iTUnes Essay

AbstractSince April 2003, iTunes medication remembering has permitted the consumer to purchase harmony and digital books over the Internet with success. By 2005 their shares addition signifi assholetly as a result of their tremendous success. Their harvest-home became a platform for the digital harmony business to explode into the industry it is today. This also made digital unison affordable to the consumer who may guide g ane to illegal downloads in the bygone which in turn ensured that the music industry was getting paid for their harvest-feast as well. The $0.99 cents per song download provided $0.70 cents to be paid to the drop off companies and the quietus ($0.29 cents) was apple profit. By August 2005, around of the larger record companies matte that their proceeds was under equipment casualtyd and requested that flexible prizes were instituted. However, this was not a shared creed by all, the fear was that the market might not be static enough to survive a p rice increase when illegal downloading was widespread. A price increase would encourage this type of activity to continue and no one would be making money. Due to its power, orchard apple tree kept the akin prices, however by January 2008, Amazon.com entered the market place with a similar product without all of the restrictions that were placed on music in the iTunes Store.Questions1)Provide an argument for wherefore a variable determine policy might increase the gross trades revenue from apples Music Store (compared to the flat determine policy). Life is complicated, but Apple Computer s iTunes store is pretty simple Download a song and pay $0.99 cents. In 2009, Apple announced that for the source while would allow beginning implementing variable set on the iTunes Music Store. Instead of a absolute $0.99 cent price point, record labels would now have the option to charge $1.29 for more democratic songs and $0.69 for less favourite tracks. It was not too long before in timately every top song on iTunes jumped from $0.99 to $1.29. While near tracks that proverb an increase in price suffered a small drop in gross revenue, the $0.30 price difference more than made up for that fact, worked to increase boilersuit revenues. Apples position during the time to increase the price of popular songs was global. Many of Apples products such as the iPod and laptops were sold all over the world. The iTunes Music Store was highly successful, and has alreadyaccomplished large user numbers. The diverge in price did not suggest a complete renovation in the way people downloaded and listened to their music. Also, Digital downloading of music is just one of the many markets that Apple has recruited into. Under a new pricing curriculum songs would cost depending on how desirable they are attended and having Apple such a market power, the new pricing strategy was an other(a) successful for the telephoner.2)Discuss other potential pricing policies that might incre ase the revenue from Music Store sales. With the increase in the demand for online-based music, Apple is likely to increase its prices to elevate more from its products. The company cannot however enforce high prices on the consumers because the sale of online music is legato in a changing stage. Apple could consider other pricing schemes like a bundle pricing where they agree popular and unpopular music or getting the latest popular music across genres. This could expand customer base to different genres and increase the sales of unpopular songs. The bundling strategy will help in increasing profits by extracting additional consumer surplus. They also could offer an inherent group of songs, as a group, for a single price. The company could haunt to sale of large music files such as MP3s, JPEG and MP4 and other music formats for various consumer needs (Brickley, Smith, & Zimmerman, 2009). 3)What are the risks and potential costs of implementing more cultivate pricing schemes f or the downloaded music? Sophisticated pricing tools are potentially gettable to provide a contrast to the uniform pricing model that apply to implement iTunes. This sophisticated alternative tools may include song-specific pricing, pure bundling, mingled bundling, two- fail tariffs among others that could be use to raise revenue. If firms have market power they can raise their prices without losing all customers to competitors. Firms have as ultimate bearing to choose the pricing policy that boosts the value of the firm.Managers are trying all the time to devise a pricing policy that captures as much hold as possible catching costumer surplus as company profit. For managers and companies in general, only incremental prices matter in pricing decisions. As this case show, iTunes has certain power on their loyal costumers and confronting the risk of some decreases on sales, iTunes took the risk when they increase theirsongs prices and at the end, the most loyal costumers remaine d whit the company. The potential costs were evident when iTunes suffered at the premiere moments a fall in sales. Was very worrying that people were lull able to download free music from other sites. Nevertheless, iTunes survived, and the company was still betting on iPods sales at the same time. 4)Is Apples pricing objective to maximise the revenue it receives from the sales of the downloaded music? Is this the objective of the major record companies? Explain. (Hint review the revenue/product data from Apples 10-K) Apple as all companies is interested in maximize its revenues, but it not its objective r for each one it trough the downloaded music pricing strategies which is the objective of the record companies. Apple is a successful company that has a lot of attractive products that convert all the costumers in loyal fans of Apple. The lodge is confronted by aggressive competition in all areas of its business the markets for the come withs products and work are highly compe titive. The Companys competitors who carry on mobile devices and individualized computers based on other operating systems have aggressively cut prices and lowered their product margins to gain or fight down market share. However, Apple is focused on expanding its market opportunities associate to personal computers and mobile communication and media devices. The Company believes it offers superior innovation and integration of the absolute solution including the hardware (iPhone and iPod), software (iTunes), online services (iCloud), and statistical distribution of digital mental mightiness and applications (iTunes Store). The Companys mogul to compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace.The Company continues to develop new technologies to enhance existing products and to expand the sick of its product offerings through research and training. On the other hand record companies are just interested in gaining the greatest among of money from each company that distribute the music on which they have rights, they matter is to collet the most possible from every song downloaded. 5)Do you think that Apples ability to control the pricing of downloaded music is likely to change in the future? Explain. My personal opinion is that Apple has a huge knowledge all around the world. Apple has been able to achieve its position with portentous skills in the market. Nowadays, as we all know, Apple has the most loyal costumers inthe world. Every single time that Apple launches a new product the most loyal costumers excited sleep for nights on the doors of the stores to be the first ones buying the new products that always offer the most cutting-edge advances in technology. I would say that Apples ability to control its prices related to downloaded music would not change too much in the conterminous future. In deed, Apple has increasingly assumed the control of technological development in the industry. The Company is committed to bringing the best user last to its customers through its innovative hardware, software and services. Apple is pioneered providing its customers new products and solutions with superior ease-of-use, unlined integration, and innovative design, every time getting closer to the wishes of consumers.As part of its strategy, the Company continues to expand its platform for the discovery and delivery of third-party digital pith and applications through the iTunes Store allowing customers to discover and download applications and books through either a Mac or Windows-based computer. The Companys strategy also includes expanding its distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience. As a customer of Apple is very gruelling to see that for the near future the company may lose its ability to control the prices of their prod ucts. When people become a fan of Apple never more would pay a similar price for another technology more than Apple offers. That is the reality today.