Is iTunes Music Store Doomed, eventually?
Oops, did Apple miss an opportunity to stay in the on-line music business? MacRumors comments on a SFGate.com report of a new middle man business aimed at proliferating on-line music stores. A partial quote:
"The new Digital Music Store service from Loudeye and Microsoft will allow companies to quickly launch their own online music stores. Two early customers of the new service include AT&T Wireless and Gibson Guitar Corp."
It uses Windows Media 9 format of course. I could see the old Beta vs. VHS situation repeating itself here. Sony had the VCR business to itself, and many will argue that Beta was a better format. Yet VHS made it possible for many companies to compete, and VHS won out.
Does Apple need to provide a service so others may easily sell on-line music and other audio tracks in the iPod format? This could possibly work through a future version of iTunes, maybe? Apple makes very little if any profit from selling on-line music. Yet if Apple offered a service for others to be in this business, it would provide some profit for Apple without having to handle money flow from customers to the music industry.
I am wondering what others think about the future of Apple in on-line music. Is the Beta - VHS comparison valid? I know next to nothing about this subject, so I'll just read your replies.
"The new Digital Music Store service from Loudeye and Microsoft will allow companies to quickly launch their own online music stores. Two early customers of the new service include AT&T Wireless and Gibson Guitar Corp."
It uses Windows Media 9 format of course. I could see the old Beta vs. VHS situation repeating itself here. Sony had the VCR business to itself, and many will argue that Beta was a better format. Yet VHS made it possible for many companies to compete, and VHS won out.
Does Apple need to provide a service so others may easily sell on-line music and other audio tracks in the iPod format? This could possibly work through a future version of iTunes, maybe? Apple makes very little if any profit from selling on-line music. Yet if Apple offered a service for others to be in this business, it would provide some profit for Apple without having to handle money flow from customers to the music industry.
I am wondering what others think about the future of Apple in on-line music. Is the Beta - VHS comparison valid? I know next to nothing about this subject, so I'll just read your replies.
Comments
But I find those online music download thing is so overated and overtalked
I still like getting the actually physical CD with case, printed cover and lyric books, freebies etc.
This music download business is like the .com era (and crash) over again
Once the DRM'd WMA eventually turns to the standard and people get fed up with the restriction, expect another huge tide of the FREE (I mean priated) music sharing sevice coming (it's still here but it will only get bigger).....
Fact is. When people are used to get stuff for free it's hard to convince them to pay
But in the long run, Apple needs to increase their profits from the music store. One way could be taking over a music company and getting popular artists to come over.
But there is no doubt that the iTunes Music store is a good leap forward. Especialy by coming out early than all its rivals.
Neither format is desirable to me. I would have preffered a format for online music that was totally new and controlled by a Board of some sort. Why should consumers have to choose a particular format for online music. I'm assured that a CD bearing the "CD" logo will play on my licensed player yet online music has no such guarantee. It's a total sham and will eventually hit a brick wall.
AOL will be using there store and integrating it into their service.
iTunes Linkmaker.
Combine that with iTunes Producer and www.cdbaby.org and you've got all the makings of garage bands putting their stuff up on the iTMS without selling their souls to the devils.
Now here's an idea. There was a lot of complaints when iTunes for windows came out that they had ripped their songs into WMA format and that neither iTunes or iPod would play them. So what if iTunes and iPod supported non-DRMed WMA files. So if you ripped your music because that's what shipped with your computer you're ok, but songs that you buy from one of the also rans won't play. Methinks it might work and would not encourage people to use the other music stores.
Originally posted by HOM
Now here's an idea. There was a lot of complaints when iTunes for windows came out that they had ripped their songs into WMA format and that neither iTunes or iPod would play them. So what if iTunes and iPod supported non-DRMed WMA files. So if you ripped your music because that's what shipped with your computer you're ok, but songs that you buy from one of the also rans won't play. Methinks it might work and would not encourage people to use the other music stores.
It's a decent idea, but WiMP's default setting is to add DRM to media encoded with it. What happens if someone encoded them without changing the default (not uncommon among the layperson)? WMA needs to die a swift death and making it incompatible with your music player of choice is one sure way to do that.
You can't make money doing this. It's not there. Apple, the far and away market leader, the company with the trust of the labels and artists both (no small feat, that), the best store and the best jukebox, can't do it. They're basically hoping to break even, more or less.
The major costs here are royalties, which are logistically artificial costs that can't be reduced by the usual measures that Wal-Mart demands of its suppliers. Is Gibson hoping to sell more Les Pauls? What the Hell is Gibson, that famous buyer and killer of cool technologies, doing running a music store, anyway?
What this is is Microsoft making a short term killing off of the current rush to buy into an unprofitable market. Long term, I see little to no impact.
Maybe once this all dies down and Microsoft has fleeced all these people they will finally listen to Steve when he says that the Store exists to sell iPods.
