Speculation swirls around streaming iTunes

By Reuters
Posted Nov. 15, 2010 at 1:05 p.m.

Apple Inc. is set to make a major announcement Tuesday about iTunes, amid speculation about a possible Web-based version of the dominant digital music store.

Apple posted a message Monday on the iTunes Web site, teasing an announcement to be made at 10 a.m. Eastern Time Tuesday, but it gave few clues.

“Tomorrow is just another day. That you’ll never forget,” the message reads.

An Apple spokesman declined to comment further. The company usually hosts a media event when it wants to unveil a major new product or service, but Tuesday’s iTunes announcement will be made online.

It has been widely rumored that Apple would launch a “cloud” — or Web — version of iTunes. Such a service would allow users to stream content over a network onto various devices, though it is unclear how Apple would charge for it.

That would represent a departure from the current iTunes service. Rather than storing downloaded music locally on computers, users’ content would be housed remotely on Apple’s servers.

In December 2009, Apple acquired digital streaming music service LaLa. It shut the service down in April.

Kaufman Bros analyst Shaw Wu said the Tuesday announcement could be related to a cloud-based iTunes but said it is not clear that Apple has completes deals with music labels.

“There’s been a lot of speculation about iTunes.com, with the cloud. I’m not sure if that’s ready. It’s really more around partnerships, content partnerships, before they can announce anything,” he said.

Some analysts say iTunes, which works through desktop software, is in danger of being left behind by newer, subscription Web services such as Rhapsody and Spotify, which allow users to access their music collection wherever they are via an Internet connection.

But there are plenty of hints that Apple is moving toward some sort of streaming service. The company is spending $1 billion to build a massive data center in North Carolina and expects to begin using it by the end of the year.

The iTunes Store has helped redefine music retailing since its launch in 2003. More than 10 billion soundtracks have been downloaded from iTunes, which features more than 12 million titles.

As the dominance of iTunes has grown, Apple has repeatedly clashed with music labels on a number of fronts, including pricing and copy-protection software.

As Apple has branched beyond music, into selling and renting movies and television shows, the company has also run into opposition from studios over pricing.

The iTunes store raked in more than $1 billion in revenue last quarter. The company launched iTunes 10 in September and unveiled Ping, a new social networking service.

Shares of Cupertino, Calif.-based Apple were up 0.3 percent, to $309.02, on Nasdaq early Monday afternoon.

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