Thursday, July 29, 2004

iPod gets Real

RealNetworks has enabled its users to transfer songs they have paid for and downloaded to their iPods. Apple, instead of hailing this as a great thing because now their iPods are more valuable, are thinking about stopping it, presumably because it cuts into their lucrative iTMS business.

But I think their margins on iPods are much greater than whatever cut the RIAA lets them keep from iTMS. Maybe the issue is they want greater clout vis a vis RIAA and so want to become the dominant source for legal, digital music? If so, then this is a doomed strategy because, since the RIAA holds the copyrights, they can always appropriate rents from Apple, no matter how dominant iTMS becomes.


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