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Like many technological innovations, the iPod was not the first of it's kind, but few would argue it's tremendous success. Some industry estimates credit the Apple iPod with a market share in the 90% range. Of course, when you are flying this high, the only direction to go is down, so only time will tell if Apple is able to maintain its vaunted status. In the meantime however, the iPod continues to be a cash cow for Apple, pushing it's stock value upwards and onwards, one set of white hipster earbuds at a time. But for anyone not working directly for Steve Jobs, there is a price to pay for this success. The popularity of the iPod hits you right where it hurts most in the wallet.

Like any audiophile, I looked at several models of the iPod when I was shopping for a new digital music player. After all, who wouldn't be attracted to the sleek and oh-so-tragically-hip little device? The flashy ads on TV promised not only an enjoyable listening experience, but a chance to cut right to the front of the cool line with the "in crowd".

But there was a nasty surprise in store when I got to the store and started browsing. My brain temporarily overheated from shock when I looked at the prices. I'd done some shopping for other non-Apple iPods before, so I thought I had a feel for the various price-points in the market. The iPod takes a baseball bat to those price points and beats them to a bloody pulp, but only after stealing your credit card numbers.

So what make the iPod so expensive? In a word: Advertising. And in second word: Demand, which is a result of the first word.

In order to gain it's place as the premier mp3 player, Apple has flooded America with ads for the iPod. This tiny technological terror is everywhere; on television, radio, newspapers, websites - it's almost impossible to go anywhere without seeing an ad for the iPod. Apple's marketing campaign has been so successful, that in many social circles, iPod has become the default term for any mp3 player in much the same way that an adhesive bandage is referred to as a "Band-Aid".

But these ads come with a price. Apple's marketing budget likely exceeds the entire economic output of a small nation. Well, not literally, but it's no small sum. And as any first year economics student can tell you, who ultimately pays for the cost of those ads? That's right, you do! Apple must recover it's ad costs and they do it at the checkout stand.

But advertising doesn't only have the immediate impact of raising the cost of an iPod. The ads themselves increase consumer demand for the iPod. This isn't surprising, and in fact it may seem a little obvious to even mention. After all, the entire point of advertising is to make people want to buy your product. But when Apple knows there are thousands of people in the country who love their product and will pay to buy it, they certainly aren't going to lower prices. No sir, if there is a steady demand, any company, even one run by a room full of chimpanzees, is going to charge whatever people are willing to pay. If people keep buying the iPod in record numbers, you can bet Apple isn't going to be lowering prices.

Apple's iPod is a marvelous blend of technology and marketing. A Perfect Storm of capitalism. They have produced a fantastic product and convinced millions of consumers that you simply must have an iPod if you are to be anybody in the world of digital music. Personally, I don't doubt the quality of the iPod, but I certainly remain skeptical as to whether it's increased cost is truly worth the price.

Learn more about this author, Erich Rosenberger M.D..
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