[Update: We received e-mail from some astute Observers who questioned the wording of the release notes for iTunes 4.0.1. Our original report said that the update included better AAC report, but that appears to not be the case. While the notes (see below) list better sound as a feature of version 4, the only specific changes in version 4.0.1 listed appear to be performance enhancements, "network access enhancements," and the disabling of Internet sharing. Accordingly, the following story has been updated to reflect this fact.]

Apple has released an update to iTunes 4, bringing it to version 4.0.1. The biggest new development in this release is the fact that Apple has turned off the ability to share your playlist over the Internet. While leaving intact local network sharing through Rendezvous, the option to share over the Internet through IP sharing, which TMO first reported the day after iTunes 4 was announced, is no longer available. The release notes from Apple:

iTunes 4 features superior sound quality including support for MPEG-4 AAC audio. iTunes 4.0.1 includes a number of performance and network access enhancements, and only allows music sharing between computers using iTunes 4.0.1 or later on a local network (in the same subnet). If you have an Apple SuperDrive, you can archive your song files to a DVD disc as well as burn playlists to standard audio CDs to play in your car or home stereo.

TMO testing shows that the pulldown menu used to access a shared IP playlist is no longer available.

This became an issue earlier this month when several sites set up hubs for people to share their playlists with each other. That was soon followed by the ability to actually capture an incoming MP3 stream, which effectively allowed people to pirate music. That, in turn, set off warning bells with the various powers-that-be in the recording industry, including the RIAA.

You can download the update through the Software Update Control Panel. The update is not available through Appleis download site as of this writing.

Spin: That Apple should disable Internet sharing should come as no surprise when you look at the irresponsible actions from some iTunes users. Specifically, those who developed the means to capture the incoming MP3 stream are most responsible for losing this feature, as that no doubt immediately rang alarms at both Apple and the RIAA. Apple had little choice but to close off this feature once that happened.

That is the sad thing about this, too. Internet sharing made it very easy for you to stream your music from your home to your office, to a family memberis house when visiting, or even to share some great music with your friends, all without pirating it. There were some very legit uses of Internet sharing, but the pirates and secondhanders ruined it for those of us on the legit side.