updated 01:55 pm EDT, Wed August 22, 2007
Rivals may spur iPod sales
As competitors mount new offenses, seeking to dethrone or at least chip away at iTunes' dominance in the digital download space, their efforts may only prove to buoy Apple's iPhone sales and the prominence of its iTunes store according to a series of analysts. "iTunes was developed to promote iPod hardware sales," said Susan Kevorkian, an analyst at research firm IDC told the LA Times. "The introduction of services that offer digital music to the installed base of iPod users will help drive more iPod sales." Aiding Apple is the fact that most competitors need to ensure iPod compatibility for their tracks in order to be viable. Wal-Mart's online store, for instance, offers unrestricted MP3 format files that "play on almost all portable media devices, including Apple iPod and Microsoft Zune."
RealNetworks and Viacom's MTV division, meanwhile, are teaming to deliver a subscription-based online music sales venture -- a model that has yet to prove successful. Heralding the end of MTV's "Urge" digital music service, which was launched in tandem with Microsoft, the new store will be promoted heavily on MTV's television channels and apparently carry the same Rhapsody moniker that has been promulgated by RealNetworks. Rhapsody currently charges users a monthly fee starting at $13 to listen to an unlimited number of songs. Like other subscription services, when users stop paying their membership fee for Rhapsody, they can no longer access or play the company's stocked music.
In Apple's most recent quarterly fiscal report, music-related sales accounted for 40 percent of the Cupertino-based company's total revenue during the quarter, surging 33 percent year-over-year thanks to strong iTunes Store sales. Research firm NPD also recently announced that the iTunes Store has become the third largest overall music retailer in the U.S. above Amazon and Target.