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Apple (Nasdaq: AAPL) indicated Monday that it will launch a European version of its iTunes Music Store later this month, joining competitors Napster UK and On Demand Distribution, better known as OD2, in the race to capture the digital music marketplace there.
The company will host a press conference in London on June 15th to address the situation. A Monday press release stated cryptically that "the biggest story in music is about to get even bigger."
Apple has not specified whether this new iTunes Music Store will cover all of Europe or launch in individual markets. Currently iTMS competitor Napster has limited its launch thus far to the UK, where it offers subscription services for around US$18.33 per month and an a la carte menu that charges approximately $2 per song. Napster also offers its service in Canada.
Meanwhile, OD2, a formidable and well-established European provider with over thirty affiliated partners, has digital music stores online across Europe, including the UK, France, Germany and Spain.
Building the Empire
Phil Leigh, senior analyst at Inside Digital Media, said he would be surprised if Apple's offering were pan-European in scope because of the complexities in buying across borders throughout the continent.
"The Euro is a step in the right direction in simplifying this process," he told MacNewsWorld.
The International Federation of the Phonographic Industry (IFPI), which boasts 1,500 recording industry members and offices in 46 countries, released a report earlier this year showing that the European market is young and growing in Europe.
"The rapid development during the course of 2003 of a critical mass of legitimate online services, [with subscribers] reaching around half a million consumers in Europe by the end of 2003 -- a figure that is set to increase sharply in 2004," The IFPI report authors wrote.
Alternatives to Piracy
Leigh believes that, up until recently, illegal file sharing remained widespread in Europe because few legitimate alternatives exist, and law enforcement is almost nonexistent.
"The new factor is the move by the IFPI to begin filing lawsuits in Europe," Leigh said. "Prior to that, there [was] no risk of punitive action against file sharers."
The IFPI believes it is also an issue of public awareness. In its report, public surveys showed 66 percent of consumers in select European countries understood that file-sharing is illegal.
At the same time, the results of the IFPI's survey reveals a low level of awareness of the existence of legitimate services among consumers.
Market Growth
The IFPI believes the European market for legitimate music downloads will expand dramatically during 2004, as more Europeans take advantage of broadband Internet service.
"The relatively low penetration of broadband Internet services in many countries until late 2002 [and] early 2003 markedly limited the growth of legitimate online music. This is changing as broadband penetration expands," it said.
IFPI research shows double-digit gains in broadband adoption in the UK and Spain. Meanwhile, the percent of broadband market share in countries such as the Netherlands and Denmark presently exceeds that of the United States.
Targeting Europe
According to Leigh, it will be critical for Apple to roll out iTMS expansion free of delays in Europe.
"In speaking with some folks in the UK, [people] are buying iPods now off of eBay," Leigh said. "It is a status symbol to own one."
For her part, Susan Kevorkian, senior analyst for consumer markets at IDC, said companies entering international digital music markets need to focus on localization to compete with other providers in a given region.
"Not only do [these vendors] need to offer country- and language-specific music, they also need to complement the music with text that is linguistically and idiomatically on target," Kevorkian told MacNewsWorld.
"If they do this right, they'll build a strong base among music lovers in those countries. If they don't, they'll alienate [these consumers] quickly," she added.
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