I agree. This is going to be a long-term issue for iTunes. In addition to the pricing, even when Amazon costs more I am using it given the DRM free nature of their store and the fact that I can listen to it on more than five computers. I recently bought a pacemaker and none of my itunes songs play on it, which makes Amazon the store of the future.


I posted similar concerns as a shareholder last year.



http://blog.devost.net/2007/10/17/where-itunes-runs-into-trouble/

What I can't understand; is that all the download services which the music labels are pushing against itunes are cheaper. Clearly it is more profitable to sell your music on itunes than amazon. The same was true with NBC's problem with itunes. They didn't like the deal so they pursued alternatives with lower prices.

Did you see Apples' press release today? 1 billion songs sold in 4 months. I do wish they sold more copy free songs, but that's not there fault. Maybe you're right and they should do more cleaver marketing, but remember the margins in these online stores is very little. Amazon would not be able to continue with out sharing revenue across the bottom line. With Apples hard and soft ware margins, they could possibly to afford to give the songs away, maybe that's what they're waiting for.

MP3 is NOT higher quality than AAC. Whatever your stand on DRM (and Apple's is fairly easy to live with), you are wrong in stating Amazon has better quality downloads. While I dislike DRM, I would never go back to MP3.

You geeks ranting about DRM, DRM - and yet you know (maybe YOU dont know) that ease of use ultimately wins over any geek feature.


iTunes is still the easiest way to buy and rent movies that can be transfered to a portable device. Unless Amazon comes up with an equivalent device - there's no way a teenager or a busy executive/homemaker is going to take the time to "look" for the 10c discount for the week.



iTunes gives instant gratification on the iPod and Amazon cannot match that perception - not in a long time.



Apple iTunes - 5 billion and counting

Amazon?

not only is itunes not competing in price, they are also also lagging in software. i loathe to run itunes on my macbook because of all the apps i have this is one of the most bloated and cost/benefit wise it is a losing proposition.

I don't think this is a problem as most people that buy from Amazon will put their purchases into iTunes for organizing/syncing. This continues to support Apple's sale of iPods & iPhones which is where Apple make their profit. Note that DRM is imposed on Apple so it's the recording industry's fault, not Apple's. Also, mp3 is an inferior codec to mp4 (AKA AAC) that Apple uses. Lastly, iTunes is not bloatware from the standpoint of inefficiently written code. Nor does it have feature-bloat if you consider that the multitude of features in iTunes are not obscure but instead are widely used. Contrast this to say Word which has true feature-bloat in that many many features ARE obscure and little used by the average person. I will agree, however that iTunes needs an update, but for different reasons. It needs enlarge-able text; text page-search; selectable text; copy and paste; and many features found on the Netflix such as the ability to create personal lists of movies to rent in the future (AKA a queue) of potential future movies to rent.

sean - since iTunes is free, how is it that cost/benefit wise it is a losing proposition?

It's amazing to me that people can make statements such as the one in your post without looking at the reasons behind the situation. You write as though Apple could magically waive DRM and institute lower prices all by itself. You don't seem to understand that the labels are TRYING to hurt the iTunes store by forcing it into this situation, so there's little Apple can do other than continue to compete, hoping that its dominant position will eventually force the labels to give it the same deals that it's giving Amazon (and others). You're seeing a better deal from Amazon not because Apple is stupid, but because the labels WANT Amazon to be stronger. Your comment makes it appear that you don't understand the actual situation.

@anon2 - yeah the NBC iTunes thing always confused me a bit, I still expect them back by year's end even with the success of Hulu.


@anon3 - some thinking outside the box is required i believe. apple is good at that.

@anon4 - sorry, my mistake i thought itunes tracks were 192 kbps, but i think they may be 256 just like amazon.


@anon5 - that is true about ease of use, but at the end of the day, cheaper cost is still cheaper cost.

@david - i do completely understand that, I've written about it numerous times both here and on other sites.


but i think you are underestimating Apple's power here. it could get creative with ways to combat this, but hasn't done anything for months.



i expect we'll see something new soon from them on this front.

As has been said above, Amazon is a front for the music industry's attempts to make a dent in Apple's dominant position - by offering more generous terms and no DRM.


Steve J. wrote a prominent open letter to the music industry urging an end to DRM (don't treat your customers like criminals, etc)



Apple has recently rolled out movie rentals, including HD movies. They rent/sell more movies and tv shows than any other service by far. Their Apple TV 2.0 is much improved (rolled out this January).



So how are they standing still?



The music industry can't wait to break Steve Jobs' insistence on low, uniform pricing. As soon as they do, Apple, Amazon and everyone else will be forced to charge premium prices for the most desirable music, thus raising the costs to everyone.



Amazon won't be able to stop that, they are simply a pawn in a larger struggle.

I disagree with your main point that Apple is asleep at the wheel.


To the contrary, they are developing an ever-growing, integrated family of hardware upon which media can be enjoyed, and rather seamlessly shared via iTunes:



laptop/desktop computer, iPod, iPod Touch, iPhone and AppleTV (with more devices to come?)



What is more important? Saving 10 cents on a song, or having more ways to enjoy that song, in a way that doesn't require manual effort to manage?



Apple is busy creating products (and whole new categories) that people want to buy, and supplying the media content at a break-even rate, and insisting on low, uniform prices from the media companies.



Others have tried to imiate their success from either the content side (Walmart, Napster), the hardware side (Archos, SansDisk), or a combination of both (Sony, Microsoft Zune) with virtually no success, aside from Amazon. And if Apple breaks even on their content for the sake of selling hardware, how much profit (if any) can Amazon be deriving from selling 89¢ songs?



Asleep at the wheel? I don't think so. I would say that Apple is quite busy leading the way without any competitors who can catch up, or make money in the same market.



Is it fair to say that MS has made no money on Zune (and their music store), and that Amazon is probably around break even?