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Apple Changes the Face of Digital Music

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We've now had a week to play with the new iTunes Music Store, to analyze how well it is implemented, and to think about the effect it could have on Apple, the recording industry, artists, the peer-to-peer file sharing networks, and even physical music stores. (See "iTunes Music Store Takes the Stage" and "Apple Cranks Up iTunes 4" in TidBITS-678 for our initial reports on Apple's new musical offerings.)

<http://db.tidbits.com/article/07163>
<http://db.tidbits.com/article/07164>

Digital Rights Management and Copy Prevention -- Let's be real. The reason the iTunes Music Store exists at all is because Apple is using AAC files that include digital rights management (DRM) technology. Without including some sort of DRM, Apple would have stood an igloo's chance in Florida of working out a deal to license songs from the major record labels. AAC isn't about digital rights management; it really is aimed at doing a better job - both in terms of compression and quality - than the MP3 format. But Apple's implementation of AAC also provides hooks for digital rights management that prevents casual copying.

Songs you purchase are protected using your iTunes Music Store authorization information. Any copy of iTunes (or any other appropriately QuickTime 6.2.2-savvy software - QuickTime Player works now) must know your authorization information to play the song. Plus, if you view iTunes' Get Info window for a song you've purchased, you'll see that it includes your name and email address. That alone is likely to cut down on copying, since many people would be uncomfortable distributing tracks that listed them as the instigator. And of course, it would be extremely easy for the RIAA's hordes of slavering lawyers to come after you (something they've been doing with increasing frequency to college students they allege are sharing large numbers of music files). The traditional dodge of providing a false name and email address will be more difficult to implement since the information comes from your Apple 1-Click account.

This DRM information enables Apple to implement four restrictions on how you can use songs you download, and although they're fairly reasonable, they're still restrictions. First, you can authorize only three Macs at a time to play a song. Three feels too low to me, since any single-digit restriction will have the effect Apple wants, but three can hamper perfectly legitimate users. For instance, Tonya and I each use a Power Mac G4 as our main computers; we serve music for our entire network of Macs from another Power Mac G4; we play music for the downstairs living area from a blueberry iBook; and we copy music to a newer iBook when we travel. That's five Macs right there, although our music server doesn't need to be authorized to share a protected file with an authorized computer. If you get a new Mac, you can deauthorize the old computer and authorize the new Mac; the problem occurs if your computer is stolen or destroyed, since you won't be able to deauthorize the lost copies of purchased music. If you simply replace your hard drive and restore purchased music from a backup, you must authorize your computer again, but it doesn't take one away from your total number of authorizations.

<http://docs.info.apple.com/article.html? artnum=93033>

Second, although Apple lets you burn songs to audio CD as many times as you want, you can do so only 10 times before iTunes forces you to change the playlist you're using to burn. Perhaps because I've burned only a few audio CDs over time, this strikes me as a perfectly reasonable restriction that merely places a low hurdle in front of mass copying from the computer. Of course, once you've created an audio CD, there's nothing stopping you from making additional copies of that CD using Roxio's Toast or any other tool.

<http://www.roxio.com/en/products/toast/>

Third, when you use iTunes 4's Rendezvous sharing capabilities to share purchased music, the Macs with which you're sharing must be authorized to play your purchased tracks. That makes little sense to me, since all remote users can do is play the song - shared music can't be copied, added to a playlist, burnt to CD, or anything else that would seem concerning.

Fourth and finally, the use of AAC and digital rights management limits you to playing purchased music in iTunes 4 on a Mac and any iPod... for now. This restriction has already irritated Macintosh users who haven't made the jump to Mac OS X, but it shouldn't be at all surprising; Apple has continually encouraged legacy users to upgrade. Windows users may feel left out for now, but Apple is working on support for Windows in the future. Obviously, there's also no support for Unix variants other than Mac OS X, making the iTunes Music Store yet another way of attracting Unix users to the Mac. Also left out in the cold are all non-Apple portable MP3 players, which will no doubt annoy those who chose devices other than the critically acclaimed but pricey iPod.

