A new E-Commerce Report penned by Bob Tedeschi in
The New York Times
looks at the future of downloadable music from the iTunes Music Store and other services. Now that Apple has proven that commercial online music downloads are a viable business,
Music at your fingertips, and a battle among the sellers
examines some of the trends that experts think are headed our way in the years to come.
One thing that’s bound to happen, according to a technology research analyst interviewed by Tedeschi, is that the playing field will thin. Experts expect that the number of online music stores will continue to build through the early part of 2004, then will drop as the companies behind these services bow to pressure from heavy marketing budgets and thin profit margins.
One analyst called Apple’s own slim margins on the iTunes Music Store “… brutal, and this is the company with the dominant market share.” It’s a sentiment that isn’t denied by Apple’s own director for marketing of applications and services Peter Lowe, who reiterated the company’s position that the iTunes Music Store exists as a vehicle to drive iPod sales, for which it has significantly better margins.
Some music industry executive think that the industry will begin to offer obscure titles and live recordings to online listeners that “make no financial sense to distribute on CD’s,” according to Tedeschi.
Online music services will branch out with different service offerings, according to Tedeschi. RealNetworks vice president for music services Sean Ryan also thinks the current business model of $0.99 a track is out of whack. “You’ve got a portable music player that can fit 10,000 songs on it? Come on. No one will spend $1 a track filling it,” he said.
EMI executive vice president John Rose also suggested that another trend may be downloadable music that deactivates itself unless you pay for it. “Two or three years out, I’ll be able to send you an album that you can listen to once or twice, but that will expire after a certain amount of time if you don’t buy it,” he said.