Keurig brews consumer discontent

Nov 2015 Update: Brewer sales plummet 26% forcing Keurig to introduce 2.0 My K-Cup adapter. Owners can use any coffee they wish. Comment of Nov 8, 2015.

Feb 2015 Update: Keurig CEO, Brian Kelley, called one of our readers to discuss the 2.0 restriction. Scroll to comment of Feb 10, 2015 near the bottom of this page.

Two years ago, as the K-Cup patent expired, the leader in single-serve coffee brewers introduced Vue, a slightly larger, coffee pod. If you haven’t heard of Vue, your not alone. The newer single-serve coffee packet never caught fire like Keurig’s original K-Cup. Just as with ink jet printers, the new pod and the brewers that accommodate them were Green Mountain’s strategy to reassert control of a market that produces revenue and profit from a consumable rather than the appliance that processes it.

According to Keurig, the Vue system was introduced “in order to increase the choices users have in brewing beverages.” Now that Vue has failed to gain traction, it appears that Keurig is reaching out to owners and softening their loss.

This certainly sounds like a benevolent company; one that care about consumer preferences, and protections—Right? We’ll get to their motives in a minute…

Keurig Brewer 2.0This month, Keurig put pomp and fanfare behind the introduction of Keurig 2.0. (I think that ‘3.0’ would be a more accurate nomenclature, but who can blame them for trying to downplay the marketplace failure of Vue). And so, this week, I became the owner of a new Keurig 2.0 model 400 brewer. (The flagship model 500—or 560 if you purchase at a warehouse club—has a slightly larger water tank, a larger display screen, and the odd addition of a color changing night light).

Did you catch the omission above? I bet you missed it! I said “I became the owner” rather than “the proud owner”. You might think that unwrapping a new, 3-figure appliance with color display, operating system and lots of shiny new parts would leave me enthralled for at least a week, right?

Not really…

You see, the new Keurig brewer accepts both K-Cup and Vue coffee pods. But it also has has built a camera. The camera spies on the owner of their new 2.0 brewers. (Seriously—It really does!). It’s not trying to film the marital vows that you renewed on the kitchen floor last night. Keurig 2.0 leaves that to the NSA and Google. Rather, the camera is constantly vigilant against any attempt to use unlicensed coffee.

The camera studies the lid of each coffee pod inserted in the brewer and it looks for Taggant, a chemically-coded ink on the outer ring of the lid. It won’t accept the My K-Cup gizmo that Keurig continues to sell for use with legacy brewers, and it even rejects pre-2014 K-Cups from Green Mountain and its partners. Shocking—because they are fully licensed and are well with in the expiration date marked on the package.

For those who own a boatload of Vue pods, the new brewer comes with a comforting statement: “Call us and we will work out something”. Apparently, Keurig will placate owners with a large stash of coffee pods by exchanging them. Gee! That’s great! Just register your products, identify yourself and wait for a package, because your new machine spies on you and will not let you brew your favorite drinks. That’s just ducky.

Was every executive over 25 absent on the day that CEO, Brian Kelley, dreamed up the spy camera? Green Mountain is walking down the path of the early iTunes era. Buy all from Apple or your music won’t play on your phone, your PC or your iPod (the operative word is ‘your’). At least Apple could argue that it was trying to thwart internet piracy.

If you attempt to put a perfectly good coffee pod into a Keurig 2.0 brewer, a message is displayed across a tiny color TV screen:

“Oops! That coffee isn’t compatible with our incredibly high standards! We want you to enjoy the very best experience possible. Besides, you probably wouldn’t enjoy the flavor of coffee from any vendor that refuses to pay us for the privilege of compatibility.”

Keurig-OopsSeriously! It says something just like that. At least, to anyone who can read between the lines. A satirist couldn’t come up with better material for marketing-blunder-of-the year. And not just a blunder, but one that flips a finger to their customers.”

