PriceSCAN Blog

Now the odd thing about this strategy is that Apple doesn't own the content – they license those tunes from the recording companies, and as a result make very little from iTunes downloads. Perhaps Jobs hopes the iPod audience will become so large he'll gain leverage on the music houses and be able to lower those licensing fees enough to achieve meaningful earnings from downloads. But for the moment, he's making his green on the iPods themselves. Of course there's some competition out there, notably from some very slick MP3 players like the iRiver iFP-799T, which goes for around $220 and is a lot easier to find right now.

For now it doesn’t matter. Downloads are a small fraction of music sales as compared to CDs (meaning, I suspect, that most iPods are filled with CD rips, not downloads), so the recording industry has limited interest in forcing Apple to share its standard or in putting music out with some universal DRM method. But if people start downloading enough for the industry to care, they may not want Apple to be the only store on the block. In the long run, will consumer infatuation with the elegance of Apple's design really mean they'll submit to the closed world Jobs seems to dream of? Will so many people own iPods that even the content providers will have to sell through Apple on Cupertino's terms? Or, as with the PC back in the day, will Jobs' decision not to let others use his DRM scheme mean a more open standard will take hold, perhaps this time backed by a recording industry which can kill the music at Apple.