With both Universal and Wal-Mart aggressively competing for customers in the music download game, will iTunes struggle to stay competitive in the face of stiff competition?
While Universal's new Gbox service offers the usual DRM-encumbered tracks for 99 cents (what Gbox really has going for it is a special advertising deal with Google), Wal-Mart's new 94 cents a track DRM-free MP3 format means that it offers music in a platform-agnostic format and can cater for the iPod, iPhone, the Zune and almost every other portable media player on the market.
There's little doubt that DRM-free music is gaining momentum and outlets are becoming more aggressive when it comes to pricing. This price of 99-cent a track that Wal-Mart is offering is a far better deal than the $1.29 that Apple wants for a DRM-free AAC-encoded iTunes Plus track. This means that not only are Wal-Mart tracks better value, they are also easier to handle because they're not tied to a specific applications (such as iTunes).
I can't help but feel that Apple is being squeezed on both sides. Not only is Apple now under pressure from the recording studios but it's also facing quite stiff competition from other outlets. As it becomes easier for people dwelling cyberspace to buy music, iTunes' dominance will slowly be eroded.
Personally, I welcome easy access to DRM-free MP3 downloads. I don't buy that many CDs a year nowadays (maybe 10 or so ... compared to around 30 - 50 DVDs a year) but I'm pretty sure that if there were enough outlets for MP3s that I might buy $10-20 a month worth of tracks, certainly over the first couple of years. I don't think I'm alone in feeling like this. There's a big market out there of people willing to spend a few cents here and there for the tracks they want to listen to.