i-Tunes
The iTunes Music Store from Apple Computer allows Mac and PC users to legally discover, purchase and download music online. It features more than one million songs from the major music companies and 600 independent record labels, over 9,000 audiobooks, gift certificates and exclusive music not found anywhere else online. Since its inception, Apple customers have purchased and downloaded more than 250 million songs from the iTunes Music Store. iTunes users are now downloading one and a quarter million songs per day, which is an annual run rate of almost half a billion songs per year. The iTunes Music Store is now available in fifteen countries, which together represent more than 70 percent of the global music market. [Source: Apple Computer, Inc., January 2005]

It includes:
· Social networking (publishing a website, staying in touch, sharing photos, exchanging files, groups forming, message boarding, making announcements and calendars)
· Freemiun model (free of charge creating and using of blogs, email boxes and websites)

1. How does the iTunes business model work? How is it different from traditional models for the music industry?

Revenue sources:
· Songs selling - 99¢
· Albums selling - $9.99 per album in most cases
· Providing iTunes Plus songs that feature higher quality, 256 kbps AAC encoding — twice the standard bit rate — and no DRM (digital rights management) - 30¢ more per song
· Advertising (mainly singers)

What is different in iTunes technology from traditional models for the music industry (benefits for the customer):

- Shopping for exactly the music you want
- One song at a time, or by album.
- Unlimited access (24 hours a day, 7 days a week) to more than 250 mln songs
- Thanks to the “Complete My Album” feature, when you buy a single from the iTunes store, you get a 99¢ credit for each previously purchased song from that album.
- Availability to choose iTunes Plus songs that feature higher quality, 256 kbps AAC encoding — twice the standard bit rate — and no DRM (digital rights management). That means you can play it on iPod and other digital music players and an unlimited number of computers
- Availability to listen to a 30-second preview of any song on the iTunes Store before you buy
- Availability to get personalized recommendations according to past song purchases
- Downloading of a new free single every week
- Learning about new releases and exclusives by subscribing to the New Music Tuesdays email and podcast
- Viewing celebrity playlists for a glimpse at your favorite stars’ taste in music
- Posting your own reviews and ratings, or reading what other music fans have to say about songs, albums, and music videos. As part of a worldwide community numbering in the tens of millions, iTunes customers keep you up to speed on everything they download
-Easy to find what you need (useful classification by genre and other criteria)

2. How does the iTunes model compare with other Internet music services, such as Listen.com?

What is Listen.com
Listen.com is a leading online music company that develops and distributes RHAPSODY, a digital music service. Launched in 2001, RHAPSODY gives consumers unlimited access to the world's largest library of music via the PC and network-connected home entertainment components today and on wireless devices in the future. RHAPSODY combines on-demand music, CD burning, customized and professionally programmed Internet radio, and engaging music information and editorial recommendations. In August 2003, Listen.com became a subsidiary of RealNetworks, Inc., the global leader in digital media services and software for consumers and businesses. [Source: Listen.com]

It includes:
· Social networking
· Freemium model (free 14-days trial; if you're not ready for a membership, you can still listen to 25 full-length tracks each month and have access to 25 Rhapsody Channels. It's a great way to see what Rhapsody is all about. You can listen directly via your web broswer or download Rhapsody Software for even more features)

2.1 What is the Listen.com business model(s)?

Revenue sources:
· Membership monthly charge ($12.99 for Rhapsody Unlimited, $14.99 for Rhapsody To Go) – allows to listen to the songs (without owning them)
· Fee for downloading tracks and burning CD with Rhapsody ($; 10% discount for the members)
· Advertising – singers, technique (mobile phones), etc. (http://www.realnetworksadvertising.com/terms.htm)
· Selling of adaptable MP3 players (Sansa Rapsody) ($140-250)
· Related products (headphones, transmitters, etc.) (60-130$)

What is the Sansa Rhapsody? How is it different from other MP3 players?
Will Rhapsody work with iPod?

The Sansa Rhapsody offers the optimum Rhapsody To Go experience. Like other Rhapsody-compatible MP3 players, it allows you to drag and drop tracks from the vast Rhapsody library so you can listen on the go. However, only the Sansa Rhapsody gives you Rhapsody Channels with a non-stop mix of songs based on your taste in music that automatically refreshes every time you connect to your PC. The Sansa Rhapsody plays MP3s, video clips, and photos, features a rechargeable Lithium Ion battery with up to 20 hours battery life, and a digital FM tuner and integrated voice recorder with built in microphone.

iPods are not compatible with the Rhapsody To Go subscription service. You may, however, use the iPod to play tracks purchased on Rhapsody. Or view the MP3 players compatible with Rhapsody To Go

Main differences between iTunes and Rhapsody models:
· Different charging models (iTunes – for separate downloading, Rhapsody – monthly subscription payment)
· Clients (iTunes – more than 15 countries, Rhapsody – for USA only)
· Number of songs available (iTunes - 250 mln, Rhapsody – 3 mln)


3. Can the iTunes model survive in an environment where illegal music downloading runs rampant?

The new technologies in music industry are definitely harmful for the music producers and labels-owning organizations. We can see that less and less people are willing to buy CD any more. First of all, it is more reasonable to buy single song you like rather that the whole album (electronic snacking) and second thing is that a lot of sites even don’t charge for providing the music – clients have access to huge amount of music (without the right to download it), like on the site … , for example. So, why to pay, if you can get it free?! The sites like that make its profit by advertising on the site.
Types of conditions:
Selling music (either single songs or albums) – iTunes,
Monthly subscription to the site – listening music without the right to download it (with or without transferring the property right) – Rhapsody,
Providing the music free of charge (with or without downloading) –

This last category of sites are the most harmful for the music industry.
Now the labels start more and more attacking the sites like that, trying to get them to justice for not respecting the property rights for music. But as the laws are still not very strong in the virtual world, it is rather problematic to struggle with the companies that don’t follow the rules. The majority of sites like that try to run away from justice by establishing the juridical company in the remote countries (often in the Middle-East), where no international or national laws are followed and hence, making it very difficult for the label companies to attack them.

Attitude of the users towards music copirighting