History of Apple's ecosystem in digital music
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Market Overview
Apple has taken the digital music market by storm with its seamless integration of its iPod music player with its ITunes music store. In addition, Apple has assembled an ecosystem of partners to supports its music offerings (see above). Apple's iPod has set the standard for MP3 music players and enjoys a 70% market share in the United States, selling some 32 million iPods in 2005, approaching the sale of 100 iPods/minute. However, given estimates that in 2005 the global market for MP3 players surpassed 140 million units, Apple's worldwide share is less than 25%. Apple's iTunes has been praised for its "mild-mannered" approach to Digital Rights Management (DRM), striking a balance between the rights of content owners and the rights of consumers. Estimates are that Apple earns about a dime for a 99 cent download and pays about 65 cents for licensing rights to the song. (Apple's distribution costs are about 25 cents.)
September 2006 -- Apple has been selling online music for three years and is now the fifth largest retailer of music in the U.S., after Wal-Mart, Target, Best Buy, and Amazon.com. Since its inception, iTunes has sold over 1.5 billion songs and over 60 million iPods. iPod sales comprise over a third of Apple's revenue.
April 2006 -- Although down from its torrid holiday quarter, Apple's iPod business generated sales of 8.5 million iPods and revenue of $1.7 billion in the quarter ending April 1. Same quarter sales for last year were 5.3 million iPods and $1.0 billion in revenue.
February 2006 -- Downloads from Apple's digital music store (iTunes) exceed 1 billion since the store's opening.
January 2006 -- Apple's flashy flash memory-based Nano iPod (introduced in September 2005) sells 14 million units in Q4 2005. During 2005 Apple sold a total of 32 million iPods.
September 2005 -- Apple and Motorola introduce an iTunes phone. The Motorola ROKR phone will sell for $249 and hold up to 100 songs.
August 2005 -- Hewlett-Packard stops reselling iPod line. In 2004, HP introduced its version of Apple's iPod.
January 2005 -- Apple isselling music downloads at a rate of more than a million per day. Customers have purchased more than 250 million songs from its online iTunes Music Store.
May 2003 -- Apple licenses music for iTunes from Warner Music, Universal Music, EMI, BMG, and Sony
December 2003 -- Sony Music and Bertelmann's BMG sign a definitive agreement to merge their recorded music operations in an equal partnership in every country except Japan.
November 2003 -- An Edgar Bronfman-led investor group plans to purchase Warner Music for $2.6 billion. The group is headed by Thomas H. Lee & Co. and includes Bain Capital and Providence Equity Partners.
October 2003 -- Apple launches a version of its iTunes Music Store for Windows users. AOL becomes a key Apple alliance partner and will integrate links to iTunes on its AOL Music site. PepsiCo will give away 100 million iTunes songs through a bottle cap game that starts in February 2004.
September 2003 -- Universal Music slashes the suggested retail price of most of its CDs to $12.98, a drop of over 30%. The effort is an attempt to stem consumer complains about the high price of CDs and to curtail online piracy.
September 2003 -- After seeing its interest in pressplay, Sony Music will launch its own internet music service in spring 2004. Sony is in talks with independent labels to include them in the service.
April 2003 -- Apple launches the iTunes Music Store, which enables users to download more than 200,000 songs for $.99 each. The service provides music with a range of rights, including listening on an unlimited number of IPod music players. Jimmy Iovine of Universal Music characterizes the service as "the first offensive move in what has been a primarily defensive game."
April 2003 -- The Los Angeles Times reports that Apple is in talks with Vivendi to purchase Universal Music. The deal apparently is driven by Steve Job's vision of a music service that he believes could turn around the troubled industry. Independent of an acquisition, Apple plans to launch its own online-music service shortly and has licensed songs from the five major record companies.
August 2002 -- Apple departs from its strategy to tie its products to the Mac and introduces an iPod for Windows.
October 2001 -- PortalPlayer supplies chips for iPod
October 2001 -- Apple introduces its iPod portable music device.
Copyright © 2010 George T. Geis. All Rights Reserved.