one, just because I have, as I said, investments in companies in the Facebook app space, the big reason for microtransactions is virtual goods. So any kind of virtual world, avatar apps, some of these Mafia iMob apps, you can assume that there will be virtual goods unlocking with microtransactions. That one I think will translate over fairly well, in fact Net is going next week to China, where he's a keynote speaker at Tencent's annual conference. Tencent is an Asian company which does a billion dollars in microtransactions, all of it virtual goods. So I think that microtransactions, as we see them on social networks today, will come pretty much that way onto the iPhone social network, or the iPhone gaming network.

NJ: I also think that it will actually lead to the pricing, might even drop dramatically, but those who are charging for applications are going to go free, because they're going to earn much more by making it free and leveraging microtransactions.

Yeah, if you're charging $4 for an app and can sell four levels for $1 each, that's the way to go.

NJ: The user starts playing, gets very engaged, and wants to get to the next level and make the purchase, and it's very difficult not to make the purchase if you're engaged and you want to continue the game.

PR: The thing that's a little trickier, I think, is when you have microtransactions that aren't directly virtual goods, because virtual goods don't fit the theme. But are like chapters, or just additional content in the game. Then, I think, the business model is a little trickier, because that's your content update strategy, and to some extent, the iPhone user is used to -- like, if you look at the success of Pocket God, it's a double edged sword. If you talk to the Pocket God guys, their game is one of the few games that stays in the top five constantly. It's just always in the top five. And they use OpenFeint, and they're going to use push notifications, but when we spoke to him about microtransactions, he said, I have to figure that out, because their commitment to their userbase is, every week you're going to get an update with more content. So given that he's already committed that on the current price point, how does he unlock more content with microtransactions? So he was the first to say I definitely want to do push notifications, but I have to think hard about how I could incorporate microtransactions into Pocket God. So I do think there's a little more complexity there, especially when it's not just direct virtual goods. But I think they'll crack it. I think some other people we're talking to are certainly thinking of Chapter 1, Chapter 2, Chapter 3, three microtransactions. And certainly the virtual goods guys are like no questions how they'll do it.

And there are definitely precedents for both, in terms of episodic gaming on other services. Jason maybe you can talk about this, too, as a developer -- I'm really interested in the balance between making sure that what you're selling people is worth it, or something that's not. If you're asking to pay a dollar for a gun that's just a re-skin, people won't go for that. What do you think of that?

JC: I think, as a game designer, what you have to really think about is the motivations for why people will want to purchase this content. Whether it's a re-skin or not is less important than what it will allow you to do in the game. And the reason why I think virtual goods have done so well on social networks is that social pressure is a huge motivator to getting people to do things, and if part of that social pressure results in you engaging and buying virtual content, people are much more likely to do it. I mean, if you just have another gun that allows you to increase your DPS by two points, that's not terribly interesting to anyone but the ultra hardcore gamer, and then they'll probably just be pissed off that they have to pay for it. So that's not really an appropriate way to go about it. As a traditional gamer, buying episodic content or buying level packs, or substantially new gameplay experience, fits with my head, and then virtual goods, I think, have to be motivated through social pressure.

And the last question I have is just about the future of OpenFeint. I have to give it you guys -- there were quite a few, and there still are, services poking around that want to do the kind of stuff that you're doing. And just in terms of size and influence right now, you're kind of the top of the heap. So what's next, are you planning to kind of sit on the heap and just keep things set, or are you still aiming to improve here?

PR: I think that definitely we will continue to innovate and add more services to the platform -- there's no question that it's a platform play, and that we will continue to add features and additional things. I would say two things: one is, we will publish games, always, on top of our own platform technology, that will really kind of push the borders of gameplay design around the OpenFeint platform, to sort of demostrate and lead the way. So in the last announcement, we did hint at a new game coming out this summer based around push notifications and microtransactions, where we want to lead the industry. Because we never think that by being in front today, that we will be always in front. So we want OpenFeint to be the premiere platform, we agree that today, we certainly feel like it's way up there, but we feel like you constantly have to build new product on top of your platform to really make a world class platform. Because otherwise you're just sort of opining and thinking oh, this is good stuff. So we always want to test our own platform, and expect a title this summer based on OS 3.0 and OpenFeint features.

