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iTunes forced to rethink subscription model

Written by Andre Yoskowitz (Google+) @ 14 Apr 2007 14:24 User comments (12)

iTunes forced to rethink subscription model According to the Financial Times, next week, Universal Music will begin discussions with Apple to renegotiate their licensing with iTunes. Universal is just the first of the "Big Four" to begin discussions and the other labels should begin their discussions in a few weeks.
According to the report, the music labels will ask Apple to add a subscription model to iTunes, and that Apple's decision in that matter will be a part of the negotiations to renew their music licensing agreements.

The report also suggests that a new subscription model would provide a boost in sales and bring the labels more money. Another demand of the labels is for variable song pricing, a move that would allow the labels to increase the price of more popular songs.

Apple however, argues that both those models would push the consumer back to piracy, and iTunes, which has sold over 2.5 billion songs and owns 75 percent of the legal digital music market is in a very good position to make decisions that they see fit.

"The record industry, in particular, has long been frustrated that Apple has reaped most of the profits of the burgeoning online music market through sales of its iPod player," the Financial Times writes. "By contrast, they have earned only modest royalties from digital music sales because most of the songs on iPods and other devices result from illegal download."

The report also suggested that the music labels are hoping that a product comes along that will hurt sales of the iPod and make Steve Jobs lose his leverage in the digital music market.

"They're desperate for an iPod killer so that they won't be beholden to Steve Jobs,"
said one music executive familiar with the discussions.


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12 user comments

114.4.2007 15:33

I don't think there will ever be an iPod killer. The only thing close is the Zen series, but even that is WAY behind them. And then you have the money-hungry M$ at the bottem of the list.

214.4.2007 15:40

Apple is wrong... a subscription model would actually crush the other remaining services (Rhapsody, Napster, Yahoo!) as iTunes subscription music would work with an iPod, and people may be more inclined to pay $10-15 a month for unlimited "downloads" to fill their iPods. I think it would be an incredible idea, as I hate having to find ways around .WMA download services or use P2P and other alternatives to CD ripping in order to fill my own iPod with music. Licensing the music via subscription in order to fit 4000 songs on an iPod would beat the alternative of paying 99 cents a song!

314.4.2007 16:29

Why other company's are trying to control itunes? this is so lame... apple should do whatever they wish, costumer still buying, so, I don't see it as a big move at this moment... if you want a refiling MP3 go with different company. Still a choice people just never see it!

414.4.2007 17:21

Originally posted by vinny13:
I don't think there will ever be an iPod killer. The only thing close is the Zen series, but even that is WAY behind them. And then you have the money-hungry M$ at the bottem of the list.
rember when the walk man was new and fresh and you could dub Led Zeppelin's 'In Through the Out Door' to it with a tape. and micro-soft was just toddler. that will, that will last for ever! some thing will push the ipod out of the spot light sooner then later

514.4.2007 19:44

Noone has even come close to the ipod with the recent releases of zune, etc. Now apple has ironed out most of the bugs that haunted earlier ipods, its an attractive buy.

and if the music companies put the price of their music up for more popular songs, all people will do is get the more popular songs illegally, and reap the rewards of having cheap old songs. In other words they are on a fine line, and if prices go up, people will just go back to piracy

614.4.2007 22:25

they could do a dual thing like i think it is napster does u can pay per song or per month, i disagree with the different levels of song costs i do think that it will drive people back to illegal stuff for the popular stuff, even if they uped all the prices 25c it would be okay i think but to have different price levels is jacked, i think that every song should be equal to what ever your taste is if u like popular stuff u shouldn't have to pay more than someone that does not like popular stuff. neways those r my thoughts.

714.4.2007 22:41

...ah, In Through The Out Door.... good album... ahem.. I mean cd.. or is the proper term download now??? LOL

Here's my take on it. The subscription model IS attractive to some people but not to others. Some people will look at 'renting' music for say $12 month for portable tracks and be all like "NOT!" and pay the buck per song. Others will say $12 times 12 months = 144. So in one year I could buy 144 songs (WITH DRM which means I really do not own them anyways!) or during that time I could fill up my 30GB player with all sorts of music over and over, sampling groups and songs I would never otherwise hear and be happy with a rental system that is similiar to what they use with Netflix but not be limited to 3 items at a time.

I've said before that if you say that the average 'musical life span' of someone is say 50 years then at $144/year you are looking at a lifetime RENTAL cost of about $7200 for unlimited (How many MILLIONS of songs are offered on these services?) music consumption with no worries about losing/damaging a CD etc.

If one was to say $10 per downloaded CD then this LIFETIME expenditure of $7200 equates out to a paltry (lol) 720 discs! YES I do own them and can listen to them in my car, or at my friend's, or work or on the subway etc etc... but then somebody with a portable player can do so as well! So what difference is it AS LONG AS YOU DOWNLOAD the music regardless??? NONE.

However there is a QUALITY difference if one was to buy the physical CD's and rip them as waves or flacs or something but that is a different argument all together since we are talking online stores and unless we count I dont see too many others (who who??) selling waves of themusic I want to buy (and even allof doesnt offer it for everything!)

