Apple iTunes store has sold 5 billion songs

This is a landmark for the music industry. For many years, the traditional music industry (with their physical media) has bemoaned the presence of digital music downloads. Initially, the presence of ripped off MP's (illegal MP3's) were blamed for the decline in sales of the traditional music media. The industry fought these networks with full fury, and managed to kill most of the organized rippers (although they are facing more challenges fighting the more dispersed Bittorrent networks). In the midst of this fight, Apple initiated the combination of the Ipod and iTunes (store combination) in 2003 and managed to slowly increase its market share. The traditional delivery industry slowly accepted digital availability of songs due to the legal restrictions and use of technology to prevent copying that were bundled along with these songs; and the combination of iTunes and iPod became such a huge success that it has beaten all the other retailers (even a behemoth such as Walmart):

Apple Inc. has surpassed Wal-Mart to become America’s No. 1 music store, the first time that a seller of digital downloads has ever beaten the big CD retailers. Apple sold more albums in January and February than any other U.S. retailer, market research firm NPD Group said Thursday, underscoring how the music industry is on the front edge of a digital media shift that is upending businesses as diverse as bookstores and video game makers.
U.S. consumers still buy more CDs than digital downloads, but the gulf is narrowing rapidly. Only five years after launching its iTunes digital store, Apple has dominated the fast-growing download market so completely that it jumped ahead of individual CD sellers such as Wal-Mart, Best Buy and Target. “It’s a major milestone,” said Tom Adams, president of consulting firm Adams Media Research. “It is the first instance of an electronic venue surpassing a [bricks-and-mortar] retail venue for any kind of media delivery.”

And this is not the only field; traditional newspapers are feeling the heat from online versions; even iTunes itself is slowly making its name for itself in the field of movie downloads.

iTunes to allow movie download same day as DVD release

Apple's iTunes had always been seen as somewhat of a threat / opportunity for the industry. The opportunity was always there since it was the legal way for the recording industry to make money from the downloading of music, while the way in which Apple behaves (driven by Steve Jobs) scares the recording industry. Apple is the one which always seeks more control over the entire process and does not seem to care as much for the dictates of the recording industry as other channels do. In a step forward, and scaring the conventional sales channels of the movie DVD industry, Apple has now declared that it will make downloads of movie available on the same day as DVD releases:

Although the vast majority of all sales of movies are done on DVD, likely at mass market locations such as Wal-Mart, there is a slowly growing population of those who are playing for digital downloads. Such a phenomenon is becoming well established in the realm of music, where users of iTunes will pay 99 cents to download a song. Apple is now hoping to bring the same level of success it did to music over to movies.
Movies purchased from iTunes can be viewed on an iPod with video, iPhone, Mac or PC or on a widescreen TV with Apple TV. New release movies will be priced at $14.99 and older catalog titles at $9.99. The iTunes Store current carries over 1,500 films at present.

This is likely to covert into an increased share of the market. So even though there will be people who will be wanting a physical DVD, there will be a large number of people who will settle for the convenience of being able to download a movie onto their device of convenience and jump onto the iTunes bandwagon. This is bound to have an effect on the regular store sales of DVD's and will make them more unhappy.. tough luck, this will not go away.

Sony admits defeat to iTunes

Sony had been trying for 3 years now to defeat iTunes in the market for digital music sales. And Sony is not a small player, after it is a conglomerate with a big studio, builds a variety of electronic devices and fast selling mobile phones, but it does not have an iPod. But Sony has also been scoring self-goals in its fight with the emergence of the Apple-iTunes combination. It was slow to adopt MP3 (doing so only in 2004), but its music players have remained locked to Sony's online music store (the same as Apple with iTunes), but this constraint did not work for most people. For the iPod after all, it was the much appreciated design that got people buying iPod's and then getting locked onto the iTunes store. In addition, Sony has been lagging behind the iPod in terms of features, with video incorporation happening only this year.

