“It has been 2 1/2 years since Apple Computer Inc. introduced its iPod digital music player, and consumers’ love affair with the sleek little gizmo just keeps gaining steam. Despite the iPod’s hefty price tag — $249 to $499 — Apple has sold 3 million of them, making it far and away the most popular music player on the market. Demand is so fierce for the new iPod Minis that there’s a six-week waiting list on Apple’s Web site. And the player is only half of Apple’s dominance in digital music. Its iTunes online music store accounts for 70% of all legal downloads,” Peter Burrows and Tom Lowry write for BusinessWeek.
“What should Apple do to stay on top? Plenty. For starters, it needs to embrace the new ways consumers want to buy music. While the iTunes store offers 99 cents downloads, Apple has yet to provide a subscription service for folks who want to listen to whatever they want for a monthly fee. To stare down a raft of new music players, Apple needs to broaden its product line. It should consider forming partnerships to add iPod technology to cell phones and other futuristic devices… A swarm of competition is on the way. Rivals have unveiled more than 60 music players to compete with the iPod, and these devices can play music from a variety of services. The iPod, in contrast, works only with iTunes. ‘When you buy an iPod, you have one choice,’ says Chris Gorog, CEO of Roxio Inc., which runs the rival Napster service. ‘That may work fine for early adopters, but mass-market consumers are going to want to shop wherever they want to shop,'” Burrows and Lowry write.
“Jobs also should rethink his views on subscriptions. He has refused to offer them, saying music fans want to own rather than ‘rent’ their favorite songs. But more than 1 million people now have online music subscriptions. Market leader RealNetworks Inc. (RNWK ) boasts 450,000 subscribers paying as much as $9.95 a month, up from 250,000 in the past year. Clearly, many consumers believe subscriptions are an easy, affordable way to discover new music… The iPod may yet become what Kleenex is to tissues or Jell-O is to gelatin desserts, but Jobs has much more work to do to make that happen,” Burrows and Lowry write.
Full article here.