Sony networks boss on PlayStation, Sky and Google
Tim Schaaff: 'We don't have to be 100 per cent efficient to be successful'
Interview Tim Schaaff has one of the most interesting jobs in technology and media, as president of Sony's Network Entertainment. Under his guidance, Sony has built out the PlayStation Network and launched Music Unlimited. It's also one of the most challenging jobs, as Schaaf's vertical division spans several competing fiefdoms at the giant, which employs 168,000 people.
Schaaf was previously founding father of QuickTime at Apple. When he joined Sony in 2006, as a direct report to new boss Howard Stringer, he was asked to bring "a unified, intuitive Sony ‘look and feel’ to user interfaces and functionality", in Stringer's words.
We caught up with him in London today.
In a roundtable discussion around streaming music – with partner Omnifone prior to our chat – Schaaf made a few bullish comments about digital music services. Of particular interest was his view on Spotify's announcements: inviting publishers and services into the Spotify tent with platform APIs. In earlier interviews, Schaaf had said Spotify was good for Sony's music services – weening the consumer away from the idea that you have to buy and download songs, into streaming. Here, er, not so much.
"It's like browser plug-ins. I remember when Netscape announced plug-ins. It's interesting when you first hear about it, but after a year, it's a pain in the neck," said Schaaf. "If something is a good idea, it should be built into the app. That will limit opportunities [for partners]"
He also thought Spotify "were looking for some news to offset the news from Google and Amazon". Universal said it had only heard about the APIs - I'm not so sure about that - but thought it was an "elegant" way to expand Spotify's appeal.
But back to Sony.
An interview with Tim Schaaf...
Q: You've got this job where you're the fixer or implementer of things, of technology services, across all kinds of electronics. But Sony is notoriously competitive internally. Are you winning?
TS: I've only been at Sony for six years so I've only seen a small slice of life at Sony. My activity brings me in contact with all the different biz units across content and electronics. I sit with the presidents of the divisions, I'd say we're aligned. Obviously there's all kinds of opinions of how you get from Point A to Point B.
Q: So if as a consumer you want music or movies and don't have a PlayStation at home, is going to work on anything else?
TS: We have enabled the music service [Music Unlimited] off a dozen different product categories. But there are dozens or even hundreds of products that are music-enabled.
Some are as sophisticated as PS3, some are simpler products that are just beginning to get connected. Some are home audio products that have just simple little displays, but you can still connect to the music service, you select your get channels, select your playlists – but it's an appropriate manifestation of this very sophisticated service.
Q: Like what?
TS: Like something that fits on a home stereo rack. All built around your library, your preferences, your playlist in a way that's logical and meaningful for people upgrading their home stereo.
Q: How important is getting the phone JV, Sony Ericsson, back under the Sony umbrella?
TS: The handset is an extremely important form factor. The handset, the TV, the PlayStation and the tablet – we think they're all inter-related. When we launched Music Unlimited last November we felt very strongly the place to implement it was the living room. But we now support any Android handset running a reasonably modern version of Android. We run on a range of tablets – and we'll run on iOS. It'll be with you wherever you go.
Q: Sky gets a lot of credit for its platform play. Is there much you can learn from Sky?
TS: Well they're a very clever company, obviously, and very successful. The guy who runs Omnifone [Jeff Hughes] has a history in that environment. An area [where] we may be able to learn [from Sky] is how you manage subscription relationships with customers over a long period of time. That's a little different to the technical knowledge about the product, and so forth, but those customer relationships are very different to what we've had in the past with customers who go to the store, buy a product in a box, and maybe send a Warranty Card in. One of the reasons this network stuff is interesting is that once a device is connected, you have a relationship. We can build a relationship that was never possible in old-style brick-and-mortar retail, and understand a little what it is consumers want.
Competing with the webtards
Q: There was a McKinsey report earlier this year that estimated the consumer surplus of services web companies give away for free – Facebook, GMail – is around €100bn a year. How much money is being left on the table by Silicon Valley companies, who are better at giving stuff away for free than they are realising value. How do you tap into that?
TS: I think it's really important how to be able how to make it simple for consumers. We all have a handset, pay that monthly bill, we pay TV subscription bills essentially. We have to find ways of adding services – but people will get annoyed if it's complicated.
We launched a sub model related to gaming – a year and a half ago – and we've been really happy with that. We can bring these together in interesting ways – it's not compelling because it's just music. Consumers are really hungry for content and entertainment that spans all the content. That's the essence of the vision – realising that.
Q: Do you see Facebook as a platform threat, eventually?
TS: If anything Sony and Facebook should e working more cosely. These are environmental conditions, not simply 'friend or enemy' - that's not how it works at all. We've got a lot more experience working with Google [on Google TV] – partnerships are complicated.
Q: Google has a very different idea of where money comes from...
TS: Well that's their model, and their struggle is to find more diversified revenues. And secondly they want to make Android dominant relative to iOS. I think there are lots of ways Sony and Google can work together. It's a new world for Google to be working with device companies, sometimes that's a difficult fit – but it's growing pains for a company that's going somewhere.
Q: It seems to be a Silicon Valley Achilles heel. Web advertising is not a good fit for tapping into that consumer surplus, is it?
TS: That's true. I don't know enough about Google to know where they might be going. There's a huge revenue stream now that's the foundation of their business, and it can fund a lot of other interesting things. The question is: how you survive in the long run? The winner is going to be decided over one or two years. I'm optimistic about working on these problems from inside Sony is because we have the capability to deal with these inevitable changes – that will force us all to reset or expectations about what the model should be.
The Cloud is going to be critically important – it is already – the question is how is it going to be utilised.
Q: We have SOPA coming in the United States, for example. Paying for content is still optional. Is there anything you look for from regulators or policy-makers?
TS: I think that trying to get money from people who don't have money is not a very effective way of spending your time. I think that making things attractive and convenient for people who have money is always a good strategy.
If you make it easy for people to get what they want to get, they're happy to give you money. If you build compelling content experiences people will find a way to pay for it. Those principles are pretty robust. They may not get every last dollar that's on the table, but they will take us every bit as far as we need to go for the next few years. We're already in a growth period – we don't have to be 100 per cent efficient to be successful. ®