MUMBAI: Apple’s iTunes is witnessing an invincible growth. Come 2012 and iTunes will account for more than one-quarter of all music sales says a recent report. In the next five years, iTunes may well account for a staggering 28 percent of all music sold worldwide, approximately 70 percent of world’s digital music sales.
Digital Music News recently found that iTunes is installed in nearly 30 percent of all computers worldwide, making it the most widely installed music store application in the world.
The key to iTunes’ continued success has clearly been the iPod, but as the competition increases, pundits believe that Apple may need to rethink its iTunes strategy to maintain its lead.”Apple is under pressure from the four major labels to change its pricing model to a tiered pricing structure,” said Susan Kevorkian, an IDC audio analyst. “The way the labels are pressuring Apple is by withholding DRM-free downloads from the service while cultivating other online music services, most notably Amazon’s MP3 downloads store.
Though Amazon isn’t stealing many customers from iTunes — only 10 percent of Amazon MP3 customers have bought from iTunes in the past, yet Apple needs to keep itself on the upfront.
Apple though, has other ways to grow iTunes without relying on the iPod, such as music subscriptions. The most obvious scenario is a PlaysforSure-style subscription service, which would require a new, stronger version of FairPlay DRM and rule out compatibility with older iPods, as per reports.
Another option would be an eMusic-style subscription in which customers get a fixed number of songs per month, getting a better deal than purchasing the songs individually.
There is also the so-called “unlimited music” iPod, which could be on the tracks. “We think the issue holding things up is how much money per iPod the labels get,” states Kevorkian
If it becomes difficult for Apple to deal with the music labels it could eventually cut them out, at least part of the equation by forming its own record label to keep a portion of the estimated 65 cents it currently pays out to the labels for each song sold.
Apparently, only Steve Jobs knows which of these paths Apple will take, but iTunes’ prospects for the next five years looks as bright as they have been for the last five.