(TV) Mostly OT: Apple adds all Television cd-rs to its Internet 'Catal ogue' making TV twitch & rich

["Casey, Leo J" <CaseyL@VOLPE.DOT.GOV>]

Could not send just a (useable, live web-page for this story in 
today's Globe [Boston Globe 5/5/2003] , so here it is in its 
entirety.  Leo

Apple pumps up volume in online music service fray 
By Hiawatha Bray, Globe Columnist, 5/5/2003 
The struggle for the future of recorded music began last week. Never mind the 
billions of swapped MP3 files, legal and illegal. Never mind the rise and fall 
of the Napster file-swapping service, the courtroom victories of other file 
swappers like Morpheus and Grokster, the desperate efforts of the recording 
companies to fend off the future. Significant events, all. Still, they were just 
preliminary skirmishes. 

The real action began last Monday, when Apple Computer Inc. launched its iTunes Music Store. 
By now you've heard the hosannas of the critics, and they're well-deserved. 
Despite its rather clumsy name, the iTunes Music Store is by far the most elegant 
and attractive method yet offered for buying digital music over the Internet. 
Which means that its success, or failure, will reveal whether the music industry 
can hope to co-exist with the Internet. 

By offering a la carte music downloads for 99 cents a pop, Apple's shrewdly targeted 
millions of casual Internet music thieves. There's no converting the hardcore file-swappers, 
but there are plenty of Kazaa and Morpheus users who just might pay by the piece rather 
than $10 a month for a limited music subscription. 
Apple encodes its iTunes files so they can be used on no more than three Macintosh 
computers. But it's painlessly simple to burn them to audio CDs, for listening on any 
disk player. Then you can rip the CD into MP3 files for illegal swapping. Apple insists 
that the resulting MP3 files sound dreadful, but to these ears they didn't seem so bad. 
In any case, Apple's betting that only determined thieves would go to the trouble. 
The casual listener will do the right thing. 

That's the theory, at least. Nobody's tested it until now. If the iTunes Music Store is a 
hit, we may find that the profits from legal music downloads will make up for sales 
lost to thievery. 
On its own, the iTunes Music Store isn't much of a test. It's presently available 
only to users of Apple's Macintosh computers -- about 4 percent of the world 
market. Never mind. Apple says it'll offer a version for computers running Microsoft 
Windows before the year is out. Besides, the other online music services are sure 
to copy Apple's a la carte approach, perhaps as a supplement to their existing 
subscription models. 

Indeed, we shouldn't be too quick to dismiss the subscription approach, in which 
a user can listen to all the music he wants, streamed over the Internet. Seth Oster, 
spokesman for the subscription music service Pressplay, points out that his firm has 
been selling 99-cent downloads to its subscribers for months, but fewer than 
one-third bother with it. Most just want to be able to log on and listen to an 
album, without having to buy it. 

Makes sense. We don't buy every pleasant song we hear on the radio; we're often 
content to wait until the station plays it again. Perhaps the best approach is to offer 
both the a la carte and subscription models. Thanks to the iTunes Music Store, we'll 
probably find out. 

Apple's entry will also kick off a lively skirmish over digital music standards. 
They're not dealing MP3s. Instead, the iTunes Music Store sells files that have 
been encoded in a newer format called AAC that promises higher fidelity with 
smaller file sizes. AAC also lets Apple add its thin layer of antipiracy features. 
But AAC files won't play on the millions of portable digital music players -- except 
for Apple's own iPod devices. Apple's clunkier rivals may be able to take 
advantage of the incompatibility argument. But only up to a point. Pressplay, 
for instance, doesn't use MP3 either, relying instead on Microsoft's WMA 
format which, like AAC, sets limits on the users' ability to make copies. 
So here's another question for the market to sort out. Some people will reject 
on principle any file format that limits them in any way. For these, it'll be 
MP3s or nothing. But Apple and the music moguls are betting that most 
people won't care, as long as they can play their music on their machines. 

Meanwhile, the portable music players will have to start adding AAC 
compatibility to their devices. And Microsoft will have to start sweating. 
The first online music service with any chance of being a hit doesn't use 
its beloved WMA format. What'll Microsoft do to recoup? 
This should be interesting. 

Even more interesting is whether Apple can actually make money 
selling music at 99 cents a tune. ''We wouldn't be doing it if we 
didn't expect to make money at it,'' said product line manager 
Chris Bell. But how? If you buy just one song, the credit card 
transaction fee will eat up about a third of the purchase price. 
Unless Apple's worked out a special deal with the credit card companies. 
Or maybe the company's betting that nobody can eat just one --
 that customers will gobble up tunes like salted peanuts, thus keeping 
transaction fees under control. 

That's not a bad bet. The iTunes Music Store contains lots of music that people 
would actually want to buy and makes buying it virtually painless, at least until 
the bill arrives. 

But what if the iTunes Music Store can't turn a profit on cheap digital tunes? In that case, 
look for a desperate music industry to seek ever more onerous ways to harass file-swappers. 
Worse yet, they'll keep trying to embed irksome antipiracy features into their disks, or even 
our computers and music players. So a victory for Apple's new music venture will also
 be a win for the rest of us. 
Hiawatha Bray can be reached at bray@globe.com. 
This story ran on page C2 of the Boston Globe on 5/5/2003. 
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