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Apple blasÚ about online music rivals

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By Dennis Lloyd

Publisher, iLounge
Published: Tuesday, December 16, 2003
News Categories: iTunes

“Jobs says he has no plans to lower prices or dramatically change iTunes to address the new threats. “We’re going to continue on our winning strategy,” he said in an interview. [...]

Rivals such as Dell have introduced more flexible portable players for other services. Jobs says Apple “trounced Dell this quarter” in music player sales. Researcher Jupiter predicts the $80 million digital music market will hit $1.6 billion in 2008. The field is quickly getting more crowded.”

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Comments

1

Way to go, Mr. Jobs.  That’s the kind of thinking that almost killed Apple in the 80’s.

Posted by Mountain Man on December 16, 2003 at 8:52 AM (PDT)

2

Yes, based on past experience it seems like Apple can only take Mr Jobs in 5-7 year stints before his “vision” becomes increasingly divorced from reality and his obnoxious style alienates too many people.

I expect Apple to give him the boot within 18-24 months when iPod sales taper off, its market share declines, and the iTMS settles down as a niche player.

Posted by HistoryRepeating on December 16, 2003 at 9:34 AM (PDT)

3

Jobs’/Apple’s strategy is pretty simply.  Right now the music companies hold all the cards with respect to digital music rights.  By Jobs’ own account Apple pays about 70% to the music companies, with another 3 to 5% for transaction costs, there is almost no profit for Apple.  However, it’s clear, if Apple can exist on iPod profits to sustain iTunes for the near term, and Apple can grow iTunes into a music giant, then Apple will be able to turn the tables on the music companies in a few years and renegoitiate the terms of the deals and iTunes/Apple will likely demand more lucrative arrangements and perhaps become a major player in the music business.  Pixar is the obvious paradigm for this scenario.

Posted by Obadiah on December 17, 2003 at 4:03 AM (PDT)

4

Problem is, I don’t think Apple and the iTunes music service have a few years to get their act together.  Pixar is its own paradigm since it’s a unique product that is not easily copied.  iTMS, on the other hand, has a lot of competition waiting in the wings, and Apple simply does not have the luxury to slowly massage their music service into a more profitable entity.  Like I said, it’s this kind of untouchable attitude that almost bankrupted the company 20 years ago.

Posted by Mountain Man on December 17, 2003 at 5:06 AM (PDT)

5

“...Problem is, I don’t think Apple and the iTunes music service have a few years to get their act together.”

To get their act together? What do you mean? iTunes Music Store has 88% of the legal download market and is selling at a rate of 1.5 million songs per week - and growing. The rest of the legal services are moving almost 300,000 songs per week combined. It seems that iTMS already had its act together quite nicely, eh?

Posted by Atomic Bomb in Mid-Atlantic on December 17, 2003 at 5:44 AM (PDT)

6

Which is why I said the competition was waiting in the wings.  If Jobs doesn’t take a proactive approach to business instead of resting on his laurels, he’ll wake up to find that he’s been eclipsed yet again and will be reduced to playing catch up.

Of course, his confident swagger in front of the press may be an act and he may already be planning sweeping changes to the iTunes music service in order to keep the edge.

Posted by Mountain Man on December 17, 2003 at 8:40 AM (PDT)

7

> selling at a rate of 1.5 million songs per week

Selling 1 and a half million times zero is still zero. Or worse, if you are losing money on each sale then the more you sell the more you lose.

What if we are seeing a fool’s game like the internet bubble where all these companies keep trying to outdo each other to sell profitless stuff. Maybe Steve knows this and is trying to lead them all in to ante up then he jumps ship?

I’ve heard that all the real money is in subscriptions and radio services. And I’d still like to know how I could tranfer my iTunes AACs to my Tivo over my Ethernet - interoperability is the key here.

