Courses/Computer Science/CPSC 203/CPSC 203 2007Fall L04/CPSC 203 2007Fall L04 TermProjects/iTunes: Changing the Tune of Music

Group Members
Sydney Gilbert, Matthew Pounden, Nathan Bruner, Patrick Zajac, Ben Cole

Initial Project Statement
Since the emersion of internet downloading, iTunes has lead many of the changes in the distribution of music. We will examine how much freedom iTunes has given the consumer. What can Apple do to improve the freedom of consumers through iTunes?

Backround Information
-What is the history of iTunes?

-What is iTunes method of delivery?

Beneficial Consumer Freedoms
-Does iTunes provide an adequete amount of songs at a fast download speed?

-Is it cheap and convenient to download songs from Itunes?

Limits On Consumer Freedoms
-What happens if you lose your files?

-What limits do regional availability place on the consumer?

Proposed iTunes Improvements
-Institute a Universal Individual Purchase System: all songs would be available for purchase independent of albums.

-Eliminate Regional Encoding

-Institue a Rewards/Loyalty Program exclusive to iTunes

What is iTunes?
iTunes is a free digital media player available for both Windows and Mac operating systems. Originally released as software called SouldJam MP by Cassidy & Greene, it was later purchased by the Apple and given a new interface as well as the ability to burn CD's, it was also renamed iTunes. Originally iTunes was only supported by the Mac OS 9. Eventually Apple added support for Mac OS X and all Windows operating systems. Recently with the latest version of iTunes Apple stop support for the Windows 2000 or lower operating systems. iTunes was officially launched in 2001 alongside its MP3 player the iPod. The application enables users to store and organize their digital media, including music and videos. It also serves as an interface with the iPod and the iPhone, allowing the user to upload their music and videos to Apple's portable digital media players.

Source: http://en.wikipedia.org/wiki/ITunes



What is the iTunes Music Store?
On April 28th, 2003, Apple introduced the iTunes Music Store. Initially launching with over 200,000 songs, the iTunes Music Store has since enabled Apple to become the major leader and driving force in the digital distribution of media. Through the iTunes Store, Apple has developed a profitable means with which to legally distribute music, movies and television shows for download over the internet. Sources estimate that the company controls around 75% of digital music sales. Unfortunately, the profits enjoyed by Apple's digital media sales have created resentment in the music industry. Conflicts have emerged between Apple and companies such as Sony BGM Music Entertainment and Warner Music Group over the low price per song that Apple sells through its online store. As of July 31st, 2007 the iTunes music store has hit the milestone of 3 billion song sales, recently topping Target and Amazon to become the largest music retailer in the United States. iTunes has breathed new life into the music industry by developing a new and innovative business. With the introduction of the i-touch and the i-phone, both being wifi capable, it is now easier then ever to get your favorite songs directly to your portable music player and it continues to develop innovative and easier ways to get your favorite songs faster and easier.

Source: http://www.macworld.com/news/2003/04/28/musicstore/index.php

http://classwork.busadm.mu.edu/Economics%20Newspaper%20Articles/Microeconomics/Price%20Searching%20Markets/2005/2005%2008%2027%20Apple,%20Digital%20music's%20angel,%20earns%20record%20industry's%20scorn.pdf

http://macdailynews.com/index.php/weblog/comments/14425/

Does iTunes provide enough to the customer?
With today's music industry producing hundreds of songs weekly, a question arises about whether or not iTunes can keep up with the pace. It has been shown that iTunes can not only deliver what the customer wants but does so in high speed, giving the customer the fastest possible connection when downloading new songs.

"When you log on to Apple iTunes you can gain instant access to a choice of more than six million songs, 100,000 free podcasts, literally thousands of videos, TV shows, iPod games, and audiobooks. You will be able to download any song instantly for a very reasonable cost. Any songs you download are yours for keeps."

Source: http://www.download-itunes.co.uk/

The costs of downloading


Some would argue that iTunes is overpricing their customers, but if one were to look at the download price in relation to purchasing a full CD or movie, he would find it very convenient.

The prices are as follows:

Music Over 6 million songs. 99¢ each. Movies New and classic films. $9.99.                                                          TV Shows Thousands of shows at $1.99 an episode.

Podcasts 100,000 and counting. 100% free.

iPod Games $4.99 per game.

Source: http://www.adwarepro.net/itunes/

How the “Album-Only” restriction is getting out of hand
Itunes is definitely not perfect. To be quite frank we don’t think it ever will be. With something this big and widespread it’s nearly impossible to please everything and have all of your bases covered. One of the problems is that in some cases when you want just a couple of songs, you have to actually buy the whole album. Well, let me clarify here. You can buy a song by itself, but there are special cases that when they present themselves can be especially irritating. For example, iTunes released a new U2 album in 2006. It was a collection of 15 of their best songs plus 3 new tracks. Here in lies the problem. Let’s say that you only wanted the 3 new songs because you already have all of the other songs. Well, tough luck. The only way that iTunes let’s you get these three new songs is by purchasing the entire album. That means spending money on an entire album, of which you already have over ¾ of the songs. This as you can quite clearly see puts some restrictions on the customers. So this problem needs to be addressed, and quickly.

