Can anyone stop the dominance of iTunes?

December 4, 2008

**Tom Dunmore is Editor-in-Chief of Stuff magazine. The views expressed are his own.**

tomdunmoreeicstuffmagazine2Amazon’s music download service has finally arrived in the UK. That’s great news for music fans, who will benefit from lower prices and greater choice – but it’s not going to save the music industry from the dominance of iTunes.

After all, Amazon’s download service has been running for a year in America, but it’s still way behind iTunes. In fact, even if you add all of Amazon’s CD sales into the mix, iTunes is still bigger.

Here in the UK, iTunes has well over 50 percent of the music download market (some put the figure as high as 80 percent). And that’s despite Amazon’s biggest online rival Play.com selling MP3 music at knockdown prices for the past six months. Why? Because neither Play.com nor Amazon can match Apple’s integration of iTunes software and iPod hardware.

More importantly for the music industry, despite all the new rivals in the download market, there’s nowhere near enough music being sold to make up for the slump in CD sales.

The last figures published by the BPI, the UK’s music industry body, showed that total year-on-year album sales were down 5.5 percent. Digital sales were up, but not enough: 7.5million less CDs were sold in the first nine months of 2008 compared with the same period in 2007. Download album sales were up less than 3.5m.

And that was before the economic downturn really began to bite. To compound the music industry’s woes, the UK high street’s biggest music retailer, Woolworths, has gone into administration – along with its music distribution arm Entertainment UK.  Supermarkets are having to source their CDs direct from record companies, and megastore operator Zavvi has been forced to cancel all orders through its website.

It’s not all bad news for consumers: the treacherous market conditions have forced the music industry to do away with the Digital Rights Management (DRM), which limited how music could be played and made most download music incompatible with the massively popular iPod.  The end of DRM means that Amazon, and Play.com can offer their entire catalogues in ultra-compatible MP3 format – unlike iTunes, which still sells some songs with DRM.

Amazon’s entry to the download market will help push down prices, too – much has been made of Amazon’s £3-per-album introductory offer. But while price is important, it’s by no means the killer issue online – after all, the easy availability (and overwhelming popularity) of free music illegally downloaded from peer-to-peer services makes ‘bargain’ £3 albums a pretty tricky sell.

The key to Apple’s success has been convenience and ease of use: you can buy music in the same software you use to listen to music – or even buy it directly from your iPod. Until Amazon can produce something quicker and simpler than iTunes, it’s destined to be a bit-part player in the download music market.

Read Tom’s blog at www.stuff.tv/blogs/future

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