iLounge

Sony has announced that it will support the AAC audio format used by Apple in the next version of Sonic Stage, its digital music management software. While the application will not be able to play copy-protected songs from the iTunes Music Store, Sonic Stage will play music encoded with iTunes in AAC format. Sony already supports AAC in its PSP gaming device and select mobile phones, and it appears Sony plans to soon do the same with its line of Walkman digital music players. “Sony’s latest strategy is taken as an open acknowledgment that it can no longer ignore iPod’s dominant lead,” says one report on Sony’s announcement.

Facing Apple’s increasing dominance in the digital music world, Napster has shifted to an advertising-supported model that allows visitors to its website to listen to any of the 2 million songs in its catalog for free. But unlike the original Napster, which famously offered unauthorized song downloads, visitors can currently only listen to a song five times—after that, the track must be purchased for 99 cents or visitors must sign up for a subscription plan ($10-$15/month). “Napster clearly had to find something different,” says American Technology Research analyst P.J. McNealy. “But until the device market for non-iPods picks up, Napster faces an uphill battle.”

The Beatles are preparing to make their albums available through online music services after years of refusing to embrace digital music. During the Apple Corps vs. Apple Computer trademark lawsuit last week, Neil Aspinall, a former Beatles road manager and managing director of Apple Corps, said that the company was digitally remastering the entire Beatles catalog in preparation of selling it online. “I think it would be wrong to offer downloads of the old masters when I am making new masters,” he said. “It would be better to wait and try to do them both simultaneously so that you then get the publicity of the new masters and the downloading, rather than just doing it ad hoc.” A spokeswoman for Apple Corps confirmed Aspinall’s statement.

Sonos today announced the Sonos ZonePlayer 80 Bundle, the latest addition to its line of wireless multi-room digital music systems. The $999 bundle includes two Sonos ZonePlayer 80s and a Sonos Controller. “The brand new ZP80 Bundle lets you play all your digital music, all over your house, on all your current audio equipment—your home theater, stereo, powered speakers, premium table top radio and more,” says Sonos. “By simply connecting a ZP80 to any amplified audio device in any room, that device is instantly and seamlessly part of a wireless, multi-room digital music system. Plus, you can wirelessly control all your music from the palm of your hand with the industry’s only full-color wireless Controller.”

Following a similar investigation by New York Attorney General Eliot Spitzer, the Department of Justice is now investigating the major music labels for possible anti-competitive pricing of digital music downloads.

“One music industry source said that some subpoenas may have been issued already in connection with the probe, while other labels had been tipped off that subpoenas would likely be coming in the next few days,” reports Reuters. “The two music industry sources said Thursday the DOJ’s probe appeared to be focused on the same issues—whether the labels colluded to set wholesale pricing for song downloads. The investigation also could be related to licensing renegotiations with Apple, maker of the wildly popular iPod digital music player, for its iTunes music store.”

Amazon.com is planning to launch a digital music service and Amazon-branded MP3 players, according to a report by the Wall Street Journal. The online retailer is currently finalizing deals with the major music companies and could launch the service and portable devices as soon as this summer.

“Amazon is in advanced talks with the four global music companies about a digital-music service with a range of features designed to set it apart,” reports the Journal. “Among them: Amazon-branded portable music players, designed and built for the retailer, and a subscription service that would deeply discount and preload those devices with songs, not unlike mobile phones that are included with subscription plans as part of the deal.”

The article claims that music executives “privately welcome Amazon’s plans, which they see as one of the only credible challenges to Apple’s hegemony in both digital music and portable players. Now the question is whether Amazon’s massive customer base is enough to offset a long delay in entering the online music business.”

“Amazon’s online music plans would take advantage of the company’s strong position in selling CDs and portable music players,” the Journal notes. “The online retailer sells an estimated 10% of digital music players in the U.S., including iPods, and the pending deal could hurt its relationship with Apple. If Amazon’s competing offering presented enough of a threat, Apple could even stop selling iPods on the site.”

Flash memory card company SanDisk has quietly become the No. 2 seller of digital music players in America. “We want to be a strong No. 2 in the MP3 space,” said Eric Bone, SanDisk’s director of consumer product marketing. “There are people who, no matter what, will buy an iPod. All I want is for people to think there is an alternative.”

SanDisk, which began selling MP3 players in November 2004, used its strong presence at retailers across the U.S. to sell one million players during the recent holiday quarter. The company also reported a record $2.3 billion in revenues for 2005. “We already have the channels. We have the brand,” SanDisk Chief Executive Eli Harari said. “We are not Apple. We are not an iPod. But we have a highly respected brand.”

