Low-tech trick gives free iTunes

NEWS It doesn't take a code breaker or a math whiz to lift songs from Apple Computer's iTunes online music store -- it just takes a good pair of eyes and a trip to the corner store.

iTunes fans have "hacked" a high-profile Pepsi promotion aimed at giving away 100 million songs through special codes marked on the underside of bottle caps. The codes can be entered on the iTunes site to download a single for free. One in three bottles is a winner, but it turns out that the markings can be read without removing the cap.

CNET News.com confirmed that it is not only possible to pick out winning bottles in advance; careful scrutiny can reveal the full 10-digit redemption code, meaning no purchase is required to get a free iTunes single courtesy of Pepsi.

"I've always been looking under caps whenever they had a giveaway," said Jon Gales, Webmaster for MacMerc.com, an online community for Macintosh users and developers, which published a detailed description of the code-grabbing technique on Wednesday. "I thought it was human nature. People have been doing it for years."

The bottle cap loophole could disrupt Pepsi's ambitious marketing campaign, which kicked off with splashy TV spots that aired during the Super Bowl and also took a shot at file-swappers. The giveaway comes amid growing interest in music as a promotional tool for soft drinks and other products. Pepsi's archrival, Coke, has also jumped into digital music, launching a digital download store in Europe.

Pepsi said that as a precaution against prying eyes and other shenanigans, the company restricted the number of codes a given customer could redeem in a day.

"We always put redemption limits in place on promotions like this," said Dave DeCecco, a Pepsi spokesman, "but we found that most consumers played by the rules."

Apple declined to comment.

Technology buffs were buzzing over the Pepsi "hack" this week. Gales' site crashed on Wednesday after it was featured on Slashdot, a popular Web site devoted to open-source programming. The "hack" was also spoofed in a fake security posting to the influential Bugtraq security mailing list.

"This attack is not new," the posting noted. "Prior soft drink distribution versions have been vulnerable to this attack in the past. Known vulnerable versions have included the Mountain Dew "Free Soda" giveaways."

Apple typically sells singles for 99 cents and albums at rates comparable to those found at brick-and-mortar stores. Despite the popularity of iTunes, the business as a standalone doesn't make money. Apple's real purpose for selling music is to drive sales of its popular iPod digital music player, which does make money. For this reason, Apple took the unprecedented step of launching a Windows version of the iTunes store after years of developing software solely for its own operating system.

The iTunes music store only lets people transfer songs onto their iPod. No other hardware device is supported by iTunes.

Apple is not the only company that has expressed interest in the music download business. Microsoft chairman Bill Gates has also publicly mulled opening a music store using the software giant's Windows Media Player software. Gates admitted that the venture would not be a significant revenue driver, but a way to keep people loyal to Microsoft's software.

Web giant Yahoo has also begun exploring ways to step into the business. The company recently acquired a start-up called Mediacode to develop a Yahoo music player and download store, sources said. At the same time, Yahoo has been approached by companies such as Roxio's Napster, BuyMusic.com and MusicMatch to partner with, or acquire, them.

RealNetworks, Microsoft's main competitor in digital media software, has pinned its future on selling music subscriptions and downloads through its Rhapsody subsidiary.

All of these companies argue they cannot overlook the growing number of consumers buying music off the Internet, even if it means losing money for a while. In the meantime, they hope to make up the loss through sales of other products, such as concert tickets and soft drinks, and the partnership deals such sales suggest.

Macmerc Webmaster Gales said he discovered the exploit shortly after seeing the bottles in stores. But he said he paid for the bottles after selecting winners.

"The store's happy because they're still making a sale, and Pepsi is happy too," Gales said. "The difference between this game and other games is you don't have to save caps, send them away and wait 8 weeks to get a T-shirt. The instant gratification made it more fun to get a winner."