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Wed, Jan 07, 2009 - 07:00 AM EST  —  AAPL: 93.02 (-1.56, -1.65%)  |  NASDAQ: 1652.38 (+24.35, +1.5%)

Analysts: Moves by iTunes Store also-rans may spur even more Apple iPod sales
Wednesday, August 22, 2007 - 09:52 AM EST

Apple iTunes"As competitors challenge Apple Inc. in digital music, the biggest beneficiary may be Apple," Joseph Menn and Michelle Quinn report for The Los Angeles Times.

"Wal-Mart Stores Inc. and RealNetworks Inc. on Tuesday strengthened their digital music offerings to better compete with Apple's iTunes store. Wal-Mart began selling songs without anti-piracy locks for 94 cents apiece, and RealNetworks' Rhapsody subscription service announced new partners that would promote it on MTV and distribute it on Verizon cellular phones," Menn and Quinn report.

"But the competition might actually help Apple. That's because the Cupertino, Calif., company makes a slim profit on selling songs but cleans up on every iPod music player," Menn and Quinn report. "A robust market for digital songs should translate to more demand for the music players on which to play them, and Apple's iPod is the runaway leader."

"'iTunes was developed to promote iPod hardware sales,' said Susan Kevorkian, an analyst at research firm IDC. 'The introduction of services that offer digital music to the installed base of iPod users will help drive more iPod sales,'" Menn and Quinn report.

"'Certainly the ability to buy music in more places helps Apple,' Pali Research analyst Richard Greenfield said. 'They make very little money on iTunes transactions, and they make a good amount of money on iPod transactions,'" Menn and Quinn report.

"'By putting [MTV's Urge and RealNetworks' Rhapsody] together, they have a stronger service,' said analyst Josh Bernoff of Forrester Research. But he noted that songs through the Rhapsody subscription service don't work on the iPod," Menn and Quinn report.

Full article here.

[Thanks to MacDailyNews Readers "Judge Bork" and "Mike in Helsinki" for the heads up.]

MacDailyNews Take: Rhapsody is a product in a never-ending search for a market and AAC (Advanced Audio Coding) trumps the MP3 dinosaur in every important measure. All of the music sold via Apple's iTunes Music Store uses AAC. Wal-Mart sells MP3 tracks.

AAC advantages over MP3 include:
• Improved compression provides higher-quality results with smaller file sizes
• Support for multichannel audio, providing up to 48 full-frequency channels
• Higher resolution audio, yielding sampling rates up to 96 kHz
• Improved decoding efficiency, requiring less processing power for decode


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Reader Feedback: ( = registered)

Aug 22, 07 - 09:03 am Comment from: Unfettered

Why does combining two marginal, failing enterprises make one "stronger service?"

I don't buy it. Lump two turds together, you have a bigger turd.

Aug 22, 07 - 09:09 am Comment from: jj

Now, Apple doesn't own AAC, they merely license it, then add their fair-play DRM to their 99c tracks. They remove the fair-play DRM but include some purchaser metadata in their $1.29 no-drm tracks. Apple won't license fair-play DRM, and this may actually be a bad thing long term for them. As slim as their margins are on the itunes store, they are hoarding marketshare.

Any other digital retailer could offer unprotected AAC if they chose to, but the MP3 codec has the widest compatibility - acceptance - and consumer awareness. We don't call em 'AAC players', now, do we?

I don't see how Rhapsody America (the rhapsody+urge ogre) will sell more ipods, since music downloaded there is still under Rhapsody's Helix DRM.

***-Mart's mp3 and emusic's mp3's will obviously play fine on 99pct of portable players in the market.

Until the record industry can align itself, and until the format wars of music find common ground (aac, protected aac, mp3, windoze drm, helix), the consumer will continue to run to the internet underbelly for the widest selection of unprotected music. In other words, this will be a mess for years to come.

Aug 22, 07 - 09:13 am Comment from: Gandalf

Rebrand AAC as MP4 is the answer. I am sure a large part of why AAC was chosen was that back then MP3 was thought of as the piracy medium.

Aug 22, 07 - 09:22 am Comment from: Matrix3

Can anyone tell me what should be the best import type file to use when ripping into iTunes?

When I say Best - I'm referring to audio quality and reproduction.

