June 23, 2004 10:49 AM PDT
iTunes shows strong early sales in Europe
The news marked a strong start for the service in a region that is already substantially more competitive than the U.S. market was when iTunes initially launched in early 2003. The store opened its digital doors in the United Kingdom, Germany and France last Wednesday.
More than half of Apple's sales came in the British market alone, allowing it to pass rivals that had been in the market for substantially longer. According to BPI, the British record industry trade association, rivals in that market sold 500,000 songs in the first five months of 2004.
"iTunes is Europe's top online music store," Apple Chief Executive Steve Jobs said in a statement. "In the U.K. alone, iTunes sold more than 450,000 songs in the last week--16 times as many as OD2 (On Demand Distribution), its closest competitor."
The quick surge in Apple sales appeared to foretell an early European market progress mimicking iTunes' ascent in the United States. Although overall digital music sales remain a tiny fraction of CD sales, and profit margins remain low, Apple has taken a commanding early lead in the market and is showing no sign of relinquishing its hold.
Jobs' comments were particularly pointed, given the week's other news. British rival OD2, co-founded in 1990 by rock star Peter Gabriel, was acquired Tuesday by American digital music wholesaler Loudeye in a deal worth more than $37 million.
A representative of Napster, which launched in Britain on May 20, could not immediately be reached for comment. Other large services, including Sony's Connect, are also expected to reach the European market soon.
Apple is still facing a few hurdles going into the foreign markets, largely related to the complicated task of securing licenses to music.
iTunes launched in Europe last week without the catalog of bands represented by the Association of Independent Music, or AIM, a group that includes 800 labels representing popular bands such as Basement Jaxx, Franz Ferdinand and the White Stripes. Executives for AIM said that they had "been unable to agree to terms for licensing their repertoire to the service."
An Apple representative said the company had nothing new to announce on that issue.
The independent-label market as a whole represented about a quarter of British record sales and nearly a third of the market's platinum-selling albums, according to AIM.