Apple's iTunes
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Created by 10:30 AM Group 7 (Fall 2007):
| Djeanane Chanoine | Mike Hughes | Michael McDonough | Lauren Pagano | Kate Thomas |
Re-done by 10:30 Group 3 (Spring 2008):
| Chris Bilyk | Peter Toporzycki | Kevin Leahy |
Re-Re-done by 10:30 Group 8 (Fall 2008):
| Mark Potash | Jamie Zhang | Vanessa Watson | Christopher DosSantos | James Karle |
iTunes: A Brief Overview
- Digital Media Player Application, used for organizing various types of music and video files
- Free download for Mac OS X, Windows Vista, and Windows XP from Apple's website
- Interface to manage its contents to digital media players (iPod)
- Connects to iTunes Music Store Music (over 8 million songs at 99 cents each), Movies, Music Videos, Games, and Applications
- The iTunes store eliminated subscription fees, which gained fromer Morpheus and KaZaA subscribers
- Digital Rights Management: Apple's specific security system, and key to its competitive advantage
- The video iPod, as well as any computer with video output, can be connected directly to the TV to watch videos
- Apple has sold more than 5 billion songs and more than 3 million movies as of November 2008
- By the end of 2006, the average iPod held 22 songs purchased from the iTunes Store
In this video from Steve Job's Keynote Speech at Macworld 2003, he announces iTunes' compatibility with Windows. He also discusses the advantages of iTunes as compared with the music players of Microsoft and MusicMatch. This video demonstrates how iTunes' IT is superior to other digital music applications.
Launching off the iT-unes Platform
In January 2001, Apple iTunes was launched as a simple software that organizes all the digital media on your computer. With Apple iTunes, all your music, movies, television shows and podcasts are in one spot. With the iTunes Store, you can always expand your collection for $0.99 a song. This organized collection of digital media works as the platform for which Apple has launched hardware gadgets like the iPod, Apple iPhone and Apple T.V..
Apple iTunes is great when you're at the computer, but what about during everyday life? So, Apple began to launch a series of hardware products that brought the Apple iTunes media to your non-computer life.
Apple iPod
First to launch was the iPod. This small, portable device carried all your Apple iTunes music in your pocket. Consumers now can listen to their entire library of music anywhere with this gadget. Soon the iPod beefed up capabilities to include a color screen for all your photo, movies and TV show needs.
Apple iPhone
Next, Apple consolidated pocket space with the Apple iPhone, bringing together all the Apple iTunes applications in collaboration with cellular devices and the internet. This product was a collision product, half launched off of the iTunes platform and half launched off a separate hybrid platform of internet and mobile phone technology.
Apple T.V.
The last hardware capsule to blast off the Apple iTunes platform maybe the key to a new era of visual entertainment. The iTunes software organizes videos, music videos, movies and TV shows so the consumer is able to view those visual media on the iPod, Apple iPhone and a computer with iTunes. But who wants to indulge in a cinematic experience through an a tiny iPod or computer screen. iTunes, Netflix and Blockbuster have all run into this marketing rut, they all know that the market is advancing in this direction but between copyright laws and technology incompatibilities, progress has been slow. Apple has finally created a product that connects digital media from your computer to that big, flat screen, high definition, surround sound television in the living room. Apple T.V., as it's called, is a little white box that connects to the television. The box is a wireless receiver with large storage capabilities. iTunes sends TV Shows and Movies to your Apple T.V. box, quick and wireless. Finally, consumers can watch movies and TV shows, obtained easily and legally, in the full detail, color, and sound from the television in their living room.
iPod and iTunes
Key to understanding Apple's success in the marketplace is the synergy between the iPod and the iTunes, which, together, are worth more than the sum of each product. Users download music using the iTunes store, organizes it with the iTunes software, which has a very user-friendly interface, and syncs the library and playlists with the iPod. If a user uses iTunes, he must also use an iPod, and similarly, if a user likes the iPod, he must use the iTunes (Neumayr 2008). Now, with the introduction of the iPhone, the iTunes is more important than ever, with the iTunes store now responsible for selling applications for the iPhone, which both makes the iPhone more attractive to consumers and brings in more revenue for Apple, Inc.
