Apple's Making Serious Music

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SAN FRANCISCO — Apple Computer Monday premiered its long awaited music downloading service designed to compete with the legal and illegal file sharing sites of the world.

The new service called iTunes Music Store is based on its corresponding iTunes music file software and sells downloads at 99 cents per song or between $9.00 and $15.00 to download an entire album.

The Cupertino, Calif.-based computer maker which markets its products as able to “Rip, Mix and Burn,” also launched its third generation iPod player as well as iTunes version 4.0, with the new store software automatically included.

CEO Steve Jobs said the free method made popular by Napster, Morpheus and KaZaA offered instant gratification but not much else.

“The downside is that it is stealing,” Jobs said at a press event here. “Not to mention the download is slow as molasses and then craps out halfway through. It’s best not to mess with Karma. With our service, you just buy the songs you want.”

Jobs said other industry attempts at music downloading like pressplay and Rhapsody treat customers like a criminal.

“You have to subscribe to them and you can only play them as long as your membership holds up,” he said.

Apple said it would offer the service first to U.S. users of the Macintosh platform with a Microsoft Windows version available by the end of the year. Users can listen to a 30-second preview of any its current 200,000 tracks list before buying with a credit card with an U.S. address. Customers then have ownership of the music they download. The songs can also be freely transferred to Apple’s iPod player.

The caveat is that the files can only be digitally copied between three registered Macintosh products such as its new iMac or iBook. Apple said it does allow for lifting songs off of other computers through its Rendezvous streaming technology.

“Streaming is not copying. That would be verboten,” Jobs said.

However, the new iTunes software will only allow a single playlist to be burned 10 times thanks to Apple’s proprietary encryption technology (codenamed FairPlay). The copy protection code is embedded into the new iTunes store, the new iPod and the upgrade software for existing iPods.

The platform’s codec is based on Advanced Audio Coding (AAC) technology at 128 kbps, which was developed by Dolby Laboratories and is a key feature within the MPEG-4 standard.

To entice even more customers, the company refreshed its popular iPod. Thinner and lighter than two CD jewel cases, the player comes in three new models: a 10GB model for $299, a 15GB model for $399 and a 30GB model for $499. The devices will be in Apple’s retail stores for an in-store event starting May 2. The company expects to ship internationally on May 9.

“The competition hasn’t even caught up with our first generation iPod, and we’re introducing our third generation,” Jobs said.

It’s no secret that Apple has been looking at an online music download service. The project was first rumored after Apple released the last version of its iTunes software. The speculation reached such a fever pitch at one point that Jobs denied interest in purchasing Universal Music Group to the tune of $6 million just to get the service rolling.

The project was chiefly negotiated by CEO Steve Jobs and has the blessing of the five major record labels. Jobs’ clout in the entertainment industry has escalated after the success of animated movies produced by his Pixar studios.

“Apple is an a unique position. They have a rabid fan base of Mac users who will purchase it just because it has the Apple brand,” said Ryan Jones, a digital media analyst with the Yankee Group told internetnews.com last month.

“We are entering a phase when the business rules, as dictated by the major record labels, are changing for the better. The timing is right and it makes sense for a lot of the players, from the ISPs to the PC manufacturers, to hop aboard. The record industry is becoming desperate and they are conceding on the licensing terms,” Jones said.

At this point, Apple’s two biggest obstacles seem to be the company’s small market share (about 3 percent) and the prevalence of free and sometimes illegal file download services like Morpheus and KaZaA.

The former peer-to-peer network was cleared of some of its legal woes Friday after a U.S. District judge in Los Angeles ruled that Grokster and Morpheus could not be held liable for piracy by third-party users on the basis that they were decentralized networks.

The Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA), which are also suing Sharman Networks’ for its Kazaa Media Desktop, said it would appeal the ruling.

But Apple seems confident based on its ability to handle the traffic based on the success of its movie trailer site and the technology considering it either introduced or perfected most of it.