Apple Tests Album-Specific iTunes Cards in Stores
Apple will run a retail test of iTunes gift cards that let users purchase and download specific albums this fall.
The cards in test will be offered at Safeway, Best Buy and Starbucks stores, according to Billboard magazine. Wal-Mart and Target have reportedly been approached to take part in the test, but have not yet signed on.
Among the artists whose latest albums might be featured in the pilot program are Norah Jones, Maroon 5 and Eddie Vedder. The cards will carry both the Apple and iTunes logos and may be priced between $11.99 and $14.99. That’s more than the standard $9.99 per album iTunes generally charges for a straight online download. But the album cards may contain additional material, such as phone ringtones or music videos.
Consumers are becoming increasingly accustomed to both music downloads and gift cards, and in fact Starbucks’ Hear Music catalog is already available over iTunes for online download. iTunes believes the music labels representing the performers will benefit from sales exposure in these retail outlets.
The value proposition for retail outlets that already sell music is a bit more tangled. Apple thinks retailers such as Wal-Mart or Best Buy will be able to stock more product if a popular album comes in the form of an online gift card rather than a jewel-cased CD.
But brick-and-mortar music retailers are feeling competitive pressure from iTunes and may pass on the prospect of giving Apple even more access to their customer base. Last June a survey from market research group NPD found that in Q1 2007 iTunes passed both Amazon.com and Target to become the third largest U.S. music seller, after Wal-Mart and Best Buy.
Wal-Mart also sells music downloads online, bringing it even more sharply into competition with iTunes. In late August, Wal-Mart matched iTunes by offering titles free of anti-copying software but at prices about 27% cheaper than those on the Apple music site. Wal-Mart offers tracks without the digital rights management (DRM) software for prices starting at 94 cents a song, compared to $1.29 a DRM-free track on iTunes.
