Contestable Markets - Spotify takes on iTunes
Here is the latest move in the battle for position, power and profitability in the market for digital downloads. Spotify the music streaming service based in Sweden has submitted an application to Apple for their iPhone that will allow their premium service users to search for music on the Spotify playlists and download their free library of songs onto their mobile phone.
Spotify say that the free application for the iPhone has met all of the developer guidelines required by Apple. The application will not allow users to buy music from the iTunes online store and herein lies the stumbling block! Will Apple really allow potentially one of its major rivals in the market place to find a home on the ultra-popular iPhone? Their dominance of the mobile phone music market looks too strong and too profitable to allow this new application. Spotify has become tremendously popular within a short space of time - it is claimed that they have over two million users in the UK alone.
*The advertising-funded version of Spotify is free of charge
*The premium service costs Euro 9.99 a month
*Apple has already approved several other music services such as Last.fm, Deezer and Pandora but these are much smaller competitors
*Music technology experts say that one of the main advantages of the Spotify application for the iPhone is offline play - push a button to download your Spotify playlists containing up to 3,333 songs to the app for playing whilst not connected
Here Rory Cellan-Jones from the BBC test drives the new Spotify application
And this Guardian editorial sings the praises of being able to listen to music without paying over the odds
Update: In August 2009 Apple announced that it had approved the bid for an iPhone app from Spotify. Details here
Bail-out Bitter
“A bitter ale for bitter times” is the marketing slogan coined by the Howe Sound Brewery in British Colombia which has just launched a new ale in honour (?) of the global financial crisis and the budgetary problems of the Canadian government. They are backing this up by offering Blue Plate depression meals in their pubs priced at affordable levels.
This is just one of the clever ways in which businesses can capture the mood of the times and generate some extra sales through a healthy dose of black humour. Restaurants are offering “credit munch” discounts and one of my students told me this week that millions of us have downloaded tracks which are specifically related to money. Favorites include the classic ABBA track “Money, Money, Money”, and Pink Floyds “Money”. These songs have seen a 28% increase in downloads from the iTunes website.
Has anyone come across other innovative “recession marketing”? If so please add your contribution!
Requiem for DRM
Most people who by default use iTunes are unaware that it is about to change, in a big way. At Macworld, the most important technological conference for Apple consumers (which ironically will no longer feature an appearance of Apple from now on), Phil Schiller (Apple’s vice president of product marketing) has announced that two major changes were going to be made with the most used music download program in the world. Firstly there would no longer be any DRM, and secondly there would be a new three-tier pricing system. Of course all Apple aficionados who were present at the conference rejoiced, but that is a something that can be ignored since they would have done so no matter what the Apple representative on stage would have said (yes, they’re that devout to the company...).
read more...»Apple introduces variable pricing
As a regular customer of the iTunes digital music store, I have become accustomed to clicking “buy song” and spending my hard-earned seventy nine pence to download another single. So too have the 75 million customers who have over the last six years bought around six billion songs from the iTunes store.
read more...»Arming the Donkeys
Dan Ariely has a weekly podcast available on iTunes “Arming the Donkeys” in which he interviews a prominent scientist and talks to them about how their work links in with his own research interests in behavioural economics. This week’s podcast was on bottled water - better for you or just a fabulous marketing achievement?
A Dad and his Son go mining ….. once more
This is a heart-warming story from the BBC about the rebirth of Hatfield Main colliery which is back in action once more, coal-mining having been made economically viable by the soaring world price of coal.
read more...»Apple’s dilemma resolved by falling pound
Earlier this year Apple was accused of engaging in some blatant price discrimination by selling download tracks at a higher price in mainland Europe compared to the UK. They responded by saying that they wanted to bring in a “standardised price” within months. Well now the falling pound against the Euro seems to have done the job for them - according to this BBC report - “exchange rate changes since January mean 0.99 euros now equals 79p, meaning no price cut is necessary, Apple said”
Still no explanation for why download prices are cheaper in the USA? I haven’t downloaded a song from iTunes for months - there is now much more competitoon - but I am happy enough downloading the free podcasts to keep me happy!
LSE podcasts
A terrific resource for those unable to get across to the London School of Economics - the LSE podcasts are available on iTunes.
Tesco adds to contestability in digital downloads
News today of yet more competition in the increasingly contestable market for music and film downloads. Tesco Digital is launching a new platform-neutral service which eventually will offer 3.3m music tracks compatible with iPods and other MP3 players. At the moment, the downloable tracks are only available in windows media player format. The move heralds yet more pressure for high street retailers such as HMV who are also building an online presence. Do you think that Tesco’s move will be a success?
Contestable Markets - Online Music
When was the last time you went into a store or ordered a CD online? The BBC web site reports that iTunes has overtaken Walmart as the biggest retailer of music in the United States. Over 50 million people have used iTunes since its inception but the market for downloadable music is becoming more and more contestable as the major players line up for a share of the supernormal profits that are available. MySpace has entered into a joint venture with Universal, Sony BMG and Warner and will now compete with rivals such as Last FM (a free streaming service) eMusic and Napster. According to the new data (which covers the month of January) 48 percent of US teenagers didn’t buy a single CD in 2007, compared to 38 percent in 2006. Paid music downloads in the USA accounted for almost 30 percent of all music sold in January.
Music sales in the USA (for Jan 2008)
iTunes Store - 19 percent
Wal-Mart - 15 percent
Best Buy - 13 percent
Amazon - 6 percent
How important do you think ‘first mover advantage’ is in this market? As a dedicated iTunes user I haven’t even looked at competitor services for many months now.
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