Apple Service Seeks Bite of Online Music Market.
Apr. 29--SAN FRANCISCO--Wading into the contentious
world of online music, Apple Computer on Monday launched a music download
service that it said addresses consumers' concerns about price and usability
while soothing the record industry's fears of piracy.
Analysts said the service also gives Apple a foothold in the digital-entertainment industry and could help drive customers to purchase more Apple products, which are tightly integrated with the service.
It also could lure downloaders from free services such as Kazaa, which allow millions of users to swap online music without paying record companies or artists.
Such services have been the focus of fierce and costly legal battles, including one by the recording industry that forced the shutdown of Napster in 2001. Even college students with music-sharing computers have been the targets of aggressive legal action.
Based on Apple's well-regarded iTunes software, the iTunes Music Store lets users download music for 99 cents a song or $9.99 an album.
Once downloaded, the music can be stored on the user's computer, burned onto CDs or transferred to Apple's iPod MP3 portable music players.
Similar existing services generally charge a monthly fee and restrict how the downloaded music can be used.
Although only users of Macintosh computers equipped with Apple's OS X operating system can use the service now, Apple software that will let Windows-based computers use the service will be ready by year's end.
Unveiling the service at the Moscone Center, Apple Chief Executive Steve Jobs said the recording industry's big five -- Sony, EMI, Warner, BMG and Universal -- are contributing music to the site's catalog, which numbers more than 200,000 songs and is growing daily. The site also features exclusive cuts by 20 artists such as U2 and Bob Dylan.
A slick search function hunts for music by genre, artist or song title. For example, a search for "Mack the Knife" turned up more than a dozen versions by various artists, including Bobby Darin and Louis Armstrong.
Users can preview 30-second clips of any song in the catalog and then purchase and download the song by clicking a single "buy" button.
Jobs said users would find the service more convenient and less expensive than buying CDs at a store because they could buy just the songs they liked and mix them into a CD of favorite tunes.
But even if they chose to download an entire album, it would be less expensive than buying at a store. For instance, Missy Elliott's "Da Real World" CD sells through the Tower Records and Amazon.com online stores for $14.99 but can be downloaded at the Apple site for $9.99.
Jobs said people would embrace the opportunity to download music easily if the price was right. "Illegal downloading has proliferated because there's no legal alternative that's worth beans," Jobs said, taking a swipe at existing services.
"They are subscription-based, and we think that's the wrong path. ... People are used to buying music (without a subscription) and getting a broad set of personal use rights with it."
In a nod to the recording industry's anti-piracy campaign, Jobs repeatedly said downloading music for free from Napster-like services is wrong.
"The good side of those services is that it's instant gratification," Jobs said. "The downside is that it's stealing."
He even took the opportunity to revise Apple's digital-music mantra of "Rip, Mix and Burn," saying "rip" could be interpreted as "rip off." He half-jokingly said the slogan now would be "acquire, manage and record."
Analysts generally were enthusiastic about the iTunes Music Store, both as a model for music downloading and a business opportunity for Apple.
"It's the closest we've come to meeting the needs of both the consumer and the recording industry," said Robe Enderle, an analyst with Giga Information Group in Mountain View. "I'm not convinced it will get a lot closer. Anything less than a dollar a song the music industry won't go for. For the consumer, it's a pretty good value. (In a store) you would pay $15 for a CD and only get a few songs you'd like."
Enderle also said the service was a hedge against further erosion of Apple's hardware business, which has slipped to about 3 percent of total personal computer market share. "Music services and other services later on could be very lucrative," he said.
But Tim Bajarin, a long-time Apple watcher in the Silicon Valley, said the service could drive more customers to Apple products, especially the iPod portable MP3 player, the only portable player that can play music downloaded from iTunes Music Store.
Apple also introduced three new iPod models Monday, with capacities of 10, 15 and 30 gigabytes. The 30-gigabyte model would hold 7,500 songs.
"This clearly enhances the Macintosh platform," he said. "But you have to find ways of creating a service with recurring revenue and tying it to your hardware platform."
Bajarin said it also gives users a "brain-dead simple" as well as legal way to download music. "A great number of users want to do what's right and pay for songs, but so far they can't because nobody's given them a great way to get the songs they want."
But users of free services may not willingly pay for what previously was gratis. "When you've had a taste for free, it's hard to take it away," said Mike, a frequent downloader from Sacramento who asked that his last name not be used.
"But people who are interested in supporting the artists and record companies by paying, this could be a great way to do it," he said.
Evan Wallis, a freshman at the University of California, Davis, also said he doubted he would use a pay service, even after the university warned students against free file-sharing systems.
"I don't have a lot of money and am reluctant to spend it on music downloads," he said. "I'd just try to get the music any way I could."
And as it confronts those attitudes, the recording industry faces other challenges, too. A federal judge in Los Angeles last week ruled that the Grokster and StreamCast Networks file-sharing services weren't guilty of copyright infringement. The judge said, in effect, that neither company was liable for illegal copying done by customers.
At least one Apple music competitor expressed bewilderment at the attention Jobs' announcement received.
"I'm a little bit dismayed," said Michael Bebel, chief executive at pressplay. "I'm not sure what the hoopla is all about."
Bebel said that Apple is a master at drawing publicity, and that could be good for an industry that has yet to prove it's a sustainable business.
"Clearly they're a recognized brand," Bebel said. "They do provide that legitimacy to whatever they do. ... I'm happy Steve has entered the market."
Bebel, however, said that Apple could be in for a rude awakening. Accustomed to free music, "consumers are pretty demanding in this space," he said. He wouldn't say how many subscribers pressplay has.
