Posts filed under ‘ITMS’
According to a tip I’ve received from a trusted source, Apple is laying the groundwork to introduce connected wireless access to iTunes Music Store across continental United States. Similar in nature to the service offered by Amazon’s Kindle book reader, iTMS access would be offered utilizing AT&T’s traditional data networks in order to provide a WiFi-free way to search, sample, and purchase available content. Apple will offer fast and high speed delivery of iTunes content and will pick up the wireless connectivity costs as well. The new service may also be interpreted as the precursor to offering a subscription based iTunes content model.
In recent days, Financial Times reported that Apple is in talks with major recording labels over bringing subscription music service to iTunes. The deal supposedly would allow unlimited access to the iTunes music library in exchange for an undisclosed mark-up on iPod prices. Arik Hesseldahl of BusinessWeek reports that while such a deal in these times of slower sales growth for iPods makes sense, his sources familiar with Apple’s plans have refuted the claims made by FT. He goes on to say that while recording labels do see potential benefits to unlimited downloads for a flat monthly fee, Apple’s chief is harder to convince.
Billboard magazine online reports that as the second largest U.S. music retailer, iTunes Music Store has had over 4 billion total downloads to date, 1.7 billion of which came in ’07. Billboard estimates that iTMS made $1.9 billion last year in total revenue from music downloads and $570 million in net profit.
Apple has announced a media event covering the iPhone SDK ( Software Development Kit ) and “some exciting new enterprise features”. The event is to be held at Apple Building 4 Town Hall on March 6 at 10 AM. While Apple, at this rare Thursday event, will not unveil any new products, the hint at new business features probably means the company is ready to announce tighter integration of the iPhone with business including mobile versions of popular business apps developed by key partners.
CNET has an interesting article on the potential distribution model for iPhone apps including speculations on how many different versions of the SDK may be made available.
Wal-Mart Stores’ days as the single largest music retailer in the US are numbered, so says a new report by the NPD Group. Within the past few weeks, iTMS has overtaken Best Buy and Target to become the second largest music retailer in the US and Wal-Mart is likely next. Russ Crupnick, the NPD Group’s president of Music, says while CD sales were down about 20% last year, digital sales grew by about 50% and that means “Apple will in all likelihood catch Wal-Mart this year”.
Crupnick also mentions that stats are stacked against traditional music vendors which “devote less and less floor space” to CDs which in turn results in fewer sales. According to the NPD Group, “nearly half of all U.S. teens (48 percent) did not purchase a CD last year” and that is up 10% from a year ago. Apparently, teens who lack a credit card also prefer to use Apple iTMS gift certificates which they can readily purchase at many retail locations.
I should mention that while iTMS’ thriving business is very positive news, most analysts agree that Apple’s main revenue growth over the next ten years will come from rising Mac sales due to increasing desktop market peneteration and the iPhone business.