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Summary:

There is a lot of buzz surrounding music labels’ agreements to sell DRM-free music in marketplaces other than the iTunes Music Store. The problem is that they miss the big picture. They don’t pay attention to the two things that really matter. People want to be […]

There is a lot of buzz surrounding music labels’ agreements to sell DRM-free music in marketplaces other than the iTunes Music Store. The problem is that they miss the big picture. They don’t pay attention to the two things that really matter.

  1. People want to be able to buy their music easily
  2. People want their purchased music to work on their devices

The iTunes Music Store allows people to easily purchase music. They set the precedence with a $0.99 price point, and everyone is following suit. They showed that if it is easy to purchase music and easy to listen to it again, they will pay that price.

The problem is that with the (barely) exception of Amazon.com’s mp3 store, the price point has stayed the same 99 cents. People will still pay that price, and DRM-free music is certainly enticing for those of us that even understand that. Many people don’t realize that DRM even exists.

To make things worse, some companies try to charge $1.99/song for downloading it straight to your phone. It just doesn’t make sense.

So, you get a less-than-the-easiest interface for downloading music, and it costs about the same or more, and these companies want to bite in to Apple’s market share? I don’t think so.

If they want to bite into Apple’s bottom line, they need to offer something more than what iTunes offers. Yeah, it is DRM-free, but other than that, there is nothing.

Russ Crupnick, senior analyst for NPD group had it right when he said:

“When you have 80 percent market share on Apple devices…there isn’t much demand from people to get unprotected music. They don’t seem to encounter any issues with it.”

I am a big fan of tossing out DRM and all, but differentiating in only the DRM category is not enough. These DRM-free shops will get the Apple haters, but not much more.

To make themselves stand out and sell more, make a daring move and sell the music for much cheaper. People will continue to buy music from iTunes until something better comes along. Is it greed? If I could buy two songs from one vendor for the price of one iTunes song, and the quality was just as good as anywhere else (if not better), what would stop me from buying those two songs instead of downloading one song from iTunes? Nothing but ease of use. If the song could be downloaded and automatically added to my iTunes Library, I would do that in a heartbeat. Who wouldn’t?

Pirates will exist as long as it is easier to steal music than it is to buy it. Allofmp3.com had a good idea when pricing songs by the data size instead of a straight price. It was illegal which is not cool, but many people went to great lengths to purchase songs from that website. You could get between four and seven songs for the cost of one iTunes song. Music labels can create a site just like that and iTunes would immediately feel the pain. It would be so easy to get a lot of music for so cheap, that many people just wouldn’t bother pirating music. There will always be those who break the law, and so there will always be people who pirate music. But instead of borrowing a CD from my friend, I would much rather just go to a website and buy the album for a couple bucks.

People will always want value for the money they spend. If Rhapsody, Napster, Amazon, Microsoft, and anyone else wants to take market share away from Apple, they need to change their tune, start making it easier to get cheaper, DRM-free music into our iTunes libraries, and the money will follow.

  1. I’m a big fan of Amazon MP3, and I don’t mind the price-point, personally. However, I am also more geek than mainstream, and you make a good point regarding what it would take to take down iTunes and DRM.

    I think Amazon just about has it. With a little more work they could really cut into iTunes market. They price lower than iTunes at times (though barely), and they have a simple solution for importing your downloaded music into iTunes (for Mac, not sure about the Windows client). They even have a gimmicky, though potentially successful, marketing tool in that you can buy songs with Pepsi points.

    Like you say, though, most people would prefer ease of use and don’t worry about DRM. The iPod+iTunes environment is pretty well enclosed, and I admit that I could probably return to buying songs from iTunes and never feel a difference, since my computer and my iPod/iPhone are my primary sources of music. However, it’s nice to know that if something better came along, I could switch over, and that I can burn a CD for a friend without worrying.

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  2. Like Joe, I’m a big fan of Amazon MP# too. In fact, it’s now my preferred way to purchase music. Being DRM free is a big plus, but they make it as easy to purchase music from them as it is from iTunes: Click a button, it’s purchased, downloaded and placed into iTunes. The main reason I’ve switched to Amazon is they make it compelling for me to check their site. There is a “Deal Of The Day” and easily half the time it is something I would buy. They have the Friday Five, where there are five albums for $5. They offer more free songs. While the individual songs are .99 or .89 cents, typically the whole album is cheaper on Amazon. They also don’t clutter up their MP3 store with videos or other items.

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  3. The only thing I like better about the Amazon MP3 Store is the ability to preview an entire album with one click.

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  4. “You could get between four and seven songs for the cost of one iTunes song.”

    Exactly. With a short experience with the russian stores I actually spent in total more money to buy music than at iTunes or on CD. If an album costs an euro or two, I will buy it without thinking that much. When it’s at 10 euros or more, I only buy the albums I really want — I don’t experiment with new albums that much.

    I’m too lazy to look any torrents for music but I think a lot of that traffic would disappear if the labels would go for this kind of experimental pricing. Something like 256-320k MP3’s for $2, lossless for $5 — for a full album. I think at the end they’d earn a lot more than today with the sliding sales.

    Just look at the magazine industry..

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  5. Must say iTunes makes it easy. Will have to take a look at Amazon. Thanks!

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  6. You may well be describing the “big” picture, but you’re missing the “whole” picture yourself. I read very recently that Rhapsody would be selling music outright, in addition to their subscription model.

    Well, yippe-kay-yay! Yet ANOTHER place I can’t buy my music. Why? Because I don’t live in the good ol’ US of A.

    Hell, it took Apple a very, very, very, very long time to open up an iTunes store in New Zealand. But they did. I’m an anti-DRM zealot, so I will only buy iTunes Plus tracks from them and unfortunately that’s not much of a selection.

    Most people here, however, will have iPods and will buy from iTunes because there’s really not much choice.

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  7. I think you might be mistaken about the DRM-free shops getting the “Apple haters and not much more.” I love Apple and my Apple devices – I’m on my third iPod, I’m typing this from a MacBook Pro, and I fix Apple computers for a living. It’d be very hard indeed to say I’m an Apple hater.
    BUT.
    I loathe DRM every bit as much as I like Apple, probably more. I will NEVER buy a DRM’d track from Apple or from anyone else – and I don’t care that it will play perfectly well on all my Apple devices. I will not ever pay money for any mp3 that has a limit on what I can stick it on, where I can listen to it, to what I can burn it. And yes, I am willing to pay more for it.

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  8. I think you might be mistaken about the DRM-free shops getting the “Apple haters and not much more.” I love Apple and my Apple devices – I’m on my third iPod, I’m typing this from a MacBook Pro, and I fix Apple computers for a living. It’d be very hard indeed to say I’m an Apple hater.
    BUT.
    I loathe DRM every bit as much as I like Apple, probably more. I will NEVER buy a DRM’d track from Apple or from anyone else – and I don’t care that it will play perfectly well on all my Apple devices. I will not ever pay money for any mp3 that has a limit on what I can stick it on, where I can listen to it, to what I can burn it. And yes, I am willing to pay more for it. I have I’m not alone, either, and many of those who think like me have very large music libraries (frequently managed with iTunes and listened to on iPods) indeed.

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  9. I object to DRM out of principle but do have to admit iTunes DRM hasn’t caused me that many problems.

    What has caused me problems (with all web music stores and sites like Hulu) is that after the US, the rest of the world is forced to wait whilst negotiations are held over how much we can be gouged.

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