The second thing, which is, I think we're really doing something different around the business model. Ngmoco announced their Plus+ platform this week, and it's really a publishing tool rather than an open platform, and we're pretty proud of the fact that we're sort of the biggest player who is really able to provide an open platform where a developer does not have to make a publishing deal with us in order to get access to the platform. Ngmoco's platform is hey, we have this platform, it's part of our publishing network, and if you want to publish games with us, that's how you get the platform, and obviously you know the economics of the publishing business in the game industry, right? There's revenue that has to be sacrificed there. So I think as a guiding strategy, we will never make our platform related to anything with our publishing because it's our belief that this OpenFeint thing does two things that we will always have to provide for publishers: no servers, because 90% of developers have no experience building servers, they build great console games, client side stuff, C, C++ programming, all this stuff, but they really don't have any backend experience. And two, we're not going to take rev share, in terms of publishing deals. And those two things, I think, are sort of our long-term guides. The third thing is to build our own games constantly, so we can use Danielle and Jason's game design and knowledge to say here's the kind of games we can do. So if we can do that and execute, I think, with some fingers crossed, with some luck, we'll emerge as the de facto standard, which is our goal.

I had talked to Danielle a little about pricing already, but I wanted to ask about microtransactions as well -- when you do that stuff, are you not skimming off revenue as it comes through, or what is the pricing scheme there?

PR: Well even today, we have cross promotion inside OpenFeint 2, even before microtransactions, where if two players meet in a lobby, and they're from different games, then one player clicks on the other player's game, and you go to the App Store and you buy that other player's game? That's what you call our one-touch iPromote product inside of OpenFeint, it's a big draw for a lot of developers, because our community is now three million and growing -- we call it our social bazaar, because the App Store is so cluttered now that it's hard to differentiate. So you use OpenFeint and get your game in front of three million people in these lobbies. That revenue, when someone buys a game using OpenFeint's cross promotion feature, doesn't come from the developer, it comes from Apple. Because we are an Apple affiliate, through BigShare. So we take the user into a webview, which is our own catalog, where you can buy games off the App Store, and then Apple actually pays us. So that's hopefully -- this is the same thing, the whole idea is to get Apple to pay us every time there's a purchase in the App Store, including in-app purchases, as opposed to the outside.

Great. That's pretty much everything I had to ask, was there anything else you wanted to share? I guess we'll keep an eye on the game coming out this summer.

JC: Yeah, I guess the only other thing worth mentioning is that OpenFeint is available now -- it can be downloaded by anyone from our website. It's real.

Cool. Thanks very much.

Some of our readers have informed us that Tap Tap Revenge (iTunes store link) has been updated to version 2.6, boasting compatiblity with iPhone OS 3.0. This is most likely merely the first of many apps that will see updates in the coming weeks, but it's interesting that Tapulous has unleashed this update so far in advance of OS 3.0's release.

If you are running OS 3.0, upon launching the new version of Tap Tap it will ask you for permission to send push notifications to your device. If you allow them, a new category called Notifications will appear in your device's main settings, which will allow you to toggle push notifications on or off. Additionally, it appears that each app will have individual settings for badges and alerts.


It's not likely that Tapulous will be sending any push notifications just yet, as Apple has yet to throw the novelty-sized Frankenstein knife switch to activate push services. It's also unclear at this point what type of push services Tap Tap Revenge may offer after that switch is thrown. It is an interesting preview of things to come, however.

Yesterday, Megan noted a Fortune story saying that iTunes syncs flawlessly with the new Palm Pre. This, of course, got the water-cooler talk bubbling: "How did Palm pull it off? Will Apple allow this to happen?"

Turns out they already have. A tech note on Apple's website notes the two dozen or so third-party players that iTunes (for Mac OS X, at least) is compatible with, including Rio and Creative Labs Nomad MP3 players. True, many of the models listed predate the iPod, and the tech note itself was last updated a little less than a year ago. But third-party device compatibility with iTunes isn't without precedent.

Daring Fireball's John Gruber pointed to a story by Jon Lech Johansen that says Apple may block iTunes access to the Pre in a future update; Gruber himself said he "wouldn't be surprised if they did." I'm not so sure.

First, let's look at how it works. According to Johansen, a unique USB device ID allows iTunes to recognize MP3 players (including iPods) that it's compatible with. Johansen speculates that Palm is using one of these IDs when communicating with iTunes. If it's an iPod's unique ID, then it will work with iTunes for Windows, too; this is an important litmus test and we don't know the results yet.

I can understand Apple might not cotton to a Palm Pre specifically masquerading as an iPod USB device. Given that, allowing the Pre to freely communicate with iTunes isn't necessarily bad business sense, presuming Palm implements the functionality in a forthright manner (like other third-party MP3 players that iTunes already supports).

