Competition is a Good Thing

Somewhat ironic to think that the biggest threat to the economics of music sales isn’t coming from illegal downloading but rather from the dominance of iTunes and inevitable commoditization of pricing that comes from competitors who have to resort to scorched earth pricing in order to establish a market position in the absence of compelling download services and portable players.

Imagine where the music business would be if they had embraced digital music and portable players early on with the goal of making them cheap, convenient and ubiquitous.

iTunes will do to online video downloads what they did to music and as a result consumers will benefit from lower prices across the board. Personally, I am enjoying watching this happen and have no sympathy for an industry that thought they could roll back the clock to a time when distribution control gave them punitive pricing power.

BTW, that I am posting this during Macworld is only a coincidence.

Yet Apple has so far found it easy to dismiss the music companies – sometimes rather rudely – because Microsoft, Sony and other competitors have failed to cut into iTunes’ roughly 80 per cent share of the market. Some download stores have been plagued by clumsy user-interfaces. Monthly subscription services win praise from executives but have had a hard time convincing all but a small core of die-hard music fans to sign up.

[From FT.com / Comment & analysis / Analysis – Bruised music majors back iTunes rival]