Apple Inc. (NASDAQ: AAPL) is a powerhouse in any segment it enters. The iPod revolutionized music, and iTunes gets somewhere around 80% of all music download sales in the United States. So what happens when it wants even more? What about antitrust issues, if anyone would even bother considering this.
The LA Times reported late Monday that Apple has begun pressuring major record labels to conduct new releases exclusively through the iTunes store. While this would block the initial availability on services such as Spotify, Pandora and others, there could be antitrust issues here if this were to become the norm.
Success begets success, or at least it begets more ambition. Beyonce’s album release (why do we still call them albums?) was handled exclusively through iTunes in December, with the announcement and launch happening on the same day. Its success was off the charts, literally.
And what does this mean if the peak growth has been seen in music downloads? Downloads of songs were soft in 2013 after a decade of growth. And now the report showed that the first eight weeks of 2014 saw a 12% drop in downloads.
So if iTunes gets exclusives, then what happens to Android smartphones (yes people use their phones as their MP3 players now too) and other online music access points — or actual retail destinations like Walmart and Best Buy? What happens to Amazon.com?
It is pretty hard to argue that MP3 players that connected to PCs and the Internet, particularly the iPod, played a definitive role in destroying retail music stores that had been in place for decades previously. So what happens if a company that already has 80% of a segmented market share starts demanding even more, and at a time when broad-based music sales are declining?
Some consumers may just say that Apple is big and powerful enough to get its way, but what would millennials and other music consumers say if it was Microsoft — or, better yet, Walmart — that was in Apple’s position now and trying to demand exclusive releases from major labels and studios? Would antitrust issues come front and center?