Apple CEO Steve Jobs talked the talk: "Today we are going to innovate more," he said as he announced next-generation iPods, iTunes 4.0 and Apple's new digital music distribution service.

Apple has sold in excess of 700,000 iPods, making it the number one MP3 player in the world, Jobs claimed. Now available in 10GB, 15GB and 30GB configurations the device has been completely redesigned (see below).

Introducing iTunes 4.0
iTunes 4.0 was introduced during Jobs' presentation, which attracted world media attention. The new iTunes supports Apple's new iTunes Music Store, it also adds support for viewing album artwork, and is available for download today.

iTunes supports the Advanced Audio Codec, or AAC - a Dolby-produced audio technology supported in QuickTime 6 and MPEG-4. Apple claims that files encoded using AAC sound offer better sound than MP3s, and occupy less disc space. Apple claims that: "Expert listeners have judged AAC audio files compressed at 128-bits to be virtually indistinguishable from the original uncompressed audio."

Share, don't steal
Apple has built Rendezvous support into iTunes. This feature was demonstrated at Apple Expo Paris last year. It means that users with multiple Macs on a wired or wireless network can access each others music collections, enjoying streaming access to tracks held in other people's libraries. "This isn't copying - it's legal. You can listen to other's music when they are around", said Jobs. Because it uses Rendezvous, no network configuration is required.

Responding to user requests, Apple has made iTunes 4 capable of burning DVD archives of music for the first time from within the application - ideal for backing up large music collections.

There's new search options, including a DJ-friendly new beats per minute search. Another new feature for audio book lovers, when they listen to audio books on the Mac (or iPod), the software will make a virtual bookmark, so iTunes 4 will remember where you stopped listening.

The new iTunes is available for free download now. It requires OS X 10.1.5 or later, a G3/400MHz or faster processor, and 256MB RAM.

iTunes Music Store
Introducing the iTunes Music Store, Apple's Internet-based music download service, Jobs said: "Napster showed us that the Internet was built for delivering music."

Existing digital distribution services have adopted a subscription-based service, with limited sharing, copying or burning of tracks. Not Apple. "We think subscription service is not the right way", Jobs said.

But US only - for now
Apple has done deals with the five major music labels (BMG, EMI, Universal, Sony and Warner Music) and launches its service with 200,000 available songs. Its repertoire includes tracks from artists who have not made their music available anywhere else online, including exclusives from Bob Dylan, Eminem and Sheryl Crow.

However, the service is only available to users who can supply a valid US billing address. This reflects a common complexity faced, as the music business has different rights bodies for different territories across the world, and agreement for digital download services will have to be negotiated in each territory Apple hopes to serve. Jobs did promise to extend the service to other territories, and said a Windows version of the Store would be introduced by the end of the year.

"Downloads done right"
Apple is trying to deliver a service that matches customer need. Jobs dismissed some existing services for "making users feel like criminals". Apple's service means that, for 99 cents a track using an Amazon-like 1-click purchase system, US users get unlimited CD burning for personal use. Music fans can play music on up to three Macs and an unlimited number of iPods. Music authorization can be transferred from an old to a new Mac. Jobs called it: "Downloads done right."

The service fits seamlessly with iTunes - users can browse the iTunes Music Store by genre, artist and album. Customers can even find multiple versions of the same track. Songs are encoded at 128-bit AAC. Music lovers can even listen to free 30-second song previews, and download CD cover art. "And it's not stealing - it's good Karma," said Jobs.

Albums containing explicit tracks are marked with a parental warning notice, and purchased tracks can be used in iMovie and iPhoto projects.

"Consumers don’t want to be treated like criminals and artists don't want their valuable work stolen. The iTunes Music Store offers a groundbreaking solution for both,” said Jobs. The service is available to US customers today, but Apple's music-hungry international users can take a look at the service (accessible from within iTunes) today.

Love music
"We've got a wide range of music in the store, and it will just keep getting wider," he promised. "We think that when you come to the site, you'll fall in love with music all over again and want to spend some money." Jobs said.

To help customers find exactly what they want, the Store highlights new releases, staff favourites and up-and-coming artists, with music from a wide selection of genres and time periods, ranging from Rock and Hip Hop to Jazz and Classical.

The Store also presents visitors with lists of the top song and album downloads. To make things even more simple, the Store lets users use their existing .Mac or Apple ID details to access the service.

Pirates sunk
Apple’s move is an attempt to meet the music industry’s need to deliver a legal, elegant music download service to help tempt people away from illegal downloads.

The company, with its emphasis on the digital hub is hoping the renowned elegance and customer-focus of its solutions will meet that need.

Forrester Research analyst Josh Bernoff, nods at Apple’s history of developing ideas that are adopted across the industry. “When they do it, they do it right,” he said. “No one’s done it right when it comes to music services,” he added.

The market for the service is huge. Forty million US residents aged 12 or older have downloaded music from the pirates - and a quarter of these will pay a fee for such a service.

There's a clear need for Apple to prepare its service for other markets, too, according to a recent report from the British Phonographic Industry (BPI).

Commenting on Apple’s service, Jupiter research analyst Mark Mulligan told Macworld: “Music fans want a one stop shop for online music content. They do not want to have to shop around from label to label.”

Apple, the Walkman of the digital age
Mulligan added: “Illegal file sharing has prospered at the expense of the legitimate sector due to half hearted commitment from the record labels, who have had their sights set firmly on protecting the traditional CD sales.”

He noted that to deliver such a service requires programming and technological expertise the labels do not posses. “Third parties are the natural conduit for online music services.” he said.

Meanwhile, Hilary Rosen CEO of the digital distribution pirate’s scourge, the Recording Industry Association of America (RIAA), told the LA Times: “Apple’s service has the potential to do for music what the Walkman did for the cassette,” while declaring Apple to have “struck an industry-friendly balance” between what the industry and its customers need.