Can Apple Save Music?
Tech innovators launch music service
by David Thigpen
Apple Computer is going to be storming into the music business and is set to announce its own online-music service, according to various sources. The computer maker is staying mum, but sources expect the new service ? the outgrowth of a recently completed deal between the five major labels and Apple ? to debut on April 28th. Users will be able to buy and download music on a per-song basis, transfer files to an Apple iPod Player and also burn songs in limited amounts, for an estimated fee of one dollar per song.
Apple's entrance into the online music market could alter the complexion of both the music and the computer business profoundly. With the big labels suffering from a severe sales slump and a seemingly unfixable piracy problem, Apple's foray into Internet music distribution may provide the labels with a little daylight in an area where there has been nothing but darkness. It also could provide a model that the existing services ? struggling money-losers such as Pressplay, MusicNet and Rhapsody ? can follow. One digital-media analyst says Apple's interface ? the page music buyers will use to download songs ? has an edge over anything that exists right now. "It is a simple and easy transaction," says Phil Leigh of investment firm Raymond James, "and that's a big advantage over Pressplay and MusicNet."
Apple's new service will, of course, only be available to Mac and iPod users. Macs currently make up about five percent of all home computers, and about 600,000 iPods have been sold. Inside the labels, executives accustomed to criticizing technology companies such as Apple for making equipment kids use to steal music now view the Apple service as an experiment that just may work in their favor. "The Apple thing will be an interesting test," says a label executive, who preferred to remain anonymous. "I have to believe if you can have all the music in one place and get it easily for ninety-nine cents, it's going to work."
In a related story, the Los Angeles Times reported that Apple is in talks to acquire Universal Music Group, values at $6 billion. Talks appeared to have arises out of conversations between Apple boss Steve Jobs and UMG execs Doug Morris and Jimmy Iovine concerning Apple's online venture. Those talks raised a number of possibilities, including an outright buyout by Apple. A separate management-led buyout was reportedly rebuffed by Vivendi Universal. Industry sources are now saying that any buyout appears unlikely: Apple's online venture gives it access to the music it needs to be success and transform the company into a diversified digital media company ? which was Jobs' goal from the beginning.
