The Guardian: iTunes Music Store should quake in fear of Napster

“The music downloads industry is about to enter the third stage of its revolution. The first phase was illegal downloads from the internet, the second was the corporate counter-revolution led by Apple with the runaway success of its 99 cents-a-track downloads through iTunes,” Victor Keegan writes for The Guardian. “The third stage is the turf wars between dozens of competing devices to establish market dominance five years hence. At the moment Apple is top banana with iTunes and the justly acclaimed iPod, and looks invincible.”

“But Apple has been here before – it dominated the computer market decades ago but later blew it – and the question is whether history will repeat itself in an eerily similar manner,” Keegan writes. “Roxio claims a competitive advantage in being compatible with Windows Media Player, installed as standard in hundreds of millions of Windows-based PCs, leverage that Apple doesn’t have, even though iPods and iTunes can be used with PCs.”

Keegan writes, “Apple is trying to establish dominance with the quality and style of its products. It is also trying to keep customers within its own walled garden – just as it did in the early days of popular computing, with near-fatal effects. But the attraction of all this could wane if Apple’s first-mover advantage evaporates and second movers offer cheaper products compatible with Windows Media Player and by extension, the majority of the world’s computers.”

Full article here.

MacDailyNews Take: WMA is a proprietary Microsoft format more akin to a “walled desert” compared to Keegan’s “walled garden” of AAC/Fairplay from Apple. Microsoft has the lovely history of abusing their customers after they’ve locked them into the Microsoft “solution.” Want proof? Just take a look at MS IE’s progress on Windows PCs since MS illegally sewed up that market; it’s pure junk compared to Apple’s Safari. Keegan also neglects to mention some facts, so, as is our wont, we won’t be bashful:

At the end of February, Napster announced they had sold 5 million songs. “Napster is losing money and top executives,” The Mercury News reported February 19th. Inside Digital Media analyst Phil Leigh estimates that Apple is now selling 1.2 million songs a week (or more than 20% of Napster’s all-time total), which he says would bring them to slightly more than 52 million total songs sold through the end of April. Adding Pepsi promo redemptions, Apple should be somewhere between 75 million – 100 million songs sold by April’s end. HP is due to begin selling all consumer PCs with iTunes, including the iTunes Music Store, preinstalled. This means QuickTime will be installed as well on all of those HPs, as it is required for iTunes to function. Market-dominating iPod players work with the market-dominating iTunes Music Store. Not Napster.

Mentioning Napster in the same breath as iTunes Music Store is akin to comparing flat RC Cola to a fresh bottle of Coca-Cola. Keegan needs to get a clue and wake up to reality.

42 Comments

  1. Anti-Apple advocates in the media are trying hard to kill Apple’s dominance. What they are failing to understand is that people are not looking at these MP3 players in the same manner one chooses computers. The iPod is a music device. It is stylish, it is iconographic, it set a trend. That is far more important that what file format it can play. All that matters is if an individual can put songs from their CDs on the iPod. The answer will always be a resounding yes. And if an individual buys music online, he/she does not have a problem buying from iTunes, it works.

    So, after saying all that, Apple will rock on regardless of what these pundits write. I guess they don’t see how bad Napster is failing.

  2. “Roxio claims a competitive advantage in being compatible with Windows Media Player, installed as standard in hundreds of millions of Windows-based PCs, leverage that Apple doesn’t have”

    LOL, and what exactly the HP-Apple deal is supposed to be – unknown to Keegan? – if not having similar leverage in PC world with iTunes pre-installed on HP computers and, highly probable, a bundled HP-blue colored iPod to come at an attractive price.

  3. And Napster 2.0 has been out for how long? 6 months? If Apple has indeed sold 10 times that amount and hopes to top 100 millions songs downloaded in 2 more months, how on God’s green Earth can Napster 2.0 hope to compete!? It’s obvious to anyone with 2 brain cells to rub together that iTMS is kicking major legal downloading tail. And even though there are music player competetors out there, the iPod is still outselling them. Go figure. Even some close friends of mine who didn’t listen to me about the iPod and bought a Rio or a Creative Flash Player got disgusted with the designs and bought an iPod anyhow. I just sit back smiling knowingly that they’re happy now. They just wish they hadn’t spent double the money to realize it.

