STEVE INSKEEP, host:
Later today, Apple is holding a press conference, and as with all things Apple, there's plenty of anticipation and lots of mystery about the announcement -plenty of publicity on the way. The speculation is that Apple will announce big changes to its iTunes music store. Specifically, it may - this is the speculation - may shift music sales to the cloud, meaning that songs would not be stored on a device that you hold in your hand or keep on your desk; they would be streamed from the Internet. Joel Rose has this report.
JOEL ROSE: When Apple launched its first iPod, the selling point was how many songs it could hold.
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Unidentified Man #1: ...iPod, a thousand songs in your pocket.
ROSE: Now, the next big thing in digital music is getting those songs back out of your pocket. Why bother storing music on an MP3 player when you can listen instantly to millions of songs over any phone, computer, tablet, car, TV, or any other device that's connected to the Internet?
Mr. ELIOT VAN BUSKIRK (Blogger): Rather than buying songs for 99 cents and downloading them and managing them and moving them between your devices, you just log in from anything and your music's right there.
ROSE: Eliot Van Buskirk is a blogger for Wired.com.
Ever since Apple bought the music streaming company Lala last year, Van Buskirk and others figured it was only a matter of time before Apple switched from selling individual downloads to offering access to a stream of music over the Internet - a so-called cloud-based music service.
Mr. VAN BUSKIRK: The smart money is on this cloud-based iTunes. Whether it's what's being announced now or later, it seems to be in the pipeline, for sure.
ROSE: But for now, at least, there is no cheap, cloud-based music service in the U.S. that gives you access to almost any song you want from any device you want. For that, you have to go to Europe.
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Unidentified Woman: Introducing Spotify.
ROSE: The music service Spotify allows you to listen to music for free from your Web browser.
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Unidentified Woman: Whatever you want.
Unidentified Man #2: Whenever you want.
Unidentified Woman: Instant, simple and free.
ROSE: Well, not entirely free. The service is supported by ads that occasionally interrupt the music. If you want to turn the ads off or listen on your phone, you have to pay a monthly fee. Mark Mulligan, of Forrester Research, says Spotify's users love it.
Mr. MARK MULLIGAN (Forrester Research): It has proven a huge success as a free, advertising-supported music service. So successful at driving people to get free music, not so great at convincing people to pay the 9.99 a month in order to upgrade to the premium offering.
ROSE: For months, Spotify has been trying to negotiate licensing deals with the major record labels that would make the service available in the U.S. None of the labels would grant a recorded interview for this story; neither would Spotify. Wired's Eliot Van Buskirk says the main sticking point in negotiations is exactly what you'd expect.
Mr. VAN BUSKIRK: Money, as usual. For the industry, they only have one shot to sort of get it right in the biggest market in the world for music.
ROSE: Van Buskirk says record labels are focused on getting the highest revenue they can for as long as they can, and they're wary of letting Spotify offer the free version of its product in the U.S. But without it, Van Buskirk says Spotify would have a hard time distinguishing itself from the other streaming services that have been on the market for years.
Mr. VAN BUSKIRK: Without the free, unlimited version, Spotify is just Rhapsody's good-looking Swedish cousin. And we've had Rhapsody here in the states for years. Their membership's actually declining.
ROSE: CD sales are also falling, and paid MP3 downloads seem to be leveling off, too, says Mark Mulligan at Forrester Research.
Mr. MULLIGAN: So the record labels are beginning to realize it is absolutely time for a Plan B. They don't know what Plan B is yet.
ROSE: But Mulligan has a guess. Eventually, he thinks, record labels will have to cut their prices. And when the price of a cloud-based music service drops to a few dollars a month, it'll be a lot easier to fold that charge into one of the bills you're already getting from your phone or Internet provider.
Mr. MULLIGAN: Music stops being something that you ever pay for. It becomes something that you get free with your iPod, or free with your Verizon subscription -or, as in the case of Spotify, free in return for listening to a few adverts.
ROSE: Mulligan says free is a bitter pill for record labels to swallow, which is why it may be a while before Spotify, Apple or anyone else unveils a cloud music service in the U.S.
For NPR News, I'm Joel Rose.
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