Thanks in advance.

Aug 22, 07 - 09:22 am Comment from: MacFan

Who cares about quality? Yes, AAC trumps MP3, but Apple's Computing experience has trumped others for a long time - did no good for Apple. It's not quality, it's marketing. A half-ass marketing firm can make MP3 look far better. But no one advertises sound quality, they advertise ease of use, etc. Who cares about quality? Mass market hasn't a clue.

Aug 22, 07 - 09:24 am Comment from: Matrix3

Clarification:
What should be the best encoder type to use for the best audio quality and reproduction into iTunes?

Thanks!

Aug 22, 07 - 09:31 am Comment from: M.X.N.T.4.1

Combining two rubbish services just gives you one rubbish service with the same number of customers as the two had. It doesn't make the service any better. It doesn't immediately (if ever) allow them to sell things cheaper. It doesn't make it easier for them to attract new customers. It doesn't bother iTunes in the slightest. The only difference is that they may now get mentioned by name as only having a miniscule portion of the market as opposed to being lumped together under "other".

Aug 22, 07 - 09:31 am Comment from: Unfettered

Apple doesn't own AAC, but they put their eggs in the AAC basket when they shared their QT container format with MPEG-LA for MP4/AAC formats. So goes AAC, goes Apple.

Aug 22, 07 - 09:32 am Comment from: Unfettered

@Matrix3,

Apple Lossless

Aug 22, 07 - 09:57 am Comment from: Matrix3

@Unfettered:
Thanks!

Is Apple Lossless better than using AAC at 320 stereo bit rate?

Aug 22, 07 - 10:06 am Comment from: buddy

Unfettered,

You are a genious!!!! I totally agree.

Aug 22, 07 - 10:25 am Comment from: E of E

If you want perfect quality (best for analog-real audio recording) Apple lossless, but if you are importing from a CD and want to keep that level of quality go with AAC, 320 kbps bit rate, sample rate of 48.000 kHz, and VBR. From what research I've done that's right at the same level of quality that can be found on your CD. Remember that your CD is not analog, it's a digital recording of the audio, Apple Lossless is a format best used for analog audio.

Aug 22, 07 - 10:27 am Comment from: OpJ

@Matrix3:

Apple lossless is better than 320 bit rate. Apple lossless is...well..lossless. It is the audio version of a zip file--compressed for more efficient storage, but containing all of the original data. At 320 bit rate the encoder is still throwing out data, just less data than if it was at 128 or 256 bit.

FLAC and SHN are other lossless formats, but Apple rolled there own and iTunes and iPods live decode only Apple lossless. For the other lossless formats shareware programs or freeware programs have to be used to convert the FLAC or SHN files to aiff, wav or Apple lossless.

Aug 22, 07 - 11:13 am Comment from: um

Don't change the sample rate to 48 kHz, CDs are encoded at 44.1... unnecessary reinterpolation is bad.

Aug 22, 07 - 11:35 am Comment from: MacBill

Why do all these companies even feel the need to be in the music business in the first place? Simply because Apple is in the music business? What ever happened to sticking to your strengths as a company, and not trying to be a "jack of all trades"?

Aug 22, 07 - 11:39 am Comment from: Synthmeister

The Walmart thing might work, download a song, pay a reasonable price and play it anywhere on any machine. Can't get much simpler than that, especially if they get the Mac end of things working. (By the way, can't you just spoof Windows Explorer on Safari if you want those tracks that badly?)

But the unholy trinity of Rhapsody/Verizon/MTV sounds like a match made in hell—especially if they think subscription services and DRM have a snowball's chance in hell with even Walmart selling DRM-free tracks. I noticed they haven't given out a lot of details on pricing, DRM, etc. Real networks especially has no reason to exist if DRM goes out the window.

Aug 22, 07 - 11:41 am Comment from: Synthmeister

@um

Um's right. If you were sampling live material, the 48kHz might make a bit of a difference but using it on CDs is just an unnecessary conversion.

Aug 22, 07 - 11:59 am Comment from: Matrix3

@Unfettered, @um, @Opj, @Synthmeister:
Thanks to you all!

Ok, I'm confused -
for ripping my CD collection into iTunes what's best?

Apple lossless or ACC @ 320 sample rate?