Is Apple blundering by limiting the potential market for the iTunes Music Store so much? In the short term, no. It's likely that the only way Apple was able to negotiate the licensing deals with the record labels was because the potential user base was relatively small, thus limiting the damage should Apple's restrictions prove easily broken. Anecdotal reports also indicate that Apple's servers took a beating on the day of the iTunes Music Store announcement, even with the help of the Akamai distribution network. Running such a popular and heavily used service may not be unique, but I'm sure Apple's server administrators welcome the chance to scale the systems a bit more slowly than would have been necessary if Windows support had been present from the start. Windows support will arrive soon enough, and I wouldn't be surprised to see other portable music players supporting AAC and whatever else is necessary to work with Apple's DRM scheme.

But the question remains: how easy will it be for someone to convert one of Apple's protected AAC files into an MP3 file with no DRM or even identifying information? Not hard at all, in fact, because you can burn an audio CD from iTunes 4 of your purchased music, and then you can rip those files back to MP3, even retaining track names and other metadata. The process comes with some loss of quality that audiophiles will undoubtedly dislike but that won't bother most people (I can't hear it at all). The sheer popularity of MP3 files encoded at relatively low bit rates is proof enough that audio quality hasn't been a significant damper on the overall success of the MP3 format. There are also tools such as Audio Hijack that can capture the music being played to AIFF files you can convert to MP3, though using Audio Hijack felt a lot like using a cassette tape recorder. In fact, converting files to MP3 may be a good backup, just in case you run afoul of the authorization requirements due to a stolen Mac or other disaster.

<http://www.rogueamoeba.com/audiohijack/>

All You Need Is User Experience -- But will people pay $1 per track when they can download the same songs for free from the peer-to-peer file sharing networks? I think so - Apple has a winner here, for the same reason the iPod is the leading portable music player despite its high price. Put bluntly, Apple cares deeply about user experience. That's not to imply that the user experience of the iTunes Music Store or all Apple's products is perfect, but the end result is almost always that Apple's product offers a better user experience than the competition.

The iTunes Music Store has a number of competitors. In the battle with physical music stores, the iTunes Music Store offers better searching and linking, lower prices ($10 for most albums), immediate gratification, no chance of stumbling across an intentionally corrupted audio CD, and the welcome granularity of being able to buy a single song. Music stores still offer better browsing, but as Amazon has shown, losing the capability to flip through books and CDs isn't a problem for many people. Speaking of Amazon, the iTunes Music Store will undoubtedly compete well with online CD vendors because the iTunes interface is so much better (I can't tell you how many times I've had to reinstall the utterly annoying RealPlayer over the years just to listen to music samples from Amazon), the prices are lower, the gratification is faster, and you can buy individual songs. The only advantage the online CD vendors provide is that they ship you an actual CD with jewel case, liner notes, and more.

I suppose we should consider the other commercial Internet music services (Rhapsody, PressPlay, MusicNet, and others) competition as well, but it's an apples-and-oranges comparison until the iTunes Music Store supports Windows. At that point, I think the iTunes Music Store will offer a better interface, far less Draconian copy prevention measures, and a more attractive per-song model. Even if a subscription model proves cheaper (and it's conceivable that Apple would add such a model in the future), many people are more likely to try a service if they can pay $1 each for a couple of songs rather than committing to a $10 per month subscription. It's entirely likely that the other services will adopt Apple's per-song pricing model if it proves successful; then users will choose among them based on platform compatibility, price, selection, and interface.

The real question, of course, is how the iTunes Music Store will compete with the peer-to-peer file sharing networks like Kazaa and Gnutella. I suspect Apple did a detailed competitive analysis with these services when designing the iTunes Music Store, and it shows. The user experience of these services is inconsistent and, quite frankly, horrid. You never know what a search will turn up, you never know if what you download will be of a decent quality, it can take forever to download, and the song metadata (name, artist, album, genre, year, etc.) is seldom present. So what accounts for their popularity? Price (free), exploration of new music, and generalized rebellion against the system.

