Watch Out, iTunes

On Friday, I went to the Apple store with my roommate. We were killing some time before a movie. First, we were just messing around with the applications and the teeny tiny iPod Nanos. Soon though, as is inevitable, we began browsing the internet. I checked my email, Facebook, and naturally, Myspace, but something very strange occurred . None of the computers in the Apple store could access Myspace. Right at this very moment, a customer standing behind me approached an employee with my very same inquiry. This may be iTunes' first efforts to kill Myspace.

My story is in jest, but there is truth to the tale that Myspace is making a name for itself in the digital music world, and iTunes may soon be looking over its shoulder for real.

An interesting report just came out called the Tempo Digital Music Brandscape study. One of the study's main focuses was on brand awareness. Over the past year, iTunes' awareness rose significantly in both unaided and aided awareness. It moved from from 57% to 66% for total awareness of American Downloaders age 12 and older. There were some losses for companies like Napster and some gains for companies like Yahoo, but the most significant development was the huge spike of consumer awareness of MySpace, which experienced a jump from 16% to 54% this year alone.

Matt Kleinschmit, Vice President of Ipsos Insight and author of the TEMPO study, says, "MySpace has effectively carved out a unique area of the market centered on social networking and direct-to-consumer recommendations, it remains to be seen if this model can be monetized and scaled while maintaining the copyright protections that content holders require."

The study also ranked the services by their positioning in "best: fee-based digital music service. Downloaders are more likely to rate iTunes as the "best" service, followed by Napster, but Napster trails 11% to 41%. Still, here again comes MySpace, which gained big in 'best' mentions as well, starting at 2% in 2005 to 8% in 2006. This jump makes it the third 'best' brand after iTunes and Napster.

iTunes continues to experience steady growth in consumer awareness, but the growth of MySpace may reveal aspects of services that some consumers feel lack in fee-based digital music destinations. iTunes certainly must see Myspace as a competitor of which to be wary, else they court the under-served market segments and steal some of that iTunes glory.