Capitalizing on the complementarity of the iTunes and the iPod, Apple has made a strategic decision to make the iTunes software completely free online (and in CD at Apple stores). Why would Apple do this? Because in doing so, Apple invites new users to try the iTunes software, knowing full well that the iTunes is the best media organization software on the market (Dean 2004). Once users are converted to using iTunes as their primary media organization software, they will have to purchase an iPod to carry around their media, organized in iTunes playlists, and, more importantly, these new users will likely switch to using the iTunes store to purchase media out of convenience. Therefore, the iTunes presents Apple with an almost inimitable advantage in the media player device market and the online music market. It has such a presence already that competitors like Creative and Microsoft cannot hope to take over the iTunes' market share—or the market shares of the iTunes store and the iPod (perhaps even the iPhone). (Dalrymple 2008).
Digital Rights Management and the iTunes Music Store
Apple popularized Digital Rights Management (DRM), a term that refers to (in iTune’s case) certain protections and limitations encrypted into audio and video files that attempt to discourage piracy. All audio files, for example, purchased from the iTunes Music Store can be accessed on up to just five different computers and can be burned to a CD a limited number of times. However, DRM achieves far more than what Apple alleges; music downloaded through the service are “Protected AAC Audio Files”, a format unreadable by all MP3 players except the iPod. Additionally, files purchased from the iTunes Store can be opened only in iTunes or Quicktime (not DivX or Windows Media Player). The more music and video someone purchases through iTunes, the less likely he/she is to switch services because the files would become obsolete (switching costs increase with each download). Apple’s use of DRM is truly an effort to monopolize “software and services… and hardware, too.” (Dornan 2006)
DRM may give Apple the competitive edge, but some customers are annoyed that they have no choice but to stick with iPod/iTunes.
iTunes U
iTunes U is an application integrated into iTunes where students and professors can download educational videos and demonstrations provided by universities, museums, and PBS stations free of charge. You may also subscribe to that track, so that if the institution posts new audio or video you will automatically receive updates on your iTunes, under Podcasts. You may sync the new information to your iPod and iPhone and "learn" wherever you go. (Mains 2007)
iTunes U provides competitive advantage to Apple in combining first mover advantage (the first company to launch an effort of this sort with substantial funding) with attracting brand new customers. Respected universities like UC Berkeley, Stanford, MIT and Duke jumped on board quickly. Although lectures, demonstrations, and other material are free to students and teachers, the feature attracts new users to iTunes (like middle-aged and older people who want to remain connected to their alma mater). Because iTunes U is integrated into the iTunes store (and iPod ads), these new users are encouraged to explore Apple's other products and services. (Telecomworldwire 2007)
Entering the Market of Online Video
The iTunes store has been upgraded to compete with the likes of Netflix and HBO by allowing users to download and rent movies and TV shows. Apple representative Tom Neumayr stated, “The iTunes Store is the world’s most popular online TV store with over 150 million episodes sold and features the world’s largest catalog with over 800 shows (over 20,000 episodes)” (Neumayr 2008). Apple has made the service available to a number of countries; this is a step up from Netflix, an exclusively US-based company. Another competitive advantage that iTunes videos offer is that television programs and movies purchased and downloaded from the iTunes Store can be viewed on a Mac, PC, iPod, iPhone, or TV (via Apple TV). (Neumayr 2008). The ability to watch movies and shows in so many formats and through so many mediums provides Apple with competitive advantage over Netflix and Blockbuster.
Apple's business model (rental and purchases of videos) is far more profitable than the ad-based, streaming method of sites like YouTube and Hulu. Studios are much more willing to strike deals with Apple and tend only to offer snippets or sections of movies via YouTube because they hate the idea of having a full length-movie "broken up" by ads every fifteen minutes. Consequently, Apple continues to gain the support of new television networks and movie studios with each passing month; as their library of available titles diversifies and expands, users will be more inclined to use the service. (Sandoval 2008)
Podcasts
Podcasts are digital media files that can be downloaded and played on one's computer or MP3 player. Thousands of free Podcast downloads of news programs, class lectures, tutorials, music mixes, museum audio tour guides and myriad other programs are available through the iTunes music store. By subscribing to a Podcast, one can automatically receive the latest updates to a series or listen to previous broadcasts. Podcasts have become increasingly popular for daily or hourly news updates from trusted networks like CNN and NBC. Anyone can create a podcast series for fun or functional purposes, and Podcast subscription is easy and often free. Podcasts are extremely convenient in that one doesn’t have to be at a computer or watching TV to access information, and the Podcasts download automatically to the iTunes library. (Apple.com 2009)
Podcasts also expand Apple's user base. After the launch of Podcasts in 2005, radio and TV hosts (like CNN's Anderson Cooper) began broadcasting their programs through Podcasts each day. One host of a Radio Tech Show noted that 80% of his 200,000 viewers began catching up on airings they missed on a regular basis (Friess 2006). It is likely that a good portion of these listeners were first-time users of Apple's iTunes - once again, Apple successfully created a tool to reach out to brand new customers.
