Apple’s Euro bite

Firm launches iTunes in U.K., Gaul, Teuton

HOLLYWOOD — Apple launched its iTunes Music Store in the U.K., Germany and France on Tuesday, marking a potentially major expansion of the international digital music market, but provoking quick reaction from competitors across the Atlantic.

Apple is the second American online music store to hit the U.K., following Napster‘s debut last month, but the first to make it to France and Germany.

Sony plans to expand its Connect music store into those same territories this summer.

Apple will launch a Pan-European iTunes Music Store by October.

With tracks priced at 99 Eurocents ($1.20) or 79 British pence ($1.44) each, Apple comes in at a significant price advantage over Napster, which is charging $1.99 per track in the U.K.

But Napster has signed a deal with the Assn. of Independent Music, which represents many of the biggest independent labels in the U.K., to offer more than 50,000 songs. AIM labels haven’t signed with iTunes yet and reps for the org told the British press that their members found Apple’s terms unacceptable.

Biggest online music company in Europe is OD2, which sold 1 million tracks in the first three months of the year through stores it runs for partners including Microsoft and MTV. In an effort to head off the new competition, OD2 revealed an upgrade to its service Monday called Sonic Selector that integrates its music store into Microsoft’s Windows Media Player and offers an introductory price of about 60 cents per track.

Napster also on Monday signed a pact with NTL, Blighty’s largest broadband ISP, to promote its service.

Nonetheless, with its dominance in the public eye thanks to the success of iTunes in the U.S., where it has sold more than 85 million songs, Apple’s expected to make a major splash in Europe. Musicstore will be helped in Europe, as it has in the U.S., by sales of its iPod, for which iTunes is the only compatible service.

Apple execs said the new foreign stores will include a wide selection of American and domestic offerings in its 700,000 tracks, double OD2’s library. It will also program localized editorial content in each country.

Pan-European store will cover the rest of the EU and be programmed in English.

“We decided to put our energy into where 60% of the market is,” Eddy Cue, Apple’s VP of applications, said of the decision to launch in Blighty, France and Germany first with their own music stores.

Difficulties in negotiating royalty deals in each country, which have separate rules, is surely also a reason for the staggered rollout.

(Gordon Masson contributed to this report.)

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