Neil McIntosh 

Pump up the volume

The iTunes Music Store in the US has been a huge success. As Apple launches its UK store, Neil McIntosh looks at the prospect of a repeat performance.
  
  


At a venue in central London on Tuesday morning, soul singer Alicia Keys was on stage, purring into a microphone, describing the love she feels for a software package. It was, she sang, a good time to be listening to iTunes.

How the rest of the industry must be hoping music lovers sing similar songs of praise over the next few months, as the digital music bandwagon finally gets rolling in Europe.

Keys was in town to give that bandwagon a shove. She was appearing as the support act to Apple's iTunes Music Store (iTMS), which launched British, French and German versions this week - more than a year after it opened in the US.

In that first year, iTMS has sold 80m songs and taken 70% of the market share of digital music sales in the US. But while it has been a soar away success in the US, iTMS has been slow to get moving on its world tour.

On this side of the Atlantic, its rivals - services such as mycokemusic, powered by the OD2 service backed by Peter Gabriel, and latterly the new, legitimate incarnation of Napster - have been making inroads. Already this year, more than 500,000 tracks have been downloaded legally.

Spotting the juggernaut on its way, Napster and OD2 were quick to try to steal some of Apple's thunder this week. Napster, which itself only relaunched in the UK last month, announced a deal with cable company NTL to allow 1m cable internet users cheaper access to its catalogue. And OD2 unveiled what it calls a "pay-per-play jukebox" through its stores, including MSN's Sonic Selector, which allows users to stream any track live for 1p a play.

But, despite those announcements, the arrival of Apple and its iTunes Music Store is likely to take digital music to a new level in the UK - not least because, while iTunes is not the first music download service on the block, it certainly has the highest profile and is the most lavishly funded.

"Today's launch is another important step forward in the growing UK downloads market," said Peter Jamieson, chairman of the record industry trade body, the BPI. With a digital downloads chart expected to arrive later this year, Jamieson added this could be "a landmark year" for digital music.

At iTunes' launch, it was easy to see why. Instead of turning up to see the industry announce more poor sales figures, or unveil increasingly harsh moves against online music pirates, Apple was injecting some much-needed glitz back into the business. The company's chief executive, Steve Jobs, never short of hyperbole, announced he was "bringing the digital music revolution around the world".

Music fans who have been filling their boots in the free, if illegal, file-sharing world of KaZaA, will complain this is a strictly capitalist revolution, even if Apple did unveil unexpectedly low prices of 79p a track, and £7.99 an album (with a few, more expensive, exceptions).

And Jobs acknowledged his main foes were those pirate networks that charge nothing. But he insisted the benefits of legality, including good sound quality, downloadable cover art, and what he described as the "good karma" of not stealing music, would win consumers over.

Speaking after the launch event, Jobs refused to accept that having rivals already in place in the UK would cause problems for his new store - even though it did not face such stiff competition in the US when it opened its doors in April last year.

The market in Britain was, he said, "still very tiny". In the UK, only about 50,000 songs are being sold a week. "We sell 2.5m songs a week in the US. The market really hasn't been opened here," he insisted.

He also questioned the rationale behind some of his rivals' businesses, adding: "There's not a lot of money to be made running an online music store. Most of the money goes to the record labels. We're the largest, and we're breaking even, making a very small profit, but the other guys must be losing money. Why would a small company like Napster or OD2 want to be in this business?"

The reason that Apple has entered the fray is, of course, because of the iPod. While the company makes only a small profit even selling millions of songs online, its digital music player enjoys a huge mark-up, and is selling so quickly the company can't make some models fast enough. The machine has become an increasingly important part of Apple's portfolio, as its core computer business continues to watch its market share slide.

Apple figures claim more than 3m iPods have been sold so far, accounting for more than half the digital music player market - including the cheap, sub-£100 players that Jobs loves to deride. "Even when you get one of those as a gift, you don't use it," he sniffs.

And iPod's importance to Apple means users of other devices are unlikely to see their wishes come true, and be allowed to play music bought from the iTunes music store on non-Apple music players. "iPod works with anything," insists Jobs. "And with iTunes, we decided to work with the most popular music player - and that's by far the iPod.

"Rather than support all these other guys, we'd rather use the engineering to innovate. So far, customers have said that's what they want."

A brewing standards war may yet derail the progress of digital music, or end Apple's dominance of the market. Apple finds itself - just as it did in the PC business - offering a proprietary solution with its iPod and iTunes combo. This is ranged against a variety of opponents and a huge selection of music players, all settled on a common, more open platform built by Microsoft - in this case, the Windows Media format.

As Calum Chace, a partner at KPMG who specialises in the media business, remarks: "It's never particularly wise to bet against Microsoft. Open systems do tend to win, eventually."

And, despite Jobs' certainty about what he wants iTunes to offer, there are still plenty of unknowns in the fledgling digital downloads business. iTunes does not, for instance, offer a subscription service - unlike Napster or OD2 - or stream complete songs over the internet, like its two rivals.

Charles Grimsdale, chief executive of OD2, says streaming is an important feature for users who want to experiment with new music. "People like to stream music because you can listen to a lot of stuff you would probably not pay to download," he says.

But Jobs insists users are "not showing a great deal of interest" in streaming, and certainly don't want a subscription service. "It was proved long before iTunes," he says. "It was proved with LPs, it was proved with cassettes, it was proved with CDs. People want to own their music."

Apple also faces other challenges now it has arrived in Europe. One of its most pressing tasks will be to get the bulk of Europe's important indie music labels to sign up to its service.

Those labels - to which dozens of influential acts including Franz Ferdinand, the White Stripes and Craig David are signed - were noticeable absentees from Tuesday's festivities, after talks aimed at getting them on iTunes collapsed over the weekend.

The smaller labels say the terms being offered to them by Apple would be "commercial suicide", and do not mirror those being offered to the big labels - a claim denied by Apple.

Alicia Keys, luckily for Apple, is signed to one of the major labels that have partnered up with Apple. And, back at the launch party, she was admitting that she hadn't got her iPod working yet - despite owning three. She'd better sort herself out soon, she conceded.

Steve Jobs, along with the whole music industry, will be hoping many more follow the young diva's lead in the months ahead.

Read more of our interview with Steve Jobs at theguardian.com/onlineblog

 

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