Apple’s iPod/iTunes Business Model - ETR 500 Week 4

The IPod/ITunes business model isn’t new but what Apple has tapped into is a market that needed an overhaul.  Apple also isn’t the first company to sell you one product by lowering fees and then try to entice the customer into acquiring additional but more expensive product.  It’s a blueprint that has been implemented within many different markets.  The thing that Apple did with both the IPod and ITunes was appeal to both producers (music industry) as well as the customer base while reaping some huge financial benefits. 

The Apple concept of offering the ITunes software for free to subscribers and owners of the IPod allowed them the ability to create a one stop shop store for music and Apple product upgrade.  By partnering with an industry that was seeing its profit margin decline at alarming rate as a result of other websites ability to download their music for free, Apple saw ITunes as the prefect intermediary to the music industry and growing its IPod product line.  The decision to charge a nominal fee to customers wanting to download a variety of hand-picked music as oppose to buying an entire CD was the bases for the music industry to stop their financial bleeding.  Apple was not only able to integrate the ITunes with their growing selection of IPod models but it was also able to include other products such the IPhone.   ITunes started as a music store and has increased offerings of movies, videos, television episodes, games and apps which are only compatible with certain Apple products.