The main way many digital music retailers have chosen to compete with industry behemoth Apple Inc.’s iTunes is to offer music without restrictions on how it can be used. The second tactic has been to offer tunes a few cents cheaper. Both of those competitive advantages soon will be going away.
Yesterday Apple announced that it would change its pricing structure in April, making most songs available for 69 cents, pricing others at the current 99 cents, and selling hits and new releases for $1.29. Apple says the price for an individual tune will depend on what the music labels charge for a particular song, but that “many more songs will cost 69 cents than $1.29.” By comparison, most Amazon MP3 tunes sell for 89 cents and 99 cents each.
Apple also revealed that all music from the four largest record labels – EMI Group, Universal Music Group, Sony BMG and Warner Music Group – would be offered without digital rights management restrictions that limit how many times music can be copied and the devices on which it can be played. For example, iTunes music traditionally has not worked on other MP3 players besides the iPod.
Apple was selling music from EMI without the restrictive technology, but had difficulty getting other big names to sign on, even though such labels offered non-protected tracks to iTunes competitors such as Amazon.com and Wal-Mart. Those e-retailers trail far behind iTunes in market share. Apple has at least 75% of the digital music market, according to industry experts. No. 2 Amazon has less than 10%, according to consumer research firm The NPD Group.
The U.S. digital music market was projected to grow 39% in 2008 to $1.6 billion in sales and to make up 34% of all domestic music sales by 2012, according to research firm JupiterResearch, recently acquired by Forrester Research Inc. CDs still make up most of the music market, with sales of $9.6 billion according to Jupiter.
Apple, No. 7 in the Internet Retailer Top 500 Guide, also said that owners of its iPhone would be able to download iTunes music to the mobile device directly over a wireless data network, without having to hook the iPhone up to a computer or locate a wireless network.
The iTunes Store offers more than 10 million songs, over 30,000 TV episodes and over 2,500 films. Amazon’s MP3 store claims more than 6 million songs and Wal-Mart more than 3 million MP3 tracks.
Back...
