Alternate Option
Thoughts from me.
Wednesday, June 15, 2005 7:00 pm
2 years on, no one wants to compete with iTunes Music Store
Message to the rest of the world: Australia is still waiting for the iTunes Music Store. No ETA.

iTunes was a great standalone music jukebox software. When the iPod was released, its close bond with iTunes strengthened 2 already exquisite pieces of technology. The iTMS—which started selling a bit more than 2 years ago—applied even more glue to that bond, and started whispers of “monopoly” and “proprietary format”.

When buying music from the iTMS, some understandably feel nervous being locked into a single audio format, from a single company; which then locks one into buy a portable audio player from that single company. Especially when the company is Apple—usually perceived to be a producer of pricey iconoclastic Mercedes Benz-type products, and perpetually death knelled. While the iPod IMHO is an incredibly intuitive piece of hardware and deserves all its accolades; its major failing is that Apple is the only real player in that market.

Companies like Napster/Roxio, Microsoft, Virgin, Yahoo, Rhapsody, Buy.com and so on “compete” in online music sales. None have come close to emulating Apple’s success. Why? There are endless sabre-rattlings of iPod-killers, threats to the iTMS, threats to Apple's dominance and so on. We heard it when Buy.com entered the market, when Napster entered the market, when Microsoft announced an interest. And when Sony announced their music store and the Network Walkman. Then when Yahoo! started its subscription service. When Virgin Electronics released its cutprice player. And everytime Creative’s boss opens his mouth. Even the Playstation Portable was compared to the iPod. Apple’s end is impending. Is close. Is inevitable. Yea right.

Inexplicably no one actually creates something on par with Apple’s music strategy.

There is a simple sounding solution to challenge Apple: create an iTunes clone, that uses a iTMS clone, which uses a DRM that is a FairPlay clone. Which is compatible with iPod clones wannabes from a variety of 3rd party electronics companies. A iTMS/iTunes clone, backed by massive 3rd party support, can still challenge Apple’s dominance.

Apple’s maintenance of the iTMS/iTunes/iPod (and Airport Express) dominance is a weakness by itself. So far Apple has chosen not to license FairPlay to other 3rd parties. Companies like Netgear, Squeezebox and Sonos have relatively nice looking streaming (not copying) solutions to play music remote from a computer. But cannot play DRM protected AAC files.

Similarly, new HiFis, car stereos, and DVD Players are able to play MP3s off a CD/DVD. All these products are do not use FairPlay—and hence cannot directly access DRM protected AAC files.

PDAs from PocketPC and PalmOne now bundle audio players which are still unable to play protected AAC files. Neither can mobile telephones.

Apple’s first relationship with a 3rd party manufacturer to create a truly unique FairPlay product—that is Motorola’s iTunes phone—is still unproductive. (HP iPod doesn’t count).

I suspect that even though Apple seems to have it really cruisy at the moment, their success is the result of a massive amount of continuing negotiations with music companies, audiobook companies, independent companies, and Apple’s own R&D. Which no other company wants to perform the legwork for. Instead, all other companies opt for the “subscription model”—just to provide something different. And then hyping the hell out of that unproven marketing strategy. Meanwhile the iTMS/FairPlay formula has sold 450M+ songs, and is a proven strategy now.

The potential innovation in a DRM-filled world is still great. But for now it is a one-horse race. True competition to light a fire under Apple’s ass; is sorely needed. Meanwhile every sale from the iTMS serves as a global investment into Apple’s music strategy, and makes it even harder for any potential competition to gain a foothold.

[posted with ecto]

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