Apple iTunes now the ultimate music retailer

By Stan Beer
Sunday, 23 April 2006 10:25

Strategy

Imagine a retailer being able to dictate pricing policies to the world’s four largest wholesalers of a market segment. Well that’s the position Apple is now in with iTunes.

In the space of a couple of years, Apple has made its iTunes music portal the most powerful music retailer in the world. It is now in the position of being able to tell the likes of Universal, Warner, SonyBMG and EMI how much to charge for music so that it fits in with Apple’s retail strategy.

As their wholesale contracts come up for renewal, music companies have blustered, threatened,  cajoled and said there was no way that they would each agree to charging one flat wholesale rate for the supply of music to Apple so that it could maintain its own flat rate of 99c per track. There were even threats, according to some reports, that companies might stop supplying music to iTunes.

However, in the end, they all realised that iTunes is now the biggest and best online music retailer in the business and online is the future of music. So in the end they all gave in. Or should we say caved in?