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MacBytes
Jul 19, 2004, 09:11 AM
Category: News and Press Releases
Link: iTunes Shores Up Its Defenses (http://www.macbytes.com/link.php?sid=20040719101110)
Posted on MacBytes.com (http://www.macbytes.com)

Approved by Mudbug

Mudbug
Jul 19, 2004, 09:17 AM
ITunes Shores Up Its Defenses as Rivals Prepare to Invade
By LAURIE J. FLYNN

Published: July 19, 2004



SAN FRANCISCO, July 18 - When Kevin Britten won Apple Computer's sweepstakes for downloading song number 100 million from the iTunes service last week, the 20-year-old Kansas resident disappointed customers who had been tracking iTunes sales in hopes of winning a Mac, an iPod music player and 10,000 free songs.

But with the arrival of new competitors in online music this year and powerful new threats from the Microsoft Corporation and others, Apple is going to have to come up with a lot more than contests to keep market share. The company is focusing on making its music service as much an experience as a store, and is enhancing features to turn casual browsers into repeat customers.

"The question is: 'How does Apple keep people coming back?' " said Mike McGuire, an analyst at GartnerG2, a market research and consulting company. "Music customers and listeners want to be active participants. Otherwise, you're just a store."

Eddy Cue, Apple's vice president for applications and Internet services, said the company was adding features to Apple's site to allow users to become more engaged and to communicate more actively with one another. The goal is to enhance iTunes's reputation as a destination that can help customers find music they might like.

"It's all about making it easier for people to find music," Mr. Cue said. "One thing we know is it's addictive."

Perhaps the most significant is iMix, which lets iTunes users post their favorite play lists for others to see and copy. Users of iTunes can then download the same mix, or they can hear 30-second samples first. "IMix is an attempt to create community," Mr. McGuire said. "It's an important tool."

Two weeks ago, Apple added iTunes Original, in which an artist records a track specifically for Apple. A new song is posted every two weeks. Similarly, Apple might assemble a collection of an artist's singles into four- or five-track minialbums, as it did recently with Sarah McLachlan's music.

Apple is hoping it can persuade other popular artists to sign similar deals. For the musicians, Mr. Cue said, iTunes can provide an outlet while in between albums.

To Apple's rivals, however, iTunes is mostly a service created to sell iPods.

"They're not a music company," said Dana Harris, a spokeswoman for Roxio Inc., whose primary offering is a subscription service for $10 a month. "For them it's all about the device."

Apple executives have long acknowledged that at 99 cents a song, nearly all the revenue is going to the record labels. But for now, Apple does not appear to mind that iTune's chief financial contribution is that it drives iPod sales.

"We couldn't be happier with the success of the music store," Timothy D. Cook, executive vice president for Apple operations, recently told analysts.

With 70 percent of the market for legal music downloads and 45 percent of the market for portable music players, Apple's nearest competitors - including RealNetwork Inc.'s Rhapsody, Roxio's Napster and the Sony Corporation's Connect - do not attract anything close the traffic on the iTunes network.

But Apple's lead will not go unchallenged. Sometime before the end of the year, Microsoft is expected to begin its push into the music download business. Microsoft will attempt to catch up with Apple by deploying its new Windows technology, called Windows Media Digital Rights Management, that will let users more easily transfer song collections from their personal computers to their portable MP3 players.

The arrival of new Windows technology, also known under its code-name of Janus, could have a huge impact on iTunes, because it will make subscription services more attractive, said Richard Wolpert, chief strategy officer at RealNetworks. That will allow customers of Windows-based online subscription services to move their music from one device to another the way Apple users do now.

The technology may lead to new subscription services at slightly higher monthly fees. The makers of portable music players are already working to support the new services, and upgraded players are expected to start appearing before the end of the year.

Meanwhile, Sony Connect, which began in May, continues to add to its library of 700,000 songs and expand its lineup of portable music players. Though Sony arrived late to the online music business, analysts say, it does have the No. 1 brand in the electronics industry and a loyal following of consumers, which is hard to discount.

But Mr. Cue of Apple noted that the big struggle is getting customers to sign on in the first place. Despite the considerable attention given to online music, he said, many consumers are hesitant to purchase an intangible item like a song over the Internet.

"Our biggest challenge is getting new customers," Mr. Cue said. "Believe or not, a lot of people are still unaccustomed to buying something digital, where you're not getting a physical good."

Stella
Jul 19, 2004, 09:17 AM
If the NY times or anyother news site thinks I'm going to register for spam etc.. they have another think coming... it won't be long until they start selling email addresses. Yes, I can use a fake email address, but really, I can't be arsed.

Thank God for quality news sites such as the BBC where you don't have to register.

Anyway post the text article?

[edit] thanks Mudbug

Mudbug
Jul 19, 2004, 09:17 AM
If the NY times or anyother news site thinks I'm going to register for spam etc.. they have another think coming... it won't be long until they start selling email addresses. Yes, I can use a fake email address, but really, I can't be arsed.

Thank God for quality news sites such as the BBC where you don't have to register.

Anyway post the text article?

I was doing that while you posted ;)

MCCFR
Jul 19, 2004, 11:15 AM
"They're not a music company," said Dana Harris, a spokeswoman for Roxio Inc., whose primary offering is a subscription service for $10 a month. "For them it's all about the device."

Oooohhh, put your claws back in.

michaelrjohnson
Jul 19, 2004, 01:14 PM
"They're not a music company," said Dana Harris, a spokeswoman for Roxio Inc., whose primary offering is a subscription service for $10 a month. "For them it's all about the device."

Oooohhh, put your claws back in.


How did Roxio become more of a "Music company" than Apple? Roxio Makes some software relating to music. Apple owns eMagic, who produces Logic, oh yeah, and *iTunes*... Gee, did Roxio forget about those? Apple also already has a music store, and a portable music device. So how is it that Roxio can imply that they have more inroads to the music industry than Apple? That's a bunch of BS.

On another note, Apple needs to do some *serious* innovating, and marketing. Otherwise, the blind flock will just follow Microsoft because their service would be already integrated into their computer. Then again, hopefully the same reason people don't buy into purchasing online (no physical goods) will deter people from being forced to *rent* their music (like subscription-based services) rather than actually own it (like iTunes). I think iTunes is the best, by far, and will remain the best. Let's just hope it's continued to be lusted-after.