1. Group 06-From Lecture 06 Member 02 Presented by: Xu Wei iTunes B2C SUCCESS STORY&CONTROVERSIAL ISSUES

2. CONTENTS 1.Introduction 2.Features & Restrictions 3.Catalog 4.Pricing Model 5.Electronic Payment Options 6.Market Share 7.Controversial Issues 8.Final Thoughts

3. iTunes Store Software Based Online Digital Media Store Operated by Apple Inc Apple’s Idea Virtual Store Where People Can Buy and Download Digital Media by One-Click Purchasing. Business model: B2C and B2B When Started ? 28 April 2003 - As iTunes Music Stores with 200,000 items to purchase Introduction Introduction

4. FEATURESFEATURES  First launched iTunes Digital Music service - it had already signed deals with major record labels: Universal Music Group (UMG), EMI, Warner, Sony, BMG  One-Click purchasing  At Macworld 2009, Apple issued a software update that allowed 3G and EDGE users to access the store

5. RESTRICTIONSRESTRICTIONS  Developed Own Digital Rights Management (DRM) Technology called FairPlay, Only compatible with iPod, iPhone and a handful of other digital music players  For consumers, DRM places on purchased media (including video) is a bone of contention  In Jan 2009, DRM has been removed from 80% of the entire music catalog in United States. However, TV shows, audiobooks and movies still are FairPlay protected

6. CatalogCatalog Music TV Shows MoviesGamesBooksiTunes UPodcasts App Store apps

7. Pricing Model Music Individual Songs were sold for the same price with no subscription fee. most existing online music stores at time of introduction charged a monthly fee for access to their catalog. The release of iPhone and iPod Touch brought the introduction of iTunes music Store. Feature Length Movies / TV Episodes Movies available to purchase below a DVD price of the same film. TV episodes are approximately double the cost of a song. In 2008, movies available for rent on the same day they are released on DVD. Only viewable for 24 hours. Not yet available in all countries. Apps Applications used for various purposes. Compatible with the iPod Touch and iPhone. Some Apps cost money (called “Paid Apps”) and some are free (called “Free Apps”). Revenue of “Paid Apps” – 70% developers and 30% Apple. Games Available for some models of iPod for various prices. None as expensive as a feature length film.

8. Electronic Payment Options Pay with iTunes gift cards Pay by credit card with a billing address Other payment methods – PayPal

9. Market Shares Sept 12 2006, Apple had 88% of legal US music download market April 11 2007, iTunes store had sold more than 2 million movies, making it the world’s most popular online movie store April 3 2008, became the biggest music seller in the USA Mar 2011, Apple had 200 million registered iTunes customers with credit cards on file

10. CONTROVERSIALCONTROVERSIAL  DRM limits the numbers of devices purchased songs can be played on.  Contract entitles Apple to change the terms of contract at any time without notice, including the selection of players or software that must be used for iTunes files, and also the number of times a customer can change or copy already purchased files.  The legal relationship between Apple and customers is regulated by English Contract Law worldwide.  iTunes has no responsibility regarding damage to consumer’s computer due to software errors.

11. CONTROVERSIALCONTROVERSIAL Security of iTunes  The hacking iTunes Store Account One single Apple ID is able to access to every account connected to user’s devices – iPhone, iPad The hacking highlights the problem of balancing security and convenience - Considering the iCloud service

12. Final Thoughts

13.  An Iconic name will always be remembered.  It has cleverly used its hardware(iPod, iPhone, iPad) to drive customers to its iTunes Stores  Ability to get product in front of and into the hands of customers.  One click purchasing is absolutely the key to success for the iTunes Store.  Apple needs to make sure it keeps up with present and future trends to beat off the competition, and maintain its dominance.