Posted by WWJD on December 17, 2003 at 9:40 AM (PDT)

8

“I’ve heard that all the real money is in subscriptions and radio services.”

iTunes has over a hundred free radio stations built in. Anyone who would pay for internet radio is crazy - or stupid. And by the way, as has been stated several hundred times on this site and others, the entire existance of iTunes is meant to support the iPod and the profits Apple reaps from that product. With projected sales of over 500,000 iPods this quarter, that translates to quarterly profit form the iPod alone of at least $50 million (since the profit on each iPod is $100 or greater depending on the model).

This is all very well known and documented. Steve Jobs isn’t worried about competition for iTMS because he knows that nobody else can touch the iPod - and that’s what is making money. The other stores and subscription services are all failing because they are all flawed models. It is the seemless integration between iTunes and the iPod that is the key, people.

And as far as integration with TiVo, the TiVo hardware only supports MP3 - not AAC or WMA. That’s TiVo’s issue. But I still use TiVo’s integration (see link below) to play my full iTunes library. All I do is export my AAC files and reimport them as MP3. I have an applescript that allows me to do as many songs as I want in one shot. It takes just a couple of minutes on my PowerBook.

http://www.tivo.com/4.9.4.asp

I’ve been doing that for a LOOONG time. But one question: why bother moving your music files to TiVo when you can control and stream them straight from your Mac?

Posted by Atomic Bomb in Mid-Atlantic on December 17, 2003 at 10:38 AM (PDT)

9

> nobody else can touch the iPod

Yeah, they said this about the Mac, back in the day. I think the earlier guy is right when he says Steve Jobs has a tendency to rest on his laurels (what are laurels anyway?) and just bask in the unquestioning praise of happy users.

I know I could go through this hare-brained quality destroying re-encoding of audio tracks. Tivo runs on Linux so they could *add* AAC support easily. What I am saying is that for the iTunes store to propser it needs to forge alliances with other market leaders, to create a kereitsu effect that locks people in, an economy of devices and media that support each other.

If you could buy AACs from Apple and download them to your Tivo, then you could use it for more home media stuff and Apple would make money. If they do, in fact, make money from selling these tunes.

Of course, if Apple lose money on each track buyt make it for iPod then they have a vested interest in keeping AAC off any devices other than iPod. Then that sucks because you can bet MS and InterTrust and others will create their own pan-device DRM economy while iPods will be left isolated.

Think strategically!

Posted by WWSD on December 17, 2003 at 11:31 AM (PDT)

10

“...Steve Jobs has a tendency to rest on his laurels”

Since when? He’s only been with Apple since ‘97. What resting on his laurels has he done? He was away from Apple from 1985 to 1997. It was during the dark years of Scully et al that Apple rested on its laurels. Learn a little history.

And what do you mean “hare-brained quality destroying re-encoding”? There is no quality loss during that process - unless you’re using some crapware that I don’t know about. The conversion is all digital. And could TiVo add AAC support? They already are adding it! And again, why “download” to your TiVo? What is the point of keeping your library in multiple places? I stream my iTunes library to any machine I want - Windows or Mac - regardless of format. I can also stream it to my stereo system wirelessly. Duh.

“Pan-device DRM”? Anyone can license FairPlay from Veridisc - as Apple did, and any device can use AAC - as Panasonic, Philips, Nokia, and many others do. Oh, and by the way, I can play all my iTunes-purchased AAC songs on my Nokia 5510 - as you can with any device that supports AAC.

Think strategically? You seem to be the only one without any real knowledge on the matter! What a waste of bits on this otherwise useful site. How about registering for the site instead of posting your garbage with your ridiculous acronyms.

Posted by Atomic Bomb in Mid-Atlantic on December 17, 2003 at 11:52 AM (PDT)

11

“I think the earlier guy…”

And why am I getting the impression that the “earlier guy” is YOU.