Sony Corp.'s three-year effort to beat Apple Inc.'s iTunes Music Store is over. The company, which is one of the largest movie, music and consumer electronics companies in the world, said Thursday that it will be closing down its Connect Music Store in Europe and the U.S. In its place, Sony is adding Microsoft Corp.'s Windows Media technology to its music players and allowing consumers to download copy-protected content from numerous Windows Media-compatible music stores on the Internet, including those from Napster, Audible.com and WalMart.
Its first players weren't compatible with the fast-growing MP3 format and would only play Sony's proprietary ATRAC format -- something that didn't find favor with consumers. MP3 was eventually added in late 2004 but the players have remained locked to Sony's online music store for music purchases -- until this week's adoption of Windows Media. On the hardware front Sony has also had trouble keeping up with Apple. A video version of the iPod was launched in late 2005, but the same features weren't added to a Walkman player until April this year when devices went on sale in Europe. Walkman players with video still aren't available in the U.S. but will go on sale from September, Sony said Thursday.

This would be a big shock to Sony, it is not often that Sony has admitted defeat, but in the current case, it must not have been able to see any projections that would have enabled it to at some future point of time take on iTunes and win. But better to cut your losses and run.

Universal to try out DRM-less music

First there was music on CD's, then came the MP3's followed by Napster, swear words in the language of music studios. As a fight-back, DRM (Digital Rights Management) technology was developed to protect against this increasing piracy. Users did not appreciate all this stuff about DRM since it had some quirks, such as not being able to play bought content on other media devices, and so on, plus restrictions on moving the songs onto multiple devices.
Then came the change. EMI and Apple made a change, by allowing users to purchase DRM-less songs (although at a higher charge). Other music recorders were aghast, and made snide comments at that time, but it was pretty clear that they were waiting to see whether the strategy would be successful, and seems like a small step to test the waters. So, Universal is now going to allow music sellers to sell DRM-less songs (interestingly, not to Apple's iTunes):

Vivendi's Universal Music has said it is to test the digital sale of songs from artists without the customary copy-protection technology. It will allow the sale of thousands of albums and tracks available in MP3-form without the protection, known as digital rights management (DRM).
Universal said: "The experiment will run from August to January and analyze such factors as consumer demand, price sensitivity and piracy in regards to the availability of open MP3s." Retailers including Google, Wal-Mart, and Amazon.com, will participate in the DRM-free trial, Universal said.

An experiment indeed ! I am pretty sure that if they taste success, they will make this experiment a strategy, and also start to seed songs on iTunes. One does not know the price point as yet, but there is no reason why they would not try to make money as iTunes does.

The iPhone finally on sale

Finally, one of the most-awaited devices is on sale, and as expected, there are long queues waiting to buy the phone. But with prices of between $1,100 and $2,000 being quoted on Craiglist and eBay, it is an open question as to how many people are waiting to get it first and then immediately sell it, as opposed to those who are waiting to be one of the first to get their hands on it for personal use. Anyhow, the initial response would be good news for Apple. The iPhone is a major business milestone for Apple, and the success or failure (not meeting projected targets) would have a major impact on Apple.
If Apple can show the iPhone as a major success, they will be known as the company with a Midas touch, in tune with customer requirements and on the bleeding edge of design. If, however, there is a failure, then things will move the other way. The Apple stock, that has gone by more than 200% in the last couple of years will show the impact as well. Of course, as the example of the Playstation3 shows, it will only be with the passage of time that success or failure can be measured. Right now, it is the device fetching customers to shops:

Take San Francisco resident Jerry Taylor, 54, who was first to buy the iPhone from Apple's store near Union Square. After a brief moment in the media spotlight, he said he was selling the device, apparently to a mysterious man with a Scandanavian accent who stood next to Taylor, but who declined to give his name. In spending more than $650 for the gadget, including taxes, Taylor said he was "gambling with this month's rent."
In case you're one of the few who haven't heard, the iPhone is Apple's first attempt at a cell phone. Hyped for months - even years - the device is built around a large, touch sensitive screen, which takes the place of a physical keypad. Apple CEO Steve Jobs and a coterie of analysts, consumers and enthusiasts have predicted that the device will change the cell phone industry as much as Apple's Macintosh computers and iPod MP3 players changed the PC and music businesses, respectively.

