Future of Apple's music business in jeopardy?

Posted:
in iPod + iTunes + AppleTV edited January 2014
Here is an article from the International Herald Tribune.



Microsoft takes on Apple



Seems like M$ revealed their plans for the music business. They are licensing their portable music/video player technology to Napster, EMI music, iRiver and creative In EUROPE. U.S. to follow soon? Sony's joining the party too. All of this coming out in the summer.



Did Apple just lose the market? iTunes for Europe is still AWOL. Is the Apple music business headed for the same fate as the Mac? 5% market share? Will apple counter by opening iTunes Europe on April 28th?



IMO, Apple can beat all this by enabling WMA on the iPod. Let the users buy from Napster or Sony or EMI, manage with Itunes and listen on the iPod.



What do you think?



Edit: Edited for spelling
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Comments

  • Reply 1 of 30
    bill mbill m Posts: 324member
    The key ingredient in Apple's music business is the iPod. The songs are 95% the same on all the current and upcoming music services. It's just a matter of preference and Apple already has a very healthy 70%+ of the portable players and, consequently, jukebox software market. Microsoft and the rest will play catch up for a long time, most of them falling off sooner than later... specially since they lost a huge amount of ground since iTunes became available for PCs.



    The iPod does not need WMA support. As long as Apple maintains a strong music library available at iTMS and keeps improving iTunes, their music business is safe. Besides, people who really care about their music, will keep buying uncompressed audio CDs (or DVDs) anyway, and the iTunes and iPod combo works great for this very important market segment as well.
  • Reply 2 of 30
    satchmosatchmo Posts: 2,699member
    I wouldn't count MS out. With the clout they have, this battle is far from over.



    By forcing all those companies to support WMA, it sets the "perception" that it is the de facto standard file format.



    Once those who consider purchasing an iPod realize that it won't work with 4 out of 5 music services, they'll look elsewhere.
  • Reply 3 of 30
    hmurchisonhmurchison Posts: 12,141member
    Microsoft is formidable because they control the dominant desktop platform. However if they think video will propel their ipod competitor they are mistaken.



    I still doubt that video is what "most" consumers are pining for. No portable video product has ever come close to reaching critical mass like basic music players.



    The other fallacy is one that WMA stores have some sort of inheritant advantage in numbers over iTunes. If we were talking a Brick and Mortar store then location and amount of stores is paramount. But we're talking virtual stores and are easily accessible for all connected. So there I must ask. "Why would someone want or need to use 3 or more stores?". The only way this is feasible is if stores eventually have a large sections of exclusive content. Which today they really don't. Songs from the Big 5 will be available from all the stores and that is what is selling in the largest numbers.



    This is very interesting study. I continually see people placing "old world" business strategy on virtual products. It doesn't work. While site after site exclaims that the next "giant" is coming to dethrone Apple us iTunes users who've downloaded more than 50 million tracks are too busy searching for music and gettig easy access to care.
  • Reply 4 of 30
    chris cuillachris cuilla Posts: 4,825member
    Quote:

    Originally posted by Jamil

    Did Apple just lose the market?



    No.



    Quote:

    Is the Apple music business headed for the same fate as the Mac? 5% market share?



    Maybe. Maybe not. Why does everyone assume that Apple will fail at everything it does?





    Quote:

    IMO, Apple can beat all this by enabling WMA on the iPod.



    No! No! No!



    Why would Apple do this? Most people that suggest that Apple enable WMA on the iPod don't understand what is happening and what WOULD happen if Apple did such a thing.



    Support for WMA would kill iPod in less than a year.
  • Reply 5 of 30
    satchmosatchmo Posts: 2,699member
    Quote:

    Originally posted by hmurchison



    "Why would someone want or need to use 3 or more stores?". The only way this is feasible is if stores eventually have a large sections of exclusive content. Which today they really don't. Songs from the Big 5 will be available from all the stores and that is what is selling in the largest numbers.







    iTMS may have just as many songs as the other 4 stores, but it's all about perception .

    Unfortunately, the majority of PC people think Apple is a joke or are going out of business. They want reassurance that should Apple fails, their iPod will work with other stores.
  • Reply 6 of 30
    chris cuillachris cuilla Posts: 4,825member
    Quote:

    Originally posted by satchmo

    iTMS may have just as many songs as the other 4 stores, but it's all about perception .

    Unfortunately, the majority of PC people think Apple is a joke or are going out of business. They want reassurance that should Apple fails, their iPod will work with other stores.




    Why do people keep doing this?



    The majority of music and music player buying people though are buying from Apple (at least right now)...including MANY "PC people".



