Coming off the successful launch of an online music service this year, Apple hopes to expand the iTunes Music Store’s reach to more shoppers in 2004, a top Apple executive said at a gathering of music industry representatives.
“We have taken the position of being the market leader by providing consumers with something they really want,” Peter Lowe, director of marketing for iTunes, told attendees at the Music 2.0 conference in Los Angeles Monday. “We are going to be aggressive about continuing that and taking digital distribution to the mainstream.”
Lowe’s 30-minute keynote speech at the online music conference described Apple’s motivation for opening an online record store and highlighted the company’s belief that “the most effective way to tackle illegal file-sharing is to compete with it head on.” Lowe noted that many music-swapping services such as Kazaa and the original Napster thrived by offering a vast selection of music, unlimited burning capabilities, and no restrictions on which computers and MP3 players could store your songs. Apple appropriated those more popular features for its iTunes Music Store by making more than 400,000 songs available for download and placing only modest restrictions on burning and storage. At the same time, the company eliminated the less appealing aspects of file-sharing—namely poor quality and unreliability, limited features, and copyright violations.
“We capitalize on file-sharing’s limitations,” Lowe said. “We also do the things people love about file-sharing and do them at least as well.”
The numbers indicate users are responding to Apple’s online service. According to Lowe, users have downloaded 20 million songs from the iTunes Music Store in less than seven months. About 45 percent of those songs were purchased as part of entire album downloads — seemingly rebutting the argument of some artists who’ve declined to make their music available to the iTunes Music Store because they contend single-track sales hurt the album format. “We’ve seen balanced purchases between singles and albums,” Lowe said. “We’ve seen balanced purchases across our catalog” with 81 percent of the songs available on the iTunes Music Store having been bought at least once.
Apple hopes to sell 100 million songs by next April, which would require widespread adoption of the service. The company thinks it can achieve that, not just with cross-promotional deals with
AOL and Pepsi, but because of the music store’s simplicity and ease of use.
“If we want to take digital music distribution into the mainstream, we have to make it as simple as a CD player,” Lowe said.
Much of Lowe’s presentation, which highlighted the
new features added to the Windows-compatible iTunes store in October, covered familiar ground for Mac users. But it gave record industry executives attending the Music 2.0 conference an up-close look at the service leading the charge in the recent rush of online music stores.
“The way [Apple] did it makes sense with the way people use Apple’s products,” said Scott Cohen, co-founder and president of independent music distribution company The Orchard. “It’s the best thing that ever could have happened [for independent artists and labels].”
“Seventeen million downloads sold [between April and November 2003] — that is not insignificant,” said David Ring, vice president of business development and business affairs for Universal Music’s eLabs Group, during a panel discussion preceding Lowe’s keynote. “There’s some really great news in the music marketplace, and I’m excited to be a part of it.”
Executives should be excited, according to the conference’s keynote speaker. Sean Ryan, vice president of music services for RealNetworks’ RealOne Music Division, said all signs point to the continuing growth of online music services in the coming year.
“2003 was the best year on record, as all the trends came together,” Ryan said. “We’re predicting it will continue in 2004.” Those trends include the growth of broadband and home networking; the arrival of better, smaller, and less expensive consumer electronic and portable devices; and the expansion of services to new countries and new platforms.