Posted by Atomic Bomb in Mid-Atlantic on December 17, 2003 at 11:54 AM (PDT)

12

> It was during the dark years of Scully et al that Apple rested on its laurels

I wrote the book on that period, literally. Thanks to Steve the first Mac was a closed box that sold disastrously. Apple almost went under.

It was under Scully’s direction that the Mac II was designed - an open platform with expandable slots. That was what helped to propel Apple into the big leagues.

> is no quality loss during that process

Again you prove to me you have no real knowledge except what you read from Apple press releases. Every psyhoacoustical scheme discards data, and every scheme is different. Thus, converting an AAC-encoded file into a CDDA-encoded file and then into an MP3-encoded file is going to introduce a high degree of upsampling and compression artifacts. That’s just the way it is.

And as for centralizing media, I like the Tivo form factor and it has a real chance at becoming a “Media Hub”. PCs and Macs are noisy, electricity hungry, look pretty ugly, and don’t stack well with my other HT components. That’s why Tivo is a winner here.

Apple used to have a HT rack form factor device in the “Pippin” when they were trying to make that nice little gadget a convergence device but they abandoned it. Maybe that was before your time?

> the “earlier guy” is YOU

I don’t know who Mountain Man is but I respect his/her judgement. You should stop being so paranoid.

Posted by YMMV on December 17, 2003 at 12:19 PM (PDT)

13

“...read from Apple press releases…”

Interesting. I’ve never seen an Apple press release on this matter. That’s a strange thing to say.

Why would you stack a PC or Mac with your home theater components? That’s just strange. Your original post talked about ethernet… or did you forget that.

By the way, converting an M4P file to MP3 does not require CDDA-encoding - unless you choose that route. Were you to do that, you would experience a loss of quality.

And I don’t know what TiVo model you have , but mine consumes more juice than my PowerBook.

The Pippin, eh? So now you’re going back to the Spindler days. But if you’re defending Scully, then I see exactly where you’re coming from. Some of us were actually there at the time. You apparently were not.

Good day.

Posted by Atomic Bomb in Mid-Atlantic on December 17, 2003 at 1:24 PM (PDT)

14

Converting one lossy algorithm compressed file such as AAC to another lossy compression algorithm based file such as MP3 will lose quality - yes it’s digital as in it is run on a digital computer, but that doesnt mean anything when you look at how audio compression algorithms work.

Atomic bomb - no offence but are you being paid by Apple - you certainly seem inordinately passionate about them!

Posted by dmeineck on December 18, 2003 at 4:42 AM (PDT)

15

It still amazes me that people still believe that you can take one file encoded using a lossy format, convert to another lossy format entirely and not lose any quality along the way.

I mean do you actually understand what it means to encode a track? Do you get that data will be lost? Its a fact. That’s the whole point.

The rest of your argument may be ok Atomic but to be honest its hard to see past the fact you refuse to acknowledge that is common sense.  AAC to MP3, no matter how you cut it, results in some loss.

Posted by SpideyPod on December 18, 2003 at 7:41 AM (PDT)

16

Atomic bomb - no offence but are you being paid by Apple - you certainly seem inordinately passionate about them!

Yeah what are you like Apple’s Official Attack Dog Mascot?

I use iPod because it works, not because it’s perfect. Someday something else will work better for me. That’s just the way it is.

Posted by Superguyflie on December 18, 2003 at 10:39 AM (PDT)

17

“...what are you like Apple’s Official Attack Dog Mascot?”

Actually, yes! Thanks for asking.

“Someday something else will work better for me.”

That’s so precious! Thanks for sharing.

Posted by Atomic Bomb in Mid-Atlantic on January 2, 2004 at 6:38 AM (PDT)

18

A-Bomb only posts negative comments based on someone else’s comments that are not 100% Pro-Apple.

This individual is biased, subjective, but above all ignorant.  Some of the comments are so dumb they are laughable.

Probably a anti-social peasant locked in a cellar somewhere.

Posted by Weeeee! on January 2, 2004 at 8:04 PM (PDT)

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