Why limit access to the Pre, aside from pure spite? If someone already uses iTunes, chances are they have some quantity of DRM-free iTunes Plus music on their computer. There's no technical reason why the music shouldn't be easily playable on the Pre. One of the upshots of removing DRM in the iTunes store is to facilitate device interoperability. Allow non-Apple devices to play iTunes music, and suddenly Apple has customers it didn't have before.

If Apple chooses to cut off just the Pre, and Palm is following the rules, Apple is unnecessarily cutting a stream of revenue. That's something I don't see Apple doing lightly.

I think the whole "Apple buying Twitter" rumor floating around is about as much of a crock as the "Apple buying EA" one. But I give slightly more credence to this conclusion: that, despite the painful experience of Pippin, Apple is once again putting together a game console. Why? Let the evidence from BNET convince you.

First, Apple is picking up game execs and console chip makers left and right. Second is a whole slew of recent patents, for everything from mixing up media and game environments to management of games acquired from a media server. And third, though BNET doesn't actually connect the dots and say it, we will: Apple is sitting on what might be the best library of independent games anywhere, and it's sitting right in front of us in iTunes' App Store.

For years, console makers have depended on the mercy of publishers to keep their hardware going -- they sell the hardware at a loss, and then rely on the software sales and licensing to make it all back up again. But think of what Apple could do here: improve the AppleTV or Mac Mini, throw in some kind of Wii-like interface, and then break the whole thing open in the same way they did with the App Store: let developers in with a really low cost of entry, give them the tools they need to create solid games, and just take a nice cut from all of the tiny transactions flowing back and forth.

BNET claims that the iPhone's interface wouldn't work on a larger console, but why not? All Apple has to do is figure out a way to translate the iPhone's gestures and taps into a console system, and then they can practically run the games natively. Sure, the resolution would be a little low with a straight port, but that's a small problem to fix. Apple already has the makings of a game console with the iPod touch, and while the rumors may still just be rumors, there's never been a better time for them to leverage what they've already got.

After much time and negotiation, movies have finally come to the German iTunes Store. As of this writing, there are 500 films available to German customers (just about 100 are available in HD), including American hits like The Dark Knight (good movie, but the motorcycle is a bit over the top) and Die Fälscher from German cinema.

Pricing breaks down like this:

• Older titles are sold for €7.99
• Newer titles sell for €9.99
• Brand-new releases are €13.99

Rentals are either €2.99 or €3.99. TV shows came to the German iTunes Store earlier this month last year.

[Via iPodNN]

I coulda told you this, though I am a little surprised that we've seen the results so fast. Despite iTunes having put the new tiered pricing into effect just last week, Billboard is reporting that they've already seen sales drop on the higher-priced tunes. The iTunes Top 100 chart has 40 different songs with a new price of $1.29, and one day after the changes, those songs dropped an average of 5.3 places on the chart, while cheaper songs moved up on average. And on the second day of the price change, ten of the tracks that saw their prices rise within 24 hours dropped a huge 12.4 chart positions on average.

Of course, we're talking only a matter of days here, and there are all kinds of things that could have affected this average drop -- lots of the tracks that became expensive were from a Rascal Flatts album, and it could be just that the album has lost popularity, bringing the average down. And don't forget that even though these sales figures may be dropping, they haven't dropped nearly enough to show a loss of revenue (though fewer songs may be selling, they're still making more money).

But for those convinced that higher prices mean lower sales numbers, these first few days of figures will seem to connect all of the right dots. We'll have to wait and see if the long-term effects match up to the figures Billboard has seen so far.

The most recent iTunes update introduced variable priced, with many popular tracks now priced at $1.29. Needless to say, this makes Amazon MP3's 99 cent tracks that much more attractive. Advantageous mp3 is a little script and application combo that makes comparison shopping between iTunes and Amazon a snap.

Basically the Advantageous installer adds both an AppleScript to iTunes and a small application to your Mac. When you're browsing in the iTunes Store if you invoke the script from iTunes script menu in the menubar it will start the little application and search for the track in Amazon (via your default browser). It's not perfectly reliable (for instance, it didn't work with Choosy as my default browser and it messes up some searches), but it is a convenient way to surf for music in iTunes but take advantage of lower prices at Amazon. So now you can do to Apple what you've been doing to Barnes & Noble!

Advantageous mp3 is a free download from Robert Palmer.

