Apple tunes in on music downloads

After weeks of rumors, Apple Computer Inc. 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 new music software.

The service, offering songs for US$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, 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 ten times and burning is for personal use only, Apple said.

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 like they do in 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 capacity, 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 US$399 and US$499, respectively, come with a docking station, case and remote control. The 10G-byte model at US$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 US$19, Apple said. The iPod had been available in 5G-byte, 10G-byte and 20G-byte versions, priced at US$299, US$399 and US$499, respectively.

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 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 Ltd. and StreamCast Networks Inc., 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 AG, AOL Time Warner Inc., EMI Group PLC and RealNetworks Inc. It competes with Pressplay, formed by Vivendi Universal SA and Sony Music Entertainment Inc. and offered through Yahoo Inc.'s Web site and Microsoft Corp.'s MSN, as well as other sites. Rhapsody is operated by 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."

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