Pay for your I-Pod vanity & who cares if I-Tunes loses money?

In my last post about Beating I-Pod, I realized that I left out two important points.

1) Just to bolster my theory about Apple's style > substance, take a look at their pricing scheme for their models. The ultra-chic I-Pod Mini costs the same price as a 'regular' I-Pod that holds 11 GB more of songs (almost four times more). In other words, when you buy the Mini, you're paying for less space for songs and essentially spending your money on the cooler design. Amazing how Apple can exploit the vanity of its users so well.

2) I-Tunes loses money for Apple. Think about that for a minute. Why the hell would they push a system that they lose money in? It's the most popular legal download system by far and it's still not profitable. That should tell you something about the industry and also makes you wonder. The reason they lose money is that they have to pay off the labels and publishers so much. So why do they keep I-Tunes running? Because it's tied in so neatly to the I-Pod for downloading songs and managing playlists. The Pod itself is what they make money on, selling millions of them last year alone. They're in the market of selling players and not songs. Sure, songs are tied into it because what good's a player with it? But that's not where the money is.

This goes back to the Pod itself- if it wasn't the sexiest player out there, no one would care about I-Tunes. Napster in its legal incarnation is actually a much better service as you can hear 1000's of entire songs for $10 a month any time you like on your computer while Apple only offers 30 second song samples- that's in addition to the same 99 cent purchase price for songs. But Napster isn't beating I-Tunes for the simple reason that it doesn't have a hot, desirable digital music player tied to it.