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Startup to offer CD-quality downloads, will Apple follow?

While the majority the online music industry is focusing on different ways for consumers to obtain compressed digital music files — whether it be purchasing songs from iTunes or renting them from a competitive service — upstart MusicGiants plans to cater to a new rising crowd: those who want to download online music at pristine CD-quality.

This summer the Incline Village, Nev.-based company of 15 will launch the first service that sells online music at CD-equivalent fidelity or \"high-definition,\" according to BusinessWeek\'s Peter Burrows. The company has reportedly secured licensing agreements with all five major record labels and will offer tracks in Microsoft\'s \"lossless\" format for $1.29 — about 30 cents more than most online services. The service will also impose $50 annual membership fee, but it will be waived for anyone buying more than $250 worth of songs.

Of course, MusicGiants won\'t interest everyone. Not just because of the higher music costs and download times, but also due to a need for pricier hardware. Users of the service would likely need a high-end sound card and quite a bit of storage space. Today\'s standard 80GB hard disk drives would only hold about 200 CDs in the lossless format. That\'s why MusicGiants plans to move outside the PC box and into the living room — an area where Apple has failed to make inroads outside its AirPort Express product.

Along with its music service, MusicGiants reportedly plans to sell a wireless keyboard and handheld mouse to navigate the site. Three other remote-control manufacturers are reportedly designing compatible models. And for the die-hard audiophile, the company will offer a $9,500, 400-gigabyte device called the SoundVault that sits in a stereo cabinet, similar to a CD-player or receiver. It will bundle a high-end sound card and networking gear, allowing consumers to bypass their PCs and load songs directly into their living room stereo system.

\"It\'s hard to sell gas, if no one has a car,\" MusicGiants chief executive Scott Bahneman told BusinessWeek. His foray into the music hardware business will last only as long as it takes for other manufacturers to begin selling comparative gear, he says. In the meantime, Bahneman is trying to build a distribution network with high-end home builders and home-theater installers.

For a tiny company, its ambitions are enough to make any serious music lover drool. However, a burning question is whether there is a market large enough for MusicGiants to prosper. It may be too early to tell, but if the company does well, competitors like Apple may be forced to follow in its footsteps.

Over the past two years reoccurring rumors have suggested that Apple was preparing to offer tunes beyond its current 128 kbps AAC format, but these rumors never materialized. Instead, the company has argued that iTunes users are happy with current compression standards and that the human ear can\'t distinguish between CD-quality and bit rates of more than 192 kbps. MusicGiants will be the first to take a stab at proving them wrong.

For those interested in hearing more about the company, the BusinessWeek article is a great read.