iTunes in the Press
References
Dornan, Andy. 2006. "Apple's Demand For A State-Sponsored Monopoly Shows That DRM Aims To Stop Competition, Not Piracy," Information Week. March 23, 2006. http://www.informationweek.com/blog/main/archives/2006/03/apples_demand_f.html
- This article explores DRM as a means of not only protecting multimedia files, but also a means of gaining competitive advantage. Apple uses DRM to force users to stick with its services.
Neumayr, Tom. 2008. "HBO & Apple Bringing Critically Acclaimed Television Programming to the iTunes Store," Apple. May 13, 2008. http://www.apple.com/pr/library/2008/05/13itunes.html
- This Apple press release illustrates the fact that Apple is continually striking deals with studios and networks to its expand its vast library of videos. Studios, like HBO, prefer the rental/download service of a streaming medium.
Neumayr, Tom. 2008. "iTunes Store Tops Over Five Billions Songs Sold," Apple. June 19, 2008. http://www.apple.com/pr/library/2008/06/19itunes.html
- Apple's press release that declares its dominance among music and video downloading services
Dean, Katie. 2004. "Microsoft Edges Into iTunes' Turf," Wired. June 3, 2004. http://www.wired.com/entertainment/music/news/2004/06/63690
- Microsoft's Windows Media Player 10 attempted to take back a part of the market share by imitating some of iTunes' featuers; this is a testament to the success of iTunes.
Telecomworldwire, 2007. "Apple introduces iTunes U for free Educational Content," Telecomworldwire. May 31, 2007. http://findarticles.com/p/articles/mi_m0ECZ/is_2007_May_31/ai_n19189412
- This article outlines the main featurs of iTunes U and is optimistic of its success, as many "big name" universities have jumped onboard.
Mains, Derick. 2007. "Apple Announces iTunes U on the iTunes Store," Apple. May 30, 2007. http://www.apple.com/pr/library/2007/05/30itunesu.html
- Apple's press release about its groundbreaking service, iTunes U
Sandoval, Greg. 2008. "YouTube film service unlikely to be as profitable as iTunes," CNet. November 12, 2008. http://news.cnet.com/8301-1023_3-10094724-93.html
- This article argues that the iTunes business model - that of downloading and renting files - is superior to that of YouTube and its need to rely on ads. Studios and netowrks prefer the iTunes model.
Friess, Steve. 2006. "Podcasting After iTunes," Wired. June 28, 2006. http://www.wired.com/techbiz/media/news/2006/06/71257
- This article explains that Podcasting has both revolutionized broadcasting (by making TV/radio shows available online), and gained Apple new customers by reaching out to new groups.
Apple.com. 2009. "Podcasts," Apple. 2009. http://www.apple.com/itunes/whatson/podcasts/
- Apple's "all-about" Podcasts section of its website
Munger, Michael. 2001. "iTunes, Part 1: Encode, Organize, Radio, and Play," Low End Mac. April 4, 2001. http://www.lowendmac.com/ibasics/010404.html
- This article is a "how-to" guide for iTunes and details many of its extra features that help make it an all-inclusive, user-friendly music player.
I thought this wiki was well-organized and contained extensive information on Apple’s iTunes and the various Apple products that are compatible with iTunes. The wiki met most of the requirements for the assignment; however you still need to cite the sources you used. I thought the assignment was very detailed, and I liked how you were able to effectively include terminology from class lectures within the wiki. In addition, I thought you made good use of images and videos. To improve the project, you could eventually link the terms that you used from class to the exam question site, such as terms from the sections “iPod and iTunes” (complementarity) and “Digital Rights management and the iTunes Music store” (switching costs). You could also discuss any new technologies that Apple is currently working on for iTunes that might contribute to its competitive advantage in the future. Overall, I thought the project was very well done.
