I recently installed iTunes 8 and for once, I'm pretty happy with the upgrades they made. I like the new interface, I like the new look, and most of all I like Genius.
Genius is Apple's attempt at collaborative filtering. You nominate a song in your library and it builds a playlist of your music to match that song (based on the masses of data Apple collects from iTunes users). So far, the playlists it has created for me have been excellent. They've been coherent, listenable collections and have resurfaced some excellent music I had forgotten that I owned. For once, I am not angry that I had to accept the iTunes ToS yet again :-)
One thing I think that Apple have missed though is the monetisation strategy. Right now this consists of a persistent sidebar that shows stuff you could buy on the iTunes store that relates to what you are listening to right now. It's a very small evolution from the old mini-store panel.
That's all very well and good, but here's my beef with it. When I am using iTunes, I am listening to music. I am not looking at my computer and reading a bunch of text telling me about tracks that I have no idea how to rate. I'm afraid that response rates on these ads are going to suck, monumentally, for the reason that this is old fashioned interuption marketing. It's pretty well targeted I'll give you that, but it gives me nothing, and I have to stop what I am doing to interact with it.
My suggestion for a better monetisation strategy would be this:
1. Every Genius playlist that is created adds 2 relevant tracks that you do not own and streams them from the iTunes store.
2. Before these tracks play there is a little unobtrusive sonic logo that let's you know you are about to here something you don't own.
3. While these tracks are playing, there is a big button on iTunes that let's you buy them with a single click (you could even have it set up so that pressing 'Menu' on your remote would do that).
4. Every time you play the Genius playlist it inserts a different two tracks.
5. Once a week, Apple emails you about all of the stuff that it inserted into your Genius playlists that you didn't buy at the time. These emails give you the context of the track and a 30 sec reminder. They replace the awful emails that iTunes currently sends out.
6. There could even be a nice bit of the iTunes store fr you to go and review this info whenever it suits you.
I guarantee that this approach would sell more tunes than the current sidebar.
No doubt the lawyers would say that there are all sorts of issues with streaming and DRM etc , but hell, if you are going to build a walled garden, why don't you take advantage of it. Better than that, if I was Apple I'd go to the record companies not asking how much I'd need to pay for streaming rights, but how much they will pay to get their tracks inserted. I'd build AdWords for iTunes, with record companies / bands bidding a higher rev share to Apple on the inserted tunes, and Apple figuring out AdWords style what combination of bids and quality score (clicks, purchases, match etc) delivers the best result for the end user and for Apple. New bands just getting started might offer Apple a huge rev share to get started. Getting inserted into a million playlists automatically is a great way to build a fan base (if you are good!)
As a user, I would absolutely love this. It's what I want from last.fm, but sadly they don't have the assets to complete the sale there and then. Apple on the other hand has built exactly that. So please Mr Jobs, give me the chance to really discover and buy new music on iTunes...