What a difference a weekend makes. And no, I'm not just talking about the wonders a long weekend can do to rejuvenate one's sagging spirits. I am talking about the flurry of activity that has taken place over the past few days in the rapidly evolving field of music downloading services.
Things got kicked off on Friday when News Corp.'s (NYSE: NWS) MySpace announced it was going to begin selling digital music from nearly 3 million unsigned bands to its users.
To begin, let me say that I find it amazing that there are 3 million bands in existence - but my gut tells me there is an obvious reason that most of those bands are unsigned.
Nevertheless, because MySpace is the single most visited Internet address among U.S. Web users and now boasts more than 100 million users, it is possible that its downloads could come to be seen as an alternative to Apple's (Nasdaq: AAPL) iTunes -- especially if the company can add other major labels to its service. At this time, though, this is unlikely, since MySpace downloads will be offered without copy protection.
The second challenge to Apple came from Spiral Frog, a private New York-based Internet start-up, which announced over the weekend that it was going to begin allowing legal downloads for free. The company's business model calls for it to generate revenue through advertising.
It is still not entirely clear how Spiral Frog intends to pull this off (or whether users will even accept free downloads in exchange for watching an ad), but the fact that the company has already reached an agreement with Vivendi's Universal Music Group to supply songs from its catalog suggests it is at least a viable threat.
The third challenge came from Samsung, which reported that it would soon launch its own digital music download service. Company officials further noted that the service will be fully compatible with its new line of media players, including its new M5 device.
The flurry of news about digital music is unlikely to slow anytime soon. I expect Microsoft (Nasdaq: MSFT) will soon be providing more information about its digital music initiative, dubbed Zune, as will Sony (NYSE: SNE) about its forthcoming "Connect" service.
I don't think any of these services alone is likely to replace the dominance of either iPods or iTunes in the short term, but they could take a bigger bite out of Apple over the longer term. This is especially the case if a large media conglomerate like Google (Nasdaq: GOOG) or Motley Fool Stock Advisor pick Yahoo! (Nasdaq: YHOO) can combine MySpace's large base of users with Spiral Frog's intriguing new advertising-based business model.
Under such a scenario, it doesn't take much to imagine how the MySpace generation could be rockin' out on something other than an iPod to songs that were downloaded from something other than iTunes.
If so, Apple, which now generates 45% of its revenue from its iPod/iTunes division, and its investors could find themselves between a rock and a hard place.
Interested in other Apple-related foolishness? Check out these recent articles:
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Fool contributor Jack Uldrich likes this space, but does not have a profile on MySpace. He owns stock in both Google and Microsoft. The Fool has a strict disclosure policy.
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