We ended last time speculating on whether Apple’s iTunes Music Store (iTMS) was headed down a path that Apple’s all too familiar with. That is, gaining a competitive edge, then squandering the advantage by not licensing and promoting the technology to a wide audience. Ever since Apple introduced the iTunes digital music “jukebox” software, the iPod, and then the iTMS, industry analysts have been looking, waiting, and in some cases hoping, for the whole thing to come tumbling down. Most of their analysis centers around the fact that the whole Apple music ecosystem is built not around the ubiquitous Windows Media Audio (WMA) format, but rather on the open-source Advanced Audio Codec (AAC) format.

When the iPod was introduced, pundits liked the hardware, particularly the user interface, but were eager to point out that it wouldn’t go far unless it was opened up to Windows users (they were right, of course). They then quickly added that “real” success could only come if Apple opened up the iPod to support WMA as well as AAC and MP3. Up to this point, they’re wrong, of course. There’s no way that Apple could be selling music (and iPods) at the rate they are without many, many Windows users “discovering” the ease of use, style, and quality of the iTMS/iPod/AAC experience.

Efforts are afoot to expand the iTMS/iPod reach. Starting this summer, iTunes software (which, if you remember, contains a built-in portal to the iTMS) will be pre-installed on every HP and Compaq PC. HP will begin selling an HP-branded version of the iPod as well. Apple and Pepsi teamed to distribute 100 million bottles of Pepsi product with bottle caps containing codes for free music from the iTMS.

The question is: can the iTMS/iPod market continue to grow? So far the answer is “yes”, at least in the face of the current field of online store and personal player competitors. However, there is one very fierce, very powerful, very “stingy” player out there that has yet to really enter the fray.

You guessed it – Microsoft. The software goliath has been noticeably absent from the online music scene, other than maneuvering to proliferate their WMA format. Never long to ignore a potential profit stream, Microsoft has announced that they will introduce this year a music distribution system of their own, tied into their MSN internet service. Along with offering music for purchase, it will include and a “rental” plan, similar to Napster 2.0, but with a twist.

One reason that “renting” music hasn’t taken off is that you have had to pay an additional fee in addition to the monthly subscription to “own” the music, to either burn it onto a CD or load it onto a personal music player. Microsoft will introduce a new Digital Rights Management (DRM) scheme, called “Janus”, that will allow users to pay one monthly subscription fee (projected to be around $10), and have unlimited download access to the entire music catalog. For no additional fee, they can then load the music onto a personal music player. Encoded in the music will be a “time stamp”, which will render the music unplayable if the subscription expires.

Microsoft’s late arrival to the digital music store arena is most likely tied, like Apple’s iTMS/iPod relationship, to the idea that “the player’s the thing”. In other words, this summer and fall you’re going to see a media frenzy surrounding the Media Windows Media Center PC and associated gear – including a personal digital music and movie player. Will it be the much ballyhooed “iPod Killer?” We’ll look into that next time.

© 2004 Peter F. Zimowski