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iTunes' long march to market share

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DMF Apple's iTunes Music Store has been hailed as "the future of music" so many times that you might conclude the future has already been written.

But a few statistics we gleaned at this week's Digital Music Forum (DMF), held only days after Apple boasted of its billionth download, help put it all in perspective.

The first, and most important statistic, is that Apple has taken just short of three years to reach one billion downloads. But even after litigation has put so many P2P networks on the back foot, one billion songs are downloaded illegally every month.

Now let's assume that somehow - perhaps by magic - the illegal P2P networks disappear. How deeply has the 99 cents-per-song store gripped the public imagination?

David Pakman, who formed the Music Group at Apple and is now chief executive officer of the revived eMusic service, gave us a clue.

"There are 21 songs bought from iTunes Music Store on the average iPod."

But surely, you'll point out, momentum is growing?

And here's the third statistic to remember, which comes courtesy of Aydin Caginalp. He's a partner at the law firm Partner, Alston & Bird, and he specializes in entertainment law. Here is the reality behind the figure of 21 songs per iPod:

"The iTunes Music Store [ITMS] buyer buys 25 songs in the first year, 15 in the second year, and in the third year, the battery has died, so you have to go out and buy a new iPod."

"And you paid $300 for that machine," he said, before concluding: "This is why Steve Jobs isn't in the music industry."

Under the current 99-cents-per-song service, Apple is the only winner. If this is the future - no one else has one.

iTMS been criticized many times, but you can now understand why Apple doesn't invest serious effort in improving it. It doesn't need to.

Every dollar Apple invests in improving ITMS, as opposed to engineering even better iPods, is a dollar wasted. As a marketing gimmick, it's more than done its job.

And this also explains why Apple, rather than trying to enrich or broaden its music service, is simply applying the iTMS model to different media.

Simple, really. ®

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