    These are different markets, and, presently, Apple is the dominant player in the digital music download and digital music player market. Will that change? Perhaps. There is a lot of the game to be played. But let's not assume that just because Apple screwed up the PC market, they'll do the same here.
  • Reply 7 of 30
    hmurchisonhmurchison Posts: 12,141member
    Quote:

    The majority of music and music player buying people though are buying from Apple (at least right now)...including MANY "PC people".



    Bingo! The iPod is not a success because of Mac users people. It's because Apple delivered a product that even PC users saw the value in. Some of us have been carrying the Mac torch a little too long and have developed a paronoid "defeatism" attitude. People...let Apple throw the long bomb in hopes of getting a touchdown. What you propose is that apple "take the saftey and play safe field position"



    Either way may work or may fail.
  • Reply 8 of 30
    jamiljamil Posts: 210member
    Why would the ipod be reduced to the same 5% market share as the Mac? Arrogance to adopt what could be the dominant format out there.



    qoute from chris



    "Why would Apple do this? Most people that suggest that Apple enable WMA on the iPod don't understand what is happening and what WOULD happen if Apple did such a thing.



    Support for WMA would kill iPod in less than a year."



    Why? How? doesn't this argument go against the very argument around why the ipod is a success? design, design, design.



    I am not saying itunes music store adopt wma, I am saying allow the ipod to play wma. it's just another format for god's sake. very soon you will have a thousand stores where you don't get AAC but WMA. Which device do you think you will opt for?



    The store libraries might be almost the same today, but that will change for sure in the future. suddenly you will not find that one indie song on anything but WMA. why ? Because windows is the dominant desktop out there, that runs on the cheapest hardware available. As M$ integrates music production into their OS, artists without the fat wallet, will start developing on the MS platform.



    Don't think about the present, think about five years in the future.
  • Reply 9 of 30
    Quote:

    Originally posted by Jamil

    "Support for WMA would kill iPod in less than a year."



    Why? How? doesn't this argument go against the very argument around why the ipod is a success? design, design, design.




    See his post from iTunes vs. WMA round 2:



    Quote:

    Quote:

    Originally posted by SonOfSylvanus

    You sure about that last bit. I know iTMS is outselling everyone at the moment, but Napster, Walmart and Coke all use WMA (don't they?). WMA is everywhere and more companies are using/providing it. AAC is far from 'the standard'...



    which is, so far, succeeding in doing.



    iTMS and iPod currently dominate the market and thus ARE the standard. Whether that lasts is another question. Bottom line though is that Apple doesn't do themselves ANY favors (at this point) by supporting WMA. That will instantly kill AAC and hand dominance over to MS. They are at least putting up a (very) good fight against WMA.



    WMA is "everywhere" in the sense that many vendors support it. But it is not in terms of total marketshare.



    That about sums it up.
  • Reply 10 of 30
    chris cuillachris cuilla Posts: 4,825member
    Quote:

    Originally posted by Jamil

    Why? How? doesn't this argument go against the very argument around why the ipod is a success? design, design, design.



    Here's why...Right now, Apple has a lock on the downloadable music market (one that may or may not last). They are essentially locking people into AAC/FairPlay and thus the iPod. They are trying to establish AAC/FairPlay as the standard. If they begin supporting WMA, there will no longer be any need for AAC/FairPlay and Apple will hand over control of this market to Microsoft. Right now Apple is firing on all cylinders. They have a hip product that everyone wants and they are driving demand through a great on-line, downloadable music proposition.





    Quote:

    I am not saying itunes music store adopt wma, I am saying allow the ipod to play wma. it's just another format for god's sake.



    But it's not that simple, as I have explained above. If that's what Apple though it would be done by now. But, I suspect, Apple knows what I think is the real issue here...controlling the market.





    Quote:

    very soon you will have a thousand stores where you don't get AAC but WMA.



    Really? What makes you think this? I predict just the opposite. Right now there is no money to be made selling the music (except by the music companies). This is the brilliance of Apple setting the market price for the music. It is too low to make money. They are giving away the blades to sell the razors. These other stores are losing money without having some other source of profit (as Apple does with the iPod).



    Quote:

    Which device do you think you will opt for?



    The one that is compatible with most of the music out there. Right now this is iPod.



    Quote:

    The store libraries might be almost the same today, but that will change for sure in the future.



    This is highly doubtful. The source of the music for everyone (Apple included) is the "Big 5". There is likely to be very little difference among the libraries long term.





    Quote:

    suddenly you will not find that one indie song on anything but WMA.



    Indie songs? Are you serious? This is not the mass market. Besides, Apple has provided a great/easy way for Indies to get onto the iTMS.



