The Apple "surprise announcement" coming Monday, the 28th, isn't much of a surprise anymore:

High-quality design and simplicity of use are expected to be the hallmarks of the new digital music service from Apple Computer

....Label sources tell Bulletin that the service is an a la carte download store — not unlike that of rival Liquid Audio — that is built into Apple's iTunes player. No subscription is required for the service, and tracks are expected to retail for an average of 99 cents. Once purchased, tracks are transferred to the consumer's iTunes music library and are automatically synched to the user's iPod portable player.

Content can also be burned to CD. Credit-card information is stored on file in the store's shopping-cart system so the consumer does not have to re-enter the information for each purchase. The offering is expected to be made available initially only to users of Apple computers.

As part of its announcement, Apple is expected to unveil content-licensing deals with all five major labels. The Apple service is also expected to feature music from high-profile acts whose repertoire has not previously been available for digital distribution. [Billboard]

Arik Hesseldahl speculates cannily on the service in Forbes:

Certainly Apple is in need of a healthy new revenue stream to help counter the violent swings in demand for its computer hardware, and music downloads at 99 cents a song could potentially contribute to that effort. But not right away. The market for paid digital music is minuscule, according to Jupiter Research, topping out at 350,000 users last year and about $50 million in sales, while free and largely illegal services like Kazaa and Morpheus boast untold millions of users.

Apple's betting there is some kind of pent-up demand for a well-run legitimate music service that requires users to break out their credit cards. It may be right, and there's little reason to believe that Apple can't bring out a service that is superior in appearance and ease of use compared with those of its competitors.

But can it run this business at a profit? Given the associated costs--infrastructure and royalties, among others--the key to that will be a huge volume of downloads. And the only way to guarantee that is to reach out to Windows users. That leaves us certain that Apple will follow the path of the iPod, with this service. Expect it to debut at first for Apple users only. Once all the kinks are worked out and its brand identity is fully established by Apple's marketing machine--along with the "don't you wish you could do this?" speeches by Apple users everywhere--the Windows masses will once again be invited behind the velvet rope, which was part of the plan all along.