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Jukebox Market Heats Up

During last week's Macworld conference, Apple CEO Steve Jobs unveiled iTunes, a free MP3 jukebox software.

"Apple has done what Apple does best - make complex applications easy, and make them even more powerful in the process," said Jobs, in a statement. "iTunes is miles ahead of every other jukebox application, and we hope its dramatically simpler user interface will bring even more people into the digital music revolution."

iTunes is part of Jobs' new corporate strategy to make the Mac a "digital hub" for new media devices. He envisions users connecting PDAs, DV cameras, music devices and more to the Mac, which has the power, storage and connectivity, to centrally control and manage them.

For Apple, this is a big move into the jukebox and music market. iTunes, available free for Mac users allows users to play, organize, rip and burn digital music. It includes many features found in competing products, such as CDDB look-up, play-list generation, visualizations, and CD-burning. Among the more advanced features is a "live" search tool, which automatically filters as the word is being typed. Users can also browse songs by artist, name or even album.

MusicMatch, RealNetworks' RealJukebox, AOL's WinAmp, and Windows Media Player all have been in the market for a long time and have similar features. Apple said that it knows it is late to the MP3 party, but said it will leapfrog the competition with its new player.

"It's unrestricted in terms of saving to MP3, there are no ads, and there's no sell-up," said David Moody, director of product marketing at Apple, referring to the competition that requires users to buy full versions for full functionality or restrict MP3 encoding.

Gary Brotman, a spokesperson for MusicMatch said that it released a Mac version in July 2000 and currently has 13 million users. "We're also the only jukebox to have three platform solutions -- Mac, Windows and Linux," he said.

Faster, Unrestricted Ripping

Jobs, during his keynote speech, said that iTunes can rip songs at up to 8.5 times real-time. According to the company, this is possible because Apple "internally developed" or tweaked the MP3 codec and isn't using Fraunhofer's method.

Brotman admitted that iTunes can rip MP3's faster, but that's mostly because of processor power, optimized for Power Mac G4's. "But on most G3s, consumer-level iMacs and iBooks, we're comparable," said Brotman.

Microsoft's Windows Media Player doesn't let users save to the MP3 format at all, instead saving everything to WM audio. MusicMatch does support MP3 ripping, but limits the encoding speed in its free player. RealJukebox leads the way in its support of many different formats, including MP3, Liquid Audio, and even Microsoft's Windows Media audio (for downloading only). Nevertheless, the default selection for RealJukebox is Real's audio.

"We support the widest range of formats," said David Brotherton, product manager at RealNetworks.

Unlike the competition, iTunes doesn't use any digital rights management (DRM) technology. The other three support their own methods of rights, which limits distribution of music files. Moody wouldn't comment on whether it's working on adding DRM support in future versions, saying Apple doesn't comment on products or features it hasn't announced. "Obviously, there are a lot of unsettled, and unsettling issues involved with digital rights," was all Moody said. Without DRM, users can easily rip, trade music with others, and move them to unprotected digital music devices as often as they want.

iTunes currently supports Nomad and Rio, which Moody calls "pure MP3" devices. Other jukebox programs support a wider range of SDMI-compliant devices that limit the movement and recording of music files.

No Upgrades

MusicMatch, like RealNetworks, offers a plus version of its software. Although Brotman said the company doesn't disclose sales figures he did say that their "upgrade ratio" is 2 to 3 percent of all downloads. "The industry average is about 1 percent, so upgrade are higher than the industry," he pointed out.

MusicMatch provides more functionality with its upgrades. It allows for faster MP3 ripping (up to 20 to 25 percent faster), an equalizer, faster CD burning (not just 1x), and line-in recording.

RealNetworks also doesn't release sales figures on individual products, so it's tough to know how willing users are to pay for fully functional jukebox software. With approximately 99 to 97 percent of users electing to keep their free versions; free software is the clear winner. Microsoft's Windows Media Player, the other free software, is widely represented.

Integrated Internet Radio Functions

Perhaps the biggest surprise about iTunes is its Internet radio component, which is powered by Kerbango, an aggregator of radio content. Interestingly, iTunes doesn't stream QuickTime files, just MP3 through Kerbango's service. It can also be used as a regular MP3 streaming player.

When asked why there wasn't an announcement made about the Kerbango deal, Moody hemmed and hawed, saying, "There's no reason." Kerbango didn't return phone calls as of press time.

Users that access the radio function, get up to the minute Kerbango stations, so they always find stations that are connected. They can hit "refresh" so Kerbango can get the latest stations.

RealNetworks' radio is implemented in its RealPlayer, which is made for streaming. It's the only major jukeboxer to separate downloading from streaming. When asked if the company would consider combining the two into one software, Brotherton said that they were currently "appropriately integrated". "We are always exploring options to improve the software," he said, refusing to speculate if that would happen in the near future.

MusicMatch launched its Internet radio in November and according to Brotman, it's taken off like "wildfire". "We've eclipsed 500,000 unique listeners in a little over a month's time with over 40 million tracks played," he said. The radio is proprietary, something that MusicMatch built in-house, using streaming MP3 audio. MusicMatch programs 18 stations, and lets users choose favorite artists or listening preferences.

Who's Number One?

Apple's introduction into the jukebox space will no doubt fuel competition.

Media Metrix did research into actual penetration of media players into home and work environments and found that RealNetworks led the way with its RealPlayer with Windows Media Player close behind. In the "pure" jukebox category, RealJukebox got 8.7 percent for work users, while MusicMatch didn't even rank. In home usage, RealJukebox got 5.5 percent penetration, while MusicMatch followed with 2.3 percent.

Brotman from MusicMatch, however, said that users spend more time using its software than its competitors. In a study conducted by Jupiter Media Metrix, it found that MusicMatch users used its jukebox software for 101.8 "active" minutes during the third quarter of 2000. Windows Media Player users logged 33.4 minutes, while RealJukebox trailed at 26.6. Unfortunately, more recent figures weren't available.

What's Next?

In the coming months, will be interesting to see if iTunes makes any inroads into future studies. This week, Apple said that downloads of iTunes topped 275,000 since last week's introduction.

In terms of innovation, MusicMatch seems to be leading the way. It incorporated support for video (Windows Media format) and has a customized Internet radio function. So far, however, MusicMatch for Mac doesn't do video or have Internet radio. Microsoft's player also crosses the line between the pure play jukebox and a fully functional streaming/downloadable player.

MusicMatch said they're very confident of where they are. "From both a revenue and customer acquisition point of view, our growth has been very healthy," said Brotman. "Our software upgrades enable us to sustain and grow our business, and beyond that, we'll have advertising kicking in, as well as additional music services will help augment that revenue."

Brotherton, meanwhile said that "170 million unique registered users of RealJukebox speaks for itself". It seems they're ready to face the competition. "We are confident in how widely adopted it is," he said.

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