Monthly Archives: June 2003

It is said that the Beatles were not best pleased when Steve Jobs and Steve Wozniak named their fledgling computer company Apple in 1976, 8 years after they had formed their own Apple music label. Indeed the remnants of the group sued Apple in 1991, pocketing $26 million from the settlement and reportedly, emerging with an agreement that Apple would never have anything to do with the music business.

That was then and this is now. Apple computer is having a dramatic success in the music business, in an area where all others have failed – selling music on the web. According to the company, its new service, iTunes Music Store, has sold about 3 million songs online at a price of 99 cents each in its first month of operation, which beats what anyone else has achieved. The success is even more remarkable if you consider the fact that the service is currently confined to Mac users who make up less than 1 percent of home PC users in the US and that currently it does not include all music labels.

The way the iTunes store works is simple. You give Apple a credit card number. You can then click on a button to buy and download any track or album in the store in an automated fashion. Buyers can use the recording in any way they want except trading it online. Buyers can then do what they want with the music, except trade it online.

All the technology employed is Apple’s; the Safari web browsing software, the iTunes media player, the iPod portable digital music player, Quicktime streaming technology and the WebObjects software that created the service.

Naturally, Apple is now thinking of porting the software to Windows. If you do the mathematics, this could expand the market by a factor of 100 then Apple may be staring a $3billion per annum market straight in the face. And this is just for the music itself, never mind the iMacs, iPods and software it could sell.

However, it may not be so easy to realize this in practical business terms, even if the market is as large as it appears to be. Apple has to find a way of remaining in harmony with the music industry, which means staying ahead of the music pirates. Apple is thus waging a war against the pirates, attempting to stop copyright violations occurring through their service every time they discover them. This is not an easy battle to fight as other players in the online music game have discovered. The problem is that by protecting copyright you also restrict compelling and legitimate services, like for example, sharing music within a household. It’s a balancing act. All the major music labels currently support iTunes and if they were to withdraw their support the service would die.

There is also that little matter of the Apple music label. In 1999, quite a while after Macs had been playing music, they received another visit from lawyers representing the once-fab-but-now-litigious four and settled again. If Apple’s success continues then maybe they’ll have to pay further dues to the Beatles.