Apple's iTunes Music Store is impressive in many ways: it's compatible with portables, trusted by the labels, and doesn't stomp on its customers' usage rights. Plus, it's currently our favorite digital music service and has been doing brisk business, at about 500,000 songs per week. But technology-wise, the iTunes Music Store offers nothing new. It's a centralized e-commerce server that doles out fairly secure downloads in exchange for payment--the same model that software companies have used for years. It's effective but hardly innovative.

The iTunes Music Store is inefficient
The genius of Napster and all subsequent P2P programs is that the operator of the network shoulders only a tiny fraction of network bandwidth cost. The nodes (P2P users) on the network each provide a portion of their ISP's bandwidth. Now that online music has reached a more mature stage, it's time for someone to marry the efficiency of P2P distribution to the idea of an à la carte secure music distribution service, such as the iTunes Music Store. The resulting service would be cheaper to operate and, therefore, cheaper to use. It'd include the collaborative filtering that makes P2P more fun than centralized services. And the labels would enjoy the same level of security they currently get with iTunes and BuyMusic.

Two other companies (Flipr and Wippit) have tried to create such networks but to no avail--due in part to a lack of licensed major-label content. Now that the labels are playing ball, I see a big opportunity for a newcomer to succeed with secure P2P where its predecessors have failed.

Coming soon: a "legit" P2P service you might actually want to use
Enter Mercora (Latin for trade), the brainchild of Srivats Sampath, formerly the CEO of McAfee.com. By November, Sampath hopes to use his extensive experience selling antivirus software over the Internet (4.4 million customers paying $50 per year) to launch a "legit" P2P service with as many as 500,000 songs encoded in Microsoft's secure WMA format. In a phone interview from the floor of the Digital Hollywood conference, he told me that he sees iTunes as a one-dimensional experience--one he hopes to fill out by adding Friendster-like community features to create circles of fans and facilitate word-of-mouth recommendations.

Users will also be able to sell CDs to each other through the mail, as long as the seller pays a listing fee, as on eBay. However, when a user downloads a secure WMA file from another user, he or she will have to pay for a personal license in order to access the song. Sampath mentioned the likelihood of charging 99 cents, although other news outlets have reported that the company will offer a more complex pricing scheme, with some files available free of charge.

If Mercora succeeds, it will look and feel something like iTunes, Napster, Friendster, Yahoogroups, and eBay rolled into one--a tricky balance, to be sure. But from where I stand, Mercora's timing couldn't be better. The world could be ready, finally, for the legitimate P2P sharing of copyrighted major-label content. If the labels do in fact give their blessing to decentralized distribution, only one question will remain: Is it OK to keep a flying pig as a pet?