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After decade of iTunes, new challenges loom

Published: Sunday, July 5 2015 9:26 p.m. MDT

This undated screen image released by iTunes shows the iTunes music page on a computer screen. The iTunes music store changed how we consume music and access entertainment. It's not only music's biggest retailer, it also dominates the digital video market, capturing 67 percent of the TV show sale market and 65 percent of the movie sale market, according to information company NPD group. Its apps are the most profitable, it has expanded to books and magazines, and it is now available in 119 countries.  (AP Photo/iTunes) (Associated Press) This undated screen image released by iTunes shows the iTunes music page on a computer screen. The iTunes music store changed how we consume music and access entertainment. It's not only music's biggest retailer, it also dominates the digital video market, capturing 67 percent of the TV show sale market and 65 percent of the movie sale market, according to information company NPD group. Its apps are the most profitable, it has expanded to books and magazines, and it is now available in 119 countries. (AP Photo/iTunes) (Associated Press)

NEW YORK — When Apple launched its iTunes music store a decade ago amid the ashes of Napster, the music industry — reeling from the effects of online piracy — was anxious to see how the new music service would shake out.

"The sky was falling, and iTunes provided a place where we were going to monetize music and in theory stem the tide of piracy. So, it was certainly a solution for the time," said Michael McDonald, who co-founded ATO Records with Dave Matthews and whose Mick Management roster includes John Mayer and Ray LaMontagne.

The iTunes music store became much more than a solution; it changed how we consume music and access entertainment. It's not only music's biggest retailer, it also dominates the digital video market, capturing 67 percent of the TV show sale market and 65 percent of the movie sale market, according to information company NPD group. Its apps are the most profitable, it has expanded to books and magazines, and it is now available in 119 countries. This week, iTunes posted a record $2.4 billion in revenue in first-quarter earnings.

"They revolutionized the retail landscape by making a truly interactive and very user-friendly space and platform, and they managed to do it by keeping a great music experience attached to what was very difficult technology," said Scott Borchetta, head of Big Machine Records, home to Taylor Swift, Tim McGraw and Rascal Flatts. "They made it very easy to buy music digitally, and that's why I think they've run so quickly in the lead for that space and continue to dominate the space."

But as iTunes celebrates its 10-year mark Sunday, it faces renewed scrutiny on how it will continue to dominate in the next decade — or whether it can. With competition from subscription services like Spotify and other services like Amazon.com, Netflix, Hulu and others, iTunes will likely need to reinvent itself to remain at the top of the digital entertainment perch.

Apple Inc.'s Eddy Cue, senior vice president of Internet software and services, refused to comment on reports that the company will launch a radio service or some other service to compete with Spotify.

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