The newest pop starlet on the block made its live European debut today as Apple unveiled what it called "the best jukebox in the world", signalling the start of a price war in the fledgling online music market while setting its sights on the massive pirate trade.
From this afternoon, users in Britain, France and Germany are able to access Apple's iTunes online service. After browsing a catalogue of some 700,000 songs, they will be able to pick their favourites to download for 79p each (€0.99 in France and Germany).
Albums will be priced at £7.99, well below the cost on the high street. Steve Jobs, Apple's chief executive, called the prices "aggressive".
Mr Jobs hopes that iTunes will ride the same wave of consumer enthusiasm that met Apple's iPod, which claims half of the digital music player market. To do so, he said that it must win users from illegal download sites where pirate tracks are available for free.
Apple also announced plans to launch a pan-European store by October.
Digital distribution via the internet has long promised to represent the future of the music industry. The launch of iTunes could potentially unlock a multi-billion dollar market for Apple.
The UK, France and Germany have been chosen as iTunes' pilot European markets because they represent the bulk of the continent's sales. Together with the United States, the four territories account for 60 per cent of the world's music market.
Across Europe, Apple is aiming to emulate iTunes' success in America. The company claims around 70 per cent of the US digital music market, having sold around 85 million tracks in just over a year. It is estimated that at around 500,000 tracks have been downloaded legally in the UK so far this year.
However, whereas in America Apple enjoyed being the first to launch a legitimate music-downloading site, the European market has already shaped up into a competitive environment.
COMPETITION
Last month, the US software house Roxio announced the surprise launch of a new version of Napster, the website which had previously operated as a pirate download portal.
Yesterday, OD2, the present digital music market leader in Europe, unveiled a partnership with Microsoft. OD2 hopes that by integrating its services with Microsoft's popular Windows Media Player, it will gain access to a huge portion of the market. The move was interpreted as a signal that Microsoft holds no major plans to enter the music sales alone in the short term.
Both of these rivals hold agreements with the five major record labels, as does Apple. Apple hopes to outdo its competitors by offering exclusive tracks, audio books and videos. It also has an exclusive deal with Disney.
Apple users will not enjoy all the music available in the stores, however. The Association of Independent Music today said that negotiations between Apple and a number of its members had broken down. That means iTunes users will be unable to download the likes of White Stripes and Dizzee Rascal. The company has also failed to sign up The Beatles' back catalogue.
Mr Jobs today dismissed the legitimate competition, saying that Apple would compete with the pirate sites that have threatened to undermine the music industry.
"We understand piracy," said Mr Jobs, who added that the PC compatible version of iTunes was the "best Windows application ever written", and that it would offer users better levels of quality and accessibility than were available on illegitimate sites.
Apple may find it has its work cut out. The draw of illegal, free sites has proven phenomenal. At its height, Napster's first incarnation had more than 60 million users who swapped hundreds of millions of music tracks - all for free.
With critics claiming that it threatened to bring about the collapse of the music industry, Napster was forced to close in 2001 after the major record labels successfully sued for copyright infringement.
But with other sites, such as KaZaA, taking up Napster's former position, record industry executives have argued that illegal download sites have been responsible for a 10 per cent fall in conventional music sales. An estimated 1 billion songs are downloaded illegally each month worldwide.
However, in choosing to undercut Napster, which charges £1.09 per track, and OD2 (80p), Apple has signalled that it is prepared to compete on price to build up its share of the legitimate digital music market. Meanwhile, the message from the pop diva Alicia Keys, who performed at the London launch, was that, as an artist, iTunes offered her exposure to a huge audience while safeguarding her royalties.
"Don't forget that when you download a track from a pirate site you are stealing. What we're offering the market is good Karma," Mr Jobs said.
In return, he would be likely to consider domination of the $32-billion music market sufficient recompense.
