Wednesday, July 02, 2003 1:08:58 AM
perhaps I should let you define what a price drop from 99c to 79c is -- if not the entry of pricing pressure in the digital music arena, then what is it? Sure, you can say it's only putting pressure on part of the market and the pressure is limited, but there's no denying what it is.
Also, maybe you're not aware that Rhapsody subscribers are paying not just for the right to pay 79c / song, but for unlimited streaming play. If you have guests over for a party, you'll have to buy your music to have iTunes play what you want. A Rhapsody subscriber just steams the playlist for the party.
So ... if you want to do the sort of analysis you've attempted, you'll need to go back and decide what portion of the $10 monthly fee gets allocated to the streaming library and what should be added to the cost of buying songs.
Obviously, the pressure from this price cut will land hardest on one particular part of the marketplace (heavy buyers and enthusiasts), but it is clearly pricing pressure entering the market. And I would suggest it's not the end of deflation in digital music, but only the beginning.
Plenty of margin left to squeeze. Apple won't just waltz in and pick up the Windows market. It's either going to have to fight and compete, or focus on a particular demographic niche. My guess is, when push comes to shove, Apple elects to take the latter route.
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