    Quote:

    why ? Because windows is the dominant desktop out there, that runs on the cheapest hardware available. As M$ integrates music production into their OS, artists without the fat wallet, will start developing on the MS platform.



    Well, this is certainly a possibility. But seriously, right now Apple has probably the best music production software available for amateurs (Garage Band) and professionals (Soundtrack). I think Apple has a seriously compelling offering to any Indie band that wants to produce its own music.



    Quote:

    Don't think about the present, think about five years in the future.



    I am. WMA appears to me to be a short term gain in exchange for a long term loss for Apple.
  • Reply 11 of 30
    amorphamorph Posts: 7,112member
    Quote:

    Originally posted by Jamil

    Why would the ipod be reduced to the same 5% market share as the Mac? Arrogance to adopt what could be the dominant format out there.



    Could be? How about the problem the other stores are having, which is a refusal to adopt what is the dominant format? That would be AAC.



    In this case, we have nothing to fear but fear itself. If enough people go around assuming that WMA must become the de facto standard, then it will become the de facto standard. In other words, you're part of the problem.



    Right now, the actual and de facto standard is AAC (for commercial downloads, anyway - but iPod works with MP3, the other standard). That's becoming more and more true.



    After all, the number of stores adopting WMA doesn't matter if they all flop. If they all license the same back end and use the same technology and have the same basic catalog, do they even count as multiple stores?



    Quote:

    I am not saying itunes music store adopt wma, I am saying allow the ipod to play wma. it's just another format for god's sake. very soon you will have a thousand stores where you don't get AAC but WMA. Which device do you think you will opt for?



    First of all, WMA is not just another format. You ignore politics at your peril, and doubly so when MS is involved. In technical terms, MS is pushing for a far more DRM-centric, restrictive paradigm than Apple is, so a world dominated by WMA will be vastly different than a world dominated by AAC.



    As to which store will win: iTMS is currently #1 with a bullet. It works with the #1 jukebox and the #1 music player. Why isn't the question whether other players will fail because they aren't compatible with the industry leader - in every category?



    Also, you're basically offering a complete lack of consistency or integration as a competitive advantage. iTMS, iTunes and iPod are all top-notch, and they all work beautifully together. Nothing else offers that package. As long as iTMS remains responsive, well-laid out, reasonably priced and well-stocked, any "choices" will only be considered when it falls short. And if they aren't compatible with the iPod someone already has, so much for them.



    Quote:

    The store libraries might be almost the same today, but that will change for sure in the future. suddenly you will not find that one indie song on anything but WMA. why ? Because windows is the dominant desktop out there, that runs on the cheapest hardware available. As M$ integrates music production into their OS, artists without the fat wallet, will start developing on the MS platform.



    Don't think about the present, think about five years in the future.




    Hogwash. What we do in the present determines what the future will look like in five years. You're trying to mold a future in which MS is dominant by telling us all that there's never any point in considering any alternative to MS in any category, so just go all MS now. This is pure, classic FUD.



    What do people call digital music, regardless of format? "MP3." What format do all music players support? MP3. If you're an indie musician (as I am), and you want to reach everyone, you use MP3 (as my band does). Format conversions are cheap and easy - I haven't checked myself, but my band's album should be available on some non-iTMS digital music stores, encoded in WMA format. We didn't do that, anymore than we encoded the song into AAC format for iTMS. Heck, we didn't even have to pay anyone to do it. All this stuff you're trying to get people worried about has been worked out well in advance.
  • Reply 12 of 30
    hmurchisonhmurchison Posts: 12,141member
    Quote:

    The store libraries might be almost the same today, but that will change for sure in the future. suddenly you will not find that one indie song on anything but WMA. why ? Because windows is the dominant desktop out there, that runs on the cheapest hardware available. As M$ integrates music production into their OS, artists without the fat wallet, will start developing on the MS platform.





    Yes and the Moon could collide with the sun. This is pie in the sky speculation here. Again the same defeatist attitude. Microsoft is big and therefore they will eventually dominate. There is no need for a bunch of online stores. Content will not get that stratified. Period. Distribution is the most important so it's unlikely that artist will limit themselves in any particular way.



    In fact I actually see Apple and Microsoft perhaps coming to a truce. There has already been talk about sharing DRM tech. Let's face it Apple is not going to pay Microsoft license fees for WMA if they have marketshare. THe best solution for consumers is the eventual sharing of tech so that WMA and AAC/protected can be supported at no financial loss/gain by MS and Apple.



    By then Apple can find other links to ensure iTMS and iPods maintain their lead or position.



