Essay on Apple Ipod Case

(+) With a longer time frame and/or lower target revenue amount, it will be a lot easier and realistic to achieve

The music industry is an oligopoly. Since the late 1800’s people like Thomas Edison have been buying up patents in communication technology, forming monopolies, leading to a non-competitive entertainment industry. With only a handful of corporations controlling all aspects of acquisition, distribution and marketing of music, harsh business principles create an exploitative industry that takes the best of what artists have to offer and leaves many of them unable to support themselves. Beginning in the 1950’s with payola and white cover music and ultimately evolving into iTunes and Spotify, the music industry has grown into a billion dollar industry with far-reaching influence and control. Contracts rarely serve the artists’ best interest and many are left out to dry when their usefulness has expired.

Obviously, Apple is already the monster in tech industry, which leads the music downloads market. Amazon has only achieved the success in digital book downloads. Therefore, music downloading service is not the absolute advantage of this firm. That is why Amazon would likely to face to many challenges such as the stagnation of this service, which does not meet customer’s needs. Furthermore, the situation remains would make Amazon lose customers.

On average, subscribers purchased 19.9 CDs annually, mostly through Sonik’s website. Annual subscriber retention rate was 90 percent. Sonik accumulated CDs from various suppliers and fulfilled its own orders. Annual fixed costs of fulfillment were $400,000; shipments averaged 3.7 CDs per package. Annual marketing expenses were $230,000; Sonik spent 90 percent on acquiring new subscribers and 5 percent on subscriber retention. Sonik’s cost of capital was 12 percent. It was considering three growth options: a. Continue the Niche Strategy: Sonik believed it could acquire 20,000-30,000 new customers per annum for the next several years without major new investment. Sonik also believed that spending $0.5 million per annum would increase customer retention to 95 percent. b. Mass-Market Strategy: Abandon the subscription model, add many other music genres, and build a mass-market brand.

Personally, I am not up on the ITunes as I really am not an apple person I truly just listen to the radio for music. I believe though that ITunes has paved away for music to be purchased and distributed without even leaving the comfort of our homes. It has also paved the way for competition as there are many apps that offer music for free with ads or for a small fee and would be ad free. I believe having music avaible at a digital level is a huge advantage as the music that an individual desires to hear can be taken with them anywhere they go. Nowadays, everyone has a smartphone and pretty much has it with them 99% of the time so permitting music to be purchased through devices like ITunes was a very smart marketing move. Another great factor in my opinion is an individual does not have to purchase an entire CD for just a couple of songs that they enjoy. I recall being a teenager and doing just that and being let down by most of the album but, it worked and in that time we paid for it as there was no other way. As far as disadvantages go I feel it would hurt those in business, if less CD's or albums are physically selling there would be less stores up and running and the ones that were it may cost them a bit more than it had in the past to stay in business.

Since becoming popular iTunes has had to compete with many music competitors. These music competitors included Napster, RealNetworks, Inc., Wal-Mart, and Amazon. All of these companies provide the same music. However, these companies provide music for a minimal fee or free. For example, up until 2002 Napster subscribers were able to download music for free with an account and an internet connection. RealNetworks, Inc. users were able to download songs for $.49 cents or an album for $4.99, Wal-Mart had songs ranging from $.64 to $1.24, and Amazon account holders had access to over 15 million songs. Although these prices might not seem as much, they made a big difference to Apple since they were charging $1.29 for a song and up to $9.99 for

Overall in the past few years Apple has become more and more successful through preparing for the growth of E-Business for today’s society. The company has taken in and analysed competitors behaviour in order to remain market leaders and stay at the forefront of high end products such as IPhone and there IMacs range. Apple have tried to create a unique feel for their products when compared with Microsoft they have been trying to play catch up with Apple in all the same categories they both operate in. Apple use very different marketing techniques compared to Microsoft which has made Apple the number one brand in the world.

Introduction: Setting the trend for the future, the distribution and consumption of recorded music transformed dramatically with the launching of Apple’s iTunes in 2001. The proliferation of online music subscription services and other music sharing services exerted a great pressure on the conventional music distribution business model. Combined with this transformation, piracy of digital music had a profound impact on the whole industry. These worsening conditions in the market place for recorded music forced both established and upcoming new artists to experiment with new ways of selling their music.

Since the iTunes music store was introduced on April 28, 2003, gross music sales have plummeted in the United States - from $11.8 billion in 2003 to $7.1 billion in 2012, according to the Recording Industry Association of America (Covert). Counterintuitively, during that time consumers were buying more music than ever. How is that possible? It 's because iTunes had made digital singles popular and was selling them cheap. This would change the music industry forever. In 2000, Americans bought 943 million CD albums (Covert), and digital sales didn’t even make a dent in comparison. But by 2007, those inexpensive singles overtook CDs by a wide margin, generating 819 million sales compared to just 500 million for the CD.

Based on the background of “the era of the Digital lifestyle”, iTunes 3 target customers are;

In 2000 the digital music was the next big thing in how consumers listen to music. The technological shift in music changed how the relationship is between the artists, recording companies, promoters and music stores on how they operate today. In the late 90’s and early 2000’s Peer-to-peer (P2P) networks allowed free exchange of music files with companies like Napster and Kazaa was a big step that allowed consumers to store large libraries of music. With the cost of hard drive space going down; it allowed for pocket-sized computers to store more information in a smaller space that open the door for apple to step in with the unveiling of the iPod and iTunes. These systems made it possible for storage and playback that gave consumers the

Based on the background of “the era of the Digital lifestyle”, iTunes 3 target customers are;

Over the past decade, the use of CDs has been replaced with online streaming and retailing. This has eliminated much of the record companies revenues as they were used to making most of their profit off of distribution and promotion of physical copies of artists albums (Niemen). This has caused for a major shift and remodeling of major players in the music industries business models. Companies such Sony, Warner Music Group and Universal Music Group have started to completely rethink the way they conduct business (Forbes). In the past record labels were not only responsible for production, distribution and promotion of an artist and his/her music, but they also acted as a bank (Forbes), funding the artists tours and recording sessions. Recently, these music giants have been moving towards becoming more of a modular network organization. What this means is that they are less occupied with the nitty gritty, and more focused on what they do best which is distribution and promotion. This also allows for more freedom of creativity for the artist as well as fairer split of profits (Forbes). This adaption of new business models clearly shows the versatility of the music industry in adapting to new times and technologies.

Due to the transaction costs being lower through online channels allows for companies to offer individual products that were previously only sold as part of bundles. The advent of online stores such as Apple’s iTunes music meant music was now sold in the form of individual tracks as opposed to the previous model of the singular album. The ready availability form of singles, raises the question as to whether a number of songs on an album still matters, does it mean the track listing becomes a thing of the past and can hit songs now be relied upon to generate profits as opposed to the declining album format?

There is a good possibility for an exit strategy as business lines should be relatively easy to divest should the need arise, given that financial buyers are interested in business lines.