04/29 - Apple launching new music store service - East Valley Tribune: Business

04/29 - Apple launching new music store service

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Posted: Tuesday, April 29, 2003 11:55 am | Updated: 1:50 pm, Thu Oct 6, 2011.

SAN FRANCISCO - Apple Computer's new music service may offer a consumer-friendly method of downloading songs for a modest 99 cents each - and give the music industry an effective model for denting the popularity of illegal song swapping online.

The venture draws from all five major labels in offering more than 200,000 songs - and includes some big name artists who previously shunned online distribution.

Unlike its competitors, the Apple service announced Monday has virtually no copy-protection - a major concession to consumer demand.

Apple lets customers keep songs indefinitely, share them on as many as three Macintosh computers and transfer them to any number of iPod portable music players. No subscriptions are necessary and buyers can burn unlimited copies of the songs onto CDs.

"There's no legal alternative that's worth beans," Apple CEO Steve Jobs told reporters and analysts.

Apple charges no such fees but does incorporate some minor restrictions - playlists can be stored on no more than three Macs and once a user burns 10 copies of a playlist onto CDs, they have to "modify" the list before copying again. That can be as simple as shuffling the order of the songs.

"It's a fresh start in the whole online music scene," said Hilary Rosen, CEO of the Recording Industry Association of America.

The Cupertino, Calif.-based company, which angered the recording industry with its "Rip. Mix. Burn" ad campaign two years ago, has instead won its cooperation by launching iTunes Music Store, the Internet's least restrictive commercial music service yet.

Jobs has intensely courted music industry executives, who have been leery of digital music downloads and have aggressively used lawsuits and lobbying to stem the illegal copying and distribution of copyright works.

In contrast, Music Store already includes music by Bob Dylan, U2, Eminem, Sheryl Crow, Sting and other artists previously wary about music downloads. Eventually, millions of songs will be for sale on the site, predicted Doug Morris, the chairman and CEO of Universal Music Group.

Morris called it "a defining moment in the music business."

By allowing people to do pretty much as they please with their digital copies, Apple and the music industry are acknowledging that, due to digital technology, online file-swapping can't be eradicated.

Even Rosen, who led the fight against Napster and its free online music-swapping successors, called Apple's new service "cool, cutting edge."

"It's not stealing anymore. It's good karma," said Jobs, asserting that other industry-backed services' subscription-based models treat music fans as "criminals" with extra fees and restrictions.

Apple also announced a new version of the iPod - thinner and lighter. It comes with 30 gigabytes of memory, enough for about 7,500 songs, and costs $499.

Initially, Music Store only works on Macintosh computers with Mac OS X or higher, but by year's end, Apple plans to make it compatible with devices using the nearly ubiquitous Microsoft Windows platform. The service then could have mass appeal.

While the service remains limited to Macs, which comprise less than 3 percent of the desktop computing market, the segment is big enough to let the music industry test a new business model, said Phil Leigh, an analyst at the 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."

Until now, most music found online lacked the blessing of the major labels - BMG, EMI, Sony Music Entertainment, Universal and Warner. 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.

The RIAA has sued four college students who allegedly offered more than 1 million recordings over the Internet, demanding damages of $150,000 per song. Music companies also are lobbying corporations, urging them to crack down on the downloading of songs using company computers.

Apple enters a market that has yet to establish much traction. Other providers of online music to paid subscribers have drawn only about 650,000 users, analysts estimate.

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