    The amount of stores is irrelevant...I repeat the amount of stores is irrelevant. There is not enough to differentiate the various stores(especially WMA) so calling this "choice" is nonsense.
  • Reply 13 of 30
    Quote:

    Originally posted by Chris Cuilla

    ...Right now there is no money to be made selling the music (except by the music companies). This is the brilliance of Apple setting the market price for the music. It is too low to make money. They are giving away the blades to sell the razors. These other stores are losing money without having some other source of profit (as Apple does with the iPod)...



    Very insightful observation.



    Quote:

    Originally posted by Amorph

    ...Right now, the actual and de facto standard is AAC (for commercial downloads, anyway - but iPod works with MP3, the other standard). That's becoming more and more true...



    Very true.



    Quote:

    Originally posted by Amorph

    ...If you're an indie musician (as I am)...



    No way!



    Quote:

    Originally posted by hmurchison

    There is no need for a bunch of online stores. Content will not get that stratified. Period. Distribution is the most important...



    Uh-huh. True.



    So,



    1) Apple should not support WMA because AAC is one of the main things 'locking' ppl into buying/using the iPod and it is iPod sales that bring in the dollars.



    2) It doesn't matter how many companies provide WMAed(tm) songs because they will all offer the same stuff as each other (and the same as Apple). Plus, few will be able to survive on the paltry returns made through online music sales alone.



    But what about this (it's been mentioned before, but we're more focussed now):



    Should Apple license Fairplay so that other portable digital music player manufacturers can incorporate it into their new products for, say, a fixed rate of $8 per unit?



    In comparison to the probably obscene profits that Apple is making off the iPod at the moment, $8 a unit is tiny, but in the future margins might be much smaller.



    Edit: Thanks Hobbes, I meant licensing Fairplay rather than licensing AAC, edited accordingly.
  • Reply 14 of 30
    hobbeshobbes Posts: 1,252member
    I think it'd be up to Apple to license FairPlay, as anyone who makes a deal with Dolby can create their own DRM solution for AAC. I think.



    I'm puzzled why Apple doesn't seem to want to license FairPlay. (Maybe the April announcement will include a licensing program?) This seems like a golden opportunity -- after all, they can only hold all the cards for so long.
  • Reply 15 of 30
    satchmosatchmo Posts: 2,699member
    Quote:

    Originally posted by Amorph

    [B

    As to which store will win: iTMS is currently #1 with a bullet. It works with the #1 jukebox and the #1 music player. Why isn't the question whether other players will fail because they aren't compatible with the industry leader - in every category?



    [/B]



    Good points as always Amorph, however...

    Could the reason that Apple currently has the number #1 positions in those three categories be that Microsoft hasn't weighed in yet?



    History has shown how Microsoft can come from literally no marketshare to owning it. My point is that we've only now awoken the giant that is Microsoft. To simply dismiss them would be wrong.



    Apple would be wise to work to getting ACC format out to more of these music services. And even just hyping that format in print ads, etc...
  • Reply 16 of 30
    torifiletorifile Posts: 4,024member
    Quote:

    Originally posted by satchmo

    History has shown how Microsoft can come from literally no marketshare to owning it. My point is that we've only now awoken the giant that is Microsoft. To simply dismiss them would be wrong.





    What history are you referring to? The IE/Netscape thing? We know they had to break the law for that to work and they won't be giving anything away in the music biz.



    History, as I can recall, actually indicates MS has a hard time playing catch up:



    1) AOL/MSN - it seems to be a stalemate. AOL has successfully held MS off.



    2) XBox/PS2/GC - The XBox is still way behind in this game.



    3) IIS - Apache is still increasing their lead here



    4) MSSQL/Oracle - I don't have numbers here, but I suspect Oracle is ahead.



    edit (thought of another one): 5) PPC/Palm - Again, they made a charge, but Palm seems to have held them off.



    are the instances I can think of where MS was behind and did not successfully catch up. Office is the standard and has been for a long time. Windows has been the dominant OS for a very long time as well. I can't think of any recent successes.



    Now, I don't want to discount MS just because they've got tons of $$ but I'm skeptical they can win anything anymore.
  • Reply 17 of 30
    amorphamorph Posts: 7,112member
    Quote:

    Originally posted by satchmo

    Good points as always Amorph, however...

    Could the reason that Apple currently has the number #1 positions in those three categories be that Microsoft hasn't weighed in yet?




    Actually, no. There were online music stores with WMA content long before iTMS - which people forget because iTMS swept them away - and MS had been pushing itself as a content platform for several years. That's what the whole DRM thing was about, and it was the talk of the industry until Apple weighed in.



