Apple to expand online music store
By Don Steinberg
Knight Ridder News Service
Apple Computer is expected today to announce the availability of its iTunes Music Store — which has sold more than 10 million 99-cent song downloads to Apple computer users since it began in April — to users of Microsoft Windows computers, a vastly larger market.
Then on Oct. 29, a new version of Napster will launch, also selling downloaded songs to Windows users. The original Napster was a nightmare for record companies, letting millions of people worldwide trade music online without paying for it. The industry sued it out of business, but other software for trading music on the Internet has taken its place.
The Recording Industry Association of America says revenues have declined by 31 percent in the past three years, attributing the drop mostly to piracy.
But the new Napster 2.0 — like Apple's iTunes and others including Musicmatch, Rhapsody, BuyMusic.com, MusicNet and eMusic — is legal, the result of contracts with the five major American record labels: BMG Entertainment, EMI Music Publishing, Sony Music USA, Universal Music Group and Warner Music Group.
An industry best known for an anti-Internet stance, with its lawsuits against operators of pirated-music Web services and individuals who trade music online, appears to be changing its tune.
"They had to have the stick — the lawsuits — to show that egregious violations could not be tolerated," said Mike McGuire, research director for media at technology consulting group GartnerG2. "But there also has to be a pretty nice carrot."
That carrot, he said, is commercial services that are reasonably priced, are easy to use and offer song selection that equals or surpasses the free services.
Roxio Inc., which bought the Napster name and technology for $5 million last November in a bankruptcy auction, bills Napster 2.0 as a music-exploration service.
The new Napster is like an encyclopedia of popular music, with discographies of artists, album art and decades of Billboard charts that link to song clips and downloads. There's a "just added" section for the latest releases, and the ability to see what others with tastes similar to yours are listening to.
Those features aren't offered in free music-trading software such as Kazaa, where users can't always get what they want, or may end up downloading mislabeled songs or files with inferior sound quality.
One other thing the commercial services have that the free systems don't — a key to their embrace by record labels — is built-in limits on how the downloaded music can be used. Unlike the MP3-formatted audio files that made online music-sharing popular, music files from legal download services carry information about how many computers the music can play on and how many times it can be transferred to a compact disc. The music plays only on computers and portable players that support this "rights management" feature, and if the file is transferred to an unauthorized computer or player, it simply won't play.
Apple uses its own rights management software. Napster, Musicmatch and most of the other services use Microsoft's Windows Media format, which also has rights management.
In fact, songs from the iTunes store won't run on any of the roughly 40 portable devices that support Microsoft. And songs downloaded from the pay services that support Microsoft's technology won't play on Apple's palm-sized iPod device, the top-selling digital music player that has sold more than 1.3 million units.
"I'd like to download two or three songs from Napster to see what it's like," said Jeff Chin, an engineer in Philadelphia who used the old Napster and has about 2,000 songs on his Windows computer. But because he uses an iPod with Windows, Chin said he is more likely to buy music in bulk from Apple's new Windows-capable iTunes.
So the stage is set for a new showdown between old rivals Apple and Microsoft.
Microsoft makes money selling the software that online music retailers need to sell copy-protected song files; the more demand, the better.
Apple makes money primarily selling hardware. The iTunes online store, which breaks even financially, has helped sell iPods.
But McGuire thinks if Apple is serious about being a music retailer, too, it might consider allowing Microsoft files on its players.
"If you want to have the best music store in the world then you need to support what the customers have," he said. "They don't all have iPods."
