Strategically Apple is at a crossroads… they now exist in an environment where their brand could happily house consumer electronics, software, content interfaces and content itself. Few brands can do that. And they ‘get’ the digital domain. The emerging medium of the future. As a consultant for Sony told me recently, Apple are out Sony-ing Sony right now. Even though they’re small (still only 6m ipods wordwide) they’re seen as an emerging threat in the content & electronics industry.

Core to this is iTMS. It will evolve into a distribution channel for many types of content to many consumer touchpoints. So Apple needs the labels on their side right now to ensure iTMS dominance but then again the lables would be foolish to piss of Apple if their distribution strategy takes off. It absolutley makes sense that Apple eventually launch their own production facilities – music label, movies (Pixar) – using product launches to promote emerging talent (as they do now) but own the talent, promote and distibute the talent. It’s the SONY model.

I imagine the announcement next week will go someway to re-enforcing this vision to the public, shareholders and competition. A range of portable entertainement/communication devices would make perfect sense. iTMS in the palm of your hand 24/7 anyone?

what if they’re going live with a Movie store along the same lines as teh iTMS and at the same time launching a video iPod and a set top box

It’s about time they made more of the Mac being a home entertainment centre right at the heart of the digital hub

If the iTMS business model expands, maybe Apple have greater leverage with the big record companies who become less important as suppliers as they are only supplying music.

Furthermore it is an established fact that the iPod is capable of playing music from other services only apple doesn’t allow it – they may decide that increasing sales of iPods at the expense of the iTMS being the only supplier of music for iPods is a an acceptable compromise if the record companies don’t pay ball

I have to agree with Chris here and think it is Apple that is in a position of strength here. It is certainly true that if people cannot procure a track legally, they will just download it.

This is certainly the case currently for more specialised music, e.g. that issued only in the Japanese market. In Britain (where we pay $16-$30 for a CD anyway), Japanese import CDs can often cost $40-$50. A gratis MP3 download is thus the obvious choice for all but the most dedicated of collectors.

The iPod/iTunes platform is a powerful one indeed. It is, however, crucial that Apple establishes itself in some way in the forthcoming mobile market – either through the rumoured iTunes phone or through licensing the FairPlay DRM. In the long run, I think the latter would make far more sense, because even if your pretty-on-the-outside-but-oh-so-ugly-on-the-inside Motorola phone plays FairPlay files, the beauty/simplicity of the iPod will sell for a fair old while yet.

Nick: I remain mindful of the fact that iTunes + iPod were an already-successful music platform before Apple started music online. If Apple fails to renew its contracts with the record labels, once-convereted, now-angered music fans would likely have plenty of incentives to happily resume illegally obtaining and sharing MP3 files.

iPods do play all music formats, and iTunes is second to none, on either Mac or PC, when it comes to conveniently manage all that music. Remember the old Apple Slogans “Rip. Mix. Burn”. They remain valid.

Further, the last thing the RIAA needs is for another “Napster-Kid” to write a very nice “plug-in” for iTunes that further facilitates illegal music sharing. We’ve seen a couple of those emerge in the past, leveraging Rendez-Vous technology, turning iTunes’ “streaming the neighbor’s music” concept into “downloading their tunes”.

From what I remember reading in the past, selling songs off of its store isn’t that much of a moneymaker for Apple, in light of the razor-thin margins they’re operating on with the RIAA, and the bandwidth and computing resource costs of day-to-day operations of the online store. Sheer volume may have changed that math though.

I thought Apple mainly benefited from sales of iPod devices (or whatever they come-up with next), and their slowly becoming a household name.

There are good chances the music industry has more to lose from failed negotiations than Apple does.

If you would like to talk more about this…email me at goodleads@gmail.com or I have yet to use google talk I wouldn’t mine trying that out either….