The launching of the iTunes Music Store

Abstract

The iTunes Music Store (iTMS) created by Apple, which provides legal digital music downloads, revolutionized the music market through its MP3 technology. Since its launch, the success of iTMS continues to be confirmed by a large number of downloads on the online store. In February 2006 alone, more than a billion songs were downloaded, against 250 million in January 2005. The brand strategy developed using the iTMS, is actually a strategy of "digital hub", designed to solicit all musical products of the brand and to maximize the use of the songs downloaded.

Following this success, we will try to understand what the impact of the digital revolution on the organization of markets is, the strategies of different actors, and new approaches to delivering a customer experience that creates value. By studying the case of the launch of the iTunes Music Store, we may understand the impact of the digital revolution on the organization and functioning of the music market, identify new game rules of the economy in real time, and the impact of these rules on the strategies of key players. This will allow us to understand the key factors of success of this new service in a dematerialized economy.

This study consists of two main parts. The first part provides an overall understanding of the market for online music and review the competitive landscape. We are able to study more specifically, the comparison between traditional and current customer experience. The second part is devoted to the iTunes Music Store and its competitors. We will attempt to identify the service provided by the iTMS and study its launch strategy, which was the source of its success.

We can thus identify a number of advantages of the current experience against the traditional. Indeed, the consumer has everything to gain by buying their music online. It saves the customer time, money and freedom.

However, despite the emergence of the market for online music in 2004, sales on the latter still remains a minority compared to the weight of traditional music purchases. The customer will then have time to access these sites for downloading music and legally download with their charges. Attitudes must evolve in this direction and acquire this reflex purchase online legally.

Online music is available in two forms: free and illegal hacking through the (peer-to-peer) and the other is charged and legal from online music sites.

For clarity, we will study a first step of the legal actors with major legal sites for downloads, record dealers and record labels, then a second time for illegal downloading sites.

Most majors are: EMI, Universal Music, Sony Music etc. The dematerialization of music through the Internet competed with the distribution channel of its majors. Initially, they adopted a defensive position. That is to say they were pursuing all competitors offering the P2P file sharing through the RIAA. They also created the specifications for portable players to distribute music in a secure (encrypted) format.

Then in a second time, record companies have launched their tour in selling music online.
Today, the market for online music is still dominated by illegal downloading sites, despite the efforts of industrial music. Indeed, they are the pioneer of digital music. They appeared in 1999 with Napster and their launch was possible thanks to MP3 technology and Internet development.

Tags: iTunes Music Store, music piracy, online music stores