August 26th 2007
By Mike Flaminio
Reuters reports that Apple is considering producing iTunes Gift Cards for individual artists and albums.
Apple will reportedly pilot the idea through its own retail stores, but the company is also said to be experimenting with the gift cards by selling them through Safeway, Starbucks and Best Buy stores. Wal-Mart and Target have also been approached.
"It sounds like a way to help Apple get 50 percent market share," one senior record industry executive said - somewhat sourly - who is quoted in the article. He added that it was "ridiculous" for Apple to be negotiating with retailers on the behalf of labels.
Nora Jones and Maroon 5 are amongst those under consideration for the first of the cards.
Analysis: Yes, Apple could make quite an impact on already-bruised CD sales, the veritable rivers of gold for record companies. We assume the record executive means '50%' of all music sales, as iTunes already owns the online music market.
Of course, the labels will have to go along with this for it to work for Apple. And Wal-mart, with its own download service, probably won't be keen. It's now clear, as one can see from the behaviour of Universal, that the record labels would dearly love to break away from iTunes' dominance - so that Apple becomes just another music e-tailer - but since the rest of the subscription sites are hopeless and uncompetitive, they've had no choice but to stay with iTunes, even as they search for alternatives to diminish Apple's influence.