Sorry for being so dense.

Aug 22, 07 - 12:08 pm Comment from: Rob Enderle's Incredible Shrinking Reputation

@ Matrix 3

"Is Apple Lossless better than using AAC at 320 stereo bit rate?"

Better for what?

It has the highest possible *fidelity* -- the same as uncompressed AIFF or WAV.

But it's not best for those with limited disk space or who want to listen on a portable player such as the iPod. That's where lossy codecs like AAC and MP3 come in. And, actually, rigorous blind ABX tests reveal that most people can't tell the difference between CDs and lossy files with bitrates as low as 128kbps. (But this varies with the listener, the material being listened to, and the listening conditions.)

The one thing that can be said for sure is that it's pretty pointless to record AAC (or MP3) at 320kbps.

Either optimize for an acceptable quality/space ratio or go the whole hog.

Either:

1. Record with AAC at around 160kbps (with the VBR box ticked in iTunes if you want a little extra leeway) for an iPod. (Maybe drop the bitrate down for a iPod Shuffle where space is very limited.)

or

2. If space is not an issue, and specially if you'll be piping it via Aiport Express to proper hi-fi equipment, go all the way and use Apple Lossless.

Aug 22, 07 - 12:18 pm Comment from: Cubert

Well, no one else saw the mistake in the article. iTunes was not created to spur on more iPod sales - it was around before the iPod. It was the iTunes store that was created after the iPod to help sales.

@Matrix3,
I encode in AAC 192 to save hard drive space. It sounds WAY better than mp3 @ 256! You can code in Lossless or AAC @ 320, but be prepared for much larger files than AAC @192.

Aug 22, 07 - 03:24 pm Comment from: ken1w

Saying that DRM free MP3's helps Apple is like saying music piracy helps Apple. But it's true. Even if iTunes Store loses some market share, if the alternative is DRM-free (whether it's piracy or 94-cent songs), people will still buy iPods. Apple is in a no-lose situation here.

Aug 22, 07 - 10:49 pm Comment from: OpJ

Matrix, there's no way to tell you what the best format to use unless you tell us what you want--are you trying to maximize hard drive space or rip your cds in the best quality sound, or are you trying to find some reasonable mix between the two?

128 bit rate makes the smallest listenable files. Apple lossless makes the best sound quality files and indeed is exactly what you would hear putting the CD in a CD player. With Apple lossless you never need to pull out the CD again, while with compressed formats you might someday find that your sound system is better than music collection you ripped, requiring you to then go re-rip CDs. That isn't an issue with Apple lossless. Also, if you want to be able to burn CDs of your collection you can, with Apple lossless, burn CDs of equal quality to the original.

320 kb/bit, on the other hand, is a comfortable compromise between to the two--at least for today your files should be fine, but maybe someday you'll find yourself wanting to re-rip some stuff at better quality.

Aug 23, 07 - 09:01 am Comment from: Matrix3

@OpJ

Thank you!
You answered my question.

I'm looking to do the ripping from CD to iTunes once for the best quality and long-term use.

Sounds like Apple Lossless is the best choice for what I want to accomplish.

Will I have a problem transferring to my iPod, Shuffle or iPhone is I rip using Apple Lossless?

Aug 23, 07 - 01:09 pm Comment from: Follower

@Matrix3 --

Your Shuffle will not accept Apple Lossless files. However, its AutoFill feature will automatically re-rip the files to a format of AAC that will, leaving the original files in iTunes unchanged. The definitively Apple Lossless files will transfer fine to the iPod or iPhone. This is by design: the Shuffle's storage space is simply too tiny to allow Lossless files, of which approximately only 10 to 20 would fit on it.

Check the "Tech Specs" pages for each product on apple.com to see what supports what format.

As with everyone, your choice to use Lossless should depend on how big a hard drive you have. We are talking about a factor of five in the size difference between Lossles and high sample rate
AAC files.

Aug 23, 07 - 01:10 pm Comment from: Follower

"As with everyone" in my post above should have read "As everyone is basically telling you" ...

Aug 23, 07 - 02:44 pm Comment from: Matrix3

@Follower

Thank you for the additional information.
Just wanted to make sure doing one thing doesn't adversely affect the something else.

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