Apple Computer
Unveils Service to Sell 200,000 Digital Music Titles Online.
By Chris Gaither,
The Boston Globe Knight Ridder/Tribune Business News
Apr. 29--SAN FRANCISCO--Apple Computer Inc., whose "Rip.Mix.Burn" slogan two years ago angered music publishers fearing digital piracy, yesterday launched an online music service stocked with 200,000 tunes from those same publishers.
The new service, called iTunes Music Store, is Apple's latest and deepest step into the digital entertainment industry and offers another source of revenue for the computer maker, whose market share has slipped dramatically over the last decade. Besides selling personal computers, software, and portable music players, Apple now sells the music to play on its hardware.
For now, only owners of Apple's computers can use Music Store. But Apple CEO Steve Jobs said he expected by year-end to release a version compatible with computers running Microsoft Corp.'s Windows operating system, which powers 98 percent of the PCs sold last quarter.
"Apple is the first company that's brought together the entire ecosystem for the new digital age of music," Jobs said at a press conference here yesterday.
In Music Store, Apple persuaded the recording industry to give up more control than it has with other music services, which mostly require monthly subscriptions and charge extra for the ability to copy music onto a CD. For 99 cents, Apple's customers can download a song, burn it onto a CD an unlimited number of times, and transfer it to one of Apple's iPod portable music players. Apple charges roughly $8 to $13 to download a full album.
With its inexpensive music prices and the easy-to-use software typical of Apple, analysts said, the computer maker may have finally introduced a service worthy of persuading people to buy music instead of download it for free from file-sharing programs like Kazaa, Morpheus, or Limewire.
"This is the service we've been waiting for," said P.J. McNealy, an analyst with GartnerG2, a division of the market research firm Gartner Inc.
Indeed, trying to make clear that Apple's relationship with the recording industry has improved since the "Rip.Mix.Burn" days, Jobs yesterday hailed Music Store as a higher-quality, faster, and ethical alternative to file-sharing programs. "It's stealing," Jobs said of those free programs, "and it's best not to mess with karma."
Apple also tried to address the music industry's concerns about copying music to share among friends or family. Through a nifty software feature, a computer connected to a wireless network detects the song lists on nearby computers, then allows users to play those songs by streaming them over the network, not copying them.
But McNealy warned that Apple sells so few computers that, by the time it releases a Windows version later this year, competitors such as Listen.com's Rhapsody and Pressplay may catch up by loosening their restrictions on what users can do with the music after listening to it. Apple shipped only 1.9 percent of all computers in the fourth quarter of 2002, an all-time low, before improving to 2.1 percent in the first quarter, according to International Data Corp., a Framingham-based market research firm. For all of 2002, Apple sold just 2.3 percent of personal computers purchased worldwide, said IDC.
Yet Apple's users, who tend to work in creative professions like design, are seen as highly influential in the computer industry, and Jobs has been steering the company to try to take advantage of the blend between entertainment and technology. Its iPod reaped 23.4 percent of the revenue from all digital music players from March 2002 to February 2003, though it sold only 10.7 percent of the units, according to the NPD Group, a market research firm based in Port Washington, N.Y.
Apple yesterday also unveiled three iPods, priced between $299 and $499, that are thinner and lighter than previous models but hold more songs. Similar to plans for the Music Store, the iPod first catered only to Apple users but is now Windows-compatible.
Yet even with the success of the iPod, Tim Bajarian, an analyst with Creative Strategies Inc. in San Jose, Calif., said Apple's foray into digital music had lacked a "services business" -- one with a steady revenue stream but without the expense of building computer hardware.
Said Roger Kay, an analyst with IDC: "To package it this way gives them the opportunity to address a potentially large market with not a lot of risk."
Jobs said Apple began discussing a music service with music publishers 18 months ago. The computer maker has reportedly explored buying Universal Music Group, a record label owned by Vivendi. Apple has denied that it made an offer for Universal but would not comment on reports that it had discussed such a deal.
Apple also would not discuss the terms of its agreements with the music industry yesterday, but McNealy predicted that Apple could reap as much as 30 percent of the revenue from each song it sells.
To see more of The Boston Globe, or to subscribe to the newspaper, go to http://www.boston.com/globe
I� ~ s S �� �a� ng others, that work over Wi-Fi.
Apple said in its letter that it does not know if Google Voice uses VoIP.
