By Eliot Van Buskirk
Senior editor, CNET Reviews
(April 25, 2003)

On Monday, hordes of tech journalists will heed Apple's call to San Francisco's Moscone Convention Center, where they will hear an announcement that "will be music to our ears," according to the invitation. Most observers agree that Steve Jobs will unveil new Apple iPods (possibly in 15GB and 30GB sizes, with a new design), but plenty of questions remain about whether we can expect a new digital music service as well. Is Apple buying Universal from Vivendi? Or is this all just one big game designed to trick Microsoft into buying Universal? The Internet is buzzing with all sorts of rumors; I'd like to add my own to the mix, which (to quote the cast of Scooby Doo) "just might be crazy enough to work."

Connecting the dots
First of all, consider another deal that happened this week: Real's purchase of Listen.com. Well before that deal, Listen made arrangements with each of the five major labels to secure all their catalogs for use in its popular Rhapsody service. Listen's recent press release states that Real's acquisition included Listen's major-label consent, which means Real now has access to all of that content for its own SuperPass subscription offering.

Keeping that in mind, let's take a look at Apple's prospects for a digital music service. When the Apple/Universal rumors started flying around this month, I figured Jobs had finally realized something fundamental about the music industry: You must have some chips (in the form of a music catalog) before you can sit at the table. With the major labels licensing content to each other primarily through MusicNet and Pressplay, it's highly unlikely that a new player could saunter up to the table and expect reasonable licensing terms. But Apple's purchase of Universal would include the largest catalog in the world--the biggest pile of chips to use in negotiations with the other labels for rights to add their catalogs to a new Apple music service. It's an attractive option, but I don't think it's what Jobs has in mind.

There has been one shining exception to the labels' general rule of denying the full catalog to players who lack chips: Listen's Rhapsody. Though it lacked a major-label catalog to bargain with, Listen created a music-subscription service that beat the pants off of those provided by the majors and set up many agreements with ISPs and other content distributors. Perhaps Real saw that deal's ultimate value and purchased Listen outright--probably as much for the major-label and ISP consent as for the company's other formidable assets.

Senior Editor Eliot Van Buskirk covers portable audio and music-related issues for CNET Reviews. Have a question for him? Let him know!