[via Engadget]

Check the old Software Update, folks: there's a 68 MB iTunes 8.1.1 upgrade awaiting, or you can get it direct from Apple's site. The notes on the new version are as follows:

iTunes 8.1.1 adds support for renting HD movies and provides a number of bug fixes, including addressing issues with VoiceOver and syncing with iPhone or iPod touch.

The recent influx of HD movies onto the iTunes store (full list of titles here) promised but did not deliver rentals for HD titles; this update should take care of that detail. Let us know your mileage if you update.

Thanks Bruce!

Remember in 2007 when Apple started selling "iTunes Plus" tracks as DRM-free and 256 kbps AAC files? Much later you were able to upgrade your songs on a per-track basis, if you were so inclined. Well, get ready for more pricing changes. The LA Times reports a date has been set for the kickoff of the variable pricing model Apple announced at Macworld this year: April 7. While I doubt most people care about a slightly better listening experience (seriously, have you used an FM transmitter to play music in your car?), I think simply paying more because a song is popular won't go over so well.

I'm not alone in thinking there will be backlash against the policy of selling more popular songs at a higher price. Jim Guerinot, who manages Nine Inch Nails, a pretty vocal opponent to the labels' stranglehold on the industry, feels the increase in prices will only ramp up piracy -- again. I'm inclined to agree.

Yes, we knew this was coming. But the average consumer embraced the iTunes Store not only because it was Apple, or the iPod, or iTunes itself, but also because the one-price-fits-all model is easy to understand. People don't pay taxes with Zune Points or Disney Dollars, they prefer to think "Hey, it's just a buck." The psychological impact of having a price point at $0.99US for everything makes impulse shopping a no-brainer. Just ask all those fart app devs.

The only upside is that less popular songs will be priced lower. Essentially, it's the bargain bin of the iTunes store, featuring one-hit wonders and college radio flops and a random assortment of attic-dwelling musical pieces as low as $0.69. I only hope it doesn't play into the theory of perceived value, which Joel Spolsky noted when iTunes Plus tracks debuted. Apple also said at Macworld "many more songs" will be available at 69 cents versus the $1.29 price point. It'll be interesting to see what develops and if sales suffer as a result of the changes. The labels certainly love variable pricing, and they've been right about this new digital era all along, haven't they? In the meanwhile, get your Top 40 Radio fix while you can; it'll soon be a premium experience to join the "in" crowd.

Got $20US and a hankering for lots and lots of pixels? iTunes has a deal for you: Apple announced earlier today that it is launching HD movie sales and rentals in the iTunes Store, beginning with a small selection of titles (Transporter 3, W. and more) and with a couple of big-ticket films up for pre-order: vamp-rom-teen thriller Twilight drops on 3/21 and James Bond in Quantum of Solace on 3/24. Sales will be $19.99US and rentals will cost $4.99.

Up until now, HD movies had to be purchased rented directly on the Apple TV, although HD television content has been in iTunes since late last year. This is a big step forward for iTunes users and a big 'pptthhbbttt' to the Blu-Ray business model. Keep in mind a few caveats: you'll need iTunes 8.1, and you may want to test your video output path if you've got a DisplayPort-equipped machine and a large external screen (these files are going to be HDCP-enabled, bet on it). Playback quality may not be what you've come to expect from HD media, as the files will still be 720p with H.264 compression -- but be sure to keep plenty of open hard drive space and a clean ISP connection, since they'll weigh in at four GB or more per movie. No word yet on whether the movies will include Dolby Surround audio instead of simple stereo. Looks like Twilight and Quantum will carry the Dolby audio option, though other HD movies may not -- check the rental page for individual titles to be certain.

I'm continually impressed with the quality of streamed and purchased HD video that I play back from my previous-generation MacBook Pro over VGA to a flat-panel 720p TV -- it's not dramatically different from satellite or broadcast HD, at least to my verging-on-middle-aged eyes. The opportunity to buy or rent HD movies might make the Mac mini media center even more appealing.

Thanks to everyone who sent this in.

This seems like bad news for Apple, to say the least. A few Chinese websites are now selling $200 gift certficates to iTunes for less than a few bucks, which means that it's likely hackers have figured out the algorithm to determine gift codes on Apple's music store. As with most online codes, iTunes gift certificate numbers are generated by a formula somewhere -- figure out the formula, and you can generate your own codes (though it's of course tough to do and highly illegal).

The good news is that this might be an easy fix for Apple: they'll just have to re-figure the formula. The tougher thing to do will be to determine which of the old codes to honor -- they'll want to make sure to approve all of the cards on the shelves at Best Buy right now, while still trying to catch all of the illegal codes generated by hackers.