Just like the bad old days of the 1990s.
Originally posted by BRussell
The store exists to sell iPods, but the problem is, they're going to knock up against MS and WMA eventually. That hasn't happened yet, and it doesn't look like it will happen in the next year or two, but MS will find a way to sneak WMA in to people in such a way that they eventually say 1. "hey this iPod doesn't play WMA," 2. "OK I'll buy this ABC player," and 3. "hey this ABC player doesn't work with Apple's iTunes." Buh-bye iPod and iTMS.
Just like the bad old days of the 1990s.
It's different because people can't make money on the music itself. There is no benefit to the storefronts themselves. Only if MS comes out with an iPod competitor will they stand to benefit. At the rate MS is going, I don't think they'll be able to pull off another loss leader like the XBox is. Investors in MS are getting testy (the stock has gone sideways or backwards while others in the sector have gained value). I don't think MS will see this as a viable area. They are a software vendor at heart. They've never really made a dent in hardware and that's where the money is.
Originally posted by BRussell
The store exists to sell iPods, but the problem is, they're going to knock up against MS and WMA eventually. That hasn't happened yet, and it doesn't look like it will happen in the next year or two, but MS will find a way to sneak WMA in to people in such a way that they eventually say 1. "hey this iPod doesn't play WMA," 2. "OK I'll buy this ABC player," and 3. "hey this ABC player doesn't work with Apple's iTunes." Buh-bye iPod and iTMS.
But that's just it: How do you "sneak WMA in?" Apple has the #1 player, the #1 jukebox and the #1 store, and they have absolute control over all three. Microsoft can - and will - try to stuff WMA into anything and everything, but if those anythings and everythings suck, or never take hold, or go bankrupt, who cares?
Right now, the iPod has the distinct advantage of being a material thing. Consumers don't know from compressed file formats - any digital music file is an "MP3" to them - but they know what an iPod is, and they want iPods. And if someone's store doesn't work with their iPod, that's the store's problem right now.
Apple will have to do something to counter the FUD about how iPod uses a proprietary encoding as opposed to the "open" WMA "standard," though. That's not a lie that they want to gain any traction.
Notwithstanding the scummy things that Microsoft has done to them, Apple's worst enemy, historically, is Apple, and they make a ruthless and implacable worst enemy. Right now the market is theirs to lose, which means, historically, that if they don't lose it because of some boneheaded decision then they really have become a new company. So I'm not going to say that I'm not worried for Apple's iTMS/iPod strategy. I'm just more afraid of what will come out of Cupertino than I am of what is forged in the fires of Redmond.
man, you could make a fortune at the iTMS that way.
Originally posted by alcimedes
i'd like to see if there's a shift from major labels to independent lables that don't have to pay the RIAA tax on all of their songs.
man, you could make a fortune at the iTMS that way.
With cdbaby.org, I don't see why anyone would sign with a label. I emailed them to see if they were going to be on iTMS and they said a contract is in place and they are now re-encoding their music for placement in the store.
edit: see cdbaby's terms for digital distribution. Seems like a sweet deal to me.
Originally posted by pensieve
I don't think MS will see this as a viable area. They are a software vendor at heart. They've never really made a dent in hardware and that's where the money is.
All MS has to do is come out with an iPod competitor. They did it with gaming (XBox) and I could see them doing it with music. They are not afraid to take a loss and they could undersell the iPod and come out with a although not as good more widely used music store as it would be default on their OS.
I find it funny for you to say the hardware is where the money is, as that is what IBM thought when they agreed to lease DOS from MS
But it seem to really be the case in this venture.
Originally posted by pensieve
With cdbaby.org, I don't see why anyone would sign with a label.
Speaking as an artist whose band sells through CD Baby (that's a .com, by the way
I don't believe labels are going anywhere. The people who think they are have no idea about the kind of support they provide, or how crucial that support is for a working band. They aren't just editors. If we were able to tour we'd be looking to sign onto a label ourselves.
Originally posted by ast3r3x
All MS has to do is come out with an iPod competitor. They did it with gaming (XBox) and I could see them doing it with music. They are not afraid to take a loss and they could undersell the iPod and come out with a although not as good more widely used music store as it would be default on their OS.
I find it funny for you to say the hardware is where the money is, as that is what IBM thought when they agreed to lease DOS from MS
But it seem to really be the case in this venture.
Right, but you missed the big point. There is no money in the software or music sales either. So, if MS wanted to make an iPod killer and sell it at a loss, they would be loosing money on all ends. With the Xbox they make some of their money back selling accessories, the licensing fees that third party companies pay them, and the profits from first and second party games. There is no profit driver in the music business except the hardware. The other thing to keep in mind is that Apple has done a wonderful job at marginalizing the computer software aspect of it. iTunes is free and as long as it is there is no reason to pay for another jukebox software. And as Sony has shown there is money to be made selling consumer electronics.