Apple Makes You Pay For Piracy Without Making You Pay For Piracy

I was reading this bit of news about Apple’s newly launched iTunes Match – touted in the article as “more than just a cloud storage system for songs that fans buy legitimately through iTunes.” What really intrigued me was the value proposition and how Steve Jobs sold it: essentially, Apple has succeeded in making you pay for music piracy without making you pay for music piracy.

What do I mean by this?

Aside from offering to freely distribute new and old iTunes purchases on all of a user’s devices, the Apple impresario unveiled “iTunes Match,” a $25-a-year service starting this fall that will scan users’ devices and hard drives for music acquired in other ways, store it on distant computer servers and allow them to access it anywhere.

The service acknowledges a well-known fact — that most music on iPods, iPhones and iPads was ripped or swapped. Apple reached a deal that gives recording companies more than 70 percent of the new fees, addressing a dark secret that has crippled the music industry, and provides them with some economic payback.

Where Apple is able to identify and match songs from its 18 million-song database, it will transfer them into the user’s iCloud, a storage area housed on servers, including those at a massive new data center in North Carolina.

This is exactly the kind of creative strategic thinking that is lacking in so many businesses and brands today! No wonder we are faced with “more of the same” despite so many new brands coming to life these days. In fact, innovation is highly rewarding:

Industry observers said the new service could translate into big bucks for both Apple and the recording companies.

Apple has about 225 million credit card-backed accounts on iTunes. If only 10 percent signed up for the convenience of accessing music they hadn’t bought there, it could turn into more than $500 million a year in new revenue, said Jeff Price, CEO of TuneCore Inc., a company that helps independent artists sell their music on iTunes and other digital music outlets.

The best thing is that consumers get the sense that they’re paying for convenience, not for things they already own, he said.

“It allows for revenue to be made off of pirated music in a way that consumers don’t feel that’s what they’re paying for, and that’s what I find fascinating about it,” Price said.

Read the full article here (and also learn just how much “better” Apple always tries to make things).

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