iTunes vs. Puretracks: The downloading duel begins!

The music download market became more crowded Thursday with the Canadian launch of iTunes and expanded ISP partnerships for Puretracks.

Eagerly anticipated north of the border, iTunes actually launched a few days later than expected, having missed its initial deadline of late November. But

the download service provided by Apple Computer Inc. is likely to find a foothold in Canada thanks to shrewd marketing and a well known presence in the U.S., according to analysts.

Apple’s handheld music device, iPod, has already found an audience here. It’s a simple matter to provide content for the Canadian market through iTunes, said Apple’s vice-president of applications, Eddy Cue.

There will be some differences in music selection in Canada, said Cue, and the iTunes store will highlight popular Canadian artists like Alanis Morissette, Diana Krall and the Tragically Hip.

Apple has set its Canadian pricing at 99 cents, which works out slightly cheaper than the American pricing of US$0.99 per track.

Toronto-based Moontaxi Media, the developer of Puretracks, meanwhile has expanded its ISP partnership base in Canada to include Sasktel and Aliant. Broadband customers of the telecommunications providers can use the Puretracks service to download music with prices starting at 79 cents per track.

Moontaxi launched the Puretracks service in October 2003 and quickly formed partnerships with Bell Canada and Telus. The company will announce alliances with two more telecommunications providers on Friday, bringing its coverage of the Canadian broadband market up to 90 per cent.

Bringing the service to Canadians through partnerships was Moontaxi’s strategy from the beginning, said Moontaxi co-CEO Alistair Mitchell. “”It’s just our fundamental belief that working with ISPs that have a large population of high-speed users can promote our music effectively.””

The telcos that offer Puretracks to their subscriber base also benefit. Most Canadian providers have been looking for a way to add services above and beyond Internet access that they can charge for, said Elroy Joping, telecommunications analyst with Gartner Canada.

“”With voice, they were very good at it. They came out with call answering, call forwarding and the cash registers rang every month. They’ve never found anything as good with the whole broadband area,”” he said.

“”We’ve talked to our customers about what they want to do online and what they want to be able to access and certainly music is a growing piece of that,”” said Heather Tulk, vice-president of broadband marketing for Halifax-based Aliant.

“”Music is growing in terms of demand, particularly in the youth segment, so we thought we could have a part to play in terms of making it easier for those customers to find what they want.””

Music downloading represents a possible revenue stream for telcos like Aliant, said Jopling, “”but will it be significant? Not at the present time.””

The downloading market — the legal downloading market, at least — is still in its infancy, and the preferred delivery method is subject to change. David Card, an analyst at New York City-based JupiterResearch, said that the majority of downloaders still use online music services as a way to sample a few tracks then go out and buy an actual CD.

The research firm’s five-year forecast suggests that in the future music lovers may be looking for subscription-based services that could offer unlimited downloads for a regular fee or provide something akin to an Internet radio service.

“”As more of the (music ownership) rights get cleared and are available on these (subscription) services, you’ll have this mythical, celestial jukebox where you’ll be able to listen to anything you want to at any time,”” said Card. “”There’s some new technology on the horizon which would enable that to be portable.””

In the meantime, the a la carte model of music downloading is expected to grow with Apple as the undisputed leader (the firm claims a 70 per cent market share in the U.S.).

“”One of the reasons that Apple has been so successful, besides the fact that they have the best device in the business, is that they spent millions and millions of dollars on advertising,”” said Card, adding that for other providers to compete, “”there’s going to have to be some serious marketing.””

Mitchell said he welcomes Apple to the Canadian market since it boosts the profile of music downloading overall. Moontaxi recently made Puretracks available in the U.S. and is expected to announce American partnerships soon.

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