Update: Apple tunes in on music downloads

Service offers songs for 99 cents with no subscription

SAN FRANCISCO -- After weeks of rumors, Apple Computer on Monday launched iTunes Music Store, a fee-based online music service for Mac users integrated with iTunes 4, a new version of Apple's music software.

The service, offering songs for $0.99 a piece without a subscription, will compete with subscription services established by the large music labels, but free file-swapping services, which the entertainment industry has been battling in court for years, are undoubtedly the toughest competition.

Apple's online music service includes the catalogs of the major music labels, but to keep its air of uniqueness Apple also offers exclusive tracks from over 20 artists and music groups including Bob Dylan, U2, Sheryl Crow and Eminem, Apple Chief Executive Officer (CEO) Steve Jobs said at a launch event in San Francisco.

Songs bought in the iTunes Music Store can be stored on up to three Macs and unlimited Apple iPod MP3 players, and can be burned to an unlimited number of CDs. However, as a safeguard against home CD stores, users will be allowed to burn a specific play list only 10 times and burning is for personal use only, Apple said.

The tracks in the iTunes Music Store will be encoded at 128k bps (bits per second) using AAC (Advanced Audio Codec), which Apple claims provides better sound quality and smaller file sizes than MP3s at the same bit rate. MP3 is the format used for most music files swapped online today.

File-swapping services starting with Napster have shown the world that "the Internet was built for music delivery," Jobs said. "The downside is that it is stealing. ... It has proliferated because there is no legal alternative."

ITunes Music Store is an alternative, according to Jobs. There is no subscription fee, allowing users to buy and keep songs as they do from a store, and downloads come with fewer restrictions than Pressplay or Rhapsody, two competing subscription services, especially when it comes to CD burning, Jobs said.

"It is not stealing anymore; it is good Karma," Jobs said.

Along with the iTunes Music Store launch, Apple also refreshed its line of iPods with thinner and lighter players boasting 10G-byte, 15G-byte and 30G-byte storage capacities, improved displays and USB (Universal Serial Bus) 2.0 connectivity for use with Windows computers in addition to the Apple standard FireWire connections.

The 15G-byte and 30G-byte versions, priced at $399 and $499, respectively, come with a docking station, case and remote control. The 10G-byte model at $299 comes without those accessories. The docking station includes a line-out port to connect the iPod to a stereo system.

The new iPods will be available in the U.S. this Friday and internationally on May 9, Apple said. Windows users will have to wait until June for the software to link their iPod with a PC, and the USB cable will cost an extra $19, Apple said. The iPod had been available in 5G-byte, 10G-byte and 20G-byte versions, priced at $299, $399 and $499, respectively.

Users of older iPods will have to run a free software update to make them work with the iTunes Music Store, Apple said.

ITunes Music Store fits with Apple's strategy to make the Mac the hub of the digital home, but can also be seen as an effort to establish new revenue sources. Apple's worldwide share of the PC market has been eroding steadily. ITunes Music Store is available for U.S. Mac users only starting today. A version for Windows will be launched before the end of the year, Apple said.

ITunes 4 is available as a free download from Apple's Web site. The software requires Mac O.S. X 10.1.5 or later. New features, besides the music store, include support for Apple's Rendezvous instant network technology, which allows users to share music with other nearby Apple users over a wireless network. The music is streamed rather than downloaded.

The entertainment industry last week was given a new push to develop its own online music services when a U.S. federal judge ruled that Grokster and StreamCast Networks  two providers of free file-swapping software, can't be held liable for the copyright infringing actions of their users.

Recording and movie companies say that sharing and downloading copyright-protected material is stealing and have been battling file-sharing services in court for years now.

The challenge facing Apple and the record companies is to create compelling alternatives to peer-to-peer file-swapping services. Pressplay, Rhapsody and MusicNet so far have attracted a limited number of subscribers, even with their promises of better quality music files and faster downloads.

MusicNet is backed by Bertelsmann, AOL Time Warner, EMI Group, and RealNetworks. It competes with Pressplay, formed by Vivendi Universal SA and Sony Music Entertainment Inc. and offered through Yahoo's Web site and Microsoft's MSN, as well as other sites. Rhapsody is operated by Listen.com Inc. of San Francisco, which was acquired by RealNetworks Inc. earlier this month.

"They are subscription services; they don't let you go and download just one song," Jobs said. "We think subscriptions are the wrong path."

Jobs started his presentation with a nod to the recording industry's concerns about music piracy, offering an explanation of Apple's "Rip. Mix. Burn." slogan introduced about two years ago.

"There was some confusion about Rip Mix Burn, especially for those people who don't have teenage kids at home. Rip does not mean to rip off. It means to take a CD you have and put the bits on your computer," Jobs said.

He introduced Apple's new credo: "Acquire. Manage. Listen."

Copyright © 2003 IDG Communications, Inc.

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