What is Apple Thinking?

The Apple corporate slogan was, at one point, “Think Differently”. It may still be the current slogan. But if that’s the case, why didn’t they practice what they preach when they undertook their current iTunes Music Store business? As many of you know, Apple has reached an agreement with the Recording Industry Association of America (RIAA) to market music over the internet. Macintosh and iPod owners can download music from a list of something like 200,000 songs for the price of 99 cents per song.

Apple’s stock has actually risen over this news. And to be fair, the news reports that they have sold over 2 million songs since launching the service a few weeks ago. Apple also hopes that the Music Store will drive sales of their iPod devices.

In my mind, this is mostly bullshit. First off, 99 cents…let’s just call it a dollar…is still too much to pay for a song, particularly one that only exists in a digital format. When you go to the record store and buy a CD or vinyl 12 inch, you are still purchasing something that’s physically tangible. Downloading songs in a digital format is an intangible purchase. All that physically happens is some electrons get rearranged in the memory media of your iPod. The cost model is entirely different from a physical music purchase, so the cost of the product should reflect that. A buck a song is as much of a rip-off as buying a CD for $15 from your local Virgin Megastore.

I am not suggesting that music be given away for free and that musical artists starve. I am fervently hoping that the continuation of free music downloads via internet file-sharing (some call this theft…I do not) forces the recorded music industry to rethink their business model, which is mostly based on abusing the consumer by overcharging for their products. The new Apple Music Store is merely business as usual. To top it all off, the iPod is overpriced as well, but that’s always the case with Apple stuff.

But what’s even more disturbing to me is that it signals, once again, that Apple’s leadership is looking to move away from what they do best (creating cool hardware and the operating systems that run them) to fool around with selling software, only this time the software is pre-recorded music.

I’m not always pessimistic, but I don’t see this one working out they way they hope it will. Time will tell, but I stand firm in my assertion that a buck a song for digital downloads is too much for too little.

More later…
Paul