Apple Computer's New Service Sells Music for 99 Cents a Download.

Apple Computer launched a pay-per-download online music service yesterday, plunging into an unproven business while attempting to broaden its consumer appeal.

The new service sells music downloads for 99 cents and has the blessing of all five major record labels.

It also has some songs that, to date, have not been offered by rival music sites, including cuts from U2, Bob Dylan, Sheryl Crowe and Sting.

Unlike other fee-based online services, Cupertino, Calif.-based Apple will not charge a subscription fee, and has designed its system to make it easier to move songs to compact discs and onto its iPod digital music player.

With the new service, Apple is continuing to move beyond the personal computer market -- of which it has a meager 3 percent share -- and into consumer products and services.

In recent months, it has unveiled a Web browser and new software for creating digital home movies and photo collections.

The service builds upon the success of Apple's iPod music player, of which 700,000 units have sold.

It is built around Apple's iTunes 4 music software -- also launched yesterday -- and is called the iTunes Music Store.

The service is designed to work with Mac computers; a version for Microsoft's Windows operating system isn't planned until year's end.

The exclusivity will likely please Mac users and possibly boost sales of Mac computers, but it drastically limits the potential audience for now.

Apple also said that starting Friday, it will sell new iPods that are lighter and thinner.

Previously, Apple sold its Mac and Windows iPods in separate models.

Apple's new service enters a crowded field of online music providers dominated by MusicNet and pressplay, which are backed by the five major record labels.

Other services include Listen.com's Rhapsody, which is being acquired by Seattle-based RealNetworks.

Apple Chief Executive Steve Jobs said yesterday that competing music services "treat you like a criminal" with onerous restrictions on downloading songs and transferring them to compact discs and music players.

As a result, he said, music services have not been able to compete with the all-you-can-download allure of song-swapping services like Kazaa that are being challenged on the legal front.

"There's no legal alternative that's worth beans," Jobs said.

There's no alternative that has won the hearts of users, either.

Analysts with Jupiter Research estimate that about 350,000 people subscribe to online music services, and the largest chunk -- about 125,000 -- belong to online radio company MusicMatch.

The online music business has not been a moneymaker so far. Services like MusicNet have not been profitable, and at 99 cents a song it is unclear how much business Apple will have to do to recoup its costs.

But Apple is banking that its ease of use and simple sales model will bring in customers that have been reluctant to commit to a monthly subscription service.

Mobile music

Once a song is downloaded from Apple, it can be burned onto an unlimited number of compact discs and played back on any iPod.

It can be transferred among up to three Macintosh computers.

The music store has a library of 200,000 songs, fewer than some other services.

About 30,000 of those were purchased from Seattle-based Loudeye, a digital music company with an archive of 3.3 million songs.

To prevent massive piracy, Apple requires a user change the song selection on a playlist after burning 10 copies onto compact discs.

Some analysts said yesterday Apple's new service gives users new freedoms when it comes to moving music to compact discs and music players.

Some other services restrict downloads to a single PC or charge an extra fee to move the music to a portable music player or CD.

"This is better than I expected," said Phil Leigh, an analyst with Raymond James. "It really cracks the portability issue wide open."

The service will likely appeal to some users because it's not asking for a monthly commitment, said Jupiter Research analyst Lee Black.

But that structure limits the discovery aspect featured in a subscription service, where users can roam throughout the site and explore new music without paying extra.

A subscription service is more appropriate for someone who listens to a lot of music every day and doesn't place a premium on song portability, Black said.

"Apple's service caters to someone who likes to take it away from the PC," he said.

Richard Wolpert, an executive strategic adviser at RealNetworks, said record labels are increasingly comfortable with online music as time passes. The distribution deal Apple cut with the labels could ease some of the restrictions the industry previously required.

"You can assume that's fairly quickly going to happen now," he said.

MusicNet and Rhapsody are unlikely to make any changes to their business based on Apple's entry into the market, he added.

Wolpert also noted a major difference between Apple and the other subscription services: Eminem, for example, has had three commercial releases, with a total of 58 songs.

To listen to all three albums on Listen.com, it would cost $9.95 for the monthly subscription.

On Apple it would cost $58. 

Consumers "want to listen to hundreds of thousands of songs on demand in their entirety," he said.

"That's what you get in a Listen.com subscription."

So far there hasn't been a subscription music service for Macs, Wolpert said, and Apple's offering helps move the industry forward.

The labels might have been more open with Apple because it only has 3 percent of the personal computer market, Wolpert said.

"They see it as an experiment," he said.

Jobs put it another way: The labels "were willing to do something with us to go change the world," he said.