Does Apple Need To License Fairplay?

I don’t mean this question in the context of, ‘if Apple doesn’t license then they will die’. I mean, does Apple need to license Fairplay, or is there another way? The argument goes that, if Apple keeps itself in a corner refusing to play with other vendors, with time they will inevitably shed market share until they are a bit player just as happened with the iPod’s big brother the Mac.

But the idea that came to me is, why can’t they repeat the process they went through with the ‘Apple iPod from HP’, but include their own software as well. The idea here is to allow companies like Dixons, Tesco etc to have their own storefront which open in iTunes, and then pay them the amount they pay out to affiliates for each song sold through ‘their’ store. The companies could also have their own brand iPods for sale, giving them a complete digital music solution with almost no financial risk.

How this could be implemented is an interesting question. One possibility is to allow the already web based iTMS run from within the relevant companies websites, rather than tie it to iTunes. Some might say this is a bad idea because it would reduce the number of iTunes downloads (and therefore Quicktime). This is not the case however, because as soon as someone bought a song they would have to download it anyway, and to take the song with them again, they would need iTunes for their iPod.

A second option is to have the iTMS remain within iTunes itself, but allow a certain amount of branding to occur on the software itself. For example when you click on iTMS you could get a cover screen saying the “iTunes Music Store from xxxxxx”. Then click through into to store. You could even cede some of the design process of the store itself to the managing company.

A third option is the give complete control of the store to the company running it, with the exception that the links to the music being downloaded are to Apple’s server farms. I guess this is very similar to how many of the stores popping up today are being built on Loudeye, or OD2 or whatever its called.

I don’t really see a downside for Apple in any of these circumstances, especially the latter one. If someone comes up with a naff looking design from within iTunes it could reflect badly on the slick image built by Apple. But if they are running a store which has no brand association with Apple (apart from the iPod, which Apple would remain control of), then surely this could only be good for Apple.

I would ramble for a bit, but it was just announced that London just won the Olympic bid, so I’m going to go and celebrate now. And I would like to give a big Churchill style V sign to Chirac, and let him know that the best country won. The French are an ignorant country who lost the bid because of their own arrogance. Commiserations to all the other countries who lost, especially the NY bid.

Comments

[Stormy]

OMG Tim, didn't realise how proper techie you were.. but ultimately impressed by the infiltration of classic Tim sarcasm throughout most of this website.. (not that I read every entry.. that would make ME a techie wouldn't it?)

Oh, and that pic you have up is truly representative.

and...

what 'killer' tan???

[Johnathan]

I think Apple doesn't do the above mentioned items because it would dilute their brand, and, arguably, cheapen it.
If they ever did this, it would be with very select partners, carefully chosen, and would probably consist of a small logo or text mention somewhere on the front page of the store.

What I would like better is this: Why not let 3rd party companies (such as Tesco) cut deals with record labels to offer exclusive downloads through iTMS? Tesco could offer anyone who made a purchase over a certain amount a free download of a new single. Apple could integrate this by providing a place to enter one's frequent shopper card number. Various stores almost all have these, and if they don't, they could simply print a claim code directly on the receipt.
Target, here in the US, has a somewhat similar offer already. With the purchase of any CD from a certain rack of "classics" or "all time hits" - something like that - there is a scratch-off card entitling the holder to a new music sampler album download at iTunes (not an album of choice, but pre-selected).
I think that is the way that retailers can partner to enhance all the brands involved without unnecessary dilution or brand saturation.

[Doug Petrosky]

Why? What do you get and what do you loose?

The HP iPod gives an in for apple to those people who just can't stomach buying from Apple and in turn gets iTunes and Quicktime pre-loaded onto a bunch of systems. So I see the win here. But how many times do you need to duplicate this?

Ok, you could make the iTunes Music store presented by HP but with the same search engine and same content and same prices how much would it help sales?

The reason to license fairplay to hardware manufactures (something I think is more likely than the iTMS) is to get greater selection. Apple may have the most popular designs but there are people who want features that Apple sees as un-necessary. More selection would satisfy more people and presto more sales.

The up side is more users of iTMS and quicktime. The down side is the loss of some iPod sales. Today, the money made on iPods far out weighs the money made on music sales, thus the reason this has not been done.

On the other side, allowing Napster to distribute their library in AAC fairplay format, would spur sales of iPods as people would see greater competition and selection of music for the device. So why if Apple makes most of it's money on iPods do I think this is unlikely? Because ultimately Online music sales will bring in more money with less ongoing costs. (IMHO)

[Nate Friedman]

minor correction: While the ITMS backend uses WebObjects it is actually an XML based system with most of the layout built into iTunes, rather than being included with the content.