iPOD’S EUROPEAN LAUNCH

For the iPod generation, it will be the only way to buy music. The iTunes Music Store — which has already taken America by storm — will be available to British consumers from Tuesday.

The service will be launched by the charismatic chief executive of Apple Computer, Steve Jobs, making a rare visit to London. And that will set in train a process that could see high street record shops struggling to compete within a few years. Apple aims to dominate the burgeoning online music business, which analysts expect to be worth billions of pounds in the next few years as high-speed connections become more common in the home and make downloading the multi-megabyte music files quick and painless.

The company is already basking in the success of the American version, launched in April 2003 and which now commands 70 percent of the online market there, having sold one million tracks in its first week, and 85 million so far. The site is available only to customers with a credit card with a US billing address, excluding European buyers.
“That’s only one percent of all legal music sales,” said Rob Schoeben, Apple’s head of product marketing. “But it also represents a technological disruption, to gain one percent in just one year. And, you know, there’s a lot of headroom for us to grow into.”

CD sales have been depressed in the US and Europe in the past few years, recovering only slightly last year. But singles are on the way out — and the iTunes Music Store will speed that up, and could even kill off the album. It lets customers pick one or two tracks from an album, without having to buy the whole thing. That has music bosses worried, but their fear is tempered by the extra sales the songs provide — and the fact that it has drawn people away from illicit file-sharing networks such as Gnutella, which offer music for free. However, some bands, including the hugely popular Radiohead, have refused to let their songs be sold via iTunes because they object to the “cherry-picking” it allows.
Mr. Jobs is aiming for Apple to disrupt and dominate the market in Europe just as in the US. And he is likely to succeed, certainly in the short term: Apple has already sold more than a quarter of a million iPods in Europe, according to industry estimates, and there are millions more people with the free iTunes jukebox software on their computers — Windows or Macintosh — that will let them access the store.

Individual songs are likely to cost 99p and albums less than pounds 10, to encourage “impulse” sales. Payment currently requires a credit card, though parents can buy their children vouchers to redeem online. Once the details are entered, a song or an entire album can be bought with one click: it then downloads at once to the buyer’s computer, and can be transferred to an iPod, or four other computers, or burnt to a CD to listen to in a car.

Market Ripe

Although there are dozens of legal music download sites in Europe that have been running for more than a year, as well as familiar names such as Napster, which launched its own UK-based service last month, their sales have been comparatively slow: altogether they sell fewer than one million songs per week. It would only require all the iTunes users in Europe to buy just one song next week for Apple to immediately have more than 50 percent of the market — and that can only accelerate with the launch next month of the iPod Mini, which aims at a lower-cost market.
“IPods are just selling through the roof. To launch on top of that, I should think it will do well for them over here,” said Simon Dyson, an analyst at research firm Informa Media in London.

Those who have tried the store praise its ease of use and say it quickly changes one’s view of shops. “You quickly lose the CD-buying habit,” said David Birch, managing director of Consult Hyperion, a technology consultancy. “I’ve been a very happy user of the service since it started.” He says he has frequently bought songs he already owns, because those are on vinyl LPs — “and I don’t have a turntable any more.”

Competitors May Benefit

Despite the threat, rivals in the UK and Europe are looking forward to the launch almost with relief, because they are sure it will raise the profile of legal downloading, and thus benefit them — even though songs bought from other online stores will not play on the iPod.[*correction]
“We feel that there’s plenty of room for competition,” said Adam Howorth, a spokesman for Napster. “It’s healthy for consumers and for the players in the market.”

Ed Averdieck, sales director for the online service OD2, which powers three dozen legal download sites around Europe, including MSN and mycokemusic.com, said: “This is a really big opportunity for more and more people to find out about these services. When Napster launched, we saw an 80 percent rise in traffic, even though we’re not connected to them at all.”
Paul Myers, head of the Wippit site, said: “As long as they spend a fortune on marketing and stick with their iPod-proprietary format, we’re happy. Apple will do all the right things to build and promote the market and Wippit will be in a good position to serve any customers that want music in MP3 or the Microsoft-compatible WMA format — or wish to pay less for the same music.”

One band that will be missing, however, is the Beatles — whose Apple Corporation is currently suing Apple Computer in the High Court, alleging the US company has broken a pledge not to use the Apple name in the music business. That case continues. None of the Beatles’ music has yet been licensed to any download site.

*Editor’s Correction Note: In the section ‘Competitors May Benefit,’ the writer of the piece stated erroneously that “songs bought from other online stores will not play on the iPod.” In truth, other music stores, such as AllofMP3, eMusic and Audio Lunchbox, offer music that can be played on iPods. However, songs purchased off Apple’s iTunes Music Store are not supported for any other musical device besides the iPod.