  4. WMA or AAC? I’ll take AAC. Fairplay or WMA DRM ? I’ll take CDs thank all the same. Don’t forget that neither service is available in the UK (The Guardian’s a UK paper), so iTunes had no advantage here other than extent of iPod sales (which is mentioned in their headline).

    Also this bit : Of course this market dominance may not last much longer if the European commission, which is investigating Microsoft’s Windows monopoly, insists that its Media Player must be detached from the operating system. Could this open up the possibility of Apple a greater toehold in PCs?
    is also very relevant. We’re not talkign US here, we’re talking Europe. It hasn’t started here yet and iTMS has no lead.

    The products compatible with Windows Media Player and by extension, the majority of the world’s computers is a little annoying, because they could add due to the fact that they’re delivered with a monopolistic and illegal configuration that includes WMP. But they’re reporting the way things are rather than the way things should be.

  5. JadisOne: exactly.

    Looks like pundits look at iTunes and iPod and WMP as if they were some sort of dull pre-installed calculator application.

    Seems like a new catchy statement is emerging: It’s the MUSIC, STOOPID!

  6. MDN has that wrong. That remark about RC cola. I think it’s more like flat Root Beer and a fresh bottle of RC Cola.

    Or flat Root Beer and a fresh bottle of Dr. Pepper.

    or better yet American Coffee to Italian Espresso with a shot of Grappa.

    That’s more like it.

  7. Hywel, that’s a very good point, and one I completely missed. I guess I need more Coffee….we unfortunately don’t have any coffee shops that make Italian Espresso in my town. >:(

    ~Dak

  8. I agree somewhat w/ Keegan in that early market share can be of little concern for final domination. Apple had it, lost it; WordPerfect had it, lost it; Netscape had it, lost it.

    But where this differs that Keegan didn’t note is that there is a precedent here that was not in the other cases. Meaning, music has many well established formats preceeding the “new” formats like AAC & WMA. Less we forget, MP3s still rule the day by a gargantuan amount… and even there, they are dwarfed by CDs which can easily be copied in various formats and used on dozens of hardware types.

    Apple may not stay dominant but it won’t be because of Microsoft… I don’t think anyone is going to fully dominate this sector; there’s too many options.

  9. To me the Guardian article is one more in a chorus of voices that point out an important issue for those of us who look beyond our personal desire to use iPod and iTunes on our Mac (or Windows) platform for our music needs. We have seen Windows over time oust or marginalize from the marketplace Mac and other competitors who originally had better products. The Courts are worthless in curtailing MS’s monopolistic behavior. We need to be very concerned that history will repeat, and we should hope that Apple “thinks different” this time so as not to squander an innovation-led market advantage. Apple seems to be taking a different tack with iPod by agressively marketing/advertising crossplatform usage and with the HP alliance. I think this is a very good idea, but I don’t think it is enough. I think Apple should find a way to broaden the interoperability of its song format, to get beyond the feud of whose format is “proprietary,” there’s no winning that argument with the average buyer. If this is done, and Windows writers no longer can complain that iTunes is a walled garden, Apple will genuinely GROW. Either do more to make AAC become industry standard, or broaden iTunes/iPod format compatiblity to other formats. The more the iTunes/iPod system grows and increases revenues and “Switchers”, the better chance that the rest of the product line will improve under Jobs. And the more money us Apple stockholders will have to buy new stuff.

  10. “But Apple has been here before – it dominated the computer market decades ago but later blew it – and the question is whether history will repeat itself in an eerily similar manner,”

    He’s so close to having a good point there. The difference between now and then was that back then Jobs was gone and Apple didn’t know what it was doing. There was no vision and no leadership. Apple is doing better than ever now and knows exactly what moves to make next. Jobs and Co. have learned their lesson the hard way and I doubt the will make the same mistakes again.

  11. Yahoo! Briefing – In Play�: “…(AAPL) 26.90 +1.74: As we noted 15 minutes before the close yesterday, AAPL was making new highs into the close on strong volume. The price strength is continuing this morning, carrying stock to a new 52-wk high IN A DOWN MARKET.”

    I don’t know what it means. Just felt like copying and pasting something. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

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