What Needs to be Remembered in The Future The demonstration of the importance of networked knowledge and creativity through significant investment in product development remains fundamental to stay ahead in the market Cultural needs and desires remain important to remember as the user wants to feel the cultural experience in the cyberspace Using attention to bring new users ultimately contributes to the success and economic survival 2
And what is iTunes doing to adapt to the new way people are consuming media in the network economy by keeping in mind their cultural experiences??? 3
iTunes, the Subscription Model & the Economic Basis of Internet Commerce iTunes actually offers the subscription approach for television programming only After buying Lala 5 months ago, Apple is planning to launch a full and vibrant subscription service Apple has over 125 million registered users (including credit card details) users of its a-la-carte iTunes music service (Jakomi, 2010) If Apple decides to leverage this in the music subscription market, what are the implications for current struggling subscription services like Spotify, Rhapsody, eMusic and even Vodafone with its 450,000 subscribers across 7 European markets? (Jakomi, 2010) 5
iTunes, the Subscription Model & the Economic Basis of Internet Commerce By introducing the subscription model, Apple will be able to predict very clearly its revenue stream, the number of subscribers & subscription fees In a perfectly competitive market, positive economic profits cannot be sustained in the long run as more firms enter the market and increase competition like will be the case if Apple iTunes joins the subscription market A less than 3% conversion to monthly subscription would almost certainly be viable and would dwarf Spotify and Rhapsody’s current subscriber numbers (Jakomi, 2010). 6
iTunes, the Subscription Model & the Economic Basis of Internet Commerce Will Spotify and Rhapsody then earn normal profit only and hence find themselves in a long-term equilibrium? If this is the case, the fundamental economic basis of e-commerce in the music industry will undergo serious challenges especially when all music services are striving to be both productively and allocatively efficient! 7 If Apple shifts from being the prevailing a-la-carte music service to the overriding music subscription service as well, will this influence cross-border rivalry and thus changes it into a superior monopoly?
iTunes in the Cloud iTunes will be getting a huge cloud capability that many users have been requesting These new capabilities are broken down into 3 groups: Streaming music and movies from Apple’s servers to your computers, devices, etc. Streaming music and movies from your home computers to your other computers, remote devices, etc. Wireless iTunes syncing with devices According to National Purchase Diary's polling of 3,862 iTunes users over the age of 13, roughly 25% of iTunes users would be interested in a free -from-anywhere library streaming option - that's a total of 13-15 million customers in the US alone (Gizmodo.com, 2010) 9
“The proposed changes would represent a fundamental redefinition of what it means to own a song, movie or other piece of media - shifting the emphasis from possession of a physical disc or digital file to the right to access content.“ (Kane, Y.I., & Smith, E., 2009, cited in Chaffin ‘s “Apple to Use Lala to “Reboot” iTunes Into Web-Based Service”) 11
Conclusion Being a catalyst of innovation, delivering consummate technological solutions and extending its brand as an untapped new technological leeway remain Apple’s focused and consistent trek towards living up to its ‘Think Different’ approach… all of which has resulted in… Winner Takes All 16