It could be similar to what the iPod has turned out to be. The iPod is more expensive than most other music players of its category, but yet is an incredible success, chiefly because it has an incredible reputation. It is known as having an excellent design, with a great brand value and with a complete service infra-structure including good integration with a music purchase and download process (iTunes and store).

iPhone data plans out

As the time period for the release of the iPhone on Friday evening rolls out, the Apple PR machine cranks out on full speed, releasing articles one after the other. So here's the latest update, the data plans for the iPhone have been released, with the lowest one starting just below $60, instead at $59.99 per month.
There are essentially 3 data plans that have been released, with each plan offering unlimited data, offering 200 text messages, mobile-to-mobile calling and a new service, visual voicemail. These plans do not offer much variety, with $59.99 plan offering 450 minutes, the $79.99 plan for 900 minutes and the $99.99 plan valid for 1,350 minutes. The plan is for a 2-year service agreement, with a one-time activation charge of $36. In addition, the users need to have an iTunes account as well.
Visual voicemail is like email, and the user can review all the email that they have, and select the one they want to hear. Apple is expecting sales of 10 million devices by the end of next year, which is a fairly high expectation. It offers the user a great device, combing a great phone with internet access and the quality of an iPod. However, it is expensive, so there is some amount of doubt over whether Apple can meet the target. If for some reason, the phone under-sells, it will hit AT & T and Apple pretty hard.

iPhone will require iTunes account

Now, it almost seems that most news in the Tech World relates to the impending launch of the iPhone on the 29th. Well, Apple came out with another bit of news. Customers wanting to purchase the iPhone need to have a iTunes Store account before activating the iPhone. Customers in the US can only get the iPhone via the deal with AT & T, but just buying a contract with AT & T Wireless Services is not enough, customers need to have a iTunes account as per this report:

Consumers planning to buy the iPhone when it goes on sale in the U.S. later this month will need to have an iTunes Store account before they can activate the device, according to information on Apple's Web site.
The move will allow Apple to create its own billing relationship with iPhone customers, rather than collecting payments for any iTunes purchases they make via the mobile operator.
Mobile handset vendors, such as Nokia and Motorola, will be keeping a close eye on Apple's strategy of linking content with handsets, she said.

The iPhone is causing a shake-up of how things work in the US cellular industry. In the past, it has been seen that the carriers such as AT&T, Sprint, Cingular, etc drive the show in terms of deals, data services, etc, while phone vendors such as Nokia, Motorola, do not have much of a say in terms of customer facing terms.
In the case of the iPhone, Apple has struck a hard bargain and managed to keep it, so AT&T people were not privy to much of the details of the iPhone, did not have much of a say in how the phone software works and the interface, etc. And now, to insist that iPhone users need to have a iTunes account means that AT&T can't simply sell the iPhone to users and expect it to start working.
There could be an uptake in the number of people complaining that their phones don't work and why do they need to sign up for an iTunes account. The question remains, with the high prices, with no keypad, and with additional requirements such as this one, when will the iPhone just be sold for novelty value and not get the mass selling. At some point, do you reach a point where people resist buying because of the inconveniences involved?
Why does Apple want people to have an iTunes account mandatorily ? If you refer to the bottom section of the Apple iPhone page, it is clear that the user needs to have an account. But if the user wants to use the iPhone for phone calling, and for loading their personal music and videos, they would certainly not prefer having to create an iTunes account. And there is the familiar argument about the iPhone restricting competition by forcing people onto the Apple music platform; after all the iPod's were pure music devices, but this is a phone as well, and there can be a distinction made between the music selling industry and the phone industry, and forcing one on the other could be treated as anti-competitive.

