I had one of those “convergence of thoughts” reminders the other day. In the content and tech business sectors it has recently been impossible to go a day without a story on Netflix – further evidence this morning – a WSJ story on Netflix being added to the S&P 500 (kicking out the NYTimes and Kodak). Netflix is, to put it mildly, on fire at the moment. I’m not a subscriber or shareholder, and truthfully don’t have enough time to watch much recreational television. However a couple of weeks ago, I started ruminating over the value proposition of an unlimited $7.99 streaming option, that also allows me to view shows and movies on my iPhone and iPad, and also comes with a one month free trial. And I used that pricepoint to draw a direct comparison to unlimited mobile music subscriptions – currently at about $9.99/month from Napster, Mog, Rhapsody and Rdio (note – Pandora is not in this list as it’s a radio experience and not truly interactive). None of these services even offer a 30 day free trial – 14 days is the maximum. I think you can see where I’m going here… unlimited video – $7.99/month – unlimited music $9.99/month. (Napster also offers an $8/month annual plan but it can’t be canceled at any time like Netflix). The question in my mind has been, what makes labels (who are driving this pricing model) think their product is worth a 25% premium over video?

Earlier this week, I read a thoughtful post about Facebook Jumping The Shark on AdAge. In it, Judy Shapiro referenced a Clay Shirky blog article titled The Collapse Of Complex Business Models which draws inspiration from Joseph Tainter’s Collapse Of Complex Societies. In his entry, Shirky uses the analogy of cost-efficient television production to illustrate his “collapse” analogy. If you read the posting, you can see that it’s actually analogous to all 20th century media distribution forms  - print, TV, radio and of course, the packaged content that fills those media types.

So my convergence thought was the perpetual notion of collapse, as applied to the music industry, tied to this seemingly high value low cost offer from Netflix. Putting on the consumer’s hat it’s clear that the Netflix offer is a value proposition – it offers something the consumer can’t get (TV shows and movies when they want), something that they could want for a very attractive price, and I anticipate that the streaming subscription will be an enormous business for Netflix and their content suppliers. Conversely, a $10 mobile subscription for music is as dead in the water as a $10 online subscription was 5 years ago. A little business, with struggling players and no breakout service, with labels impeding the companies’ success (due to punitive content costs) and ensuring their own slow motion collapse. Razor thin margins for the services, and no money left on the table for marketing. And the collateral damage, labels are driving away innovation which has historically helped the music business model.

Back to the question – what makes music think their product is worth more than video? Purely on the basis of numbers, and the value to the consumer, if Netflix has set the market price of $7.99 for video, what is the potential market price for a mobile subscription music service? It certainly isn’t $10 – I’m going to say it’s $1.99 and it should just be buried in your carrier bill.

That’s what I’ve thought for a number of years and those are the thoughts that converged once again this week.

We announced a new strategic partnership today, with Jetmind Technologies. Jetmind is a New York-based software development company, with deep expertise in iOS (iPhone/iPad) and Android mobile development. Our clients and prospective clients had been looking for a trusted app developer, and we’re pleased to now offer these services. Jetmind has already done work for The Home Depot on Android, and has had a top ranking game in the App Store in Color Wars. Their dev and UI talent is best demonstrated in their content, consumer products, social network, health and financial services, sports and games apps. It aligns with our own core competencies in those sectors, and enhances our dev services already available in CMS development, PHP, JS, Flash and HTML5. Take a look at a small portfolio of their apps and if you’re looking to enter the Android or iOS mobile markets with your product, or with an app tied to your company’s services, let us show you how efficient and cost-effective Jetmind’s development resources can be for your enterprise.

Last week, Sprint announced a landmark outsourcing deal for mobile carriers, turning over its network operations to Ericsson. The headline number is $5 billion value to the deal and 6,000 Sprint employees wlll become Ericsson employees. Clearly this is a major win for Sprint, which can now focus its resources on customer acquisition, service enhancements, and growing the network, while allowing Ericsson to do what they do best –  maintaining the network infrastructure. It’s an ideal example of shifting the commodity segments of a business to an outside vendor to improve efficiency and profitability, and in doing so, shifting the primary focus to growth of the organization, in this case, Sprint. Essentially, the network operations segments of the wireless business, like those in media are duplicative across providers, even with CDMA/TDMA technology differentials. In media, each major  company – Disney, Fox Interactive, Viacom, NBC Universal, has built largely duplicative network operations facilities. Even in a tight margin business like digital music, Napster, Pandora, Rhapsody and iTunes have their own data centers and ingest, encode and host their own content. As the business of digital media matures, and CEOs and CFOs look for ways to improve the bottom line, I anticipate more deals like the Sprint/Ericsson arrangement. It’s easy to see envision a ubiquitous backend service for rich media.  It’s called Akamai. But a ubiquitous service bureau for licensing, hosting and reporting makes even more sense, between content owners and end distributors. It allows the content owners to focus on creating new content, reduces business development and business affairs cycles, and in turn allows distributors recognize similar efficiencies, and  focus on their primary business – growing their customer base to maximize revenue, product enhancements and creative packaging.