|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | |
JULY 6, 2004
By Eric Wahlgren Europe Hears Apple's Song [Page 2 of 2] NO SUDDEN LIFTOFF. Meantime, Napster's parent, Roxio (ROXI ), is investing heavily in the service, Mulligan says. Napster, he adds, is positioning itself as a destination for music sophisticates who can listen to whatever they want in return for a monthly subscription fee. On the horizon is also new and possibly more formidable competition to worry about. Sony (SNE ) is expected to soon jump into Europe's online music action. And later in the year, Richard Branson's Virgin is planning to hang its digital-music shingle in Europe. "Virgin has always been very customer-savvy," Wolf says. "You can't rule them out." Europe's market for digital music is still puny, only about $10 million, according to Jupiter Research. In the U.S., sales of downloaded music are expected to top $150 million this year. Estimates of how fast Europe's digital-music biz will grow vary, but "the online market in Europe is not suddenly going to lift off," says Mulligan. HIGHER COSTS. For one, a smaller percentage of European households than in the U.S. have the fast broadband connections required to easily download music. Also, the illegal swapping of music files remains widespread in Europe. Like their U.S. counterparts, many young Europeans don't want to pay for music, Mulligan says. And so far, the recording industry's music-piracy fighter in Europe, the IFPI or International Federation of the Phonographic Industries, has been more laissez-faire about these scofflaws. Says Mulligan: "The IFPI is just starting to ramp up its activities." Also, iTMS is a somewhat late arrival to the European scene and needs to catch up to its competitors in striking key deals with Europe's many independent labels for distributing music by local artists. Some 40% of the music sold in France is produced by domestic artists, Mulligan says. And a large proportion of those artists are represented by independent labels. "The biggest issue is getting local content," Wolf says. Apple didn't respond to calls seeking comment. Another hurdle: iTMS's costs are likely to be higher in Europe, suggesting that it will have to sell more songs than in the U.S. to make money, analysts say. To launch in Europe, Apple had to set up three separate sites because music companies required iTunes to get separate licenses to do business in different countries. "Any time your fixed costs are higher, your volume has to grow higher to break even," Leigh says. "I think they will get there. It just may take longer." COOLER THAN iPOD? In the longer term, Apple in Europe, as in the U.S., is likely to face more pressure to make its iPod compatible with downloads from services other than just iTMS. Down the road, another outfit could come out with a digital music player that rivals iPod's features and cool factor, potentially diminishing the attraction of iTMS. "There is going to be pressure for interoperability," Wolf says. It's far too early to tell whether iTMS will someday dominate Europe as it does the U.S. But for now, it's fair to say that the service is off to a good start.
 Wahlgren writes for BusinessWeek Online in Paris Edited by Beth Belton
BW MALL
SPONSORED LINKS
Buy a link now!Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