The iTunes Music Store fares well in the comparison. Its overall user experience is very good, thanks to the clean iTunes interface, fast download servers, reliable quality, and well-described songs (complete with cover art). Searching the iTunes Music Store often turns up unexpected finds (my first purchase was a Nina Simone cover of Leonard Cohen's "Suzanne") and as far as generalized rebellion goes, Apple has always branded itself as being outside the mainstream. So it all comes down to price ($1 or less versus free) and selection (200,000 songs versus a vast unknown). I say "or less" with regard to Apple's pricing, since most albums are priced at $10, and if the album contains more than 10 songs, buying the entire album gets you a lower per-song price.

Actually, this ignores a major difference between the iTunes Music Store and the file sharing services - the extent to which any given person feels as though downloading from the file sharing services is a legal or ethical problem. It's clear that millions of file sharing users aren't terribly concerned. But are they sufficiently concerned to switch to the iTunes Music Store and pay a buck per song? That's Apple's bet, and I think it's a good one. There will always be people for whom any price is too high; they'll continue using the file sharing networks. People who found the file sharing networks awkward to use, however, are likely to at least give the iTunes Music Store a try first, since it's faster, easier, and doesn't involve copyright infringement.

Unnatural Selection -- 200,000 songs in the iTunes Music Store sounds like a lot, but if songs that interest you aren't included, that number will shrink quickly. For an entirely unscientific comparison, I performed the same search in the iTunes Music Store, the Gnutella network (via LimeWire in Mac OS X), and the Kazaa network (via Kazaa Media Desktop in Windows XP under Virtual PC). I looked for the word "Ipanema" in song titles in an attempt to see how many covers and variants of "The Girl from Ipanema" I could find. In the iTunes Music Library, the search was almost instantaneous, returning 47 songs. Some were obviously duplicates from different albums, but there were still about 23 separate artists represented. In LimeWire, I ran the search 5 times, finding a different number between 3 and 22 hits each time. Along with the varying numbers of hits, the lousy metadata made it difficult to determine which hits might be duplicates, and there were certainly some bogus entries. In Kazaa Media Desktop, after clicking Search More several times and crashing once, I found 284 files, 79 of which were unique (many files were being served by more than one user), about 69 of which appeared to come from different artists (compared to LimeWire, Kazaa exposes more metadata, such as Artist, in the interface).

It's impossible to draw firm conclusions from this test, since the number of files available on the file sharing networks changes constantly and probably isn't even the same for different people at the same time. LimeWire reported about 525 hosts online, whereas Kazaa claimed a whopping 4.3 million users. Nonetheless, the challenge for Apple is clear - they simply must add as many songs to the iTunes Music Store as possible, so it was good to see Apple announce this week that another 3,200 songs are being added on 06-May-03. It's conceivable that this realization may have led to some of the rumors about Apple buying Universal Music, since Universal owns MP3.com, which boasts 1.7 million songs from over 265,000 artists, most unsigned by a label. Many of those artists probably want to give their songs away for free, but plenty would love to be included in the iTunes Music Store. Barring any future acquisition of MP3.com, Apple would do well to make it easy for independent labels and artists to list their music on the iTunes Music Store, swelling the number of available songs and the breadth of available music.

Future Moves -- Keep in mind that the iTunes Music Store is a 1.0 release, so there's plenty of room for improvement, such as the following features.

  • I'd like to see Apple expose the links to every track available in the iTunes Music Store, perhaps along with a new URL scheme that would make it trivial to click a link in a Web browser and jump to the song's listing in iTunes. Utilities would undoubtedly appear to let people build Web pages of their purchased songs for showing friends and other visitors. It appears the necessary bits may already be in place; see the link below.

    <http://nslog.com/archives/2003/04/29/itms_ links.php>

  • Also interesting would be music recommendations via the social information filtering researched at the MIT Media Lab (the Ringo music recommendation project) and then tried (unsuccessfully) in the business world as Firefly Networks. The iTunes Music Store already has Amazon-like "Listeners who bought this also bought" links.

    <http://www.acm.org/sigchi/chi95/Electronic/ documnts/papers/us_bdy.htm>

  • Along the same lines, popularity rankings and user comments would also be welcome, much like those on Amazon.

  • Providing full liner notes, preferably with lyrics, would undoubtedly help some people decide what to buy. However, I'm sure the contractual issues surrounding lyrics are complex.

