Itunes

History and Features

iTunes is a digital media player application for playing and organizing digital music and video files. It is based on a media player called SoundJam MP, which was released by a company called Casday & Greene in 1999. Apple purchased the rights to SoundJam software in 2000. They added features as well as a new user interface and introduced it to the market as iTunes 1.0 in 2001. Seven major versions of iTunes have been released to the market since then.

iTunes is available as a free download from the Apple website. The software supports Mac and Windows operating systems and is bundled with all Macs, and some HP and Dell computers. The program can be used to manage the content on Apple’s popular digital media players: the iPod, and the recently introduced iPhone. In addition, the iTunes branded software runs on mobile phones, for example, the Motorola RAZR.

In Version 4.0, Apple added the Music Stores support to iTunes. The iTunes Store is an online business that sells media files, from which users can buy and download songs for use on a limited number of computers and an unlimited number of iPods. The iTunes Music Store was the first online music store to gain widespread media attention. Since 2003, movies, television shows, podcasts, and video games have been added to the extensive iTunes Store catalog.

The key features of iTunes consist of:

• Playlists: this feature allows you to select the digital files that you would like to play. It allows users some control over the order in which the songs are played, from a specific order to random as well as some other variations.

• Library: this is the complete database of songs that users have stored. Playlists are chosen from the user’s library. It contains all the specific attributes for each song, such as music genre, album information, etc. These attributes, known as “tags,” allow users to make very specific searches in the library.

• File formats support: iTunes 7 can currently read, write and convert between MP3, AIFF, WAV, MPEG-4, AAC, and Apple Lossless.

• Music sharing: this allows you to share digital music with anyone on your local network, but it doesn’t allow you to share the music over the internet.

• Synchronizing: This allows you to copy files back and forth between your music player and your computer. iTunes gives you the option between automatically copying your entire music library, including playlists to music players or just selected playlists as well as a menu mode which you can manually select the files.

• iTunes Store: the iTunes software allows you to connect to Apple’s iTunes Store to purchase and download digital music, music videos, television shows, iPod games, audiobooks, various podcasts, feature length films and ringtones. As of January 9, 2007, over 2 billion songs have been downloaded since the service first launched on April 28, 2003. Apple recently announced that as of July 31, 2007, they had over 3 billion downloads since iTunes was first introduced, accounting for more than 80% of worldwide online digital music sales.

Advantages & Disadvantages

Before discussing the advantages and disadvantages of iTunes, it is necessary to first take into consideration the competitors of iTunes. Apple’s popular online music store faces competition on two separate fronts: the traditional retail sector and the online music service sector. Major retailers like Wal-Mart, Best Buy, and Amazon fit into the first category; these stores sell music through a physical medium вЂ" the compact disc. Online music services, on the other hand, sell music through a digital file that is downloaded onto the computers or mobile devices of customers. iTunes is an online music service, as are eMusic and Rhapsody.

The primary benefit that online music services such as iTunes have over traditional retailers is that it is cheaper to sell music online than it is to produce a CD. With online music services such as iTunes, certain costs associated with selling CDs вЂ" such as printing the album booklet, storing the album, and shipping and distributing the album to retailers вЂ" are reduced and even eliminated.

Another factor that is important to this discussion is the trend of declining CD sales. From 2000 to 2005, physical album sales declined from 730 million to less than 600 million. While some have attributed this decline to music piracy and file-sharing, others argue that consumers are spending more of their disposable income on other electronic products such as videogames, DVDs, and mobile phones. Regardless of which is correct, Elite Consulting strongly feels that it is time for record labels to invest in something beyond the traditional music CD.

In the wake of falling CD sales, the iTunes Store has been the unquestioned leader of a music delivery system that has steadily grown over the years. In 2006, the total revenue from digital music sales doubled to nearly $2 billion. 70 percent of this revenue can be attributed to sales from iTunes. The store’s user-friendly design, convenience, and brand association with the iPod has attracted many customers and helped make it the 3rd largest music retailer in terms of album sales, right behind Wal-Mart and Best Buy.

But, at the same time, there are numerous negative characteristics of iTunes. Pricing consistency, for example, has been a cornerstone of iTunes since its launch in 2003. According to Steve Jobs, consistently pricing all iTunes songs at 99 cents has helped reduce piracy and attract customers. Despite its benefits for consumers, though, the 99 cent price tag may be undesirable for record labels because it does not take into account the popularity of songs. For example, a music distributor may want to raise the price of a popular song in order to capitalize on its demand.

Unfortunately, due to Apple’s policy on pricing, the price would stay at 99 cents. Therefore, a major drawback of selling through iTunes is that record labels give up control of pricing over to Apple.

Another drawback to iTunes is that, despite its impressive sales, these sales have not been enough to counteract falling CD sales. In fact, in this year alone, CD sales from January to March were 20 percent lower than the same-period last year. This sales decline has far outweighed any of the gains made by digital music services like iTunes. Therefore, it would be unwise for record labels to depend solely on iTunes as a source of revenue.

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