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Apple's and Microsoft's Digital Music Ploys

By Blane Warrene MacNewsWorld ECT News Network
Jun 4, 2004 12:50 PM PT

Apple's recent release of the iTunes Software Development Kit (SDK) for Windows and Microsoft's release of Windows Media Player 10 beta are the latest salvos in the war going on in the digital music industry.

Apple's and Microsoft's Digital Music Ploys

Apple's SDK enables Windows developers to write code to control iTunes from other applications. These tools require iTunes 4.5 or later and support several languages, including C++, C# and JavaScript.

The Windows Media Player (WMP) beta introduces new features, including access to online music stores, expanded device support, new "smart" jukebox features and a new interface design.

More Than Functionality

According to Yankee Group senior analyst Mike Goodman, Microsoft is taking a page from Apple with the release of the Media Player beta and features capitalizing on synchronizing music with music players and smart playlists.

"Apple has set the standard for digital music features and functionality," Goodman told MacNewsWorld.

However, Goodman believes it is more than that, referencing Apple's overall market share as slim in the world of client operating systems. Goodman observed that it is a "revelation that Apple is extending development resources beyond their own platform."

"Apple's iTunes Kit for Windows is not about control -- it is about monetizing," he added. "This new iPod-iTunes division of Apple has to be self-sufficient and needs adopters on Windows to grow."

Mike McGuire, senior analyst with Gartner, agreed with Goodman. Apple's a la carte model of selling music requires constant streams of traffic.

"Apple knows they need to drive traffic to the iTunes Music Store," McGuire told MacNewsWorld. "Increasing development on Windows will increase the users adopting iTunes and going to the store."

User Issues

Both analysts agree that the similarities in features between iTunes and WMP are competitive moves, but the issues go deeper. On Microsoft's platform, subscription models are being developed in which music is leased rather than purchased.

"Microsoft wants to see their digital rights management platform as the next big thing after Windows," Goodman said. "The jury is still out on if they will build music devices themselves, but they have the potential to dominate DRM in the future on other vendor's devices."

McGuire believes this will not be so much a technical issue as a consumer issue. According to him, Gartner research shows consumers prefer ownership to subscriptions to music services.

"Apple's DRM in iTunes is barely visible to consumers," he said. "They know it's there, but it does not reduce usability."

"As DRM evolves, on the Microsoft side, there is the subscription model," McGuire said. "The success will depend upon getting consumers to adopt a lease model rather than owning the content."

According to McGuire, the big difference between traditional subscriptions -- to magazines for example -- and subscriptions to a music service is substantial.

"If you stop your subscription to The New Yorker, you still have all of the back copies already sent to you," McGuire explained. "With this new model, you would not only lose access, but would lose access to all of the content you had previously paid to access."

Apple and Microsoft -- Again

McGuire believes the industry remains in its infancy, and it is too early to predict what is around the corner.

"If you had asked me five years ago who would dominate digital music, the last companies I would have suggested would be Apple and Microsoft," McGuire said.

For his part, Goodman believes Microsoft will pursue smaller successes with devices and look for a big win with DRM.

"If the Windows cash cow slows down as pressures from competing operating systems mount, [Microsoft] will look for multiple small product wins and look to set their DRM as the standard in the industry," he said.

"Apple need[s] to continue extending [its] marketplace. The Windows SDK opens up product potential for iTunes beyond OS X."

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