Secondly... IF I was to buy a HDD based player it WOULD BE the Zen Vision:M and NOT an iPod; although I do have two flash based iPods and like them I would go elsewhere if I was REALLY serious about getting a 'big boy' 30+ GB player for the formats the Zen supports.

And as a final note... are we not getting to the point that it wont make a difference if we are storing out stuff uncompressed? I mean 30GB of storage could hold a pretty good 'sampling' of high quality sounding waves or even flacs. Yeah it wouldnt be 25000 songs but the 25-50 CDs worth of music would sound better!

815.4.2007 2:31

subscription based services is what pushed most ppl into p2p file sharing in the first place why try to do it again. if you pay for a product then you own it and it should not self destruct 3 weeks later.
the pic and mix of itunes is defiantly is the way ahead so if you like 3 songs from a rushed out album you are not lumbered with the rest of the rubbish from too many manufactured artists and bands like westlife ect. this is exactly why the record industry is in a sharp demise, not because of piracy but because of the ability to choose not to purchase their crap, $0.99 for the one decent song on an album is a whole lot better than wasting $10 for a single now. most artists receive their income from tours and concerts because of the pittance they receive from actual record sales and its about time that the record industry reaped their exploitation of the real talent. its a good thing imo that itunes stick to no subscription.

This message has been edited since its posting. Latest edit was made on 15 Apr 2007 @ 2:33

915.4.2007 8:03

what pushed most people into file sharing 'in the first place' was the music industry not effectively marketing the ability to buy singles. And when they did offer a singles cd it was priced too high so as to 'coerce' you into spending the extra bucks to get the whole CD.

If I recall correctly, Napster and file sharing were around BEFORE iTunes came into being. It was the file sharing situation that convinced the industry to go the route they now have taken with offering online music.

You sound too much like Jobs...people want to own the music...when in reality when you purchase a digital download you DO NOT OWN the music. When you buuy a CD you own the music. You can rip it, copy it onto your cell phone loan it to a friend, resell it, listen to it on any device you want to when ever you want to how ever you want to... while purchased downloaded music allows you to do SOME of these things you cannot do ALL of these things. The feeling of ownership is fleeting once you 'hit the barrier' of what the DRM and the industry allow you to do with the product you purchased. As they clearly will tell you, when you buy a download you are only buying a LICENSE to LISTEN to the music not to own it. In this situation paying for downloads and paying for subscriptions exist on and even par.

And in 3 weeks your music DOES NOT go **POOF** if you continue the low cost of subscription. Thats like saying that NETFLIX is driving people to filesharing because when you return the movie it goes **poof** if you continue your monthly subscription the movie never has to go **poof** or it can go **poof** only to reappear in a few weeks when you wish to see it again.

Personally, if I could pay flat fee for access to all the quality bitrated movies I want to see whenver I want to see them I'd do that as well. Do I own them? Nope. But neither do I own the movies I rent from Blockbuster, Hollywood or Netflix. The only thing stopping me from music subscriptions is the low quality bitrate and what stops me from iTunes et al is the lie that I am buying music 'to own' but that is infected with DRM so as to limit my use of my property. However I have been known to purchase online msic from which has no DRM and offers me whatever quality of bitrate I am willing to pay for. I find it funny that in all the 'free world' only a Russian site truly offers a consumer the ability to truly purchase music the way we all want to purchase it.

I think Jobs and you are wrong... MOST people dont care about owning their music (or movies) as long as they can have access to the rentals whenever they want them.


1015.4.2007 13:24

I always question legality. Is the claim that Apple is reaping the benefits of music on iTunes a legit claim? Can the Big Four legally pull their music or would the consumer outcry spark congress to push them back into agreement? Is it legal for me to buy a record and rip it to MP3 if I do not own the CD?

It seems that the music industry is trying to apply economic principals to digital downloads. Requesting that the popular music cost more does not meet supply and demand criteria. To say popular music must cost more is to mean that the digital download of the music is in limited supply.

It is a farce that the music industry would claim to increase the costs of popular downloads to recoup the cost of higher bandwidth costs because of the popularity.

This is a pointless tactic. Perhaps the Big Four should consider hiring some Chief Operating Officers that are not retarded.

1119.4.2007 8:25

The Music Biz wont be happy until they can rent music and charge late fees. LOL

1219.4.2007 20:42

Apple seem to be the only ones with any real vision. They invent and then Microsoft make a poor quality copy (Like Vista trying to copy Mac OSX). iTunes is a success because it offered what people wanted. If the music industry hadn't been so greedy in the first place, then iTunes would not have been the success that it has become.

iTunes is a safe way of downloading music at a sensible price without the risk of a huge fine from the music industry. That's why iTunes took over the pirate download sites (in terms of volume) most people are not criminals...they were just sick of paying through the nose to buy CD's. The fact that they will pay for legal music rather than get free illegal music proves this.

Leave Apple alone to do what they do best. The music industry have enough money already!

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