“According to Strategy Analytics, subscription services will replace downloads as the dominant music online model and cause the success of iTunes to be short lived. The shift towards subscription music services will be driven by a combination of changing consumer expectations as well as pressure from broadband service providers and record companies,” Wolfgang Gruener reports for Tom’s Hardware Guide.
“‘Downloads tend to be too expensive,’ said Martin Olausson, senior analyst with the Strategy Analytics’ Broadband Media & Communications service. ‘If you were to download 10,000 songs at 99 cents each, you are talking about a lot of money.’ Instead, subscription services such as Napster and especially Yahoo’s Music Unlimited offered access to the same amount of songs ‘dirt cheap’ and therefore would be more attractive to consumers,” Gruener reports. “Even if iTunes controls about 70 percent of the online music market this time, Olausson is certain that Apple will lose market share to subscription services and the fact that iTunes is deeply tied to the iPod. ‘iTunes is positioned to increase hardware sales for Apple. Other services focus on content,’ he explained. ‘Apple is about to make the same mistake that they made in the PC world. They also lost their lead they had with computers in the 70s and 80s.’ The stronghold the company tried to keep with iTunes and the iPod could soon be broken with more open subscription services and music-capable mobile that could outsell the iPod ‘very quickly,’ Olausson said. According to the analyst, Napster and Yahoo were best positioned to take iTunes’ place as the dominating music service.
Full article here.
MacDailyNews Take: If faced with any market share losses, not seen to date, what’s to prevent Apple from adding a subscription option to iTunes Music Store? Does this analyst really believe that Apple’s iTunes Music Store doesn’t “focus on content?” Has he ever explored Apple’s iTunes Music Store? Does he understand that an iPod is not required to use the iTunes Music Store and vice versa? Does he realize that Motorola and Apple are about to introduce a music-capable mobile phone line? Just how much analyzing went into his analysis anyway? Can anyone with a demonstrable pulse be an analyst?
Again, iPod+iTunes is not the Mac, no matter how weary we grow of having to repeat basic common sense, here goes: The Macintosh platform required and still requires huge investments by developers to create compatible software. So, when faced with budgetary contraints, they chose and still sometimes choose to go with the most popular platforms. The iPod simply plays music that can be encoded, for very little cost, in any format the “developers” (musicians and labels) desire: AAC, MP3, WAV, AIFF, etc. The music doesn’t need to be rewritten, recorded, and remastered. It’s like writing Photoshop once and then pressing a button to translate it for use on Mac, Windows, Linux, etc. To draw an analogy between Mac OS licensing and the iPod/iTunes symbiotic relationship simply highlights the analyst’s ignorance of the vast differences between the two business situations.
Related MacDailyNews articles:
Merrill Lynch analyst: Apple could ‘flick the switch on a music subscription model’ – May 13, 2005
Enjoying Apple’s iTunes and iTunes Music Store without owning an iPod – May 11, 2005
J.P. Morgan: Yahoo music service ‘does little to break Apple’s tight grip’ on digital music market – May 11, 2005
Yahoo launches Napster To Go, Rhapsody To Go killer (takes aim at Apple’s iTunes Music Store?) – May 11, 2005
Motorola expects to launch first Apple iTunes phone this summer, second iTunes phone in 4th quarter – May 11, 2005
Motorola’s Apple iTunes phone software screenshots posted online – May 11, 2005
Will cellphones eat Apple’s iPod or vice versa? – May 09, 2005
Another day, another ‘iPod may go the way of the Mac’ article – August 16, 2004
The iPod is not the Mac, so stop trying to compare them – August 13, 2004