Does Apple Need to Refresh iTunes?

Dec.10.09 | About: Apple Inc. (AAPL)

Apple’s (NASDAQ:AAPL) purchase of streaming music service Lala reportedly represents a shift in the company’s iTunes strategy. The aim: Make iTunes more Web friendly.

The Wall Street Journal reports that Apple is looking to give consumers more ways to access and manage iTunes without a download of the software.

The larger questions: Does Apple need to rethink the iTunes model? Is Apple missing a shift to Web listening habits? Can iTunes, the largest music service around, be getting tired?

Those questions can be answered with one word: Yes.

Streaming is coming around. And it’s even possible that subscription services will gain popularity. If Apple were to simply copy Microsoft’s Zune Pass subscription model it would have a hit. Apple is a no-show on subscriptions and streaming. Meanwhile, everyone has an iPod so there aren’t massive growth gains for iTunes ahead. In addition, iTunes has become rather bloated.

In other words, I’d welcome a more Web savvy iTunes. My usage beyond managing a music library has dropped off. I buy music at Amazon’s MP3 store more often than not. And streaming services are also very handy and garnering more of my consumption time.

Apple obviously sees these trends developing and sees Lala as a way to get in front of those changes. Business model transitions are often tricky and it should be interesting to see how Apple tweaks iTunes.