ITunes music (Apple) store entered into the music market in 2003. However, prior to Apple 's entry into the digital world of music, the industry was fighting this new wave of music getting released to customers. However, with Apple 's release of its iPod digital-media player (2001) and adding the iTunes Store in 2003, they became the gatekeeper of digital downloads. Consequently, they promptly became supreme inside this new swim lane of the music industry. The key player that allow this was the iPod, MP3 players, and Apple 's own iTunes software which all interfaced, thus making them one of the industry most popular amongst technology favorites and consumers. However, the music companies did not take too kindly to this, they were at odds …show more content…
Apple used the concept of variable pricing upon their entry into the world of digital music, in their efforts to identify the structure of pricing and to implement pricing strategies which would promote downloadable data. Variable pricing affects the different cost of a merchandise based on the preferences of the manufacturers. While this varies from flat pricing model, where just one fixed price is utilized for those items that are alike. Take the content of purchasing songs, all cost one price and all movies will cost another. Apple captured the music industry with its entry of variable pricing through the iTunes music store. Nevertheless, this pricing tool (variable) was not welcome with open arms by music executives in the industry, but Apple demonstrated its pricing influence in delivering a product and winning over executives as a result of this pricing strategy and that its policy was here to stay.
Offering consumers more choices through the use of variable pricing is a great strategy model. Not only can consumers purchase songs they have never purchased through the Apple’s Music Store, Apple also control how they increase the price, which can tremendously affect its revenue. There are articles and reports that have been published on Apple and how they have over 70 percent control of this market base in the United States when it comes to downloading music. Having such a large market sector, as well as providing easy on the go music options to listen to,
Obviously, Apple is already the monster in tech industry, which leads the music downloads market. Amazon has only achieved the success in digital book downloads. Therefore, music downloading service is not the absolute advantage of this firm. That is why Amazon would likely to face to many challenges such as the stagnation of this service, which does not meet customer’s needs. Furthermore, the situation remains would make Amazon lose customers.
By making their products differentiated from the competition, Apple can establish their own price. Apple believes that people will pay some more money if they know that what they are buying is better and more reliable. That is also the reason why Apple sells the same products all over the world, making no selection or differentiation depending on where the market takes place. The high costs of Apple’s products are the one of the reasons why Apple Inc. preferred to be
The largest storage capacity for an iPod was 160 gigabytes as of March 2010. Users of the iPods use iTunes to hold their digital files and transfer those files to their iPods. iTunes was released on January 9, 2001 (Apple Inc., 2001). You can also connect to the iTunes Store via the Internet to purchase and download music, music videos, television shoes, iPod games, audiobooks, podcasts, movies, and ringtones. According to Steve Jobs (2010), “iTunes is pretty remarkable. People have downloaded 11.7b songs from iTunes. Over 450m TV episodes. 100m movies, 35m books.160m accounts with credit cards and 1-click. It's the number one online media store in the world." (Engadget, 2010). Steve Jobs announced the release of the iPad on January 27, 2010 at a press conference in San Francisco (Apple Inc., 2010). The iPad is a revolutionary device that can be use to browse the web, reading and sending e-mails, looking at photos, watching videos, listening to music, playing games, and reading e-books just to name a few of the capabilities (Apple Inc., 2010). Once the iPad was released in April 2010 it sold 3 million devices in 80 days in the US (Apple Inc., 2010)
Pricing is one of the important elements in within the marketing industry, it is also among one of the key elements of the marketing mix. This is a report briefing about a case study about Radiohead, an English rock band from Abingdon in Oxfordshire. The aim of this briefing report is to discuss, using the case study as a source, about pricing strategy in the music industry, which includes defining and talking about the online value chain of Radiohead, to compare online value chain and the traditional value chain, to critically analyze the online value chain’s impact on Radiohead pricing strategy and its implications for customers. Furthermore, the report will talk about ethical access to free online content and also will give a recommendation of how Radiohead’s next album pricing strategy would be.