Who would have thunk it? Keurig put DRM into a coffee maker. For cryin’ out loud, it’s a coffee maker! What’s next? Cars that demand Ford-branded gasoline? How about a TV that only displays Sony-licensed content?

As for my new brewer, I have found work-arounds that defeat the Gestapo agent within. Several YouTube mavens describe tricks for keeping Keurig in its place. But make no mistake: It is a pain! I don’t relish the idea of taping a forged software license across a camera and changing it whenever a family member wants to brew a different beverage. I don’t want to search local stores for a licensed K-Cup that is sufficiently close to the each beverage that I already own?                                                 Continue below photo »

Keurig 2.0 brewers look for data hidden in the outer ring

Keurig 2.0 brewers look for data hidden in the outer ring

Keurig has turned their brand into the butt of a joke faster than you can say ARccOS. They must be guided by lawyers with no concept of market dynamics. In the blink of an eye, they will become an anachronism. In a few years, the Keurig 2.0 will be a unit in market training seminars alongside the ‘New Coke’, Andy Grove’s slow recall of the Pentium that exhibited math errors, and Ken Olsen’s conviction that consumers would never buy ‘personal’ computers for use at home.

But unlike Coke and Intel, Keurig doesn’t have a 10 billion dollar cushion. Even worse, they have fooled their fans once before. They may not be able to recover from screwing them over with malicious intent and an extended middle finger.

Green Mountain Coffee has a limited time to recover from the Keurig 2.0 fiasco. Here, then, is our humble WildDuck marketing advice:

  • Change the heartless restriction into an on-screen sales pitch. Be a good guy!
  • Accept all the existing K-Cups that your consumers already own. I have dozens.
  • Offer an adapter that allows owners of your new brewers the same privilege of occasionally scooping in the grounds of their favorite store-bought coffee.

And for G-d’s sake, stop spying on your customers! With a downward-facing camera mounted 10 inches above my kitchen counter, I wonder if your next software update will activate a microphone. Get off my back. Please Keurig; respect your customers!


Afterword 2.0

A guest lecturer at Cornell University asked his students to suggest a shareholder letter from Green Mountain Coffee. I haven’t been a college student in years. But if I were in that class, this would be my letter…

Dear Shareholder,

These are exciting times for your company. As you know, we are introducing a series of Keurig branded coffee brewers that are not quite compatible with both of our previous single-serve coffee pods, the ubiquitous K-Cup and Vue.

Keurig Brian Kelley-a

Brian Kelley; genius behind cameras in coffee pots. But, hey! it’s for your own good. A safer, more enjoyable beverage experience.

As a former Coca-Cola executive, I know a thing or two about tinkering with a successful brand in an effort to teach consumers what is in their best interest. That’s why we pushed New Coke onto the market back then, and it’s no different with the Keurig 2.0 product launch.

Of course, it is critical that we at Green Mountain Coffee convince consumers that our use of digital rights management is a benevolent and beneficial act—one that protects them from unsafe coffee, electrical failure and night terror. We must avoid any perception of ulterior motive or hidden agenda. Fortunately, consumers have a very poor memory. With clever marketing, they will buy our products with an assurance that they cannot accidentally harm themselves (or their Keurig 2.0 appliance) by brewing inferior coffee.

Of course, we could have used the very same coffee pod detection technology to simply display a message that the K-cup a user has inserted is not licensed, and may not taste as wonderful as coffee that comes from a company that pays us for the privilege of compatibility. But that wouldn’t be sufficient. We are concerned that our customers may be too busy enjoying coffee from 10,000 competing brands to heed our urgent warning.

Brian Kelley, CEO
Green Mountain Coffee

Ellery is editor at AWildDuck and owner of a new Keurig 2.0 brewer

Cloud Music Players Foreshadow Movies On the Go

AWildDuck was launched in August 2011, nearly 2 years ago. In that first month, I wrote about a radical new feature of Apple Computer’s iTunes Cloud Player. Music Match allows users to upload music obtained from any source—even bootleg copies. Once uploaded (or more precisely, matched and mapped to a licensed, original track on Apple servers)—users can not only play it from the cloud with pristine quality, but even download a new high-quality original to their PC, without any copy protection (also known as DRM or “Digital Rights Management”).

