Apple on Tuesday launched the long-awaited iTunes Music Store in Australia, with songs priced at AU$1.69, videos at AU$3.39 and most albums at AU$16.99. The pricing is similar to that of Telstra's BigPond Music site, which has been selling music online for more than a year. However, Gartner's research director for mobile and wireless, Robin Simpson, told ZDNet Australia that BigPond seems to be targeting the wrong market with the wrong format.
"[BigPond Music's] business will go up because iTunes Australia gives credibility to the whole market of buying music online. But [BigPond's] growth is not going to be anywhere near as big as iTunes," said Simpson.
Gartner's Simpson expects iTunes in Australia to replicate the same kind of success the company has enjoyed with its 20 other online stores: "The history of introducing iTunes stores worldwide is that they take off instantly. One thing BigPond can't say is that they support iPod, which is a problem."
Simpson said that because BigPond Music sells music in a format that can only be played using a Windows Media Player, iPod owners cannot use the files. He argues that as the iPod makes up around 70 percent of the global digital music player market, BigPond are targeting the wrong market with the wrong media format.
According to Telstra, the number of people visiting BigPond Music over the past year has doubled, track downloads have trebled and album downloads have increased almost fivefold. However, the company has not given exact sales figures.
Apple, on the other hand, claims to have sold one million tracks from its recently launched Japanese online store within four days, bringing its global music sales total to more than 600 million.
BigPond said on Tuesday that nearly half its music buying customers are aged between 25 and 49 while the other half are aged 40 and over. This, according to Gartner's Simpson is not the growth market: "iTunes and iPod is all about kids. [Bigpond Music] is servicing a niche market that is not even the major consumer of music".
Speaking at a press conference on Tuesday morning, Apple's vice president of iTunes, Eddy Cue, made it very clear that he is not after BigPond's customers: "[the younger generation] buy a lot of music… That is what they know music as, they certainly do not know music as a record or as a CD, they know it as digital bandwidth," said Cue.
Sony BMG will fall in line
The only major record label that has not signed up with iTunes on its Australian launch is Sony BMG, which is still in negotiations with Apple.
Simpson expects the company to fall in line as soon as it sees the iTunes online store take off: "My view is that it is not going to take very long before [Sony BMG] cave."
Simpson said that Australian artists signed up with Sony BMG will be the first to complain once they realise they are missing out on income.
"If you are an Australian band that is signed up with Sony BMG and you see everybody else going through the roof, you will not be happy. You will say to Sony, 'what are you doing? This is the new way'," added Simpson.