2006: The year in music

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In last year’s 2005: The year in music I looked into my crystal ball and proclaimed:

What’s ahead New models, enhanced capabilities, huge demand, a little more than impotent squeaks from the competition. Is there any doubt that the digital music scene was dominated by the iPod—again? Though Macworld will soon release official predictions for 2006, here’s our unofficial hint: Short of hell freezing over, look for the iPod to maintain its Top Dog position throughout 2006.

And, in fact, that pretty well summed up Apple’s musical efforts in 2006. But 2006 was about more than just the iPod’s continued dominance—new iPod models, iTunes updates, legal issues and settlements, and alleged competition from an expected quarter also featured prominently in the year’s headlines.

New (and improved) iPods

After maintaining a fairly static line-up of iPod models for the better part of 2006, Apple held an “It’s Showtime” event on September 12, where Steve Jobs introduced two new iPods—second-generation models of the iPod nano and the Pod shuffle—and an updated fifth-generation iPod. Nothing about the new iPods was particularly revolutionary. The new 2G iPod nano shipped in capacities of 2, 4, and 8GB; featured aluminum cases in a variety of colors; sported brighter screens than were found on the original nano; and offered a new search feature. The 2G iPod shuffle —which just barely met its promised end-of-October ship date—offered a smaller and redesigned form factor, shipped in a single 1GB capacity, and required an included dock for syncing and charging. Apple’s largest iPod, the fifth-generation iPod (Late 2006), failed to fulfill the desires of those who’d dreamt of a true “video iPod.” Instead, it offered higher storage capacity at 80GB for the top-end model, a brighter screen, and the same search features found on the 2G nano.

The fact that the latest iPods didn’t sport enormous screens or house death-rays did nothing to suppress demand for them. During its fourth quarter, Apple’s iPod sales grew 35 percent from the same period the year before—selling just under 8.8 million iPods during those three months.

New (and somewhat improved) iTunes

During that same “It’s Showtime” event, Jobs unveiled iTunes 7, a version of the venerable music application that included a more organized interface, Album and CoverFlow views for searching your music collection by album cover, support for gapless playback, and tighter iPod integration via a new iPod preference panel. Regrettably, many found the initial release unstable with third-party plug-ins and finicky about correctly identifying and organizing album artwork downloaded from the iTunes Store. Subsequent updates (the program stands at 7.0.2 as I write this) solved many of these problems.

The iTunes Music Store changes its name

During the first moments of Jobs’ demonstration of iTunes 7, the audience couldn’t help but be tantalized by the new Movies entry that appeared in iTunes’ Source list. And for good reason. Apple dropped the other shoe and—to no one’s surprise—announced that it would now sell feature-length movies online. To reflect its expansion into long-form video, Apple shortened the name of its online media emporium to iTunes Store.

The selection of movies was—and remains—limited. The iTunes Store’s movie operation debuted with just 75 movies produced by the four studios owned by Disney—Walt Disney Pictures, Pixar, Touchstone Pictures, and Miramax Films. Featuring a pricing structure that sells new releases for $12.99 for pre-orders and during the first week of availability, $14.99 for those same movies afterwards, and $9.99 for older movies, the films are provided in a 640-by-480 resolution, which became the new standard for iTunes playback. Disney President and CEO Bob Iger announced in early November that the iTunes Store sold nearly 500,000 of Disney’s movies since movies became available in mid-September.

Just prior to the “It’s Showtime” event, Amazon announced its movie download service, Unbox. It’s safe to say that reviews were hardly mixed —no one seemed impressed.

Home stereo. Reinvented?

At an Apple special event earlier in the year, the company determined to gain a chunk of the luggable iPod speaker market by introducing its $349 iPod Hi-Fi. Featuring a universal iPod dock cradle, three speakers, and the ability to run off six D batteries, Apple proclaimed the iPod Hi-Fi as a replacement for your home stereo. Reviews were mixed. The iPod Hi-Fi was unquestionably loud—loud enough to easily fill a room with sound—but it lacked high-end detail and, because the speakers sit in a single unit, its soundstage (degree of stereo separation) wasn’t very broad.

Courting Creative

Apple’s lawyers remained gainfully employed in 2006. In May, Creative sued Apple for infringement on what Creative called its “Zen Patent”—a patent that covers the user interface used by the iPod. In return, Apple sued Creative over infringement on four of its patents. In August, Apple announced that it had settled its legal disputes with Creative for a cool $100 million. Macworld ’s Peter Cohen described the settlement this way: “Apple said in a statement that the terms of the agreement pay up a license between the companies in all Apple products. What’s more, Apple can recoup a portion of its payment if Creative is successful in licensing the patent to other companies. Apple and Creative announced that Creative has joined Apple’s ‘Made for iPod’ program and will release iPod accessory products later this year.”

Let it be

The past year also saw what appears to be the conclusion to the most-recent Apple Corp-versus-Apple Computer legal kerfuffle. The Beatles’ Apple Corp believed that Apple Computer had broken a 1991 agreement in its use of the Apple logo to promote the computer company’s music services. The judge did not agree and he told them so. In May, England’s high court judge, Edward Mann, ruled in favor of Apple Computer, stating that the use of the logo “does not go beyond what is reasonable and fair.”

And speaking of the Fab Four, a November report in Fortune suggested that, despite the two Apples’ past differences, the Beatles and Apple Computer were close to a deal that would bring the Beatles’ catalog to the iTunes Store. Though the deal was rumored to be announced to coincide with the release of George Martin’s Beatles mash-up, Love, the iTunes Store remained Beatles-less in 2006.

International law

Apple confronted challenges in countries other than England. In early summer, Apple faced a fight with Norway’s Consumer Ombudsman and Market Council, who claimed that the iTunes Store violated Norwegian law because of its digital rights management (DRM). Its complaint centered around music from the iTunes Store being incompatible with MP3 players other than the iPod. Apple was given a deadline to respond to Norway’s complaints, which it largely ignored. In September, the U.S. Department of Justice weighted in and asked European regulators to lay off.

Earlier in the year, a proposed French bill would have required that music sold by the French iTunes Store be made compatible with other MP3 players. In June, French lawmakers backed off and approved a watered-down version of the bill that skirted issues of interoperability.

Microsoft’s ineffective “iPod killer”

Just in time for the holiday season, Microsoft finally introduced its “iPod killer,” the Zune. Professional prognosticators suggested that the $249 Zune—which featured a unique “squirt” technology for transferring music from one Zune to another wirelessly—would do little to take a chunk out of the iPod’s popularity with holiday buyers. This proved to be the case, as harsh reviews did little to popularize Microsoft’s flawed music player.

What’s ahead

And so we end as we began:

New models, enhanced capabilities, huge demand, a little more than impotent squeaks (and squirts) from the competition. Is there any doubt that the digital music scene was dominated by the iPod—again (and again)? Though Macworld will soon release official predictions for 2007, here’s our unofficial hint: Short of hell freezing over, look for the iPod to maintain its Top Dog position throughout 2007.

This story, "2006: The year in music" was originally published by PCWorld.

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