According to Apple's director of product marketing Chris Bell, "the Music Store has a positive margin that will grow exponentially – but if that was our only story, we might need to be worried about competition."
Talking to E-Commerce Times Bell describes how Apple is in a "unique situation" in the music downloads market, "because a key part of our strategy is to drive sales of iPod, and we see that in tandem with the music store."
Another benefit for Apple is the fact that companies just joining the market are still at an early stage of innovation, while Apple is "already on to our second and third generation". The advantage of experience also means that Apple has "moved into finding new ways to collaborate with artists".
Bell also outlines the histories of the iTunes and iPod projects. He says Apple's digital music strategy goes back to the original Macintosh: "That was the first computer that had sound included, after all".
Bell explains: "Music has been part of Apple's culture for 20 years. iTunes just feels like a natural direction for us to take."
Bell also admits that when the iPod was released, the company "knew that iTunes would be a companion to it". But Apple decided to wait before releasing it because: "At the time, there were a number of failed attempts and we waited until we could do it right and have it work seamlessly."