Source: http://bokardo.com/archives/why-itunes-needs-an-album-only-enema/

Lost your music?
Everybody's worried about what happens to your music when you lose it. Say your files get damaged, or your hard drive gets wiped, or you get a massive virus that eats your hardrive. The question is, what does iTunes do to help you get your music back? Well, not much unfortunately. In the event that you lose your entire library, iTunes does let you get the songs back. This is all very good, but it’s only a one-time exception. So if you lose it all again for some unlucky reason, tough luck. They are usually very helpful to their customers in dealing with this problem but keep in mind it is something that you have to go out of your way for. You have to contact them and inform them of your problem. They could make it a bit easier for the customers if they wanted to.

Source: http://thecontent.wordpress.com/2006/05/24/itunes-lets-people-re-download-all-your-music-once/

Regional problems
Regional restrictions on iTunes are another problem. If you are paying for your songs on a Canadian credit card, you are restricted to the Canadian region on iTunes. The problem here lies in the fact that each region has a different database of songs. Sometimes you can’t find a certain band or album on the Canadian region, therefore making it impossible for you to buy the song. However, other regions such as the U.S. might have this artist or album that you’re looking for, but you can’t purchase it because you’re in the wrong region. ITunes needs to make sure that every single region that’s available has the same amount of songs and the same artists and albums as every other region. That way it’s fair to all of the consumers and doesn’t make it advantageous to be from a particular region that has more of a selection of songs.

Improving Single Song Purchasing
The first proposal for improvements to iTunes would be to convert their system to allow for single song purchases on all songs. From an artists perspective it is understandable that blocking certain songs from individual purchase encourages the sales of the whole album ($9.99 versus $0.99) and thus is better for profit, however at is also driving away customers and encouraging illegal downloads of the inaccessible songs. As previously mentioned, if you already own other songs that are part of the album or are only interested in the one song it is a deterrent to have to re-purchase these songs for the one item you want. As our modern world is becoming increasingly customer/demand driven, it would be wise for both artists and iTunes alike to allow all material to be individually purchased. Another important issue in this is soundtrack albums; where quite often you have to purchase the entire album (instrumentals and all) to access songs limited only to the album. It would be in everyone’s best interest to offer the customer choice in purchase, at the risk of deterring customers from the pay system to the theft system. In instituting a universal individual purchase system iTunes would further democratize itself; making it more accessible and attractive to the modern day consumer. “Universal” meaning all songs would be available for purchase independent of albums.

Reviewing Regional Decoding
In continuation of the idea of democratizing and universalizing iTunes a necessary improvement would be to eliminate regional encoding. Regional encoding alienates the customer base and causes frustration among consumers; thus encouraging them to find alternative means of accessing the product they want. Whether that is purchasing the hard copy or illegally downloading it. A good example of this is television shows and movies; two high demand products which are unavailable to Canadian customers. Despite demand, iTunes has yet to produce a solution to overcome this issue leaving Canadian customers once again unsatisfied and searching for alternative means of obtaining the product. Available to Canadians on iTunes are; music, Pixar short films, podcasts, music videos, audiobooks, iPod games, and iTunes U. However, much of this product is also limited with some music artists, authors, podcast programs and albums unavailable for purchase in Canada. By alienating their customer base, iTunes becomes susceptible to competition or deterrence of customers. An improvement would be to create an equal system available to customers in every region that iTunes serves.

Installing A Rewards System
A final improvement that we would propose to iTunes is the installment of a rewards program. Stores such as make-up giant Sephora and Shoppers Drug Mart have created systems which reward customers for loyalty and purchases. These systems have helped to encourage sales and store loyalty as well as customer moral. In a world where customers have such a great variety in where they make their purchases it is important for companies to differentiate themselves and provide incentive for loyalty. One recent improvement that has been made, and that also relates to the idea of universalized individual purchase, is the “complete my album” which allows a $0.99 discount off of full album price for 6 months after purchasing one song off of the album. While still an improvement, it does not allow for complete customer freedom as songs still remain unavailable for individual purchase and not all albums are available for this. In Do Customer Loyalty Programs Really Work? by Grahame R. Dowling from the Australian Graduate School of Management it was claimed that because of loyalty and rewards programs; “the costs of serving customers are less, loyal customers are less price sensitive, they spend more with the company, and they pass on positive recommendations about their favorite brands/suppliers.” To institute this iTunes could install a tracking system into their accounts system which would reward a bonus (to be redeemed later) or a small discount when total albums are purchased. This improvement could also mend customer dissatisfaction when individual songs are not available for purchase, hence fixing two problems at once.