You should always be careful managing your dominance in any industry. At my old company, we held a 35% market share in the publishing of men’s lifestyle content, like a moth to a fly, that drew competitors. We were publishing content, content is hard to overtake in the sense that all the money in the world cannot necessarily overcome the time it takes to buy or create the content.
In Apple’s case, they own 82% of the digital music player market and 70% of the digital music player, it’s a force to be reckoned with, and given that the other companies trying to compete are a) tech giants and b) media giants, it really need to tone down its ambition. And, you guessed it, coming out with the much hyped iPhone only makes its “partners” in the recording music more jittery.
As such, this is no surprise:
“The music industry has been frustrated with Apple for some time because they feel (Apple) has a veritable monopoly on downloading music,” said Tony Berkman, director of research for Majestic Research. “For a while, Apple had all the leverage and could dictate the terms to the publishers.”
Despite the introduction of music services by Yahoo, Napster and others, Apple’s iTunes Store remains the most popular with a 70 percent market share, according to the NPD Group.
But that hasn’t stopped competitors from introducing rival services. Amazon plans to unveil a music downloading store later this year, while Qtrax plans to start a legal, advertising-based peer-to-peer music service this fall.
“As much power as they might be perceived to have, Apple needs the record labels and the record labels need Apple,” said Allan Klepfisz, chief executive of Qtrax. “But it’s a mistake for anybody to think the record labels need Apple more than Apple needs the record labels.”
What really exasperates the problem is that music is going digital, but it’s also going wireless. Meaning that supremacy in music + leadership in handheld devices can be a major competitive advantage (file that last part under “duh”).
It’s not - right now anyway - quite as dominant as “Search + Advertising” because:
- 8 out of 10 websites are found via search and search remains the most popular activity online after email…
- music is still not an ad supported business, so it’s not clear how much residual, recurring revenue you can make with it.
But if Apple continues at its pace and competitors don’t contain it, it can be a major anchor in many other fields.
Today UMG said enough is enough, I expect others to follow suit to try to tame Steve Jobs and Apple.
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