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MP3 Market Approaching Critical Mass
An anonymous reader writes "Led by the Apple iPod, Jupiter Research says that sales of DAPs are reaching a point where it will ignite an industry of support products and services. According to Jupiter analyst David Card
'Historically, any new device or medium that reaches a U.S. household penetration of 15 percent to 20 percent creates a critical mass of customers for other products and services.' The iPod already has a slew of peripherals out there and this is particularly good news for the paid download services like iTunes, especially with Apple announcing Wednesday they sold another 5.3 million iPods last quarter."
...another News.com article on this topic:
Music moguls trumped by Steve Jobs?
When Apple Computer CEO Steve Jobs walked into the suites of top record label executives in 2002, iTunes software in hand, he was welcomed as a trailblazer to a digital music future.
Now, nearly two years after Apple's iTunes launch, record executives have become worried that they have inadvertently ceded too much power over their industry to this charismatic computer executive.
Frustrated at what they see as Jobs' intransigence on song pricing and other issues, some record executives are now turning their hopes toward other partners, particularly mobile phone carriers eager to get into the business of selling music. They see this new focus as a way to broaden the digital music business, and lessen Apple's dominance over their market in the process.
[...]
For example, Apple wants to sell all its songs for 99 cents each, a single price point that's easy for consumers to understand. But the record labels have pressed for the ability to vary prices to maximize their own sales. They want to sell older titles at a discount--like the $9.99 CDs available in most record stores--and charge more for popular songs to take advantage of market demand.
Full story
I understand that the iPod craze has been great for Apple, but I wonder how many people actually buy those accessories that are available (such as the voice recorder and FM transmitter). It's one thing to pay a premium for a high-quality Apple iPod; it's another thing to pay $30 for a an add-on - for features that come standard with other MP3 devices!
When I can get one of these in the US for less than $100, then I will agree. Until then, there is more mass to be had before criticality.
I'm sure this was a report sponsored in part by Apple in an attempt to boos the stock price back up soon after Apple's stock got hammered by the Street because there are widespread concerns about what Apple does "next". i.e., is the Ipod a one-hit wonder?
I'm sure the Apple zealots will mod this into oblivion.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
I give credit to iPods/Apple for succeeding in the most harsh econmical climate. High unemployment rate, .com market crash, real estate prices are ludicrous.... yet it managed to succeed while being totally overpriced.
Steve Jobs was talking about the "iPod economy" in January at the MacWorld Keynote.
It's not "will ignite," it's "is already here."
Good job, Slashdot, keep up the irrelevance.
If MP3 players are rapidly approaching critical mass, how long will it take before car stereos will feature minijack inputs as standard?
Considering the cost of including one versus the cost of replacing the deck so that you can plug your MP3 player in, why wouldn't more manufacturers be doing this? I know a few are, but I'm in the market for a new car and the deck that comes with it figures into the real cost. Replacing the stock stereo with one that will take input from my MP3 player should be unneccessary if these things are really at critical mass.
Synergy is your friend
I think it's funny that the respective industries think that $3-$4 is fair for a low quality rendition of a music clip played through a high-pitch piezo speaker. I'll stick with the stock tones, thanks. Same for "wallpapers", a postage stamp sized image of 1k pixels is not worth $3-$4. I remember downloading my own using the phone's internet service, even making my own, put it on my web site and downloading to the phone. If either were half a dollar, then it might be a worthwhile package as a whole.
They were talking about this on NPR yesterday, but instead of "critical mass" they called it market saturation.
Thats why Apple's stock took a dump yesterday
Problem for apple is that everyone already has an ipod and it will be tough to find new people to sell to.
Top 10 Reasons To Procrastinate
10.
Everybody I know seems to completely hate the add-ons to their phones.
Cameras are no biggie to most people one way or the other, but otherwise it's a parade of dissatisfaction:
- Ringtones and wallpapers are way too expensive.
- Phone internet access is a pain in the ass, and also overpriced.
- Text messaging should be damn near free, often costs a bundle.
- Voice mail services are often a hassle to navigate.
- Speakerphones can sometimes only be turned on after the call has begun, making it slightly less useful.
- Damn near every phone has it's own custom charger, it's own custom peripheral connector, etc., so every time you change phones you gotta buy everything for it all over again.
It seems to me that there's a HUGE business opportunity here. If just one company would come along to offer a truly standardized GSM phone with one fair price for all services, and totally open access to data services of any kind, they would completely own the US market within two years (the time it would take some of us for our currect contracts to expire.)
As it is, my current plan with T-Mobile is cheap enough, and the Motorola phone I bought for it is okay for most things... but give me the chance to jump ship to somebody who doesn't outright rob their customers over trivial things like ringtones, and I'm there!
Information wants to be anthropomorphized.
They have little competition in their iPod space... so they sell at a premium and can walk away rich.
If they were to start making accessories, they'd be treding on ground either already successful for other makers (and therefore a smaller market) or an unsafe venture into the unknown.
Notice they do have a couple accessories... like the iPod Photo's new camera jack. But this is something they hinted at early on (giving other companies the hint: "We're Apple, With us making this product first, you won't stand a chance"), and now they have no competition for it.
Despite appearing to be a trend setter and a risk taker... they really do play it as safe as possible. iTMS was made only after years of research and watching the market... AND having a successful product to go with it. The iPod itself was just a luxury novelty item when it first came out... and Apple didn't care less if it didn't sell millions. Apple focused on what got it attention. OS X got it plenty of attention in those early iPod years. The G4 Cube was a publicity stunt. And if the iPod died just as hard as the Cube... they'd let it go and focus where they knew they could profit. They were one quarter the company they are now... and played their cards close to their chest... saving aces only for the Perfect moment... and spending tons on market research to make SURE.
Just drop acid, already, and invent something better... or quit your whining.
Errr.... no. In many industries, having a range of prices, especially that vary with time, allows not only for greater profits, but for larger numbers of satisfied customers. The math is a bit more involuted than a simple supply/demand scissors curve, because you also have to factor in substitutibility, price elasticity, and information costs, and time value of money, but in many situations this allows for a good thing all around.
Sure, but Apple and Steve also realize when it's time to change strategy, and it's not clear that they're being unneccessarily stubborn on this.
In it's infancy, you don't want a service to be overly complicated to scare off potential users. Once that critical mass takes hold and the service begins to displace others, it can then afford to offer more choices.
Apple in its rebuilding phases under Steve has always been about simplification - 4 product lines, Mac-only, what have you. Once those reach a given point, you expand and differentiate.
I can't imagine that the $.99 only policy is a forever deal with Apple, but consider when this started, the up-front costs of buliding the iTMS, aiming for 1M songs in the library, with NO customers, nor a sense of what could realistically be expected looked like a huge money sink for Apple. So it was kept as simple as possible - one format, one bitrate, one pricing model, no pay-for-play, take it or leave it. It minimizes Apple's expense exposure and keeps the system from being overwhelming to customers.
Roll ahead a few years to when iTMS is pushing 100M songs every other month (right about now) and you have a situation where enough revenue is coming through to support variable pricing, volume discount, frequent buyer programs, or whatever.
Of course, the labels aren't going to report if Apple is planning these things, they want to jack prices up to $1.49 per song for the hot singles and recover Apple's $.09 in the process. After all, Apple's already spent the money to create the market which they don't need to reinvest.
So I don't buy for a minute that Apple isn't planning for that day that songs are variably priced, but I think the labels are downplaying the challenges of offering $0.49 singles and still having enough money left over to cover the transaction costs. Of course, for old songs, they're not paying the artists any more, so they *could* lower their price to Apple, but I doubt they'll volunteer that.