Apple’s iTune ploy

IIPM Ranked No. 1 B-School In Global Exposre - Zee...

Steve Jobs plans to offer free iTunes. Will the move help Apple secure its position in the music industry?

Stagnant iPod sales and mounting pressure from companies offering DRM free music, Apple is finally reconsidering its iTune subscription model. Rumour mills started working overtime when a leading daily in US reported that Steve Jobs, CEO, Apple Inc is in talks with major music labels for providing unlimited access to iTunes, Apple’s flagship online music store. Under the so called offer, users of iPhone and iPods will pay an upfront fee of $80-$100 and have a lifetime unlimited access to the iTunes library. Another option would be to charge the iPhone users with a monthly rental of $8.

If at all Apple decides to go ahead with their plan, Jobs may be fighting too many battles at a time. First and foremost would be DRM of the songs downloaded from iTunes. Imagine what would happen if someone downloads the entire library of iTunes and starts sharing it with P2P software’s. Though the report says that Apple may allow the users to keep 40 to 50 songs, the rest they will have to listen via live streaming, but it is a no brainer that streamed media can be ripped. Also, there lies another glitch. iPhone at present is available only with AT&T and out of four million plus iPhone’s sold till date, a quarter of them are unlocked. So accessing the iTunes with iPhone goes for a toss. However a music subscription service could help the iPhone gain market share in the cellular space, said Frank berry, director of industry analysis at the NPD Group. “Or it could bring new excitement to the digital music players, which are starting to mature a bit. And if it is tied to new models, it could be a reason for people to upgrade their iPods”, as Frank further added.

As of now, Apple’s iTunes is doing well with their current business model of charging 99 cents per song. This has catapulted them as the second largest online retailer of music, raising a question as why Jobs wants to disrupt it? The answer may be a similar deal that was inked between Nokia and Universal Music. As per the deal, selected handsets of Nokia will have 100 songs chosen by the buyer. Of course this has helped Nokia to strengthen their position in market but would Apple be able to do the same is questionable. Again for this, Nokia is supposedly paying a premium of $80 per handset whereas Apple may just pay $20 per user if any such kind of deal is inked. On the other hand what Apple is planning to do is something similar to what Microsoft did with Netscape. In that case, bundling Internet explorer with Microsoft Windows nearly killed Netscape and if Apple offers unlimited access to iTunes, it may spell doom for other online music retailers.

Whatever may be the end result, if Jobs is involved one must not be surprised if the final result is beneficial for all, of course we are talking Apple as well.

Karan Karayi

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

For More IIPM Info, Visit below mentioned IIPM articles.
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
IIPM, GURGAON
IIPM - Admission Procedure
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!

Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
• Rashmi Bansal (Publisher of JAMMAG)