Through key patent holdings and a partnership with Toshiba, SanDisk gets its own source of flash chips at wholesale prices, allowing the company to sells its players at lower prices than other companies. SanDisk’s strategy is to sell MP3 players to those “beyond the middle class,” Harari said. “Our passion is to bring the cost of these devices down. It’s basically about creating new markets in which people can afford a product.”

The company’s current line of players range in price from $79 to $149 with capacities from 256MB to 2GB. SanDisk will release its new Sansa line next week, which consists of 2GB, 4GB and 6GB players and prices from $120 to $300. The high end model, the Sansa e200, will feature an iPod nano-like design, 1.8” TFT color screen, video and image playback, and a replaceable lithium ion battery. The player also supports Rhapsody, Napster and Yahoo Music.

The Washington Post reports that digital music single sales grew by 150 percent last year, but may have resulted in fewer CD album sales in stores.

“As iPods and other MP3 players outsell CD players, sales of downloaded singles are booming accordingly,” the publication says. “Though sales of full-length albums were down 7.2 percent last year, the digital singles market grew by 150 percent, with 352.7 million individual songs sold online, according to Nielsen SoundScan. It was by far the highest figure for singles sales in any format since 1973, the first year for which Recording Industry Association of America shipment data are available for singles.”

“In late December 2005, weekly singles sales topped CD sales for the first time, as American consumers—many of them flush with holiday gift cards and loading new MP3 players—purchased 19.9 million digital tracks but just 16.8 million albums, according to Nielsen SoundScan.”

Google has denied reports that it plans to acquire Napster or launch its own digital music store. The New York Post, citing anonymous sources, claimed yesterday that Google was considering an extensive alliance with Napster or an “outright acquisition” of company. Robert Peck of Bear Stearns predicted last week that Google will launch “Google Tunes” within the next six months.

The internet search giant said the published report was untrue and that it will not roll out a music service in the foreseeable future. “We have no plans to acquire Napster, nor do we have plans to develop a music store at this time,” Google spokeswoman Sonya Boralv said in a statement. She noted that Google recently introduced a new search feature that offers users faster access to music-related information.

Electronics giant Samsung said it will take aim at Apple this year with several new portable products and large ad campaigns. A Samsung executive claims that Apple’s lead in digital music and video can be attributed to only marketing.

“What’s the difference between how they have gone to market and how we have gone to market? It’s real simple. They spent $165 million last year to advertise Apple MP3 products. We spent $1 million,” said Peter Weedfald, senior vice president of consumer electronics for Samsung’s North American division. “We are going to break the code. In 2006, we are going to over-invest in advertising and marketing around these really hot new digital video and digital audio products, and we will spend tens of millions of dollars.”

Sonos has released a software update for its wireless multi-room music systems. Sonos software version 1.3 includes support for the Apple Lossless codec, Audible.com content, full-screen album art, detailed track information, and German language support.

Sonos has also introduced a new ZonePlayer to complement the Sonos Digital Music System. The ZonePlayer ZP80 “allows music lovers to play all their digital music, all over their house, on all of their favorite audio equipment—a home theater system, powered speakers, a premium table top radio such as a Bose Wave Radio, and more.” It will ship this spring for $350.

The four major record companies are being investigated by New York attorney general Eliot Spitzer over whether they have violated antitrust laws in the pricing of songs sold by digital music services such as the iTunes Music Store.

“Spitzer’s office recently began serving subpoenas on the major record companies—the Universal Music Group, a unit of Vivendi Universal; Sony BMG Music Entertainment, a joint venture of Sony and Bertelsmann; the EMI Group; and the Warner Music Group, according to people involved,” reports The New York Times. “Some major record companies have been pushing to introduce flexible pricing, charging more for hit songs and less for oldies, for example. But some executives say that a more complex price structure would turn off buyers and hurt industry efforts to woo music listeners away from free, unauthorized file-swapping networks.”

In what could be the stiffest competition yet for the iTunes Music Store, MTV Networks and Microsoft announced today that they have joined forces to develop a new digital music service called URGE. Set to launch next year, the service will be integrated into a forthcoming version of Microsoft Windows Media Player. Music pricing was not announced.

“The collaboration unites MTV Networks’ music DNA, marketing strengths and powerful MTV, VH1 and CMT brands with the technology leadership and consumer reach of Microsoft,” the companies said. “URGE will offer rich entertainment programming and innovative tools designed to guide musical discovery and connect fans to the artists and music they love. Offering more than 2 million songs from the major labels and thousands of independents, URGE will encompass all musical genres, from alt-country to zydeco. In addition to a broad catalogue of music choices, URGE will deliver a deep well of exclusive MTV Networks programming and original, hand-crafted content.”

