TechWeb

Apple Debuts Online Music Service

Apr 28, 2003 (10:04 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=9400056


SAN FRANCISCO (AP) -- It's time to buy, mix, and burn, according to Apple Computer Inc. The Silicon Valley company that angered the recording industry with its "Rip. Mix. Burn" ad campaign launched an online music service Monday that promises to make it easier for consumers to pay for music downloaded from the Internet.

The announcement is the result of an intense effort by Apple CEO Steve Jobs to court music industry executives, who have been leery of digital music downloads, and have aggressively filed lawsuits and pushed for new laws to stem the illegal copying and distribution of copyright works.

That wariness has hamstrung other online music distribution models, but with Apple's well-known brand and marketing finesse, analysts say the new service could be more widely accepted by consumers.

Initially, the service is expected to work only with Macintosh computers, but if Apple eventually releases a version for the nearly ubiquitous Microsoft Windows platform--as it did for its portable iPod music player-- then the service could have mass appeal. A new version of the iPod was also announced Monday.

Even if the service remains limited to Macs, which comprise less than 3 percent of the desktop computing market, the segment is big enough for record labels to test a new business model for supplying music online, said Phil Leigh, a digital music analyst at research firm Raymond James & Associates.

"I think it'll change the world a little bit," Leigh said. "It'll be the first legitimate online music service that will have major brand recognition, and it's focused on portability and ease of use."

So far, most music found online does not have the blessing of the five major record labels. Millions of users are downloading free copies of songs through file-sharing services such as Kazaa--services that the recording industry have sued in an effort to stem what they deem as revenue-robbing piracy.

Meanwhile, paid subscription providers have drawn only about 650,000 users, analysts estimate, and lack support of Macintosh computers. Pressplay, a joint venture of Sony and Universal, charges a flat fee of $9.95 a month to listen to an unlimited number of songs from the major labels. Consumers who want to purchase songs to store on their hard drive or burn them onto a CD pay an extra fee of 98 cents per song.

Apple's latest efforts aren't limited to new music downloading. The company also has its sights on Hollywood, promoting its products as a "digital hub" that consumers can use to play or edit movies as well as music.

The ability to make perfect copies of creative content makes entertainment industry executives nervous, but Jobs, who also runs Pixar, the animation studio behind such hits as the "Toy Story" movies and "Monsters, Inc.," has tried to bridge the divide between their world and that of the computer industry.

Apple's announcement comes as recording companies and movie studios prepare to appeal a court decision Friday that was a major blow to their piracy-fighting efforts. A federal judge in Los Angeles ruled that Grokster Ltd. and StreamCast Networks Inc., the companies that distribute Grokster and Morpheus, aren't to blame for any illegal copying that their customers do using their file-sharing software.