Fortune: ‘Poor Microsoft on the outside of Apple’s closed iPod+iTunes system looking in’

“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


  1. Again this is a space where the MMC™ rears its ugly head. The Microsoft Myth of Choice would have the masses believe that using Apple is closed, yet using Windows Media format is some sort of open standard, by which Microsoft is willing to allow anyone under the tent.

    It’s two companies folks. You can choose one of two, Apple or MS. Apple that makes great products that work, or MS that makes also ran technology and maybe it might work if you are lucky.

    And for the record, been using iTunes since it came out and the iTMS since it came out, purchased hundreds of tracks and have yet to run into the DRM limitations that people always bash Apple for.

  2. Apple is succeeding due to the RIAA’s stupidity. If they want to lessen Apple’s dominance, there’s only one way to do it. Remove the DRM stipulation. You do that and all of a sudden, I can purchase music from any online store and play it on any player. Wow, what a concept! And that would force Apple to give up their DRM. And life would be good. And then I might actually be willing to purchase my music online.

  3. Macromancer,
    You may not have run into the limitations of Apple’s DRM, because you have chosen not to. They are there. You can’t play the music on other software. You can’t play the music on another portable player. You can’t play the music on a Linux system. You can’t play the music on anything but iTunes and iPods. Thats pretty limited if you ask me. Sure, you can always burn a CD and then reimport and convert, but thats not an acceptable choice. Would you still be happy if, all of a sudden, Apple prevented you from burning CD’s of your DRM’d music? They don’t let you copy their videos from iTMS, who’s to say the RIAA won’t pressure them to do the same with music down the road.

    It’s simple, any DRM sucks. Apple’s just sucks less, but it still sucks. Like I said, the RIAA got themselves in this mess. And there’s only one way out. Lose the DRM.

  4. Good point Frobots, I hadn’t thought about that. Make a portable player thats small while running an entire Windows OS in it. Then you can play any music from iTunes. Interesting.

  5. I know plenty of people over 40 that own an iPod. Amazon is definitley on the wrong track there. NPR group – whatever.

    I don’t think anyone connects the iPod with bubble gum and zits.

    The iPod is beautiful, hi-tech and not cheap in any sense.

    Well, thanks for playing Amazon but you don’t get it either.


  6. If the RIAA were smart (which they obviously are not), they would have established the DRM standard themselves and licensed it to software and hardware vendors. Still limited DRM, but more choice and flexibility.

  7. sg,
    Create the DRM themselves, sort of like the MPAA did with CSS for DVD’s? Yeah, more licensed technology which prevents individuals from writing software because they can’t afford the licenses. Yeah! Lets keep the software development in the hands of the big corporations. Have you ever wondered why there are no DVD players or mp3 encoders for Linux or even for OS X that isn’t written by Apple? Licensing costs. Why can’t you find software that does AAC encoding other than iTunes? Because it costs somewhere like $25000 for the license.

  8. iTunes is ok but I now prefer the 2nd place which I have been subscribed to for the past 5-6 months. I pay $9.99 monthly for 40 tracks in high quality mp3 format a month. I’ve found some really cool music on there and the files have no DRM so they work with iTunes/iPod and they are mine to keep and do what I want with. Oh, and get this I don’t illegally share my files with others. . .maybe some of the other download services should catch on to this type of model.

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