But then again, we're talking about a digital store that's already making cash hand over fist. Maybe even if one hacker on a shady website has figured out how to generate iTunes codes, Apple isn't too concerned about losing a few thousand dollars when they're still selling millions of dollars worth of music and content legitimately.

Eminem's production company, FBT Productions, has been arguing that their artist is entitled to half of all royalties generated by sales of his music in the iTunes Store. Of course, Apple takes a commission before the artist receives their compensation. FBT's argument hinged upon whether the arrangement constitutes a licensing agreement.

MacNN reports that a Los Angeles jury decided no, iTunes is simply another distribution channel, so Em will not be receiving the $1.47 million he was after. Bummer, dude.

This certainly isn't the first time Eminem's legal team has clashed with Apple's. Back in May of 2005, Apple was forced to pull an iPod ad that featured a young user singing (Rapping? Speaking?) the lyrics to "Lose Yourself." The story at the time was that Eminem refused to give Apple permission to use the song, but they did anyway.

Later that same year, the folks at Lugz footwear had Apple pull an Eminem-approved TV ad that looked a lot like their own. Oops.

I don't want to start any blasphemous rumors... but 'groundbreaking electro legends' isn't the first phrase I'd use to describe Depeche Mode. (In case you were wondering, that first phrase would be 'New Wave, eminently danceable Brit synth veterans,' but right there you have ample reason why I write about computers and not bands.)

In any case, Dave Gahan, Martin L. Gore & co. will be the first band to offer an iTunes Pass. Customers can pay $19 to pre-order the band's next album, Sounds of the Universe, and get 'Wrong' (the first single) and a dub remix immediately. Over the next 3+ months, they'll automatically get the new album along with additional tracks and video exclusives. From the EMI release:

"The relationship between Depeche Mode and their fans has always been our top priority," said the band's manager, Jonathan Kessler. "We are thrilled to be the first to participate with Apple in giving fans the kind of deep musical experience they expect from Depeche Mode."

Truth is, I don't see much difference between the iTunes Pass approach and a "special edition" iTunes expanded album with videos + singles added on, except that this has the same effect as a television show's Season Pass of frontloading the revenue and dribbling the content out over several weeks. Granted, for DM fans this is a nice way of jumping into the new stuff and getting extra goodies, but it's not a dramatically different way of delivering music. If you want to find out more about iTunes Pass provisions (yes, all the music will be DRM-free iTunes Plus tracks), check out the details page within iTunes.

[via Macrumors]

Earlier this week at New York ComicCon, Marvel announced their intention to sell "In-Motion" comic books through the iTunes Store. According to Marvel, the In-Motion comics go beyond the paperback books with animated panels and voice-over work from popular actors. Sounds like something that could be a lot of fun on an iPod touch or iPhone.

Speaking of paperbacks, traditional paper versions will be made available following iTunes releases. As of this writing, there's no word on when these will be sold or for how much. I'll sacrifice some geek cred here and admit that I've never been a comic book fan. However, I do get behind attempts to expand artistic endeavors into new territory. Good luck to Marvel!

In today's New York Times, Tim Arango tells a story of a heated conversation between Sony Music's Rolf Schmidt-Holtz and Steve Jobs on Christmas Eve -- one that "ricocheted around the music industry."

Apparently, before the announcement at Macworld, all the labels except Sony had agreed to a new pricing deal. Sony wanted the new pricing to take effect immediately after the announcement, but Jobs wanted a longer rollout. After the phone call, according to the Times, Sony agreed to the longer waiting period.

During this time, Jobs was allegedly on medical leave, recuperating at home from his much-publicized illness. Arango notes that Jobs' point-man on music industry relations, Eddie Cue, and Apple's entire staff "do their best to follow Mr. Jobs's style in their own negotiating." That is to say: Hardball.

Music executives, according to an unnamed source, are afraid of angering Apple, as Apple can single-handedly remove a label's catalog from the iTunes store, angering the label's customers. At the same time, Apple can claim that their hands were tied, the decision wasn't theirs, and that all the ire should be directed at the music industry. Such a thing hasn't happened -- yet -- but the threat is there, and real.

The labels, on the other hand, feel like they brought Apple back from the dead, blessing the company with content.

Even so, David Card of Forrester Research offered an interesting coda to the story: "if it weren't for Apple, God knows how bad the music industry would be," he said.

[Via 9-to-5 Mac.]