Chapter 10 Blog- Has Apple's Music Biz Hit a Sour Note?

http://www.reuters.com/article/idUS153876824720100526

Summary
Apple has been pressuring music labels to refrain from participating in Amazon’s MP3 Daily Deal promotion by lowering the market support in their iTunes store for any albums that are featured in Amazon’s promotion. This promotion features new music that is on sale on Amazon one day prior to the album’s official release. iTunes controls 28 percent of the market for digital and physical sales in music retail, while both Amazon and Wal-Mart controls 12 percent each. Apple controls 70 percent for digital downloads in the U.S. and Amazon controls only 11 percent of the market. With Apple dominating as being the top music store, the Justice Department may decide to put Apple out for regulatory oversight. The influence of Apple in the music industry questions whether it holds a monopoly in music retail.

Connection
In this chapter, the concept of monopoly is discussed. A monopoly is when there if only one seller or firm in an industry. Because there is only one seller, they have control over the price of the good or service provided. Since Apple have an immense influence over the music business, it could easily abuse its power in pressuring music labels to only use iTunes as a mean of market support. The textbook also mentions how a firm may still have competition even if it is a monopoly. As mentioned in the article Apple has competition such as Amazon and Wal-Mart. Government usually operate and oversee monopolies; however Apple is a corporation and is privately owned.

Reflection
I think how Apple Inc.’s strategy of lowering their market support for albums in their iTunes store in order to pressure music labels to not participate in Amazon’s MP3 Daily Deal is unfair since music labels are trying to promote the albums so consumers will purchase the albums when they are released. In the article it mentions how the Justice Department should force Apple to make iTunes and iPod be interoperable with other devices and software that are not by Apple. By doing that consumers would be able to purchase similar devices at cheaper prices and still be able to sync with their iTunes library. I doubt Apple would be willing to do this since several companies are competing for the consumer’s dollar. Hopefully Apple will stop their practices of restricting music labels to exclusively use Apple for market support; otherwise, the Federal Trade Commission may intervene.