Apple Computer opens online music store

PC owners can buy songs for 99 cents using credit card

April 29, 2003|By BLOOMBERG NEWS

SAN FRANCISCO - Apple Computer Inc., maker of the iPod portable music player, said yesterday that it is expanding into the music business with an online store where personal computer users can buy songs from the world's five top record companies.

The iTunes Music Store will sell digital copies of songs for 99 cents each to users of Apple's Macintosh PCs and iPods, Chief Executive Officer Steven P. "Steve" Jobs said at a news conference. The record companies agreed to sell more than 200,000 songs through Apple. Unlike rival services, Apple won't charge a subscription fee, and users can make unlimited copies of the songs on compact discs.

The online store opened yesterday and will sell only to users with a U.S. credit-card billing address, Jobs said. Users of PCs that use Microsoft Corp.'s Windows operating system will be able to use the service by the end of this year, he said.

"We think subscriptions are the wrong path. People have bought their music for as long as we can remember," Jobs said.

Jobs, who regained control of the company in 1997 after it had two years of losses, helped turn Apple around by focusing on PC designs and software tailored for tasks such as managing digital music and photos. Jobs is expanding beyond PCs to spur demand that's slumped because many users see little reason to buy new computers.

"Jobs is willing to press ahead with novel ideas where other people won't," said Brett Miller, an analyst with A.G. Edwards Inc., which rates Apple "neutral" and makes a market for the shares. "We have a whole industry that's just sitting idle with a ton of capabilities and nothing to do with it."

The top music companies are AOL Time Warner Inc.'s Warner Music Group, EMI Group PLC, Bertelsmann AG's BMG Entertainment, Sony Corp.'s Sony Music Entertainment Inc. and Vivendi Universal SA's Universal Music Group.

The online service is Apple's latest product aimed at music fans. More than two years ago, Apple sought to capitalize on the growing use of digital music with iTunes software and later the iPod music player.

Apple also announced yesterday an updated version of iTunes and three new iPod models, to go on sale in the United States on Friday and a week later internationally. Apple has sold more than 700,000 of the palm-sized iPods since their introduction. The new models cost $299 to $499 and can carry from 2,500 to 7,500 songs.

Apple shares, which have declined 40 percent in the past 12 months, rose 51 cents yesterday to close at $13.86 on the Nasdaq stock market.

Web sites that charge fees for digital music have struggled to gain customers because files are widely exchanged for free on such services as Kazaa and Morpheus.

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