Apple's New Music Service Plays A Merry Tune - InformationWeek

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Apple's New Music Service Plays A Merry Tune

The vendor says its iTunes Music Store sold more than 1 million songs in its first week

Apple Computer said Monday that its new iTunes Music Store, launched last week, sold more than 1 million songs in its first week of operation.

The online store, accessed through the computer maker's iTunes 4 digital music jukebox software, enables users of Apple Macintosh computers and iPod MP3 players to search and preview a catalog of more than 200,000 songs and then use a credit card to buy and download music for 99 cents per title. There's no subscription fee, and users can burn songs onto an unlimited number of CDs for personal use, listen to songs on an unlimited number of iPods, play songs on up to three Macs, and use songs in any Mac application, including Apple's iPhoto, iMovie and iDVD software.

With last week's launch of the iTunes Music Store, Apple also unveiled thinner iPods--now available in 10-, 15-, and 30-Gbyte models--as well as iTunes 4, an upgrade of its digital music application, and QuickTime 6.2, an update of its MPEG-4 streaming media software that provides foundation support for iTunes 4 and Advanced Audio Codec format capabilities.

So far, more than 1 million copies of iTunes 4 have been downloaded, according to Apple. In addition, the company said it has received orders for more than 110,000 new iPods, and more than 20,000 new iPods were sold in U.S. stores over the past weekend.

Apple's online music play reflects its "digital lifestyle" strategy, which puts the PC at the center of a computing environment that touches home, work and leisure activities. However, the online music store also represents a move to position the company as a provider not only of technology but also of digital content, which is necessary to feed the emerging "multimedia household," industry observers say.

Media networking, in which media servers store and play rich content over a home network, is expected to represent 49% of total home networking revenue by 2007, compared with a 6% share in 2002, according to research firm In-Stat/MDR. Overall revenue for the home networking space is projected to hit $5.3 billion by 2007, up from $1.8 billion last year. And by the end of 2007, the total number of installed home networks in the United States and Canada is expected to top 28 million, more than three times the 9.2 million installed home networks in 2002, In-Stat/MDR reported.

To procure content for the iTunes Music Store, Apple inked deals with five major music labels: BMG, EMI, Sony Music Entertainment, Universal and Warner. The computer company said it plans Tuesday to add about 3,200 new tracks to the store's catalog.

In the news release on the iTunes Music Store's first-week results, Apple quoted record executives who expressed surprise over the store's early progress. Roger Ames, chairman and CEO of Warner Music Group, said in a statement that selling 1 million songs in a week was "totally unexpected," while Universal Music Group CEO Doug Morris said his company had an internal benchmark of 1 million songs sold in the first month as a measure of the store's success.

"In less than one week, we've broken every record and become the largest online music company in the world," Apple CEO Steve Jobs said in a statement.

The iTunes Music Store launch ended weeks of industry speculation that Apple had planned to acquire Universal Music Group, a subsidiary of French media and entertainment conglomerate Vivendi Universal. Jobs had even issued a statement saying that Apple "never made any offer to invest in or acquire a major music company," although he didn't deny that talks had occurred.

This story courtesy of CRN.

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