The Downloadable Music Business Shuffle
from the everyone-adjust-a-bit dept
As Microsoft gets ready to launch their own music download store, Apple has a carefully timed announcement adding an affiliate program to iTunes, so that individuals and organizations can get a tiny piece of the pie for every paid download they push on people. The end result, of course, will be to make iTunes' already miniscule margins even smaller. This, obviously, is of little concern to Apple, since they still view the iTunes store (properly) as a promotion for selling iPods. Meanwhile, Napster, fresh from shedding their core Roxio software business appears to be in complete denial about the marketplace. In an interview, Napster's CEO brushes off all of the competitive questions by pretending the real competition isn't competition, and then pointing out how badly they trash the non-competition. Obviously, Apple's iTunes is their main competition. However, he brushes this aside, pointing out that Apple only does pay-per-download, whereas Napster does pay-per-download and subscriptions. Since iTunes has no subscription offer, apparently, they're nothing. No customer anywhere would ever think of replacing one with the other, apparently. Of course, he seems to be forgetting two things: customers define what the competition is by deciding what products are substitutes, and it's pretty clear they consider iTunes and Napster substitutes. He also seems to completely ignore file sharing systems, which while much of the sharing may be in violation of copyrights, is still competition. So, with those in his blind spot, the competition he does bring up is Wal-Mart and Sony, two companies who everyone knew did a dreadful job creating music download stores. Any time you have your CEO defining away your biggest competition on a technicality and then bragging about how you beat the competition who had already beat themselves, you should be worried.
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