Music’s New Gatekeeper March 9, 2007 Page W1 Kyle, David, Phil, Isaiah

iTunes: The Basics Approx. 1 million visitors per day Offer 4 million downloadable files including  Music  Games  Movies  Television Shows

Exclusively from iTunes… iTunes wants more exclusive content Exclusive material will create greater promotion 1 week of promotion = 5x more sales than in next 3-5 weeks

iTunes: the basics, cont. One of the largest retailers of music in the US  80% of all Music Downloads Home page access in exchange for exclusive material for discount pricing

iTunes vs. Big Box Retailers Promotions:  Discussions with iTunes begin 3-6 months before Cooperative Advertising  End Caps: $5 per disc Cut into CD profits Independent and Alternative Music  iTunes: 15%  Others: 5%

iTunes vs. Big Box Retailers Pricing  Big Record Labels = $.72 per song  Independents = $.62 per song  Through profits from iPods Staying away from “pay-for-placement”

To Conclude: Artists will give in to creating more exclusive content Exclusive content helps drive total sales for iTunes and artists Hence: the New Music Gatekeeper