Apple iTunes: Changing the Face of Online Music Retailing Industry

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Case Details:

Case Code : BSTR070
Case Length : 16 Pages
Period : 2003
Organization : Apple Inc.
Pub Date : 2003
Teaching Note :Not Available
Countries : USA
Industry : Software

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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iTUNES - Facing Competition

Although iTunes was considered a remarkable improvement over the previous services available in the market, it did have some drawbacks. Firstly, critics argued that the collection of songs at the store was limited (200,000), and did not give much choice to the users. Secondly, songs downloaded from iTunes could be played only in Macs since the software was not compatible with Windows-based PCs.

The biggest problem, however, was the emergence of similar services that had been inspired by the growing popularity of iTunes. All these new services were working on a Windows version to tap the 97% of the global PC market that iTunes could not reach out to...

The Future of iTUNES - Not Sweet Music All Along

The going seemed to be smooth for iTunes in mid-2003, with the music industry as well as customers apparently happy with the service. Thus, the opposition to iTunes from popular music bands such as Red Hot Chilli Peppers and Metallica, was totally unexpected.

These artists argued that they would lose creative control of their albums if companies like Apple were allowed to sell songs individually. In a statement made to Reuters, Mark Reiter of Q Prime Management Company, which managed Red Hot Chili Peppers, Metallica and many other artists, said, "Our artists would rather not contribute to the demise of the album format."...


Exhibit I: The iTUNES Music Store Webpage
Exhibit II: A Note on the Major Players in the Music Industry
Exhibit III: A Note on Music Piracy
Exhibit IV: Online Music Services*


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