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Apple's new tune
Will the company's much-hyped music service help it grow market share? Well, consider its partner.
April 23, 2003: 10:27 AM EDT
By Eric Hellweg, CNN/Money Contributing Columnist

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SAN FRANCISCO (CNN/Money) - If creating buzz were all it took to be successful, then Apple would have left Dell, Compaq, et al. in its dust a decade ago. After all, what PC maker has ever come close to generating the kind of excitement Apple creates every time it introduces a new design, product line, or service? But hype hasn't translated into sales, at least not yet.

With that in mind, I'm betting that the mysterious announcement on Monday that the company promises will be "music to your ears" probably won't do much to lift Apple's (AAPL: down $0.12 to $13.39, Research, Estimates) market share past its current 3 percent.

The company is being typically tight-lipped, but articles in the Wall Street Journal and elsewhere have it that Apple will unveil a new digital music service that will feature offerings from all five major record labels.

The as-yet-unnamed service will reportedly be available -- at least initially -- only to Apple users, who thus far have been shut out of the existing legal digital music subscription services. News.com stated that the company will also introduce new models in its successful iPod line of digital music players.

Early pronouncements also suggest that the new service will sell its songs la carte -- a dramatic departure from the subscription models of the existing legal music services MusicNet, Pressplay, and Rhapsody. This means that rather than having to pay an ongoing monthly fee, Apple users will be charged only for the songs they want.

That's certainly attractive to users -- if not to the labels, which hate the idea of selling singles rather than whole albums. But, as IDC analyst Susan Kevorkian points out, single servings beat the alternative: "If you're a music label today, you'd rather consumers purchase a single than download it for free on Morpheus or Kazaa."

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For Apple to break through with its new offering, it will have to solve one of the biggest problems facing legitimate music services: clunky digital rights management technology. It's a given that Apple's downloads will carry some sort of DRM technology, but the question is, Can Jobs & Co. avoid the kludgey mess of usage restrictions that make the other services a drag to use?

Simplifying the user interface has always been Apple's forte, but it's doubtful that the company's design prowess can overcome the ironclad licenses that have heretofore accompanied digital music sanctioned by the major labels.

Within the closed-room, wet-lab environment of an all-Apple experience (a user downloads a song on an Apple PowerBook and uses Apple iTunes to port it over to an Apple iPod player), the service may flow smoothly enough to win over fans. But that's not enough for a real-world success. To succeed with this service, and as a company, Apple needs to tempt the other 97 percent of computer users.

You saw hints of this with the iPod. But the music industry, with its hostility toward digital distribution, is hardly the partner to help clean up the DRM mess and thus facilitate a breakout success. Remember, one of the reasons the iPod was such a boffo hit is that it was part of Apple's "Rip. Mix. Burn." marketing campaign. The message resonated with consumers but infuriated the labels.

No, to make digital music its springboard into the mainstream, Apple must adopt another of its marketing slogans and "think different" -- in this case, revolutionize the music industry by buying one of its key players and bring about change from within.


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.