“Steve Jobs has had much to celebrate lately. But the Apple CEO was particularly happy in February when he announced that the iTunes Music Store had sold its billionth song, to a teenager in Michigan who had bought a copy of Coldplay’s ‘Speed of Sound.’ That milestone is all the more impressive when you remember that Apple has numerous competitors in the digital music world. Yahoo Music Unlimited and the legal incarnation of Napster are gunning for iTunes customers. Sony and Samsung are trying to create iPod slayers,” Devin Leonard writes for Fortune. “And the field is only getting more crowded. By summer, Amazon may launch a digital music service with a branded MP3 player, possibly made by Samsung. It is already being referred to in the industry as the aPod. Amazon won’t discuss its plans, but sources tell FORTUNE that Amazon is targeting people over 40 years old–it refers to them as ‘the NPR crowd’ –who aren’t as likely to own iPods as MySpace users.”

“Yet Apple’s challengers all face the same problem: Jobs’ company will no doubt dominate the digital music market for years to come. That’s because Apple has learned its lesson about closed systems,” Leonard writes. “With the iPod, Jobs created a closed system with mass appeal. Fulcrum Global Partners estimates that iPods now account for 73% of the 30 million MP3 players currently in use in the U.S… Jobs cut a deal with the Big Five record companies in 2003 that locked up his device. The music companies wanted to sell songs on iTunes, but they were afraid of Internet piracy. So Jobs promised to wrap their songs in Apple’s FairPlay–the only copy-protection software that is iPod-compatible… That satisfied fearful music companies, but it means none of the songs sold by those services can be played on the wildly popular iPod. Instead, users of the services had to rely on inferior devices made by companies like Samsung and SanDisk that supported Microsoft’s Windows Media format.”

“The situation has been a disaster for Apple’s competitors. iTunes holds a commanding lead over its rivals, selling more than 75% of all digital songs, according to NPD. The second-place digital music store, eMusic [9%], can’t sell any major label hits because it refuses to copy protect them,” Leonard writes. “Poor Microsoft. Nearly every music service and MP3 player maker other than Apple supports Windows Media and its copy-protection software. But not enough music lovers want to use them. It’s a far cry from what happened in the desktop wars. It’s no fun when you’re outside of the closed system looking in.”

Full article here.

[Thanks to MacDailyNews Reader "Jim" for the heads up.]

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Related article:
Apple’s vs. Microsoft’s music DRM: whose solution supports more users? – August 17, 2005