How to Go Legit

PHOTO-ILLUSTRATION FOR TIME BY LON TWEETEN

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The problem so far with the pay-per-song model from a business perspective is profits or the lack thereof. With as much as 70% of each sale going to the record label and the rest eaten up by surprisingly high costs for things like infrastructure and credit-card fees, sales volume must but doesn't yet compensate. "It's not a way to make a lot of money," acknowledges Jobs. No, it's a way to help sell iPods. Apple says sales of the music-storing, high-profit-margin palm-size gadgets almost quadrupled between the quarters before and after iTunes' launch. Apple's approach borrows from a proven business tactic. "Westinghouse created radio shows to sell radios," notes Lee Black, an analyst with Jupiter Research. AOL Music takes a cut from songs sold through MusicNet, but its ka-ching comes from the 16 million visitors it delivers each month to advertisers like Coca-Cola.

Believers in legit downloading think they can win over citizens to a new law-abiding habit. "Somebody in your neighborhood will always have pirated cable," says Rob Glaser, CEO of RealNetworks. "But the social norm is, if you want cable, you pay for it." Yet freeloaders won't necessarily go quietly. LaTisha Knowles, 19, a Florida A&M; sophomore and former avid file sharer, still refuses to buy CDs. "It's a waste of money," she says. Karen Keenan, 26, a copywriter in Chicago, downloads regularly from iTunes but also from free file sharer LimeWire. "I have the same moral problem with sharing digital music that I have with public libraries i.e., none," she says. The future of digital-music sales may rest in the hands of those who, to borrow from the Talking Heads, have developed a healthy fear of music free music. Says Kyu-Heong Kim, a junior majoring in biology at the University of Texas in Austin: "Who wants to be put in jail or pay some huge fine because you downloaded Justin Timberlake's newest song? It's just too big of a risk."