pple Computer seems to have the future of
online music in its hands for the moment. Its new service, iTunes
Music Store, has been the first real success story in the long
effort to sell music over the Internet. In just its first month of
operation the service, by the company's estimate, has sold three
million songs online, at 99 cents each. This is an impressive figure
considering the limited access that music fans now have to the
service. Less than 1 percent of the country's home computers are
Macintoshes that are compatible with the iTunes Music Store, and
only a fraction of those have a broadband connection to the
Internet.
But it would not be an online success story without a
complicating twist. That complication came this week when the
specter of the music industry, which has been publicly supportive of
iTunes, began to loom over Apple. The success of iTunes, after all,
depends on cooperation from the music business, which controls the
songs that iTunes wants in its collection. Apparently trying to stay
in the record industry's good graces, iTunes removed a service it
had previously offered customers. Called Rendezvous, the service
enabled listeners and their friends to access one another's music
and listen to it — but not download it — from any computers.
Hackers, however, had figured out how to download the music as well,
creating programs with names like iLeach and iSlurp. So on Tuesday
Apple sent out an update for its iTunes software, disabling
Rendezvous and limiting music access to a user's local network at
home or at work.
In a statement released yesterday, Apple said Rendezvous had been
"used by some in ways that have surprised and disappointed us."
"We designed it to allow friends and family to easily stream (not
copy) their music between computers at home or in a small group
setting, and it does this well," the statement said. "But some
people are taking advantage of it to stream music over the Internet
to people they do not even know. This was never the intent." A
spokesman for Apple, Chris Bell, said the company made the decision
by itself.
The restriction makes sense: hackers are exploiting a loophole,
so get rid of the loophole. But in offering music online, there will
always be a loophole. Nate Mook, who runs the online news site
Betanews, said hackers were already finding a way around this new
restriction, writing software that would trick iTunes into thinking
that an outside user's computer was on a customer's local network.
If Apple responds by limiting the functionality of the music it is
selling every time that hackers find a way to trade files, it could
end up with a system as unsuccessful as the record industry's own
attempts, like Pressplay and Musicnet.
Most of the uses for Rendezvous were not about illicit
downloading. For example, Richard Yaker, co-founded — with a friend,
Christian Bevcqua, who is in the band Ditch Croaker — a Web site
called shareitunes.com. His intention was to enable iTunes users to
see one another's song collections and then listen to the music (but
not download it). Next to every song, Mr. Yaker put links to the
iTunes Music Store and to online mail-order retailers like Amazon and
CDBaby, so that users had options to buy the music. As far as he
knew, his application was neither illegal nor even sneaky.
"The industry has never explored the idea of how people sharing
and listening to one another's music helps sales," he said. "We're
all about selling the music once people find it and like it."
"But," he continued, referring to Apple, "they just closed
everything down. I was totally disappointed. We were hoping that
traffic would continue to grow and we could quit our day jobs."
No one has ever doubted that there is an audience that wants to
buy music online. And that audience hasn't asked for much: just the
permission to do whatever it wants with the songs once they're
purchased. Apple Computer gave it just that. The music store is a
simple concept: after giving Apple a credit card number, a Macintosh
user with an up-to-date computer and operating system can click on a
button and buy any song or album in the store. Buyers can then do
what they want with the music, except trade it online.
What is notable about the success of iTunes is that it has been
achieved not by a music company but by a computer company. And this
makes sense, because it was a computer solution that was needed, not
a music one. Even more impressive is that Apple's coup has been
accomplished relatively simply and cheaply. It owns nearly
everything it is using: the Web browser software (Safari), the
computer media player (iTunes), the portable digital music player
(iPod), the streaming technology to play music videos (Quicktime),
the software that creates the service (WebObjects), the computer
itself (Macintosh) and the operating system (MacOS).
"Apple is the new MTV," said Numair Faraz, 18, who has started
several online service companies. "It is the new funnel for music.
When things moved from radio to video, MTV was the sole source of
music. Now Apple is going to control the distribution and the
promotion of music. The entire ecosystem they are using is theirs."
Mr. Faraz said he bought roughly $115 worth of music at the iTunes
store last month. In comparison, he said, he spent no money on CD's
in the last year.
On a recent visit to the studio owned by the pop production team
Matrix — which has produced music for Avril Lavigne, Ricky Martin
and Britney Spears — Andrew Nast, the recording engineer, was
working on his Macintosh. "I'm buying Paul Simon's `Graceland' right
now," he said.
He was asked why he is buying it rather than downloading it free
of charge from a file-sharing service like Limewire. "Because it's a
pain," he answered. "It takes forever to find the track. Then once
you find it, maybe you can download it. And then if you download it,
maybe it sounds cool. And if it sounds cool, maybe the whole track
is there."
The iTunes Music Store is not without flaws. Its song collection
is not only relatively small, but also limited to music from major
labels; independent labels are shut out. Another flaw is that it
does not allow consumers to get more involved, as they did with
Napster, by promoting their favorite songs through instant messaging
and other features of the open architecture of the Internet. In
fact, iTunes, doesn't even have an affiliate program, similar to
Amazon's, so that other Web sites can refer customers to the iTunes
Music Store and earn a small portion of money from the sales. And of
course the iTunes store is available only through a Macintosh.
Mr. Bell of Apple said the company planned to add content beyond
the major labels, was open to other innovations and would have a
Windows version by the end of the year.