3. Discuss other potential pricing policies that might increase the revenue from Music Store sales. Another way Apple’s iTunes Music Store might increase revenue is with product bundling pricing. According to Brickley (2015), “bundling products extract additional profits from consumers with heterogeneous product demands, bundling can be more profitable than selling the products separately” (Brickley, p.g 243). For example, iTunes can generate more sales by bundling soundtracks to movie video or even audio books to movie video. I like that movie Pitch Perfect 2 and I downloaded the movie to watch while flying last week. I spent $9.99, the Pitch Perfect 2 sound track is $6.99. ITunes could have bundle these two together for $13.99, increasing possible
Apple came back from near extinction to become one of the most revered technology companies in recent memory. They achieved this status by developing innovative design products and pushing the limits of their marketing prowess. Apple is known for their ability to listen to consumers and revolutionize market segments by providing modern design laden and feature rich alternatives to the target markets. They employ strategies that might contradict normal convention by keeping their prices high to build a brand image of prestige and promote their products through word of mouth. The impact on marketing is hugely noticeable by other companies following suit with store models
In 2000 the digital music was the next big thing in how consumers listen to music. The technological shift in music changed how the relationship is between the artists, recording companies, promoters and music stores on how they operate today. In the late 90’s and early 2000’s Peer-to-peer (P2P) networks allowed free exchange of music files with companies like Napster and Kazaa was a big step that allowed consumers to store large libraries of music. With the cost of hard drive space going down; it allowed for pocket-sized computers to store more information in a smaller space that open the door for apple to step in with the unveiling of the iPod and iTunes. These systems made it possible for storage and playback that gave consumers the
Since the iTunes music store was introduced on April 28, 2003, gross music sales have plummeted in the United States - from $11.8 billion in 2003 to $7.1 billion in 2012, according to the Recording Industry Association of America (Covert). Counterintuitively, during that time consumers were buying more music than ever. How is that possible? It 's because iTunes had made digital singles popular and was selling them cheap. This would change the music industry forever. In 2000, Americans bought 943 million CD albums (Covert), and digital sales didn’t even make a dent in comparison. But by 2007, those inexpensive singles overtook CDs by a wide margin, generating 819 million sales compared to just 500 million for the CD.
ITunes created the first legitimate digital music store that competed with piracy. On April 28, 2003, Apple released the iTunes store. The music industry had finally an application to earn money from the sale of digital music, after years of suffering from the power of Napster and piracy. Steve Jobs created a new link between the artist and the customer. Indeed, instead of having to go to a store and
Radiohead, one of the most popular and contemporary bands of this period, attempted a significant break from the industry standard of fixed price music. In 2007, Radiohead had planned release of its new album, “In Rainbows”, exclusively as a digital download on the band’s website, with an innovative pricing option of allowing its buyers to decide on how much they wanted to pay for the music. Radiohead’s “name-your-own price” pricing model for its new album generated an intense speculation about the future of recorded music industry. The key issues with Radiohead’s innovative distribution model and my views after an analysis of these issues are as follows:
When speaking economically, the digital music sector of the international music industry is undoubtably the most important sector in the industry. Within the last decade, music has seen cardinal changes in the way both major and independent labels distribute their products. An industry that once relied on Payola 's and mass distribution of physical records and CD 's now relies heavily on the power of the internet. The first instance of mass distribution of music through the internet was by the service Ritmoteca.com in 1998 [1]. Ritmoteca had a library of over 300,000 songs, offering individual songs for 99 cents each and albums for $9.99. After signing distribution deals with many major music labels such as Warner
The shifted new strategy of Apple was initiated by the release of iPod in 2001, followed by the iPhone in 2007, then by iPad in 2012. It was the iPod that brought significant growth in Apple. Initially, the iPod was just another MP3 but soon became the icon of the digital age due to its sleek design and user friendly interface. Moreover, iPod could sync with Windows as well as a Mac and offered accessory markets. Soon enough all the competitor in MP3 market had to face the challenge of consumers comparing their model with iPod. However, the greatest challenge that the competitors had to face was the introduction of iTunes store.
Jobs also changed the pricing strategy and focused on value-based pricing that provided customers with premium products at a premium price. Product pricing has specifically set Apple apart from its competitors. Apple believed that they could create demand for their products which would give the company “power over prices through product differentiation, innovative advertising, ensured brand loyalty, and hype around the launch of new products” (Nair, 2014).
Apple Computer redefined the portable digital music player market with its launch of the iPod digital music player. This began in January of 2001, when it introduced its jukebox software called iTunes. This software enabled Macintosh users to import songs from audio CD's converting them to MP3 format and storing them on the computer's hard drive. It later launched the iPod digital music player in October of 2001. The iPod was designed to synch to songs and playlists from iTunes via a Firewire cable connection. Once music was downloaded, the iPod provided for 10 hours of continuous play from its rechargeable lithium-polymer battery. Media is stored on iPod's internal hard disk (Day, 2005).
Apple users are at 4% computer market, failing to convert Windows PC users. BuyMusic. Com has a larger audience offering the same service.