“When you think of legal music downloading on the Internet, you naturally think of Apple Computer’s (AAPL) iTunes Music Store. The first successful legal music service to offer the catalogs of the major labels, iTunes has roughly an 80% share of the legal market, according to Apple. It offers 1.5 million tunes, about 50% more than most competitors, and has sold a staggering 500 million downloaded songs, vastly more than anyone else,” Walter S. Mossberg reports for The Wall Street Journal.
“There are three main reasons for the success of iTunes. First, it is tightly tied to the iPod, Apple’s wildly popular portable music player. The only legal downloads of major record label songs that the iPod can play are those sold by iTunes. Second, it is well-designed, works identically on the Macintosh and Windows PCs, and is easy to use. Third, its restrictions on the use of downloads are comparatively liberal: You can copy each purchased song to up to five computers and to an unlimited number of iPods and burned CDs,” Mossberg reports.
“So Apple’s music competitors are trying something else: a whole different model for distributing music legally. Led by the reincarnated (legal) version of Napster, by RealNetwork’s Rhapsody service and by Yahoo’s new music service, these companies are hoping to win by renting music to consumers rather than selling it to them,” Mossberg reports. “This rental model has attracted a solid audience, but it is nowhere near as popular as iTunes — not even close. That may be because the rental model is far more complicated and restrictive than iTunes, and has several big downsides. The biggest problem with renting is that if you stop paying your subscription, even for one month, all the songs you’ve ever downloaded — going back years — will become inert and unplayable. Rental song files are rigged with computer code that requires a monthly digital confirmation the renter is continuing to pay. Without that, the song files die.”
Full article here.
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
J.P. Morgan: Yahoo music service ‘does little to break Apple’s tight grip’ on digital music market – May 11, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005