For the former, iTunes is the most likely candidate.
Although hardly life-threatening, iTunes is facing new competition from Amazon and a variety of social networking sites. While it has made great advancements with the iPod, iTunes' innovation has been slow. The service looks and operates much like it always has. The only new features are in video.
In 2008, look for Apple to make nice with its label partners by offering a bit more with each download, such as lyrics and more interactive album art.
iTunes is the only music service that has a built-in video download feature. The others offer only streaming video. It's also one of the few services that feature a tightly integrated device -- the iPod. Apple is in a great position to roll out new features across its online store and its devices at the same time.
Microsoft's Zune is another place to watch for this, for the same reasons. It also has the integrated service and device, as well as ownership of the technical building blocks needed (such as Windows Media Player). And since it's still lagging far behind Apple in the digital music game, Microsoft could easily tap digital extras as a battleground for new market share.
The problem is that the four major music companies rarely work together on anything. So another angle would be for each to go it alone. If digital music services can't or won't incorporate better metadata into their downloaded files, look for third-party applications to emerge that will do so after the fact.
Early examples of this are two games developed for the iPod -- "Musicka," created by the developers of the original music rhythm game "PaRappa the Rapper," and "Phase," created by "Rock Band" and original "Guitar Hero" developer Harmonix. Both are rhythm-based games that let users "play" along to the songs on their device by pressing buttons at the right time.
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