Apple puts buyer information in DRM free tracks

A lot of people have celebrated the decision by Apple and EMI to provide DRM free audio tracks through iTunes (even if they cost 30 cents extra). But suddenly, when there was some amount of excitement among anti-DRM users, Apple has caused some amount of caution. It has been discovered that users who buy DRM free files are getting files that have their user names and email id's embedded in the files.
Users who download the latest update for iTunes, version 7.2 have got the ability to buy DRM free files. But analysis of these files have disclosed that these files have user information embedded in an unencrypted form. This should not harm anyone in an obvious manner.
However, for users who are going to share these files, analysis of these files will easily disclose the original buyer of these files, and know that these files have been shared, something that is still not legally permitted. However, Apple is not disclosing the reasons why these files carry the user information, something which makes privacy experts queasy. So, even though Apple has made files DRM free, it still wants to make sure that it has a way of tracking any movement of these files. Maybe this could have been part of the agreement with EMI.
Refer this article:

An Apple spokesman suggested by e-mail that Wired News contact Michael Gartenberg, an analyst at Jupiter Research who has been briefed about iTunes Plus. The Apple spokesman didn't respond to further requests for comment.
Gartenberg said there are many reasons why Apple would want to tag music sold through the iTunes store. The information could be used as a proof of purchase, or to facilitate upgrades (songs previously bought through iTunes can be upgraded to higher fidelity versions for an extra 30 cents). The identifier could help identify songs missing from albums (iTunes offers a "complete album" feature), as well as to thwart piracy.

The silence by Apple is puzzling. It does not solve any immediate need, and Apple would have expected that this would easily have been found, and they did not have a canned reply. Seems a bit strange.

Apple launched DRM free music on iTunes

It finally happened. Apple launched iTunes Plus, a new service that will offer songs free of DRM protection, although at a higher rate and with a higher quality level of 256 kbps AAC music. A song will sell for $1.29 vs 99 cents for the DRM protected songs. These songs are currently restricted to only songs provided by EMI under the EMI-Apple deal. Apple is also letting people upgrade their previously purchased DRMed songs to DRM free for 30 cents per song.
Consumers have not been very appreciative of DRM. While it prevents piracy, it also restricts the choices available to users; for example, consumers cannot play these songs on a player other than iPod, which is considered an unfair restriction. Refer this article:

Today Apple launched iTunes Plus, a premium service that offers music tracks free of copy protection. The iTunes Plus service debuts, as expected, featuring EMI Group's digital catalog of recordings.
Apple says the copy protection-free music tracks will be available as high quality 256 kbps AAC encoded audio "virtually indistinguishable from the original recordings" and will sell for just $1.29 per song. That's 30 cents more than tracks with copy protection that sell on iTunes for 99 cents. The technology that is used to prevent music tracks from being copied and redistributed is called digital rights management or DRM.
Apple will continue to offer EMI's music with the DRM technology and at its current audio quality, for customers who don't want to pay extra.
Most notably, Apple's proprietary DRM system prevents people who buy songs from its market-leading iTunes store from playing them easily on any music player other than an Apple iPod. That restriction has attracted criticism, particularly from regulators in Europe who say it unfairly limits customer choice.

This is actually a pretty good deal for Apple. They get to be considered as responsive to customer needs, and at the same time, are able to up the price of songs that they sell. Surely, there's good money to be made in seeming to be responsive to consumer needs. There will be a number of other players, both in the online music category and the music albums other than EMI who will be waiting to see the user response to this campaign. If sales jump, so will they.

Amazon jumps on DRM free bandawagon

DRM (Digital Rights Management) was the ultimate solution to prevent piracy and trading through the torrent network and others, you could have a way to ensure that everybody is getting their songs legally. It was the solution recommended by the recording industry; but there is a contrary position pushed by a number of people. This position states that there is a large section of people put off by copy protection schemes (such as DRM) and would purchase songs if they were DRM free.
A start was made in this direction when Apple signed a deal with EMI a few weeks back when Apple announced that they would make DRM free songs available on iTunes (slightly more expensive than regular DRM restricted songs). Now Amazon has jumped on this same platform, announcing that Amazon will make DRM free songs available that will be playable on a wide variety of portable music players, including Apple's iPod and Microsoft's Zune.
If it turns out that this strategy starts to sell more songs, then a lot of other retailers will jump onto this effort, and start to sell DRM free music. More such successes will start to hurt the basic claim that DRM is necessary, after all, money and sales count. Refer this article:

