Rip, Mix and Run
By Niall McKay in Silicon Valley, Mon May 12 12:00:00 GMT 2003
Apple's recent announcement of the iTunes Music Store shifts the digital media landscape.
Both users and analysts have praised Apple's recent announcement that it will sell individual songs for 99 cents through its iTunes Music Store as the first "workable" digital music distribution scheme. It is indeed an important landmark for the industry. On the down side, the service is still pretty limited with just 200,000 individual tracks.
That is less than what is available on Kazaa or Limewire. Later, Apple says, it will add independent labels and artists. This could give rise to new pricing models. On the upside Apple has inked deals with the five major record labels. So it is likely it will grow. It has also managed to persuade them to endorse a digital rights management or a DRM solution using MPEG-4's AAC (advanced audio codec) that is not completely draconian.
So why, you may ask, is this important to the wireless community? Well, Apple's Music Store will probably provide a stepping-stone to a model that will eventually be used in the wireless industry. At least, music industry officials have said that Apple's small but loyal following (no doubt including a lot of executives and musicians) are an ideal test bed for digital music distribution. Indeed, downloading music through its iTunes software, storing it on a desktop computer hard disk and syncing it with an mobile device - be it a phone, PDA or music device will likely be the dominant model. It will be several years before downloading music directly to a mobile device is both practical and affordable.
Now, the analysts have made all the usual (optimistic) predictions about the size of the content market in years to come. Ovum, for example, predicts that the global market for consumer mobile data services will reach $71 billion by 2007. Gartner projects that online music sales will bring in $92 million this year. However, the iTunes Music service surprised the analysts by bringing in over $1 million in its first week.
The industry is gushing about the iTunes store because it enables ownership (or sort of ownership) of the music you buy. Music, like family photos, wedding videos, and pictures of one's true love are very personal. While the Eminem generation are more progressive than the baby boomers and probably don't need to posses the vinyl or CD, most will want to at least own the bits.
True, you can buy and download music to cell-phones and PDAs today. But the business model is unworkable (for the artists), the restrictions ridiculous (for the users) and the network slow (for everybody).
Of course, any per packet charging model will kill the wireless data market. That is why closed networks failed and the Internet succeeded. But there are other reasons why online and wireless music markets have so far failed. Catastrophic hard disk failures, terrible restrictions as to where and when you can play your music, and of course completely pointless subscription based downloading services such as Pressplay and MusicNet which are owned by the recording companies. Imagine if the Virgin Mega store only sold virgin label records. Now, however, desktop computer are becoming increasingly reliable and backing up data is easier with new firewire hard disk solutions.
Having said that, once you get used to a digital music collection you can never return to the world of feeding CDs (even by the 100) into changers. Recently, the techno artist Moby told Rolling Stone magazine. "I can't imagine music any other way. I can be sitting on an airplane and think to myself: wouldn't you like to listen to the first Roxy Music record?" And there it is."
Currently, there are all sorts of rumors about Apple bringing out a wireless device. Apple groupies have even imagined what this device will look like. The URL iPhone.org points to the Apple's Web site and there are some very interesting images floating around the Internet.
What we can definitely expect, however, is an even groovier iPod digital music player. The next stage will be to add wireless support, hopefully, both 802.11 and Bluetooth and perhaps a bigger, color screen. That way not only will they be able to auto dock with one desktop in the home but they will be able to do it on the road as well over Wi-Fi. One could even imagine a way of buying songs or play lists from, say a friend's computer.
However, there are three things that make it relatively easy for Apple to get a foothold in the music market. Firstly, it has, relatively speaking, a tiny share of the computer market, so it is not really a threat to anybody. Secondly, it owns a walled digital garden so it controls both the hardware and the software. And thirdly, it has a very loyal following. In fact, Apple is a kind of mini techno cult with well-healed followers who are prepared to buy anything Apple. No PC users for example, put a little Microsoft logo stickers on their bumpers but you see those infernal little Apple stickers everywhere.
Becoming a music distributor is all very well and fine when you are the little guy in the market. Everybody loves the baby, but Apple has a habit of getting an extraordinarily arrogant and greedy (it's top down thing) when it gets a little on top of things.
So while Apple is the innovative little style bunny it's easy for users to love it. But that is not why the company lost market share the first time around.
The second major problem that is emerging is that if Apple is successful then it will own the hardware, the software and the channel. Is that a good thing? If it keeps bringing out good products and a reasonable price it's good.
Last month, rumor had it that the company was trying to buy Vivendi Universal. One has to ask ones self is Apple a monopoly in the making?
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Niall McKay is a freelance write based in Silicon Valley California. He can be reached at www.niall.org.