Apple and Free Music?

March 20, 2008

As we all know, the free craze has been forcing companies to rethink their business tactics. To my surprise, Apple is thinking about it as well. Apple + free music = Are you kidding me?! I guess this will be an add on to Dave’s post..

But of course there is a catch. To receive unlimited free access to the music library, customers have to be willing to pay more for the iPod and iPod Phone playing and digital media storing devices. Apple has to wake up and smell the coffee. Some of the company’s rivals are experimenting with new ways to distribute online music, even if that means giving it away. So as of now, “Apple is negotiating with record labels over a deal to offer a monthly music subscription for the iPhone, as well as an unlimited music bundle for both the iPod and iPhone” according to a cited unnamed music industry source.

As of right now, the iPod shuffle starts at $49, and the iPhones start at $399. No one is really sure as to how much prices with jump but one can only imagine. Oddly enough, approximately 10 percent of Apple’s revenues are made through iTunes. In 2007, iTunes made a 2.7 billion dollar profit for Apple. According to The Financial Times, “Apple sold $8.3 billion in iPods last year, an 8 percent increase over the year before.”

I think that it would be in Apple’s best interest to make free music available to customers without jacking up prices. Then again, Apple has become the world’s second largest music retailer in the U.S. To my amazement, Walt-Mart Stores Inc is the world’s largest music retailer.

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