Week in review: Song wars

Music download services cranked up the volume this week, with newcomer Yahoo taking aim at market leader iTunes.

The Net giant launched a deep-discount music service in hopes of capturing a slice of the online music market, now dominated by Apple Computer. Yahoo's service is built in large part around a monthly subscription plan similar to those offered by Napster and RealNetworks, which allow customers to put the music onto their portable devices. However, Yahoo is deeply undercutting those rivals' prices, offering initial monthly subscriptions for just $6.99. Napster and RealNetworks both charge close to $15 for their portable subscription plans.

Yahoo also has spent considerable time building links to its other products, such as its popular instant-messaging application, with the aim of making community and legal music-sharing among subscribers a core part of the service.

The new music service is likely to kick off a price war that could put rivals in a painful squeeze.

"It is going to put pressure" on Napster and RealNetworks, said GartnerG2 analyst Mike McGuire. "But it all depends on how long Yahoo can keep running this introductory pricing."

Whatever the outcome, the price war is likely to draw attention to the subscription music model, which has languished in the shadow of Apple's 99-cent iTunes download store.

While Yahoo aims to take a bite out of Apple's music territory, iTunes looks to be morphing into a multimedia download shop. The latest update, which Apple released earlier this week, comes with new features for the music store and updated QuickTime video support, leading to speculation that the update is paving the way for Apple to sell music videos or longer film downloads alongside its singles and album business.

Going mobile
Whatever tricks Apple pulls, Bill Gates isn't likely to be very impressed. Microsoft's chief said in an interview published Thursday that he sees mobile phones overtaking standalone MP3 players and that he views the raging popularity of Apple's iPod player as unsustainable.

"As good as Apple may be, I don't believe the success of the iPod is sustainable in the long run," he said in an interview published in Germany's Frankfurter Allgemeine Zeitung. "If you were to ask me which mobile device will take top place for listening to music, I'd bet on the mobile phone for sure."

Gates made similar comments in an interview with CNET News.com earlier this week.

Gates made those comments as his company wrapped up development of Windows Mobile 5.0, its latest operating system for cell phones and handhelds. Microsoft is hoping to boost its fortunes--and grab some market share from archrival Nokia--by creating software that can more easily be customized by device makers and wireless carriers.

Microsoft points to a number of features it said will help in that regard, including support for software-based buttons that will make it easier to operate devices with one hand and without using a stylus. The new version also offers features such as improved mobile versions of Word and Excel, a viewer for PowerPoint spreadsheets, and a mobile version of Windows Media 10 that supports subscription music and viewing of recorded TV shows.

Meanwhile, cell phone giant Nokia revealed details of its television technology to help jump-start the young mobile-TV industry. The company unveiled its version of a standardized method for delivering broadcast digital TV to handsets in the United States, Europe and Asia. The standard, DVB-H, or Digital Video Broadcast-Handheld, competes with a host of other similar technologies, including Qualcomm's new MediaFlo. Companies supporting DVB-H say it's less expensive and allows a quicker product turnaround.

Nokia's move supports the wireless industry's view that there's a sizable market for mobile-TV fare, including movies, news clips and

[System Tyrant]

I don't...

really like the subscription music service. To me it's like renting a home or leasing a car. It may work for some (or the majority), but in the end you don't own anything and are still left with nothing. At least with paying for each song I download I get to keep a copy that I can continue to use.

[bobby_brady]

You have to be careful with pay downloads

too. Even if you think you "own" the song at $.79, your computer owns it more than you do. How easy will it be to transfer the song to another computer you buy in two years? What about after that?

One reason why I like Itunes is the ability to strip away the DRM the songs are infested with via burning to CD. That way I know I'll be able to transfer the song to future generations of computers I eventually will buy.