Wednesday, April 28, 2004

Happy Birthday iTunes. There are a number of new features in this release that exhibit Apple's willingness to break down old paradigms they can't benefit from. For instance the new "publish your iMix" meme (a copy of Napster's playlist sharing, but not as community oriented as their Inbox), is another stab at cutting down the per transaction cost from single song downloads. Of course it also blows away the traditional album meme that the traditional music industry depends on, but I think that was just a second effect. Similarly, Radio Station charts, builds on the celebrity playlist meme to encourage buying of multiple tracks at a time, except now based on favorite terrestrial radio stations.

On the other hand, there are some hoped for things missing because they would cut into Apple's bottom line. The radio station charts actually highlight one: there's no affiliate program. This impacts a whole bunch of people. Independent artists who drive sales to their songs (cuz Apple sure isn't) would get a bigger cut of the sale. Radio stations (internet or terrestrial) are still the most common means of discovering music and drive sales to the iTMS without compensatio. Finally, there is a whole new class of tastemakers, the people who publish their iMixes, whose talent Apple fosters and the profits from.

Similarly missing is support for other brands of music players, probably the single biggest restriction to the growth of the iTMS. But then again, Apple doesn't really care about digital retail market share. They care about selling iPods. Likewise, an affiliate program would cut deeper into the loss-leader digital single sale, so Apple has to be careful about who gets to participate and how much they get. When they do release an Affiliate program, I'm guessing it will only be for the sale of iMixes, since paying out for single sales would worsen an already bad cost structure.

No one can deny the impact the iTMS has had on the music industry. It is also hard to deny the impact they haven't had...and probably won't.

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