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In Search of the iTunes Killer

A new crop of contenders takes aim at Apple.

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There's something about Apple—probably its nearly monopolistic control of certain markets or its disproportionate influence on the zeitgeist—that brings out the bloodlust in new-media commentators and gadget bloggers. Whenever some company rolls out a new MP3 player or smartphone, they seem to relish calling it an "iPod killer" or "iPhone killer," even though products that actually pose a threat to Apple—like HTC's Google-branded G1 smartphone—have so far been few and far between. Most don't even leave a scratch.

Apple's digital music retailing operation is an especially hard target. The massive catalog of the iTunes Store is deeply integrated with the iTunes software and of course the iPod, still by far the most popular player despite would-be assassins like Microsoft's Zune. Big-name retailers like Amazon and Wal-Mart have stolen away some potential iTunes users, both by abandoning DRM sooner than Apple and by offering better prices on some stock, but all that means so far is that iTunes is slightly less overwhelmingly dominant.

Because Apple, Amazon, and Wal-Mart have such a lock on the traditional a la carte retail model—where a user pays for individual song files to download and with any luck own in perpetuity—start-up operations are trying alternate methods of making money off music. Some are audacious. Some are obviously doomed. And many of the best have a pedigree in piracy.

Napster, the first program to bring peer-to-peer file sharing to the general public, was also one of the first black-market services to go legit. It was relaunched by new owners Roxio in 2003 and then bought by Best Buy in 2008, and though it no longer operates as a P2P network, it offers both a pay-per-track store and subscription options for streaming and downloading. The Pirate Bay may have a similar future. Though its founders see their recent convictions as accessories to copyright crime as a victory of sorts, thanks to the sympathy for their cause that the proceedings generated (the Pirate Party is growing all over Europe, and the Swedish arm actually won a seat in the European Parliament), they're still putting the site up for sale. A Swedish software company, Global Gaming Factory X, wants to buy the Pirate Bay for roughly $7.8 million and turn it into an aboveboard operation similar to the iTunes Store; the company had planned to close the deal in August, but it's dragging its feet now that the Dutch copyright-defense group Stichting Brein has launched its own suit against the Pirate Bay and included the GGF as a defendant.

Buying one of the most popular sites on the Web might seem like a fail-safe move. Though a monetized version of the site would eliminate the reason most people visit it—to download free shit—like Napster, the Pirate Bay is still a powerful brand. There's no doubt a good number of die-hard pirates among its massive user base, but there's just as certainly a good number of people who'd pay for music if it were delivered how they wanted it.

Considering how deeply the entertainment industry despises the Pirate Bay, though, would any labels license music to the site, even if it were reincarnated as a for-profit venture? It's more likely than you think. The majors came down hard on Napster, suing it into oblivion in 2001, but only two years later they eagerly got aboard when Roxio hoisted the Napster flag. The RIAA went after Jammie Thomas-Rasset to the tune of $1.9 million for sharing a couple dozen songs on Kazaa, but they don't have any problem with Kazaa now that it's a pay service that wraps its files in highly restrictive DRM.

There are lots of reasons the Pirate Bay might look attractive to labels, aside from its name recognition. The site uses BitTorrent, the powerful file-transfer method that links together a distributed network of computers rather than relying on a centralized server. A monetized BitTorrent system might start with its files on a single server, so they could be encoded with the info that the service's dedicated client would need to use to verify a transaction, but once the files traveled out into the world only super-obscure deep-catalog stuff would need to stay on that server. In stark contrast to the big three—iTunes, Amazon, and Wal-Mart—such a service would have bandwidth and storage costs only slightly higher than those incurred by any BitTorrent site. This would make it easy to offer multigigabyte files, just as the Pirate Bay does: entire artist discographies, fan-curated dubstep compilations, collections of the top 100 most popular songs of the 1960s, et cetera. Audiophiles love the Pirate Bay because it makes it so easy to download lossless FLACs, which are enormous compared to compressed MP3s. Most digital retailers avoid them because of the bandwidth cost, but a monetized BitTorrent service could sell them below standard retail price and still make a handsome profit.

But such a service seems unlikely to arise from the Pirate Bay if it stays so legally toxic that companies get sued just for planning to buy it. Americans looking to gorge themselves legally on a massive catalog of music, including popular major-label stuff, will probably get the opportunity sooner via Spotify, a streaming-only service that's been available in Europe since last October. Spotify works a lot like Last.fm, Imeem, and MySpace, but it has at least one advantage over each of them. It has a catalog of around 6 million songs, with all the majors participating. Its interface is as easy to use as iTunes. And its method of serving up music uses a combination of Spotify-owned servers (for stuff in lesser demand) and P2P-style distributed networking (for more popular songs) that allows it to stream faster than many competitors.

Spotify offers a premium paid option without any ads, but those willing to put up with a little sponsored infringement on their listening experience can access the entire catalog for free. If the service makes it across the pond—which at this point is almost entirely dependent on the majors' willingness to support an American version—Spotify has the potential to compete directly not only with streamers like Rhapsody and traditional retailers like iTunes but also with piracy itself. A recent review of the European version on Slate—Americans can set up proxies to spoof it into thinking they're logged on in an eligible country—credits Spotify in part for a recent precipitous drop in the rate of illegal downloading among UK teens, down to 26 percent from nearly 50 percent a year ago. The service has one distinct advantage over piracy too—it doesn't rely on BitTorrent seeders to provide its catalog, eliminating the need to search multiple sites for harder-to-find material—and if a promised mobile platform launches, subscribers will have access to that entire catalog wherever they go, not just to whatever MP3s they have stored on their phones or iPods.

Would-be iTunes killers can still make money without cooperating with the majors in any way, of course, if they're willing to risk flirting with monetized piracy. Recently a start-up calling itself Zookz announced that it would be exploiting a 2007 WTO ruling against the United States that supposedly allowed Antigua to legally infringe on American intellectual property to the tune of $21 million in profit per year. It planned to offer unlimited music and movie downloads for a fixed monthly fee, with no money going to rights holders, but after a statement from the Antiguan government denying that Zookz was authorized to do any such thing, the option to subscribe to the service disappeared from the company's site.

Not every country is willing to defend intellectual-property rights holders the way Antigua did, though. In the early aughts a Russian operation called AllofMP3.com started selling unprotected MP3s at clearance-rack prices without paying or getting permission from the labels that owned the rights. AllofMP3 bowed to belated pressure from the Russian government and shut down in 2007, but in a country with a more fuck-it attitude toward U.S. relations, a similar site could operate indefinitely. The truth is, the Internet's thriving black market has yet to be meaningfully undercut by the proliferating number of ways to get music legitimately. As tough as it's been for anybody to come up with an iTunes killer, a piracy killer is an even taller order.

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