Posted by: nickgerlich | April 4, 2008

Number One With A Bullet

History is being made before our very eyes. It was only a few weeks ago that Apple’s iTunes ascended to the number two position in US music retailing. Yesterday, though, Apple announced that its online music shop is now the top retailer, having toppled mighty Wal-Mart.

iTunesTo some this may be no big deal, but in this humble E-Commerce Prof’s opinion, it is the last banana peel in the path of dinosaurs. Digital downloads in, CDs out.

I bet it was that one song I downloaded earlier in the week that tipped the scale. Sorry Sam Walton, I didn’s realize I was wielding a hammer in a mortuary.

Since the inception of iTunes five years ago, over 4 billion songs have been sold, all at about 30 cents profit apiece. Do the math. Steve Jobs must be singing.

But does this rapid rise to prominence spell immunity for the renegade Apple? Of course not. If anything, it means they now have a huge bullseye on their forehead, as evidenced by the other big announcement yesterday: MySpace Music is coming soon to a web browser near you. MySpace, owned by News Corp (parent of Fox News, among many other things), inked a deal with three major labels for music distribution. With over 110 million users, that’s a lot of ears and eyes.

More and more News Corp’s purchase of MySpace a few years ago for about $550 million seems almost like a bargain. Effectively they paid a mere $5 per user.

And to their credit, MySpace already has a built-in audience for music sales. Thousands of artists use MySpace pages to promote their craft, from fledgling indie acts all the way to the biggest stars. Being able to go the next step from the embedded music player to online music store not only makes sense, but it will probably also make lots of dollars.

Still, I don’t see iTunes being toppled any time soon. If anything, it is the oldline BAM CD retailers who will continue to feel the pinch of an enormous paradigm shift in music buying habits. Which means maybe I had better have that garage sale soon and try to unload those 1500 CDs before they are totally worthless. Can anyone say 8-track tape?

Dr “04-04-1968::We Remember” Gerlich


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