The Think Different Store has announced the launch of its new CD ripping service. “Designed to provide iPod owners with a fast path to a complete digital music library, the service converts music on CDs into high-quality MP3 files suitable for importing into iTunes and the iPod,” according to the store. Conversions start at $55 plus shipping and require approximately 5 days to complete. The service is available online at 1-800-iPod.com, and also at the 1-800-iPod.com retail location in Selden, New York. Customers purchasing the service in person will save shipping fees.

AOL confirmed today that it has bought Circuit City’s MusicNow digital music service. Financial terms were not disclosed, but insiders said AOL paid less than $25 million. MusicNow will offer 99-cent song downloads and monthly subscriptions for $9.95 for unlimited downloading. Like services from Napster and Yahoo, users can download songs to a compatible music player for an additional fee.

AOL entered into a partnership with Apple in 2003 to promote the iTunes Music Store through its internet service. AOL members can also sign in to the iTunes Music Store using their AOL screen name and password to buy tracks. The company said its purchase of MusicNow will not immediately affect its relationship with Apple. “AOL’s partnership with iTunes is strong, has been fruitful for both companies, and will continue,” said AOL spokesman Nicholas Graham.

Despite the increasing popularity of the iPod and iTunes Music Store, digital music sales in the U.S. have plateaued in recent months. According to Nielsen SoundScan, sales of digital tracks almost tripled to 6.6 million downloads a week in the year through May, and were at only 6.7 million in the last week of October.

“The download numbers suggest that the iPod’s iconic success, which has driven up Apple’s share price almost sixfold since 2001, isn’t translating into new music sales the way the evolution from vinyl albums to cassettes and then CDs did,” says Bloomberg’s Charles Goldsmith. “For many users, the portable devices are just another way of stocking and listening to music, not an incentive to buy new music,” he says.

BusinessWeek reports that Verizon Wireless, Sprint, and Cingular will introduce new services for downloading digital music directly to mobile phones later this year, and that the first two companies have already turned down carrying the Motorola iTunes phone because of their upcoming offerings. The wireless carriers want to be able to charge customers to download songs over the air, instead of allowing them to freely transfer music from their computer to their phone.

“The two sides also have very different perspectives on how digital music stores should work,” notes BusinessWeek. “Verizon, Sprint, and Cingular are expected to charge about $2 for wireless downloads when they introduce their services, or twice the 99 cents per song on iTunes. They figure they can charge a premium for the convenience of getting songs anytime, even though customers most likely won’t be able to listen to those songs anywhere but on their phones, at least initially. One knowledgeable source close to Apple says the operators are simply being unrealistic if they expect customers to pay $2 or $3 for a song, especially with restrictions.”

At the Musikmesse show in Frankfurt, Numark showed off an early prototype of an iPod DJ mixer. Little is known about what features the company aims to include in a final product, but German hip hop site WebBeatz was able to acquire a prototype rendering and a prototype photo of the actual device.

Create Digital Music reports: “In one of the photos of the actual prototype, the iPods aren’t even plugged in. Conceptually, though, the idea is interesting, and aside from allowing basic DJ mixing and crossfading, a buffer could grab audio from the audio for brief scratching. Apparently pitch control is possible, too, though limited, and it’s not clear how they might fix iPod cueing; in other words, all the normal limitations of the iPod for DJing apply. Don’t expect this to ship any time soon.”

Slim Devices today introduced Squeezebox2, an updated version of its network audio device that streams music from your computer to another room where it can be played through your stereo. Squeezebox2, together with SlimServer 6, supports a large number of audio formats, including AAC (unprotected), MP3, FLAC, Apple Lossless, AIFF, WMA, WAV, and Ogg Vorbis.

Features include: a 24-bit Burr-Brown digital-to-analog converter; optical and coaxial S/PDIF outputs; built-in support for 802.11g; a larger 320 x 32 vacuum fluorescent display; an improved search feature; the ability to connect to SqueezeNetwork for “always-on” access to Internet radio streams; and an option to automatically import existing playlists from iTunes.

The Squeezebox2 is available in two colors—Basic Black and Triple Platinum—and will ship on March 31. The Wireless version will sell for $299, while the Squeezebox2 Wired will be priced at $249.

Sonos today announced that its Sonos Digital Music System is now shipping. The multi-zone system features a wireless, full-color LCD controller and accesses music—MP3, WMA, AAC and WAV—from a Mac, PC or Network Attached Storage (NAS). The Sonos Digital Music System is comprised of two components: the ZonePlayer, a networked audio player that distributes, plays and amplifies music in any “zone” in the home, and the Sonos Controller, a wireless handheld device with a color screen and iPod-like touch-sensitive scroll wheel that allows the user to control the music from anywhere.

Sonos offers an introductory bundle of two Sonos ZonePlayers and a Sonos Controller for $1,199. Since the system is scalable to up to 32 zones, additional ZonePlayers retail for $499 and additional Controllers cost $399. Speakers are not included with any system.