In that early article, I questioned Apple’s integrity in turning vast pirated libraries filled with tunes of questionable quality and pedigree into newly legitimized albums and tracks—all with high quality and no DRM. What I found most surprising was that Apple was nabbing a subscription fee of $24.95 per user while rights owners got a raw deal, even if Apple distributed the subscription fee across all rights owners in all those collections. After callout-02all, the deal covers 25,000 songs for each user, and it is likely that this will be expanded to 200,000 tracks to level the playing field with Amazon.

Since writing that piece as a newly minted Blogger (I was still wearing diapers), I have begun to dismount from my high horse just a bit. First, there is the fact that the recording studios were very much a party to the new service. Although the deal really shafts it to composers and musicians with a continuing stake in their creations, Apple didn’t hold a gun to their heads. Rather, they faced a brutal technical and market reality. Music is very easy to copy. To maintain a core of paid listeners, authorized channels of distribution and licensing had better be inexpensive, very simple, and with added value that drives consumers to be both legitimate and loyal.

Another reason that I can’t take a strong position against piracy is because it would be the very epitome of hypocrisy. The legitimacy of my own collection of music and movies is questionable to say the least. Actually, there is nothing “questionable” about it. I know the source of each track and film—and I certainly don’t claim that licenses are in order.

Even so, I had a difficult time understanding why Apple would help to undermine content producers, which are the very bread and butter of a windfall revenue engine, from any perspective. But my thinking has softened toward Apple…

First, there is the fact of participation by rights owners and the Piracy facts on the ground. But also, the high-quality, DRM-free tracks that users can download are laced with encrypted data that identifies the distributor, authorized user, and even the download transaction. No, they are not copy protected, and users are free to back-up their collection, create their own mix and even share music (with certain restrictions). But if studios lose control of their collections, they can at least identify the leak if an investigation ensues.

But I am not here to revisit the politics of Music Match and the effect on Pirates or rights owners. After two years, I am finally becoming a cloud streaming groupie. That isn’t to say that I lack experience in the Cloud. I wrote the spec on Reverse Distributed Data Clouds and I create streaming data clouds from a plug PC situated in my own home to access documents and media on the go. But this time, I am joining the legions who stream from a major service and not just from their own private clouds.

Last week, I compared three services: iTunes Match, Amazon Cloud Drive and Google Music. Then, I moved my entire music collection to Google Music. By “compare”, I mean that I read advertising claims, specifications and online reviews for each service. I talked to users and I searched for critical feedback concerning bugs and limitations. But, I did not subscribe to each service nor test them against each other. So my observations are not a comparative review. cloud_music_player_logosYet, I can confidently make some observations about an emerging industry. These observations apply equally to all three media streaming services.

First, and perhaps most obvious, is the continuing change to entertainment delivery mechanisms, and the significant benefits with each change in technology…

Movies and Television

In the early 20th century, there were movies and newsreels. You had to travel to a big auditorium, the choice was limited, and the schedule for new content was measured in weeks. Display equipment was expensive. Then, after World War II—long before most of us were born—there was television. TV brought entertainment into the home. But it was not personal, it could not be saved and retrieved at will, and it belonged to a big company. In the mid-1970s, video tape allowed time shifting, archiving and purchasing or borrowing content. But it was complex, bulky and slow to move between films, chapters or scenes. Because of the nature of tape, it was very difficult to catalog a personal collection. For most of us, the “catalog” was a bookshelf next to the VCR with a narrow graphic or description along the edge of each box.

