Euro iTunes Downloads Top 800K in First Week

Apple (Nasdaq: AAPL), moving quickly to repeat its U.S.-based leadership in legal online music distribution, announced Wednesday that it has sold 800,000 songs through the European wing of its iTunes Music Store during its first week of business.

"In the UK alone, iTunes sold more than 450,000 songs in the last week, 16 times as many as [On Demand Distribution] OD2, its closest competitor." Apple CEO Steve Jobs crowed in a press release.

Meanwhile, dissed iTunes rival OD2 had a big announcement of its own: On Tuesday, digital media solutions provider Loudeye purchased OD2 for US$20.7 million. This acquisition will double the revenues and reach of private-label digital music services across Europe and in Australia for Loudeye and OD2 clients.

Apple's Marketing Might

These recent movements in the European digital music market are transforming the music industry as a whole, said GartnerG2 senior analyst Mike McGuire, who added that initial concerns, such as the price of iPods and the single format support of the iTunes Music Store, has been unfounded.

"The people who are using online music -- early adopters -- are just not as price sensitive and will want increased storage for their music," McGuire told MacNewsWorld. "Apple is offering this."

McGuire explained that marketing has played a bigger role in Apple's ascension than the technology. While competitors like Samsung offer similar features and functionality, they are not garnering the same attention.

"This is about a rich-media strategy, one where music, videos and games are sold online, and companies are seeing this industry in that light," McGuire continued. "There is a reason why Nike has the monstrous advertising budget they have. Apple is doing the same by also investing in marketing their own brand."

On learning that Napster failed to respond to MacNewsWorld's request for comments about Apple's announcement, McGuire expressed disgust.

"You would think they would have called yesterday," he said. "They all should want to tell their story and differentiate themselves, especially with Apple selling in a week what might take them months to sell."

Don't Forget the Tech

For his part, Loudeye CEO Jeff Cavins told MacNewsWorld that technology holds comparable significance in the online music marketplace, as does marketing.

"Unfortunately, the most successful in digital media remains [illegal] peer-to-peer file sharing. Kazaa alone has a 30-billion file catalog, in contrast to a worldwide market for recorded music at around $32 billion," Cavins said.

Moreover, Cavins contended that a company's marketing perspective varies, depending on its motivations. "Sony is in it purely to drive business to their consumer electronics and could care less if they make money, [while] Apple equally wants to drive up iPod sales," said Cavins. "Napster, on the other hand, is in this business purely to make money from its music."

The Pepsi Challenge

According to Cavins, the online music spaces stretch beyond the music itself. Cavins cited branding as a major factor. The recent Pepsi-Apple promotion, for example, demonstrated that Pepsi had served to strengthen Apple's brand because consumer traffic was directed toward the U.S. iTunes Music Store.

Coca Cola faced a similar challenge in Europe because of social and cultural dividers in consumer adoption of Coke, Cavins said. To help win those buyers back, the company launched mycokemusic.com.

"Now on a Coke can in the UK, 70 percent of the can's real estate is covered with promotions for mycokemusic.com," Cavins explained. "And when someone buys a case of Coke, they assume they might win a few songs and are driven to a Coca Cola-branded property."