contributed by Deanna Osganian on Dec 2 11:23pm
This project meets most of the requirements for this assignment. The table of contents makes the project easily accessible and readable. You use a nice array of photos and advanced media such as videos to display your project and add to the readers overall enjoyment of the project. You also use the terms effectively from class where they are necessary. However you do still need to site your sources or you will lose major credit. Also I am wondering which part of the project your group actually did. This project has been done by 3 groups and how are you distinguishing between what was your part of the project? I really like how the project offers the problem that iTunes is facing and Apple's solution to it. It made for a good read and kept the reader interested. However I don't like how long the project is. It is a little more than 2000 words which can cause some people to lose focus and not want to continue reading. If you are able to cut down on the amount of words it will make the project more effective. However you did a great job I learned a lot, thank you for your hard work.
contributed by Jack Fabbri on Dec 3 9:23am
I believe that this project meets all of the requirements. One thing I would look out for is the word count-I don't know if there is an exception because you guys built upon a previous project but just be aware that this is about double the assignment asked for. Also, it might be a good idea to expand in some things about the network effects of the iTunes. Finally, I would suggest that the section in the beginning that talks about "Connects to Music Store" and "Whats new in iTunes" be made into bullet points. I really enjoyed the picks in viedos-although one was a little long-and I really like the "iTunes in the Press" section. Very clever; no explanation needed.
contributed by Khloe' Scurry on Dec 3 9:39am
1. I thought your project was very well-organized and met all of the requirements. The only things I would look at for are to make sure all sections have citations when needed and that the length is within the limits.
2. To make your project even better I would use more supplemental multimedia considering its availability on the topic. A sample podcast is an example.
3. I really liked the section for iTunes in the news.
contributed by Michael Sama on Dec 3 1:28pm
I enjoyed viewing your project and with the exception of the sources, which you noted were to be added later, all of the requirements were met. I enjoyed the video and felt that with your summary at the bottom of the video, I learned a lot about iTunes U. One thing that I would consider changing is the iPod and iTunes section in the beginning. I know that you are trying to add your own input into the project and not just copy from what has already been done but a lot of the points that you bring up in that section were mentioned by the previous groups who have done this topic.
contributed by John Fiorenzo on Dec 3 2:42pm
Great work improving that page. Your section is very informative and well organized. You also did a good job incorporating things that you have learned in class. To organize the page, you could create an internal link for all these comments and copy and paste them to that page. That might make the pages look cleaner. Nice job! Don't forget to list your sources.
contributed by Samantha Burke on Dec 3 3:40pm
1) The project does a great job of meeting the requirements. Your section was long enough and added greatly on previous posts. Only thing missing is the sources, but that was noted.
2) I like how you talked about more recent aspects of Itunes not covered in the previous posts, such as movies and television.
3) The only thing I would change, however it is not that big, is add more pictures. The page is very visually appealing however under the headings "Entering the Market of Online Video" and "Podcasts" there are no pictures.
contributed by Al Minahan on Dec 3 4:59pm
I think you guys have really improved and add onto the previous project. The new information added is very up to date and interesting. The requirements are definitely met, excepted the sources, which presumably would be added. I really like the part about "entering the online video" because that is an example of market making, and it is going beyond what their original focus was on, but at the same time, making it all work. However, I think, as another previous person suggested, cutting some words would be good, or spreading them out. In particular, I think the section on "Ipods and Itunes" could be cut down a little since the focus is on itunes and not necessary on the "ipod" even though they are definitely, strongly, related products.
contributed by Chien Ya Chin on Dec 3 8:19pm
I thiught this project definately met the given criteria. I thought the table of contents and overview did a nice job setting up the project for the reader. Also I thought you did well in explaing the competitive advangtage of Itunes in the market, especially the part where you explained how the mobility of ipod and iphone have helped to hold off competitiors like Netflix and Blockbuster. Another piece I like was the links in the text that gave supplemental information about the Apple procducts like the Apple T.V. The only suggestion I have is that I would like to hear a little more about what Itunes competitiors are doing to try to win back some of the market share. What technology or innovations are they developing? Overall, good job.
contributed by Brendan Cawley on Dec 4 5:57am
This project does a great job visually and is really full of a lot of information. I think it definitely meets the requirements. I enjoyed how the use of classroom terms (switching costs) was incorporated into the project and that it was linked to another page. To improve, I might add a bit more detail on how iTunes has outsmarted other music sharing programs such as Rhapsody, Napster and Walmart.com. Excellent project.
contributed by Ariel Aspinall on Dec 4 6:48am
