Since we’ve been looking at the business models of so many streaming, peering and music industry start ups, I thought it would be worthwhile to review a few of the more interesting aspects of Apple’s iTunes Music Store.

There are a number of very creative flourishes to the on line music store. The allowance account is a clever touch, enouraging parents to avoid RIAA litigation by giving their kids a few bucks a month download songs.

But the twist I really liked was the iTunes Link Maker. This is an ingenious touch designed to tap into the peer rated aspect of P2P. Anyone with iTunes installed who clicks this link, will be taken to that song in the iTunes store. If you haven’t downloaded iTunes, the link takes you to Apple’s iTunes page. Sharp!

Here’s an example: Check out Jet’s Are You Gonna Be My Girl:    

I smell an “iTune Music Store” associates program coming on. I wonder if Apple can pull off the level of customer relationship that Amazon has done so well.

Tapping into the viral aspect of music sharing shows that Apple has seriosuly considered this business model. I suspect that the music store will be a significant part of Apple’s model going forward. By morphing into a hybrid content/hardware company, they get out from under their limited legacy platform.

Of course, you cannot really discuss this intelligently until you’ve downloaded the program:    

UPDATE: 10/21/03 2:37pm Apple’s iTunes Music Store Team responds to my email query:

“Thanks for your note. AT THIS TIME, we have no plans to create a revenue-sharing affiliate program for the iTunes Music Store.” (emphasis mine)

Best,

The iTunes Music Store Team

Category: Finance, Music

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4 Responses to “iTunes Associate Program?”

  1. Umair Haque says:

    1) they provide an infrastructure for direct positive consumption externalities, which create massive search economies. Long way of saying that people file-share to find other music they like, which is a very significant cost for listeners otherwise.

    2) they provide an implicit form of *insurance* – a kind of guarantee that offsets the risk people face in buying music under moral hazard (a sketchy contract from the labels). I think this is the second big reason people file-share – it’s a simple form of risk-sharing.

    3) they blur the boundaries between the firm and it’s user/consumer base. business models like this create winner-take-all markets.

    I put up a longer piece yesterday which is related, arguing that music today is fundamentally about risk, and new business models that work must offer some kind of insurance to offset the risk.(see link: http://www.bubblegeneration.com/level2.cfm?resource=musicrisk1).

  2. setmajer says:

    Funny…when I click the ‘iTunes’ link in Safari I get a dialog saying ‘Cannot go to [url] because Mac OS X does not recognize links that begin with “itms”‘.

  3. Adam says:

    An associate linkage from iTunes Radio to the Music Store would be very nice. Hear a song you like on the radio, tag it (in some way) so you can check it/buy it at the store later. No reason why that could not extend to any digital radio (or DVD sound track, TV program, TV advert, etc.), but simpler and immediately sensible to make the connection between iTunes Radio and the Music Store.

  4. I remember at a Mac World San Francisco 1998 the editor of Mac World saying that Apple had lost the desktop war, but the network war was up for grabs. Well, Apple didn’t win that one either. But now there is a war over entertainment, with Apple’s iTunes/iPod in one corner and Microsoft’s WinMedia in the other. And for the first time in my memory, nothing Microsoft seems to be doing will be, at least in my opinion, enough to stave off Apple from dominating. Those of us who have used iTunes and its music store, or as most just call it, iTMS, Apple’s music entertainment offering is unbeatable. And it’s only going to improve. Now that iTMS is available to Windows users, I’ll go ahead and predict that Apple will win the entertainment war. And I doubt music is all that Jobs & Co. are shooting for. An Associates program is one logical step. But what about watching music videos on your iPod, or in iTunes, while listening to your music? And eventually movies.