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BrustBlog Pontifications on Microsoft and the Tech Industry

In the latest issue of SmartMoney magazine, Wall Street Journal columnist Walter Mossberg explores the relative merits of iTunes and its competitors, including Napster and Yahoo Music, in an article titled “Rent vs. Own.”  Essentially the article compares the Apple AA3 format with Windows Media, with a heavy focus on Windows Media’s Plays for Sure subscription support.

The article has so faulty a premise (starting with its title) and so many misleading statements, that I felt compelled to challenge many of his points.  The full text of the original article is here and my rebuttal to it follows:

>> In the download model championed by Apple, the music service functions like a physical record store. You choose a track, pay 99 cents, and you own it. <<

This is precisely that model that most of Apple’s competitors follow as well.  The fact that many of them also offer subscription services does not diminish this.  Only one or two of the online music stores available through Windows Media Player require a subscription before you can buy tracks.

>> As long as you abide by the restrictions, which are designed to thwart mass copying by pirates, the song will play anywhere you want to hear it forever, with no further payments required. <<

Again, all purchased tracks from Apple’s competitors are provided on this basis as well.

>> This rental model has attracted a solid audience, but it is nowhere near as popular as iTunes — not even close. That may be because the rental model is far more complicated and restrictive than iTunes, and has several big downsides. <<

This premise of “iTunes or rental” presents a false dichotomy.  If people find the “rental” model too “complicated,” they can choose to ignore it and consider only the purchased track model.  Where is the downside in this?

>> Also, the rules for rental songs are more restrictive than for owned downloads such as Apple offers. At Yahoo, for example, you can store each song on only three computers, versus Apple's five. And you can install each song on only two portable devices, versus an unlimited number at Apple. <<

The number of PCs you can store your purchased tracks on varies by service.  MusicMatch (now owned by Yahoo) and Napster allow you to store tracks on up to 3 PCs; MSN Music allows up to 5.  Purchased tracks from any service can be copied an unlimited number of times to compatible portable devices.

>> At the Apple service, every song is a 99-cent download you can own, but at rental services, there are different kinds of songs. Some can be both rented and purchased (for that extra 79 cents each); others can be either rented or bought outright, but not both. Some songs can only be "streamed" — that is, they can be played directly from the Internet, but not downloaded, even on a rental basis. And some can be rented, but not streamed. You get the picture. <<

Actually, on Napster, most “rental” tracks can be downloaded, streamed, or purchased.  I have come across only a few that can be “rented” and not purchased.  It is true that some tracks are available for purchase only, and cannot be downloaded or streamed for free.  But on iTunes, all tracks have this limitation!  Does Mossberg really think that the additive option to subscribe to Napster or other services somehow diminishes their tracks-for-purchase offerings?

>> Another huge downside of the rental services is that the songs they rent — and even the ones they sell outright for the extra 79 cents — cannot be played on the world's best and most popular portable player: Apple's iPod…the rental-service songs are encoded in a format owned by Microsoft, Apple's rival, and Microsoft software is required to play them on a portable player. <<

With Apple’s scheme, iTunes locks you into iPod, and vice versa.  With Windows Media, an array of online stores provide tracks compatible with a wide array of players from a host of different manufacturers including Creative, iRiver, and Dell.  Most Windows Media players are offered at lower costs than iPod, based on hard disk or flash memory size.  The players and many of the services offer their own software, but you also give you the choice of using Windows Media Player as the single software tool for purchasing or subscription downloading or streaming of tracks, for playing them on your PC and for copying them to your portable player.  The Windows Media format has created a market, while Apple has created a monopoly.  Need I expand on the irony here?

>> Apple won't build the necessary Microsoft compatibility into the iPod. <<

Bingo!  I wholeheartedly agree with that observation.  The question is whether or not this is a defensible decision.

>> …the rental model is better for people interested in sampling a wide range of music without a large out-of-pocket expense. That might make it attractive to curious but cash-poor students, for example. The rental services also have many more "community" features than iTunes does, features that allow friends and families to share music recommendations, see what others are listening to and discuss music. So they may be better for people who view music as a social activity. <<

I’m not a cash poor student, and I’m not a teenager yearning to use my online music service as a chat or sharing tool (not that there’s anything wrong with that).  There’s no question in my mind that music is a social activity, but my guess is that Mossberg is using the word “social” in a condescending teenage-gabbing sense of the word and does not mean to invoke the spiritual, uplifting power of music.

>> But for most people, it's no contest: Right now iTunes and the iPod are the better choice in digital music. <<

I beg to differ.  Subscription services offer a great way to expand your horizons and listen to music you don’t own.  As you listen to the tracks you have purchased, you can click on links to artists that your service has determined have an affinity to what you’re listening to.  From there, you can check out the artists’ discographies, pick an album, and start listening to it without plunking down more money and without having to wait for it to download.  If you like what you hear, then you can buy it.  I have done so many times, and have been very happy with my purchases because I knew what I was buying.

And here’s a whole dimension that Apple doesn’t even care to cover: owners of Windows Media Center PCs who are Napster subscribers can do all of this from their remote control, on their television (with a specially designed user interface that is living room-friendly) and listen to the music on their audio/home theater equipment.  Portable players and earbuds are great (I have a Creative Zen 6GB player and I like it a lot), and music on PC speakers can be remarkably good, but getting the music on my own amplifier and speakers makes the other options sound just plain tinny.  I suppose you could hook your Apple notebook up to your stereo, but it’s just not going to be integrated nearly as well as a Media Center PC.

There’s no question that the iPod is hugely popular and incredibly well designed, both from a technology and an industrial design perspective.  Apple is heavily dominant in the portable music player market and probably will be for some time.  About 25 years ago, there was another dominant player: the Sony Walkman.  “Walkman” was then, as “iPod” is now, the generic noun for all products in the category.  Sony had a great cash cow product that eventually became commoditized and irrelevant.  Sony of course has survived, but they also had numerous other market-leading products like Betamax VCRs, Trinitron TVs, and mass market and high-end audio equipment.  The Betamax died, but the PlayStation has arguably become even more important, especially as games for the console now command budgets and revenue comparable to major motion pictures.

Apple doesn’t have this kind of diversified product line.  In fact, iPods are starting to represent the lion’s share of the company’s revenue.  Will the iPod eventually be “Betamaxed” or “Walkman-ed?”  Will Apple become a one-trick-pony like Palm?  Will it suffer a similar fate?  Walter Mossberg owes his readers the courtesy of exploring these issues fairly, honestly and more thoroughly.

Posted on Wednesday, August 24, 2005 12:23 AM | Back to top

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