Apple Gets Good News, Bad News

Apple's iTunes is reaching nearly 14 percent of the active Internet population, according to Nielsen//NetRatings. Apple's iTunes Web site and use of the iTunes application has skyrocketed 241 percent over the past year, from 6.1 million unique visitors in December 2004 to 20.7 million in December 2005.

"The rapid growth of iTunes is an important phenomenon in the online media marketplace," said Jon Gibs, director of media analytics at Nielsen//NetRatings. "Consumers have clearly indicated that they are eager to control their own music libraries, one song at a time."

Google Power

At the same time, despite Apple's enjoyment of ongoing iPod mania, Google usurped the company's authority as the world's most influential brand in 2005, according to a Brandchannel.com poll. Apple and Google have been trading places on the annual list for the past five years.

Brandchannel.com asks voters to rank the brands that had the most impact on them, good or bad. Google received about 39 percent of the votes cast, while Apple took about 37 percent, leaving it in second place after holding at first for 2004.

"Prior to Google, life was a source of wonder with no ready answers; with Google, we are all instant scholars. It's no exaggeration to wonder how we functioned without such a tool in our lives," wrote Robin Rusch, editor-in-chief of Brandchannel.com, in his presentation of the results.

What's in a Brand?

Brand awareness is, of course, vital in a competitive marketplace. Brand influence is especially critical for Apple, with a tiny percentage of the overall computer market share compared to Windows-based machines.

"Brand awareness could contribute to greater computer sales," Jupiter Research Analyst Joe Wilcox told MacNewsWorld. "At the same time, Apple is trying to carve out a niche in the consumer electronics market with iPod. As you can see with other companies with strong brands in that market -- not just Sony (NYSE: SNE) -- brand is important."

Nielsen//NetRatings revealed that iTunes users form a distinct target audience with identifiable brand preferences. This target audience is 12 to 17 years old and nearly twice as likely to visit the iTunes Web site as the average Internet user.

ITunes users are also more likely to be male. Their favorite brand of cars is Volkswagen. Their favorite alcohol of choice is hard cider. And they are 3.3 times more likely than average to read Wired magazine, 2.6 times more likely to read Rolling Stone and 2.5 times more likely to read FHM. When watching television, they flock to the Cartoon Network at 1.4 times the average rate, and to HBO and BBC America at 1.3 and 1.2 times the average rate, respectively.

"As networks begin to decide what types of programs to either produce or distribute through iTunes video, they should match the TV audiences' offline purchase and media consumption behavior with that of the iTunes users to maximize the success of video downloads," said Gibs.

Maximizing iTunes Success

In terms of maximizing iTunes success, Jupiter's Wilcox believes it is connected to iPod sales. IPods aren't succeeding because of iTunes. It's the other way around, he said.

"With 42 million iPods sold, it's reasonable to expect the device to drive some traffic to the music store," Wilcox explained. "Online music downloads is a growing market, but a nascent one, so opportunity remains for anyone still. As iPod continues to sell gangbusters, though, the competitor opportunity looks to be less and less."