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Apple Launches Music Service

Rare Eminem, Dylan among more than 200,000 songs available on iTunes

April 28, 2003 12:00 AM ET

Apple launched its iTunes Music Store today, making more than 200,000 songs available for download. Recent releases including 50 Cent's Get Rich or Die Tryin', Fleetwood Mac's Say You Will and Godsmack's Faceless are available for download and burn at $9.99 each, with cover art included in the price. Singles can be purchased for $0.99 each, with iMusic offering a number of exclusives by the likes of Eminem (including a collaboration with Marilyn Manson on "What I Am"), U2 (an acoustic "Stuck in a Moment You Can't Get Out Of" and two live tracks), Sting, Missy Elliott and Bob Dylan.

The online-music service is the outgrowth of a recently completed deal between the five major labels and Apple. In addition to buying and downloading music on a per-song basis, users can transfer files to an Apple iPod player and also burn songs in limited amounts.

Apple's entrance into the online-music market could alter the complexion of both the music and the computer businesses profoundly. With the big labels suffering from a severe sales slump and a seemingly unfixable piracy problem, Apple's foray into Internet music distribution may provide the labels with a little daylight in an area where there has been nothing but darkness. It could also provide a model that the existing services -- struggling money-losers such as Pressplay, MusicNet and Rhapsody -- can follow. One digital-media analyst says Apple's interface -- the page music buyers will use to download songs -- has an edge over anything that exists now. "It is a simple and easy transaction," says Phil Leigh of investment firm Raymond James, "and that's a big advantage over Pressplay and MusicNet."

Apple's new service will, of course, only be available to Mac and iPod users. Macs currently make up about five percent of all home computers, and about 600,000 iPods have been sold. Inside the labels, executives accustomed to criticizing technology companies such as Apple for making the equipment kids use to steal music now view the Apple service as an experiment that just may work in their favor. "The Apple thing will be an interesting test," says a label executive, who preferred to remain anonymous. "I have to believe if you can have all the music in one place and get it easily for ninety-nine cents, it's going to work."

In a related story, the Los Angeles Times reported that Apple is in talks to acquire Universal Music Group, valued at $6 billion. Talks appeared to have arisen out of conversations between Apple boss Steve Jobs and UMG execs Doug Morris and Jimmy Iovine concerning Apple's online venture. Those talks raised a number of possibilities, including an outright buyout by Apple. A separate management-led buyout was reportedly rebuffed by Vivendi Universal. Industry sources are now saying that any buyout appears unlikely: Apple's online venture gives it access to the music it needs to be a success and transforms the company into a diversified digital-media company -- which was Jobs' goal from the beginning.

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