The strength of Apple’s digital music market leadership seems set to face its first major test this autumn.
A host of initiatives and marketing promotions are set to be announced or have recently been initiated that aim to draw public attention away from Apple’s leadership position and into the hands of its competitors.
Napster last week announced its major cross-promotional marketing campaign in conjunction with The Sun; Wippit this morning threw its gauntlet into the ring – a promotional campaign with London’s Evening Standard.
Microsoft gets ready to rumble
The Guardian today reports that “strong music industry rumours” suggest Microsoft will launch its own digital music store later this year. Macworld can confirm such rumours exist, with some suggesting the software giant has been quietly engaged in securing licenses to sell music online during the summer.
The Guardian report warns of a, “nightmare clash of technologies as Microsoft prepares a multi-million pound launch into the market”. It also warns Microsoft may “spearhead” a rival, incompatible, digital music player. The company is also predicted to team-up with major electronics retailers to market its new services.
Informa Media analyst Simon Dyson observed: “If Microsoft becomes the biggest download site, and it is incompatible with the biggest player, the iPod, that’s potentially ridiculous. It would be a nightmare.”
Microsoft is also applying the final touches to a technology (Janus) that will let subscribers carry music from services they subscribe to on their digital music players. This technology will only work on music players that support Windows Media, however – leaving iPod users out in the cold.
Real profits from confusion
RealNetworks is attempting to profit from the format cacophony by introducing its new Harmony technology, which lets music acquired through its own Rhapsody music store be played on most available music players on the market – including iPod – without breaking the digital rights management of such songs.
The LA Times reports on a number of new initiatives that may also eventually threaten Apple’s success.
It looks at the growth and development of new digital distribution models based on file-sharing technologies. It also examines the way online music businesses are adding features borrowed from P2P, such as sending free songs to friends. iMesh and Mercora are mentioned.
MusicMatch ramping up
This report also warns of former Apple partner MusicMatch’s plans to launch new software and its own $10-per-month subscription service. This new service will reportedly “allow subscribers to play as many songs as they wish from the company’s online jukebox, and also to share tracks with friends” (though friends can only play shared tracks three times).
Audible Magic CEO Vance Ikezoye told the LA Times he was pleased at the music industry’s new readiness to approach new business models: “The industry has been criticised for not supporting digital media and new models,” he said, adding: “I think this is a positive direction”.
With digital-music providers entering a period of cut-throat competition as they aim to grab the largest slice of an estimated $700 million per year (by 2005) market, many are turning to joint marketing efforts to popularize their services.
Apple tried this with Pepsi. In the UK, Napster is working with The Sun, and Wippit with the Evening Standard. Most such promotions mean consumers get free songs when they buy a newspaper or soft drink – but such moves could also devalue the businesses the new brands seek to promote.
Billboard reports Barry Sosnick, president of music and home entertainment consultancy Earful, who warned: “By giving music away for free, you are reducing the future expectation of the price of music.”
Speaking to Macworld, National Association of Record Industry Professionals president Tess Taylor also warned of the hidden impact of mixed-message marketing:
“Undervaluing music is a mistake – it’s an art form with a high and enduring value. Relegating it to the low-level role of a sales inducement tells consumers that creativity can be taken for granted; that its OK to steal if you can get away with it.
“Making great music is not something everybody can do, and even if they can it is extremely hard to be successful. In every other field of endeavour, when someone succeeds, they see the benefit. In this industry, when you succeed, increasingly you get nothing.”
As Apple, Microsoft, Napster, OD2, Real, Sony and others battle for the lion’s share of an emerging, fast-changing business, they must beware that they do not devalue the music they sell.