Why Apple may win

In light of the recent news that ailing MusicNet will now offer its subscription service in Windows Media format, that RealNetworks will add Rhapsody to its subscription services and that Pressplay is being acquired by Roxio, it's clear to me that MusicNet, RealNetworks and Pressplay just don't get. Or, more likely, don't want to get it.

Apple is winning the online music battle, and may win the war.

Apple's new music service is brilliant move by Steve Jobs. The iTunes Music Store continues the transformation of Apple from a PC company into a CE (consumer electronics) company (as I humbly predicted four years ago to almost universal derision).

Once Apple makes its music service work with Windows, as promised by year's end, it'll be an even bigger hit. I think there's a pent-up demand for an a la carte (non-subscription) service that allows unlimited burning for personal use. I suspect there are a lot of people who are wary of free Napster-wannabes due to concerns about embedded viruses, spyware, and some nagging legal doubts (note, though, that I put that concern last).

The Mac-only iTunes Music Store release appears to be as much a marketing limitation as a technical one. I suspect Apple -- and the labels -- are doing some savvy test-marketing and loyalty-rewarding with the Mac populace first. After all, if pricing is off, or if something goes wrong and piracy rates zoom up, it's likely to be containable since, for good or ill, the Mac installed base is dinky compared to Windows. We've already seen one tweak with the Internet play list sharing feature.

And also note that I suggest one reason for Apple's current success -- more than three million tunes downloaded at 99 cents each since late April -- is that it's not a subscription service.

That's the part the other online music players don't seem to, or want to, get. The best of the competitors -- Listen.com's Rhapsody -- is being acquired by RealNetworks, and so far the main change is that it's offered as another subscription option. While there's no indication how it may look at the end of the transition, keeping it as subscription-only doesn't address the large portion of the market that doesn't want a monthly commitment. They just want to buy music when they want it. Imagine being forced to pay an ongoing monthly fee for the right to walk into a physical music store so you can later pay more to buy a CD.

Plus, Apple's unlimited personal burning option is more important than the other online music players may realize. When I tested online music services, I had a Pressplay burn fail due to a bad CD-R disc -- and was told that I couldn't burn it again since they had no way to tell if I was telling the truth. Now that's customer service.

Add the cool new iPods to the Apple iTunes Music Store, and it's clear that Apple is doing something with music that the other PC-centric firms haven't yet really done: listen to the customer more than to the industry.

(Listen to the WebTalkGuys interview in WMF, Real or Windows Media Mobile format.)