Apple (AAPL) already has the world largest digital music store, iTunes, based on most industry measurements. It plans to expand that dominant position in a fashion that will help both it and the music industry.
According to the FT, “Apple is working with the four largest record labels to stimulate digital sales of albums by bundling a new interactive booklet, sleeve notes and other interactive features with music downloads.”
Apple is apparently improving the features on iTunes to encourage album sales because it plans to launch a tablet-sized computer the sales of which could be helped by an expanded iTunes store.
Apple’s reasons for trying to push up album sales may be more complex that simply providing more content for its new hardware. Music labels have resented Apple’s ability to set pricing which has driven a wedge between the company and its content providers. The music firms are struggling with albums sales as consumers move toward buying individual songs. Apple can extend an olive branch to the industry to help it with a critical problem.
Apple also has to be concerned that a music industry facing financial turmoil is likely to be a shaky partner. Apple needs its content partners to be doing well enough so that they can supply a steady chain of digital content to the iTunes store. Apple helps itself indirectly by pushing more revenue to the music firms.
Douglas A. McIntyre