Accessible Media

Next, DVD and Blu-Ray displaced Video tape. Even during the height of the Blu-Ray / HD-DVD battle, pundits agreed that the winning format would be the last removable storage device that used moving media. They predicted that electronic media would replace spinning discs. Blu-Ray players began sporting USB ports and SD slots which allowed users and visitors to bring content on a key chain. All of it was easily cataloged, and instantly accessible. And with the improvements to audio & video compression (and especially the cost and density of electronic storage), users could fit many movies into a device the size of a postage stamp or a stick of chewing gum.

I have loaded films onto USB drives for portability and swapping. But that era lasted only a few years. Despite a leapfrog of convenience, the physical format is coming to an end. The whole idea of storing media in a device that we carry from one place to another or store in a closet is an anachronism…

Welcome to the Cloud

The cloud is not new. It could be argued that Netflix and OnDemand from your cable provider are cloud services. But with these models, content “use” is under control of rights owners and distribution companies. Consumers don’t like that. They just won’t stand for it.

Just as Netflix and OnDemand have changed the entertainment landscape (in the past, media was borrowed from a library or a Blockbuster store), iTunes, Amazon and Google are changing the way media is served up from your personal library. It’s like having everything on your own drive, but a whole lot better.

How is it better? In this bulleted list of benefits, l refer to movies and music equally. In fact, cloud services are having a difficult time dragging along movie studios into the world of user controlled, non-DRM content. But I am trying to be a forward thinker. Sooner or later, you will be able to store and serve up movies from your own iTunes, Amazon or Google account and with callout-03all of the features and benefits that are just now spreading to music. So, while it may be a bit premature, I treat music and movies equally.

■  Your collection is available everywhere you go. You cannot forget to bring content that you own.

  • You needn’t worry about making and maintaining frequent back ups. That burden is borne by the cloud service. Instead, keep one permanent collection on your own media. It is your hedge against the possibility that lawmakers may clamp down on these services in the future.
  • With a matching feature from your cloud provider, your personal copy is perfect. Listen or view at the highest definition.
  • Your collection is indexed, searchable, and easier to research as you enjoy it. Imagine clicking on an actor’s face and instantly linking to their IMDB filmography. Now that’s a benefit worth writing home about!
  • You can loan or borrow content from a friend. Some services allow media sharing. — or simply create a temporary password for your nephew in Seattle.*

For now, these benefits are limited to your personal music collection. The  motion picture industry will delay the inevitable day of consumer content control for as long as they can. But with the ease of copying, the futility of DRM and the very low cost and compressed size of videos, the dawn of consumer empowerment is lurking around the corner.

Just as the floppy disk died a distinguished death in the 1990s, the interaction of consumers with all manner of removable media is coming to an end. The cloud is not just a marketing gimmick. It is tangible, friendly and very beneficial to consumers. I still believe that personal, distributed p2p clouds have an edge over cloud services. But the services have better applications, and the staff to maintain them. They offer an array of features and security that a home tinkerer would be hard-pressed to serve up from home or from a co-location server .

What About Google Music? Ready for Prime Time?

I have disclaimed any notion of offering a comparative review of cloud services, be-cause I have not tested iTunes Match or Amazon Cloud Player. That said, readers wonder why I chose Google Music over the competition and what I think about it…

I chose it because it is free (up to 20,000 songs), it supports Android, the match component offers exceptional quality (320kbs MP3 tracks), and restoration of an entire library with one click. Finally, it is from Google, a company that champions consumer rights and tries hard to do the right thing regarding privacy. As far as my thoughts on the first week of heavy use, the user interface is limited and there are some bugs to work out. Most noticeably, it is sophomoric. Although uploading is a snap, it is not clear if a user can changes to MP3 metadata back to their PC or restrict the direction of sync. But as a music player, it is robust. I am confident that bells and whistles will follow.

* It may be a bit trickier if you wish enjoy content abroad when using cloud provider. Just as with Netflix, content “matched” by the provider may be restricted by apparent IP region. Therefore, you may need to set up a VPN to enjoy your media when traveling overseas.