iTunes Associate Program?
Since we’ve been looking at the business models of so many streaming, peering and music industry start ups, I thought it would be worthwhile to review a few of the more interesting aspects of Apple’s iTunes Music Store.
There are a number of very creative flourishes to the on line music store. The allowance account is a clever touch, enouraging parents to avoid RIAA litigation by giving their kids a few bucks a month download songs.
But the twist I really liked was the iTunes Link Maker. This is an ingenious touch designed to tap into the peer rated aspect of P2P. Anyone with iTunes installed who clicks this link, will be taken to that song in the iTunes store. If you haven't downloaded iTunes, the link takes you to Apple's iTunes page. Sharp!
Tapping into the viral aspect of music sharing shows that Apple has seriosuly considered this business model. I suspect that the music store will be a significant part of Apple's model going forward. By morphing into a hybrid content/hardware company, they get out from under their limited legacy platform.
UPDATE: 10/21/03 2:37pm Apple's iTunes Music Store Team responds to my email query:
"Thanks for your note. AT THIS TIME, we have no plans to create a revenue-sharing affiliate program for the iTunes Music Store." (emphasis mine)
The iTunes Music Store Team
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1) they provide an infrastructure for direct positive consumption externalities, which create massive search economies. Long way of saying that people file-share to find other music they like, which is a very significant cost for listeners otherwise.
2) they provide an implicit form of *insurance* - a kind of guarantee that offsets the risk people face in buying music under moral hazard (a sketchy contract from the labels). I think this is the second big reason people file-share - it's a simple form of risk-sharing.
3) they blur the boundaries between the firm and it's user/consumer base. business models like this create winner-take-all markets.
I put up a longer piece yesterday which is related, arguing that music today is fundamentally about risk, and new business models that work must offer some kind of insurance to offset the risk.(see link: http://www.bubblegeneration.com/level2.cfm?resource=musicrisk1).
Posted by: Umair Haque | Oct 21, 2003 1:42:20 PM
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