Apple’s increasing domination of the digital music scene could be a bad thing for the sector as a whole contends Fulcrum Global Partners in a recent report. Fulcrum states that Apple’s 75% control of the US digital audio player (DAP) market and its 80% share of the paid downloads sector could lead to a solidifying of the iTunes price point and also its proprietary version of AAC for DRM. “Apple’s market share needs to decline substantially for its strategy to change and its market share is actually increasing from an already high level.” The major labels would like to amend the price point upwards while the consumers’ preference is unsurprisingly in the opposite direction.

Apple’s price point has become the benchmark by default, many indie labels in the UK have stated often that they would prefer to have a more flexible approach with some artists and tracks being priced higher while others could match or even go below the 79 pence / 99 cents point. That said, Apple like all the other DMS, has the base level of that price set by the rights holders and is reaping the rewards of its DMS success through its hardware sales.

In hardware terms, the only digital music market that Apple has slipped in is Japan, where Sony is eating into the flash-based player market with a new look but more importantly substantially higher battery life. Sony’s move to embrace other formats than its proprietary ATRAC-3 has also played a major role in the company’s improved performance. iTunes has yet to launch in Japan, it’s most likely that Apple would want to couple a launch with a mobile offering, especially considering the Japanese love of the mobile. However, will the (now slightly eroding) iPod sales compensate for the cost of the downloads business there?

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