Apple iPod, iTunes, and Music Subscriptions.

According to the Financial Times this is in the works.

Personally, I’ve never been a fan of this model, though assuming it’s optional it finally has a shot to succeed now that the largest and most popular online music store (and second-largest music store) would be offering it for those who want it.

My problems with this model are the same as I’ve always had; the fact that Apple may offer it isn’t likely to change any of it:

  • Renting music makes little sense to me. People listen to their favorite songs over and over (heck, AM and FM radio were built on that principle), not so with most movies or TV shows.
  • DRM, DRM, and more DRM. Heavy DRM is the only way this can be legitimately pulled off (certainly the only way the labels would agree to it, unless they’ve had a change of heart). Don’t expect the same “FairPlay” you have now. Move your tunes anywhere? Just burn a CD and re-rip tunes to remove DRM? I don’t think so.
  • Exploding media. Part of the above DRM requires a way to shut it off when the terms are not followed or expire. We don’t have details on this yet, but without the threat of such explosion the subscription model can’t really work.

So what can Apple do with this model that others can’t? How can they make it successful where others have failed? I can think of some reasons:

  • The Ecosystem. One reason for potential success is the same reason for which they’ve had success with the current model. The iPod/iTunes system just works. Phenomenally well. Hundreds of million of people are already familiar with it and trust it.
  • The Process. Likely Apple would implement it so that getting your tunes under this model is about as easy as downloading their free track of the week now. Just select and download. No new process to learn. No new software or hardware to use, etc. People might make the move from owning to renting just because it’s so easy to try it.
  • The Price. Nokia’s similar model costs them $80 per headset. If Nokia and the labels figure the headset will be swapped after two years (the average) that’s $3.33 a month for all you can rent. Apple’s allegedly offering only $20, so even if you swap iPods every two years that’s only 83 cents a month for all you can rent. Less than the price of one one single right now!

Would I sign up for the subscription model? I’d need a lot more details first. How long does it last, what are the limitations, what’s the cost, etc. If my guess that Apple could pull it off nearly seamlessly for any iPod/iTunes users is correct, then I’d certainly consider trying it.

I like owning my music, and have never even considered renting ever since I got burned by Music Match back in ’00 or whenever when a track I paid 99 cents for wouldn’t even play when not connected to the Internet.

My guess is that if I the rental model was cheap enough, then I’d use it as a “preview”, and still buy the albums I really like. I almost use eMusic in that capacity right now. At only around $2.50 an album (with no DRM) I’m less worried about “wasting” money on a bad album. For something even less than that I would broaden my range, continuing to buy the music I really love.

Finally, one thing occurs to me. In these negotiations, I wonder if Apple is telling the labels something like this: “Look, you’ve claimed iPods are full of pirated music anyway, and you’ve claimed you want a piece of that action. We’re offering you $20 per iPod (we sell over 10 MILLION of these things each QUARTER) and simply legitimizing what you say all our owners are doing anyway. Don’t quibble with us about it; put up or shut up!” If Apple is not telling the labels this, they should be.

What do you think? Is Apple considering this? Would you join a subscription service?

[UPDATE:] There are still no real details available yet (heck, the whole thing is unconfirmed rumor at this point), but some rumored details are floating in. Ah, yes, streaming only. Maybe you can keep 50 tracks a year. That would hardly be the transparent model I alluded to above. And, no, I personally wouldn’t be interested in such a model.

3 thoughts on “Apple iPod, iTunes, and Music Subscriptions.

  1. The Fortune article linked to in the update don’t really provide any more details or insight, so I think it’s important to dissect the original Financial Times article a little more closely. “The subscription models under discussion in the music industry …” are not even being alleged as being discussed with Apple. That’s the part I think the “update” above gets wrong.

    The long and short of it is that Apple is often in talks with anyone who distributes media electronically, particularly the music industry. I’m sure that lots of ideas come up, and that music industry executives love to send up trial balloons to see what might gain acceptance and try to force Apple’s hand.

    “One executive said the research had shown that consumers would pay a premium of up to $100 for unlimited access to music for the lifetime of the device …”

    This model would more likely work for Nokia than for Apple, because ownership of a phone is DIFFERENT than ownership of an iPod (iPhone notwithstanding). It’s uncommon for a consumer to have more than one active, operational cell phone at a time, and when they do it’s for non-trivial reasons (work, travel abroad, etc.).

    It’s quite common for iPod owner to have more than one device. For example a regular iPod for general use and a Shuffle for the gym. The iTunes Library has to work for ALL of the iPods which sync to that library in order to be useful. I have a hard time accepting that Apple would put into place a plan where customers would have to remember which songs can sync to which of their iPods. (“OK, I can put ‘Eye of the Tiger’ on the Shuffle, and ‘Call Me’ on the iPhone, but what the heck goes on the Nano? Was it ‘Short People’?”)

    “Apple […] is also understood to be examining a subscription model.” And, five years ago next month, C|Net reported that “Shares of Apple Computer fell Friday after a report that the company was in talks to buy the music company of Vivendi Universal for as much as $6 billion.” Instead, they came out with the iTunes Music Store. So a grain of salt may be indicated here.

    “Subscriptions would work only for its iPhone devices, … ” and “… the “comes with music” model would work with iPhones and with iPods” are explanations of technical limitations, not conjecture about what type of offerings might be available one day. Some sites are reporting these as actual plans for different customers, and the FT article shouldn’t be read to imply that.

    That’s my view and you’re welcome to it. ;o)


  2. Remember that Canadian court that ruled that since the music industry was collecting a “piracy tax” on the music players they couldn’t stop people from downloading free music?

    It looks like Apple watched the Canadian model in action for a few years and thought, huh, that could work.

    I’d be interested to know how Apple would split the revenue between the various labels and proxies like CD Baby, but if the fee approximates the (very small) amount of iTunes-bought music on the average iPod… hmm. Could happen.

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