In spite of the apparent threat the proliferation of DRM-free music sales may pose to Apple’s iTunes+iPod ecosystem, expanded sales of device-agnostic MP3s may actually boost iPod sales, according to an LA Times article. This is due to the fact that while Apple does see a small profit from the sale of music on iTunes, it sees a much larger profit from the sale of iPods.
“Certainly the ability to buy music in more places helps Apple,” Pali Research analyst Richard Greenfield said. “They make very little money on iTunes transactions, and they make a good amount of money on iPod transactions.” The article argues that the expansion of the digital music market should mean increased demand for digital music players, a category which the iPod dominates.
“ITunes was developed to promote iPod hardware sales,” said Susan Kevorkian, an analyst at research firm IDC. “The introduction of services that offer digital music to the installed base of iPod users will help drive more iPod sales.”.