    Quote:

    History has shown how Microsoft can come from literally no marketshare to owning it. My point is that we've only now awoken the giant that is Microsoft. To simply dismiss them would be wrong.



    History has shown that MS can piggyback on a monopoly (IBM) to become a monopoly. This is completely different. At issue are accessories, not personal computers, and platform is largely irrelevant. iPods talk to Windows, too, and the demands of the accessory market play right into Apple's strengths as a company (with the exception of retail presence, which is why the HP alliance is so valuable: Apple has 8,000 retail outlets for iPod. HP will add 110,000).



    Quote:

    Apple would be wise to work to getting ACC format out to more of these music services. And even just hyping that format in print ads, etc...



    People don't know about formats, and they don't care, and frankly it's a shame that they should have to. I still see "MP3" used synonymously with "digital music" even in the tech press. Apple is fighting the war (with MS involved, it is a war) with something consumers can easily and immediately appreciate: iPod. And that's why it's so critical that the iPod not be compatible with WMA. It's Apple's main weapon against the adoption of WMA. MS uses document format compatibility (and incompatibility) to build and defend its monopoly (e.g.: Word files), so it can't be allowed to gain traction in this space or it'll be Word vs. WordPerfect all over again. It's true that all this struggling means more complexity for consumers, which is bad, but the alternative is to have Microsoft in total control of content authoring, distribution and consumption, which is really bad.



    If Apple loses, which lies within the realm of possibility (although I consider it unlikely) then iPod is a firmware update away from supporting WMA. No big deal. But the goal is to get the industry lined up around the true industry standard of MPEG-4, including AAC, and the only way to do that is to defeat Microsoft's attempt to steer everyone toward their closed, proprietary formats and the draconian "copyright enforcement" (note the quotes) subsystem they're built for. So far the iPod has proven very effective in this role. As long as people want iPods more than they want their choice in essentially identical music stores that they have to hunt for, it will continue to be effective.
  • Reply 18 of 30
    Quote:

    Originally posted by SonOfSylvanus

    Should Apple license Fairplay so that other portable digital music player manufacturers can incorporate it into their new products for, say, a fixed rate of $8 per unit?



    In comparison to the probably obscene profits that Apple is making off the iPod at the moment, $8 a unit is tiny, but in the future margins might be much smaller.




    You are absolutely correct, and I believe that Apple WILL do this. However, presently they are making more than $8/device and they are carefully riding the margins downward. As the margin pressure pushes profit down closer to $8-10/device (with the Mini they are less than $20). It is likely Apple will execute this piece of the strategy. Now that they have skimmed the cream off the profit. Now let everyone else battle it out making razor thin margins...while Apple gets a royalty of $10 a device. Apple can (and will) still make iPods...for those that want them...but they will also make $ when you buy someone elses "iTMS Compatible" digital music player.
  • Reply 19 of 30
    Quote:

    Originally posted by satchmo

    Good points as always Amorph, however...

    Could the reason that Apple currently has the number #1 positions in those three categories be that Microsoft hasn't weighed in yet?




    That's the thing, I think MS HAS weighed in.



    Quote:

    History has shown how Microsoft can come from literally no marketshare to owning it. My point is that we've only now awoken the giant that is Microsoft. To simply dismiss them would be wrong.



    I agree. I don't. But people shouldn't dismiss Apple either. They are playing this game well.



    Quote:

    Apple would be wise to work to getting ACC format out to more of these music services. And even just hyping that format in print ads, etc...



    I think they are already building demand through things like Pepsi and the (rumored) McDonald's promotion. That is a start.



    I think the idea of private-branding the iTMS is a fine one (which is basically what you are talking about). But not necessarily the right time. They are creating a brand (iTMS) so they can later go and license vendors of iTMS compatible devices.



    :-)
  • Reply 20 of 30
    Quote:

    Originally posted by torifile

    History, as I can recall, actually indicates MS has a hard time playing catch up:



    1) AOL/MSN - it seems to be a stalemate. AOL has successfully held MS off.



    2) XBox/PS2/GC - The XBox is still way behind in this game.



    3) IIS - Apache is still increasing their lead here



    4) MSSQL/Oracle - I don't have numbers here, but I suspect Oracle is ahead.



    edit (thought of another one): 5) PPC/Palm - Again, they made a charge, but Palm seems to have held them off.





    You are forgetting Quicken vs. MS Money.



    I agree. Don't write off MS. But, folks, let's not assume they WILL win just because they ARE MS. If that's the case, then there is no point in doing ANY business that MS might be interested in. I'm so glad Apple has not taken this approach.
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