from Tuesday's Australian Financial review Copyright nod to Fairfax
iTunes coming to store near you
Apple will launch its long-awaited iTunes Music Store in Australia in the next few weeks, according to some music industry sources.
The online store, which sells digitally encoded music tracks as downloads over the internet using Apple's popular iTunes music software, might sell music tracks for as little as 99¢ a track, one record industry source said. That is far cheaper than the US store, which sells music for US99¢ ($1.35) per track, and below the break-even point in Australia, said to be $1.45 per track.
iTunes Music Store has already been launched in the United States, Britain, France and Germany, and Apple announced last week that global sales through the service, which was first started in the US in April 2003, had reached 4million tracks a week, and 150million tracks had been sold so far.
The store works closely with Apple's iPod portable music player, which the company last week reported now accounts for 23per cent of Apple's overall revenue.
While most of the negotiations for the Australian version of the iTunes service have been conducted through the global parents of the Australian music labels, meaning that the date of an Australian launch has been a well-guarded secret, record companies that are based in Australia are said to have finished negotiations with Apple over pricing and terms and are now readying to launch the service. Apple refused to comment on the reports.
While Apple may have kick-started the legal music download business with its US launch of the service last year, it's now quite a late entrant to the Australian market, where ninemsn, Telstra, Destra Corp and others have all launched Australian services, selling music for between 95¢ and $1.90 a track.
Yesterday Destra, which supplies its destramusic.com online music store to the likes of Sanity, Chaos Music and HMV, reported its maiden profit of $128,000 for the quarter ended September 30, 2004, on sales of $2.26million.
Destra chief executive Domenic Carosa refused to speculate on how much of that revenue came from online music sales, but he said the entertainment division of Destra, which contains destramusic.com, was breaking even.
"Realistically, the numbers [of tracks being sold online] are still quite small," he said.
Ninemsn said its online music sales were still modest. "It is still very early days but we are pleased with how the market is growing," a ninemsn spokesperson said.
According to one internet industry source, one problem facing Australian online retailers was that the price being set by the record industry for the music was too high to be popular and profitable at the same time.
One online music store said that when it sold music for less than $1 a track, the promotions were "extremely successful".
But Mr Carosa said such promotions could not be sustained because the "break-even" point for online music was about $1.45 per track.
