iTunes and I

The conventional wisdom among market researchers regarding the iPod and iTunes is that initially iTunes drove people to iPods but over time the situation reversed. Now the nearly ubiquitous iPod drives people to iTunes. This flock to iTunes is giving Apple tremendous leverage with the record companies. And that power is about to double...

About 22 million iPods have been sold since being released just before Christmas in 2001. It's estimated that Apple will sell another 32 million in fiscal 2006, with more than two thirds of those sales coming this Christmas season. That means Apple will sell as many iPods in next 3 months as they have in the past 4 years. With more than double the iPod users comes double the number of people using iTunes (because it is the only software made to work with the iPod.

Right now all songs costs 99 cents on iTunes, but the record execs want variable pricing in iTunes. One of the five big labels (Warner Brothers) has even threatened to not sign another contract with iTunes. Are they prepared to leave over 50 million iPod users?

Steve Jobs, CEO of Apple and fire behind the iPod and Apple's resurgance for that matter, now wields tremendous power. Its a good thing he's such a music lover and at least right now his companies interests are aligned almost perfectly with the music consumers interests, but it's scary to know one man has all that power.

Plus, he's a genius.