Apple's iTunes Faces New Challengers

Competition in the online music downloading industry got a little tighter Tuesday, as two companies--AOL and start-up SpiralFrog--both announced new services that potentially challenge Apple's iTunes, the current market leader.

AOL yesterday unveiled a revamped paid music download service, in the works since the company purchased MusicNow last November. AOL's service allows users access to XM satellite radio and unlimited downloads of audio tracks and music videos for around $10 a month or $15 a month with the ability to transfer to portable devices.

In addition, New York-based newcomer SpiralFrog went public with plans for an online service that allows users free ad-supported downloads of music and videos from the catalog of Universal Music--which inlcudes Sheryl Crow, Fall Out Boy, 50 Cent, U2 and Kanye West.

Before downloading from SpiralFrog's collection, users will have to spend about 90 seconds per track, or two minutes per video, navigating through pages that display ads next to content, said Lance Ford, the company's chief sales and marketing officer.

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The content, Ford said, will include a wide array of music-related material--"everything from concert information to bios of artists to anything you might want to know about music," he said. "It will be dynamic and entertaining and hopefully sticky, while they're waiting for their songs to download."

Ford, a former publisher of Maxim magazine, said he anticipates the service will especially appeal to the teens and 20-somethings that grew up with the peer-to-peer services that enabled free--if sometimes unlawful--music downloads.

He added that SpiralFrog intends to pursue ads targeted to that age group. Users will have to provide their age, gender, ZIP code and e-mail addresses to register for the site, which potentially allows SpiralFrog to target ads based on more precise demographic information.

SpiralFrog also is in talks with other record labels to join the service. Marketers to sign up so far include Perry Ellis and Benetton.

Separately, Apple Computer Tuesday voted Google CEO Eric Schmidt onto the board of directors. Earlier this month, Google's head of business development, Chris Sacca, said publicly that the company has no intention of competing with Apple's iTunes by introducing its own paid music download service.

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