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iTunes Europe: A Preliminary Analysis



On June 15, 2004, Apple announced the launch of its iTunes Music Store (iTMS) in the United Kingdom,France, and Germany. In its first week, the store sold 800,000 songs and outsold its nearest competitor, OD2,by a margin of sixteen to one. With the new incarnations of the iTMS, Apple has preserved the business model that has been so successful in the U.S. compared to previous legal music download services. In terms of features, the European stores are virtually identical to the U.S. original, as users enjoy the same ease of use, deep catalogue, and key innovative functions such as “iMix” and “Party Shuffle.” One notable difference is the pricing—songs sell for 79 pence ($1.43) in the UK and 99 euro cents ($1.19) in France and Germany. Although the iTunes business model has been successful thus far, Apple faces a new set of challenges as it expands further into Europe and beyond. In addition to variations in the substance of laws regarding such areas as anti-circumvention, fair use, and consumer protection (discussed in the iTunes Case StudySummary), the international long-term success of the iTMS ultimately depends on how well it can manage and adapt to variations in user expectations and cultural differences across Europe.

When assessing the implications of iTunes’ arrival in Europe, it is useful to think in terms of the regulatory environment, markets, and policy. An analysis of the regulatory environment identifies both legal conditions and social/cultural norms which may serve as obstacles to, or facilitators of, the development of the iTMS service. A market analysis focuses on the potential impact of the iTMS on consumers, producers, and the industry as a whole. As the iTMS has just arrived in Europe and as of yet data is limited, our assessment of its impact is necessarily tentative. Finally, a policy analysis explores the potential influence of the launch on policy formation.