Case #3: iTunes as a Pure Play

Over the past decade, downloading music on the Internet has been transformed from a popular phenomenon to a cyber crime to an effortless social norm. The latest change in perceptions has been greatly influenced by Apple’s iTunes. Apple completely reinvented the way people purchase and listen to music with the unveiling of iTunes, and they continue to do so. The program is now basically a one-stop media experience. Through it people can watch movies and television shows, and listen to the music and the radio. The company also created a new type of media opportunity with the introduction of podcasts, which is basically a type of blog, but can be translated into almost anything. Even Apple’s iPhone is set up and managed through iTunes.

The iTunes Store probably has what you're looking for.

Now, I’ll admit that I was opposed to iTunes when it first came out. And I still think that there are a few flaws in the program. Don’t get me wrong… I love music. One of my favorite hobbies is marking when albums are coming out, and then making a trip to Best Buy, FYE, or a local record shop on the day the album drops to purchase it. I’ll even preorder the album from the band’s website if the package is appealing (a lot of bands have bonus tracks, posters, and t-shirts that are included with a preoder). I love supporting the bands, I love having something tangible, and I love the packaging and artwork that most bands include with their albums. You don’t get that full experience with iTunes. But when I know a store won’t have the album I want and I don’t want to wait a week and a half for the album to ship, it’s nice to know that iTunes has my back. Basically any album imaginable is somewhere in the iTunes database.

I will say, though, that I can’t thank iTunes enough for what it did for the record industry. Before iTunes, albums were being sold at $18 a pop. Which was absolutely ridiculous. Once iTunes introduced the option of buying a single song for 99 cents, many consumers no longer had to purchase a whole album for one song they heard on the radio. Since the introduction of iTunes, album prices can usually be found around $12.

iTunes operates on the pure play level. This means that it exists on the Internet only. This revolutionary tool follows the merchant web business model. Under this model, iTunes charges for each item that is exchanged with the consumer. However, iTunes does offer free songs, and bands can choose to let people download their songs for free. iTunes can also be called a bit vendor because the customers are actually paying for each download, whether that be for a song or for a whole album.

iTunes can make use of various performance measures to make sure they are at the top of their market. One such performance measure would simply be to check internal sales. iTunes should check to see what portion of sales pertains to music, TV, and movies. They could even break it down even further by seeing what types of music. TV shows, and movies sells the best. iTunes already has a method of suggesting music for users, as well as a most popular section for sales, so I’m sure the company has all of these figures.

iTunes could compare these figures to other businesses such as Tower Records, Microsoft’s Zune and related media purchasing site, and sales figures from record companies. If these other companies are selling more albums than iTunes, then the company should take a step back and figure out how to increase sales.

Apple iPod - The perfect companion for iTunes.
Note: This image does not reflect my music preferences.

iTunes may also want to keep track of media player sales. For example, if iPod sales begin to slow, and Zune sales increase, people may stop purchasing from iTunes. While this is possible, I don’t think it’s very probable.

I think that iTunes has done a great job of updating itself repeatedly and frequently. Anytime there is any slight problem with the iTunes experience, the company makes sure to make it better. I mentioned earlier that I loved being able to see the packaging that bands included with their albums. Over the past few years, iTunes has included album artwork and, more recently, digital booklets, which allow consumers to read the lyrics and dedications associated with the album. While iTunes is already incredibly popular, I can only see it becoming more and more prominent in the music market.

Bright Eyes - Cassadaga: Won best album artwork at the 2008 Grammy's