Apple's iTunes and e-tailer Amazon.com are in position to test this hypothesis in the coming months. On Wednesday, Amazon announced that it plans to sell digital songs from record label EMI Group that will be DRM-free. Amazon's unprotected music, which will be sold from the retailer's upcoming download store, can be played on a wide variety of portable music players, including Apple's iPod and Microsoft's Zune. Amazon's announcement follows one last month from Apple, which is also due to begin selling unprotected music from EMI.
"DRM is the only thing that has given the industry any kind of control," said one record executive, who requested anonymity. "Amazon is a strong endorsement for this (unprotected music) strategy," Card said. "The question of whether it's enough to tilt the tables away from DRM remains to be seen. The sales would have to be huge to bring the others on board."
Sales of traditional CDs are in a free fall. The industry reported a 17 percent decline in album sales so far this year. Ipsos Insight, a Chicago-based market research firm, issued a report recently that showed a 15 percent drop from 2002 in the number of U.S. consumers who had bought a CD within the past six months. The music industry is waiting for music downloads to make up these losses, but that hasn't happened yet.

A lot of people are pushed off by the restrictions on purchased music, where the music can only play on one player, and not others. However, by offering both DRM protected songs, and non DRM protected songs, they could end up confusing users, large sections of which cannot be expected to understand the reasoning and basis for copy-protection.
Another possible outcome is that users do not buy these songs just because they are priced higher than protected songs. If such a thing happens, it is not going to be far-fetched for music industry executives to claim that consumers have rejected DRM free songs, while the reasoning could be a matter of simple economics.

iPod is now 100 million old

On Monday, the 9th of April 2007, Apple announced that it had sold its 100 millionth iPod, making a massive milestone in the history of the iPod. The Apple iPod has been a major success, both a marketing marvel and proving to be a financial windfall for Apple.
Before the launch of the iPod, Apple was known as a producer of well designed niche computers, incompatible with the Microsoft operating system. Machines were well acclaimed by users, but more expensive than comparable system running Microsoft OS's.
At the time that Apple unveiled the iPod in November 2001, the market for portable music players was decidely iffy. People bought portable music players, but they never cottoned onto the design, and found them not at all sexy to use. Then the iPod came on, and the market was never the same again. Customers really loved the easy to use design with the click-wheel proving very innovative to use. In addition, the spillover into the iTunes music store has also been phenomenal, out-selling all other music stores.
The effect of this success has been a great booster for Apple. In addition to financial performance, Apple has also managed to get into multiple markets. Most importantly for Apple, it has managed to leverage this coolness into a movement into multiple markets. The iPhone is a widely awaited device, and with the recent push about making iMacs work on Intel and allow hosting of a Microsoft platform, things seem to be looking up for Apple a lot.

Apple and EMI abandon Digital Rights Management (DRM) protection

The iPod is one of the largest selling personal music player ever. When linked with the iTunes store, this is a combination that has become a major business for Apple, and brought in increasing proportion of total revenue. However, the DRM locks on iPods ensured that content bought through iTunes and transferred to an iPod could not be transferred to music players manufactured by other companies, and this was an oft-repeated complaint.
Now, in a collaboration with EMI, Apple will start providing songs and albums via the iTunes store that is not content protected by DRM, but will be transferrable to other players. The concept is that this is a customer friendly move, and is not really about relaxing any of the fight against piracy.
This does not actually come free. Songs that currently cost 99 cents will now cost $1.29 for a 'premium' version; this premium version is DRM free and also doubles the quality level from 128 kbps to 256 kbps. Albums will be available at no extra charge. And, in the neatest part, users who already have bought songs will be able to exchange these for the new premium version by paying an extra 30 cents. This is free money for Apple. These new premium songs will start to be available in April.
This is a sweet deal for Apple any which way. EMI was willing to do this deal with everyone, but Apple is the one who is the first on the starting block, and will be able to appear to customers as more concerned about their choices. This deal also has the potential of adding to the revenue that Apple currently generates. This deal also hits Microsoft by showcasing Apple as the better service, and Microsoft only struggling to play catch up. If this deal becomes a hit, Microsoft will be under great pressure to respond.