Apple's service also generates new competition for Echo, a service owned by Tower Records and other major music retailers. Officials of Echo and Tower couldn't be reached for comment Monday.
By Clint Swett and Dale Kasler
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com
Analysts said the service also gives Apple a foothold in the digital-entertainment industry and could help drive customers to purchase more Apple products, which are tightly integrated with the service.
It also could lure downloaders from free services such as Kazaa, which allow millions of users to swap online music without paying record companies or artists.
Such services have been the focus of fierce and costly legal battles, including one by the recording industry that forced the shutdown of Napster in 2001. Even college students with music-sharing computers have been the targets of aggressive legal action.
Based on Apple's well-regarded iTunes software, the iTunes Music Store lets users download music for 99 cents a song or $9.99 an album.
Once downloaded, the music can be stored on the user's computer, burned onto CDs or transferred to Apple's iPod MP3 portable music players.
Similar existing services generally charge a monthly fee and restrict how the downloaded music can be used.
Although only users of Macintosh computers equipped with Apple's OS X operating system can use the service now, Apple software that will let Windows-based computers use the service will be ready by year's end.
Unveiling the service at the Moscone Center, Apple Chief Executive Steve Jobs said the recording industry's big five -- Sony, EMI, Warner, BMG and Universal -- are contributing music to the site's catalog, which numbers more than 200,000 songs and is growing daily. The site also features exclusive cuts by 20 artists such as U2 and Bob Dylan.
A slick search function hunts for music by genre, artist or song title. For example, a search for "Mack the Knife" turned up more than a dozen versions by various artists, including Bobby Darin and Louis Armstrong.
Users can preview 30-second clips of any song in the catalog and then purchase and download the song by clicking a single "buy" button.
Jobs said users would find the service more convenient and less expensive than buying CDs at a store because they could buy just the songs they liked and mix them into a CD of favorite tunes.
But even if they chose to download an entire album, it would be less expensive than buying at a store. For instance, Missy Elliott's "Da Real World" CD sells through the Tower Records and Amazon.com online stores for $14.99 but can be downloaded at the Apple site for $9.99.
Jobs said people would embrace the opportunity to download music easily if the price was right. "Illegal downloading has proliferated because there's no legal alternative that's worth beans," Jobs said, taking a swipe at existing services.
"They are subscription-based, and we think that's the wrong path. ... People are used to buying music (without a subscription) and getting a broad set of personal use rights with it."
In a nod to the recording industry's anti-piracy campaign, Jobs repeatedly said downloading music for free from Napster-like services is wrong.
"The good side of those services is that it's instant gratification," Jobs said. "The downside is that it's stealing."
He even took the opportunity to revise Apple's digital-music mantra of "Rip, Mix and Burn," saying "rip" could be interpreted as "rip off." He half-jokingly said the slogan now would be "acquire, manage and record."
Analysts generally were enthusiastic about the iTunes Music Store, both as a model for music downloading and a business opportunity for Apple.
"It's the closest we've come to meeting the needs of both the consumer and the recording industry," said Robe Enderle, an analyst with Giga Information Group in Mountain View. "I'm not convinced it will get a lot closer. Anything less than a dollar a song the music industry won't go for. For the consumer, it's a pretty good value. (In a store) you would pay $15 for a CD and only get a few songs you'd like."
Enderle also said the service was a hedge against further erosion of Apple's hardware business, which has slipped to about 3 percent of total personal computer market share. "Music services and other services later on could be very lucrative," he said.
But Tim Bajarin, a long-time Apple watcher in the Silicon Valley, said the service could drive more customers to Apple products, especially the iPod portable MP3 player, the only portable player that can play music downloaded from iTunes Music Store.
Apple also introduced three new iPod models Monday, with capacities of 10, 15 and 30 gigabytes. The 30-gigabyte model would hold 7,500 songs.
"This clearly enhances the Macintosh platform," he said. "But you have to find ways of creating a service with recurring revenue and tying it to your hardware platform."
Bajarin said it also gives users a "brain-dead simple" as well as legal way to download music. "A great number of users want to do what's right and pay for songs, but so far they can't because nobody's given them a great way to get the songs they want."
But users of free services may not willingly pay for what previously was gratis. "When you've had a taste for free, it's hard to take it away," said Mike, a frequent downloader from Sacramento who asked that his last name not be used.
"But people who are interested in supporting the artists and record companies by paying, this could be a great way to do it," he said.
Evan Wallis, a freshman at the University of California, Davis, also said he doubted he would use a pay service, even after the university warned students against free file-sharing systems.
"I don't have a lot of money and am reluctant to spend it on music downloads," he said. "I'd just try to get the music any way I could."
And as it confronts those attitudes, the recording industry faces other challenges, too. A federal judge in Los Angeles last week ruled that the Grokster and StreamCast Networks file-sharing services weren't guilty of copyright infringement. The judge said, in effect, that neither company was liable for illegal copying done by customers.
At least one Apple music competitor expressed bewilderment at the attention Jobs' announcement received.
"I'm a little bit dismayed," said Michael Bebel, chief executive at pressplay. "I'm not sure what the hoopla is all about."
Bebel said that Apple is a master at drawing publicity, and that could be good for an industry that has yet to prove it's a sustainable business.
"Clearly they're a recognized brand," Bebel said. "They do provide that legitimacy to whatever they do. ... I'm happy Steve has entered the market."
Bebel, however, said that Apple could be in for a rude awakening. Accustomed to free music, "consumers are pretty demanding in this space," he said. He wouldn't say how many subscribers pressplay has.
Apple's service also generates new competition for Echo, a service owned by Tower Records and other major music retailers. Officials of Echo and Tower couldn't be reached for comment Monday.
By Clint Swett and Dale Kasler
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com
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