  • I'm fairly unlikely to buy an unknown song based on a 30 second clip. I'd like to see Apple instead stream a low quality version of the entire track. Even better, Apple could create a number of iTunes-based streaming radio stations in different genres. If you like the current (or recent) song, you could click a Buy button to download it instantly.

  • I gather iTunes users with children are interested in some level of parental control over purchases. Something as simple as password-protection for opening the iTunes Music Store itself would suffice.

  • There's currently no way to buy music as a gift currently, but it would be nice to be able to buy a song or album for someone and have Apple automatically send them an iCard with the download link.

  • Realistically, modem users aren't going to be able to use the iTunes Music Store much, but perhaps a future incarnation could offer a mechanism by which Apple would send you a CD containing the AAC files for an additional cost.

Was It Good for You Too? An article in Fortune says that Apple keeps $0.35 for each song purchased, whereas the labels take the remaining $0.65. So what about those artists who are represented in the iTunes Music Store? Will they find it a major boost to their income? It's impossible to know for sure, and it will undoubtedly vary by artist depending on each artist's specific contract, but the short answer seems to be no. As has been pointed out in TidBITS Talk, as well as in "Courtney Love Does the Math" in Salon and Janis Ian's "The Internet Debacle - An Alternate View," artists often don't make much at all from a recording contract, even with a hit album.

<http://db.tidbits.com/getbits.acgi?tlkthrd=1923>
<http://dir.salon.com/tech/feature/2000/06/14/ love/index.html?pn=1>
<http://www.janisian.com/article-internet_ debacle.html>

The record industry will undoubtedly fare well in the deal, since a sale is a sale, and any new venue for selling music would seem to be a good thing. More important, if the iTunes Music Store is a success, I hope it will convince the labels that treating their customers as criminals ranks right up there in the annals of stupidity with land wars in Asia, to steal a line from The Princess Bride.

As some people have asked, does this mean Apple is selling out to the recording industry? That's a loaded question, because a public company like Apple can't go around recommending that Mac users infringe copyright. Despite the idiotic fuss, even Apple's "Rip, Mix, Burn" ad campaign said nothing about downloading copyrighted songs or distributing burned CDs in violation of personal use or fair use. So yes, Apple is playing the game necessary to create a service like the iTunes Music Store, but given the company's need to work with the record labels that own copyright on the music, I can't see how Apple could have done anything else.

Will the iTunes Music Store be good for Apple? No doubt. As has happened so often in the past, Apple is setting the bar at which all other services will be judged. At least until others rise up to compete, I think Apple will do well, both in terms of sales and reputation. The iTunes Music Store should also help the sale of iPods, and perhaps even Macs, at least until iTunes for Windows comes out.

Early indications would seem to support this opinion, given today's press release announcing that Apple sold over one million songs in the first week of operation, making Apple the self-described largest online music company in the world. Over half of the songs sold were sold as part of an album, and more than 100,000 of the 200,000 songs in the iTunes Music Store were sold at least once, making it even more painfully obvious that breadth of selection is essential. Apple also said that more than one million copies of iTunes 4 were downloaded last week, and the company also received more than 110,000 orders for new iPods, selling more than 20,000 in the U.S. last weekend.

<http://www.apple.com/pr/library/2003/may/ 05musicstore.html>

These numbers are impressive, to say the least, and even the CEOs of two of the main record labels admitted their surprise in quotes for Apple's press release. What I find most intriguing is that Apple was able to rack up these sales figures with only Mac users, and only Mac OS X users at that. Once again, Apple has shown that focusing on innovation and user experience can change the world, despite having only a small percentage of the market. It will be interesting to see how the store fares now that the big splashy launch has happened, since it's unlikely that the store will consistently sell a million songs over a week's time. And, of course, we'll see what happens when iTunes for Windows comes out.

If the iTunes Music Store works out, I could see Apple breaking further from the mold of being a computer company. First the iPod, now the iTunes Music Store, and what next? Given Steve Jobs's links to the movie industry via Pixar and Apple's showcase of QuickTime trailers for movies, perhaps the iMovie Video Store is waiting in the wings. After the hypothetical video iPod or tablet Mac ships, of course.

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