In its letter, AT&T said it plans to take a "fresh look" at authorizing VoIP programs that use its 3G data network.
Apr. 29--SAN FRANCISCO--Apple Computer Inc., whose "Rip.Mix.Burn" slogan two years ago angered music publishers fearing digital piracy, yesterday launched an online music service stocked with 200,000 tunes from those same publishers.
The new service, called iTunes Music Store, is Apple's latest and deepest step into the digital entertainment industry and offers another source of revenue for the computer maker, whose market share has slipped dramatically over the last decade. Besides selling personal computers, software, and portable music players, Apple now sells the music to play on its hardware.
For now, only owners of Apple's computers can use Music Store. But Apple CEO Steve Jobs said he expected by year-end to release a version compatible with computers running Microsoft Corp.'s Windows operating system, which powers 98 percent of the PCs sold last quarter.
"Apple is the first company that's brought together the entire ecosystem for the new digital age of music," Jobs said at a press conference here yesterday.
In Music Store, Apple persuaded the recording industry to give up more control than it has with other music services, which mostly require monthly subscriptions and charge extra for the ability to copy music onto a CD. For 99 cents, Apple's customers can download a song, burn it onto a CD an unlimited number of times, and transfer it to one of Apple's iPod portable music players. Apple charges roughly $8 to $13 to download a full album.
With its inexpensive music prices and the easy-to-use software typical of Apple, analysts said, the computer maker may have finally introduced a service worthy of persuading people to buy music instead of download it for free from file-sharing programs like Kazaa, Morpheus, or Limewire.
"This is the service we've been waiting for," said P.J. McNealy, an analyst with GartnerG2, a division of the market research firm Gartner Inc.
Indeed, trying to make clear that Apple's relationship with the recording industry has improved since the "Rip.Mix.Burn" days, Jobs yesterday hailed Music Store as a higher-quality, faster, and ethical alternative to file-sharing programs. "It's stealing," Jobs said of those free programs, "and it's best not to mess with karma."
Apple also tried to address the music industry's concerns about copying music to share among friends or family. Through a nifty software feature, a computer connected to a wireless network detects the song lists on nearby computers, then allows users to play those songs by streaming them over the network, not copying them.
But McNealy warned that Apple sells so few computers that, by the time it releases a Windows version later this year, competitors such as Listen.com's Rhapsody and Pressplay may catch up by loosening their restrictions on what users can do with the music after listening to it. Apple shipped only 1.9 percent of all computers in the fourth quarter of 2002, an all-time low, before improving to 2.1 percent in the first quarter, according to International Data Corp., a Framingham-based market research firm. For all of 2002, Apple sold just 2.3 percent of personal computers purchased worldwide, said IDC.
Yet Apple's users, who tend to work in creative professions like design, are seen as highly influential in the computer industry, and Jobs has been steering the company to try to take advantage of the blend between entertainment and technology. Its iPod reaped 23.4 percent of the revenue from all digital music players from March 2002 to February 2003, though it sold only 10.7 percent of the units, according to the NPD Group, a market research firm based in Port Washington, N.Y.
Apple yesterday also unveiled three iPods, priced between $299 and $499, that are thinner and lighter than previous models but hold more songs. Similar to plans for the Music Store, the iPod first catered only to Apple users but is now Windows-compatible.
Yet even with the success of the iPod, Tim Bajarian, an analyst with Creative Strategies Inc. in San Jose, Calif., said Apple's foray into digital music had lacked a "services business" -- one with a steady revenue stream but without the expense of building computer hardware.
Said Roger Kay, an analyst with IDC: "To package it this way gives them the opportunity to address a potentially large market with not a lot of risk."
Jobs said Apple began discussing a music service with music publishers 18 months ago. The computer maker has reportedly explored buying Universal Music Group, a record label owned by Vivendi. Apple has denied that it made an offer for Universal but would not comment on reports that it had discussed such a deal.
Apple also would not discuss the terms of its agreements with the music industry yesterday, but McNealy predicted that Apple could reap as much as 30 percent of the revenue from each song it sells.
To see more of The Boston Globe, or to subscribe to the newspaper, go to http://www.boston.com/globe
I� ~ s S �� �a� ng others, that work over Wi-Fi.
Apple said in its letter that it does not know if Google Voice uses VoIP.
In its letter, AT&T said it plans to take a "fresh look" at authorizing VoIP programs that use its 3G data network.
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