Thursday, September 07, 2006

BusinessWeek: Lots Of Rivals, But iTunes Is Still On Top

Meet the iTunes Wannabees
By Catherine Holahan, Sept 5, 2006, www.businessweek.com

From MySpace to AOL, the list of would-be iTunes rivals is getting longer, but don't expect them to knock Apple from its perch just yet. There's a lot of buzz of late about new iTunes competitors that aim to change how you download music for portable devices. Haven't heard it? Turn down your iPod. On Sept. 5, News Corp.'s (NWS ) MySpace is announcing a partnership with digital music service Snocap that will let artists sell music directly to consumers through their MySpace pages. Buyers will then be able to transfer songs to any music player, including Apple's (AAPL ) iPod (see BusinessWeek.com, 9/3/06, "MySpace's Musical End Run"). That news followed a Sept. 1 announcement by Samsung that it will offer downloads through an online partner and came days after Time Warner's (TWX ) AOL unveiled a new service the same day Universal Music Group said it's teaming with SpiralFrog.com to offer free ad-supported downloads. NEW MODELS. The arrivals are flocking to an already crowded market dominated by Apple's iTunes, which controls 70% to 85% of legal digital music in the U.S., depending on the estimate. The market generated $400 million in 2005 and is expected to reach $14 billion by 2011, according to Britain-based Jupiter Research. What sets apart this fresh crop of download upstarts? One way or another, they're all departing from the pay-per-song business model that iTunes has mastered (see BusinessWeek.com, 11/21/05, "Online Music's Elusive Bottom Line"). Some are combining pay-per-download service, where the user pays a fee for each song purchased, with monthly subscriptions. That's a tack long taken by an earlier vanguard that includes Yahoo! (YHOO ) and RealNetwork's (RNWK ) Rhapsody. The hope is that a combination of these two methods will appeal both to music aficionados who want a smorgasbord of choices and those who want a sampling. USER CHOICE. AOL is one of the companies banking on the dual model. Its new Music Now service offers both a 99 cents-pay-per-track service and a $14.95 monthly subscription that lets users download an unlimited number of songs. "We want to put the choice in users' hands, and we want them to be able to choose what device they want to use and what is the model that best fits them," says Amit Shafrir, AOL's president of premium services...read more: HERE

9/07/2006 04:17:00 PM

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