Monday, April 28, 2003

A Napster that you pay for. A year or two ago I was reading an article about the sorry state of the online music business, with its high monthly fees, its patchwork line-up of artists, and its odious restrictions on copying the music you'd just paid for onto a CD or an MP3 player.

The smartest observation was from an analyst who said that everyone already knew what customers wanted: a Napster that you pay for. In other words, a wide selection, reasonable prices for the music you want, no monthly fees, and few or no restrictions on what you could do with your MP3s once you'd downloaded them to your hard drive.

Today Apple will announce a new music service that pretty much adds up to -- yes -- a Napster that you pay for. The announcement will take place at 1 p.m. The early word, according to this Boston Globe story by Chris Gaither, is that Apple will charge 99 cents per song (or $10 for an album), and that you'll be able to burn it onto a CD or copy it to an MP3 player without any hassle, although there is supposed to be some sort of restriction on how many times you can copy it.

Today's Financial Times has a good summary of Apple's music service as well.

Last Friday the Wall Street Journal's Matthew Rose had a terrific profile of Apple CEO Steve Jobs and of how he came to see that the Next Big Thing was not digital video -- as he had believed a couple of years ago -- but online music.

I suspect that Apple's announcement marks the crumbling of the Berlin Wall. That is, the entire music-industry infrastructure has been rotting from within for years now, as its younger customers have taken to downloading all the music they want for free -- illegally -- via such Napster successors as KaZaA and LimeWire. Apple's move is spectacular on the surface, but it's really just the last, inevitable step in a long process.

Most people are fundamentally honest, or will be if they don't feel like they're getting ripped off. Until now, though, the music industry has refused to reconfigure its business to adjust to how its best customers now choose to obtain their music.

Instead, the industry has filed outrageous lawsuits against a handful of college students who have acted not just as downloaders, but as enablers. As Harry Shearer sneered in the New York Times on Sunday: "Here's a business model with a future: sue your customers."

By charging only for the music that a customer buys, and by going easy on the copying restrictions, Apple is the first legitimate business to try an approach that might actually work. Of course, even though Steve Jobs deserves credit in pushing this, it's clear that the music industry would never have gone along if its executives weren't desperate.

Weirdly, the Times' Matt Richtel writes today, "Unless Apple unveils something radically unexpected, its service will not represent a marked difference from some of the Internet services already in existence."

Matt, cruise on over to Rhapsody, at, the largest online music company. Yes, it does sound like you can do pretty much what you want with songs after you've downloaded them for 99 cents apiece. But you have to pay $9.95 a month whether you download anything or not. That's the barrier that Apple is now trying to topple.

No doubt you'll be able to get all the details on Apple's website later today, after the announcement.

If history is any guide, Apple will succeed, but most of the economic benefits will accrue to those who rush in afterwards. At least at first, Apple's service will supposedly be limited to Mac users, but that will change. Apple's Macintosh computers now only control less than three percent of the market, and four of those computers are in Media Log's house. As a technological innovator, though, Apple is without peer.

This will work.

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