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Web iTunes? Don't Believe the Hype

Online music streaming services are altering the way people find, buy, and share songs–when will iTunes join the fun?

Dozens of startups now offer Internet-based music streaming technology, making millions of songs instantly accessible from almost any device. But the biggest digital music platform of all–Apple’s iTunes–hasn’t yet moved over to the Web.

A big question hanging over an event that Apple is holding this Wednesday is whether such new features will be announced for iTunes.

No published reports suggest that Apple has worked out the licensing deals needed to offer its vast collection of music via Internet streaming rather than solely through downloads. But Aram Sinnreich, an assistant professor of journalism and media studies at Rutgers University and the author of Mashed Up, a new book about digital music, believes Apple doesn’t need to take this step this week. “Is Apple operating iTunes at the cutting edge of music technology? Absolutely not,” he says. “Are they in danger of losing their share of the market? Absolutely not.”

Internet music streaming is becoming increasingly popular. Pandora, a startup that offers streaming music and various ways to discover new tracks, has more than 48 million users and has consistently seen its iPhone app atop download charts. Spotify, a similar service that has yet to launch in the U.S., has around seven million users worldwide.

Sinnreich expects Apple to launch more social features, such as integration with Twitter and Facebook, which would give iTunes functions already offered by sites such as Pandora. These features would make it easier for users to share information about what they’re listening to and what tracks they recommend. As the market leader, Sinnreich says, Apple doesn’t need to innovate as much as it needs to simply sell more songs than competitors. As Apple is one of the only profitable companies in the digital music industry, he notes, its conservative approach has paid off.

Some analysts have expected Apple to launch a streaming music service since its acquisition late last year of Lala, which lets users upload music legally and stream Web songs from any computer. Incorporating Lala’s technology into iTunes would solve a couple of big problems, Sinnreich says. He notes that iTunes has lagged in allowing users easy access to music from a variety of devices (besides the hardware that Apple sells itself). Lala’s upload features could make personal music collections much more portable.

Streaming music will eventually have to be a part of any successful music platform, says Phil Leigh, founder of the market research firm Inside Digital Media. “Web-based music, not downloads, will be the future of recorded music,” Leigh says.

When iTunes does move to streaming music, Leigh believes, it will finally make the technology mainstream. He expects Apple to ultimately launch a service that will use ad-supported streaming music to popularize new releases. For now, record labels resist streaming music because they worry about cannibalizing downloads and CD sales. Eventually, Leigh says, falling album sales will force them to warm to streaming services as a way of getting listeners to try out new bands.

Sinnreich also believes that a Web version of iTunes would have a huge impact on how many people access music: “There’s enough infrastructure in place that, if Apple did it, streaming music would be broadly adopted.” He adds that Apple is well positioned to design an interface that makes it less intimidating for people to upload personal music collections and manage them across a variety of devices.

One challenge is likely to be reaching the licensing deals Apple would need to launch a streaming music service. For recording companies, making deals with smaller music services such as Lala is a different proposition than dealing with Apple. The popularity of iTunes is such that a Web interface could immediately convert hundreds of millions of users.

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