The 10-10-220 of File-Sharing

Ninety-nine cents for all your songs at Apple’s new music store.

The Apple of the music-service world

A few record execs must have wandered into Steve Jobs’reality distortion field. After four years of denial, doublespeak, and lawsuits over digital music, all five major labels—Sony, Time Warner, Universal, BMG, and EMI—have somehow been persuaded by the Apple CEO to finally deliver a music service worth paying for.

At least, that’s my verdict after a morning spent with the iTunes Music Store, unveiled today at one of Jobs’ famous stage ceremonies in San Francisco’s Moscone Center. The store is built right into a newly downloadable version of the iTunes software for the Mac. Just sign up with a U.S. credit card for an account at the Apple Store (iTunes walks you through this if you haven’t already bought from the Apple Store in the past), and you can download any of 200,000 songs—from Franz Joseph Haydn to Eminem—provided by the five major labels. Most are 99 cents, although new tracks that you can’t buy on CD (such as Eminem’s “These Drugs”) are bundled with other exclusive songs and sold in packs of two or three ($1.98 and $2.97, respectively). You can listen to 30-second clips of everything in the store, and you get to keep songs you buy forever, even if you sell your current computer: Apple lets you designate up to three computers as “yours” at any one time and will play your songs on any of them. Plus, if you’ve got an iPod, you can transfer your music to it and take it with you.

The downloads come in the AAC format supported by Apple’s computers and iPods. Even at a modest 128 kbps, AAC sounds better than most MP3s, although that may be because professional encoding sounds better than at-home amateur ripping. More important, AAC is unfettered by the clunky copyright protection technologies that keep other pay-to-play music services’ tunes from playing outside your PC (and sometimes inside it). Apple has built a few roadblocks into iTunes to make it tough to pass around free copies of a song after you’ve paid for it, but enterprising students are picking the locks already.

The iTunes Music Store’s real innovation isn’t its technology. It’s the pricing. By getting the major labels to sell one song (or at most two or three) at a time, Jobs has broken the album-oriented business model that’s served the music industry ever since Columbia introduced the long-playing record in 1948. Usually, a hit single is sold as part of an album package, a proven hook to get buyers to justify forking over $17 because they like one song. In their more honest moments, music execs admit that albums are a bait-and-switch tactic, a lucrative one they’re reluctant to give up without a proven alternative. That’s why, four years into the post-Napster world, none of the major labels have tried the buck-a-song approach before.

Except for once: EMusic offered 99 cent downloads from big-name artists. But EMusic’s deep-pocketed funders switched the service to a subscription offer in 2000, convinced by surveys of Napster users who said they’d gladly pay 10 or 20 bucks a month for a service like it. But Napster had every song you could ever want, so of course you’d subscribe.

The labels mistakenly thought that online subscriptions were the way for them to make money from digital consumers. It made sense on the surface—people happily subscribe to ISPs, cell-phone services, even Web sites. Music buyers rejected the actual offerings, though. Products like Yahoo! Music and PressPlay (and the iTunes Music Store) offer only a subset of all the music you might want, depending on which labels they’ve signed up. And unless you read Billboard, you’ll never know what’s missing until you try to download it. Can you name which label Fischerspooner is on? How about the Dixie Chicks? If I commit $120 for the next year to PressPlay and an equal amount to RealOne will that get me every song I want in 2003, or will I have to pay yet another service to get it? No wonder the kids are all on KaZaa.

For the first time in three years, iTunes lets music buyers pay for only the songs they want. No more albums bundled with unwanted songs, and no more monthly fees. If you like the Chicks’ version of “Landslide,” it’s yours for a buck. If, instead of buying the rest of the album, you’d rather cull 16 more songs from other artists, you can. Need “We Will Rock You” for the big school rally? Ninety-nine cents. The company hasn’t said whether or not it will carry music from independent labels outside the big five. But if Apple doesn’t carry your favorite song, who cares? You didn’t pay them any money anyway.

Still, it’s hard to say after one morning if Apple’s music store will be a hit. The initial 200,000-song catalog isn’t really that big—still no Fischerspooner despite the band’s album on EMI and frequent MTV appearances. Plus, iTunes doesn’t work for Windows users. Is it enough to make you buy a Mac? Probably not.

But for once the price feels right rather than a rip-off. The suits from the big five labels find themselves squinting into a bright new future, one in which they’ll still get my dollars. But now they’ll have to earn them one at a time.