Would you pay for unlimited iTunes?
Posted
Mar 19 2008, 11:02 AM
by
Kim Peterson
Rating:
After pooh-poohing music subscription services for years, Apple is talking to labels about that very idea, according to the Financial Times. It's about time. Apple could really energize iPod sales this way. But here's the twist: instead of the regular pay-every-month scenario, the fee would be bundled up front into the price of an iPod or iPhone.
In other words, if you pay more when you buy the iPod, you could get free access to all the music on iTunes for the life of the device. Executives talking to the FT said research has shown that people will pay up to $100 for that, or they would be willing to pay a $7 to $8 monthly fee for a music subscription.
Nokia has a similar deal in place for devices it's developing, and reportedly will pay music labels $80 for every device sold. Apple, in its typical drive-the-labels-nuts fashion, has only offered to pay about $20, according to the FT. Nokia is being hit hard with the news today; its shares have fallen nearly 8% this morning to $30.17. Apple shares are down less than 1% to $132.04, and shares in RealNetworks, which owns the competing Rhapsody music subscription service, are down nearly 2%. Napster shares are down 3%.
I hate paying monthly subscription fees, but I would shell out the $100 up front in a heartbeat. So far, music subscriptions have done only so-so out there, in part because people probably feel the same way I do and in part because subscription plans don't easily work with the iPod. That's why Apple has a real opportunity here to change the game, to get the masses fired up for the first time about paying to rent music instead of owning it.
There are lots of unanswered questions here. What about video? Is this idea too complicated for iTunes users? Would the music be streamed or available for download? One idea reportedly being discussed is that customers can keep up to 50 tracks a year even if they end their subscription or change devices.
Here's what others are saying about the news:
Silicon Alley Insider: "Apple gets to rejuvenate its slowing iPod line, and makes the iPhone even sexier. The flailing music labels get a slice of guaranteed income, bolstered by the world's most inventive consumer electronics company."
VentureBeat: "This report is especially interesting because it brings up the question of why Apple would mess with a system that has worked so well for them? It’s true that they don’t make much profit off of the individual songs sold, but those might as well be considered loss-leaders for moving the profitable iPods hardware units."
TechCrunch: "If the iPod/iPhone came with unlimited music it would create an even stronger bond between Apple and its consumers. It would turn iTunes into a true universal jukebox that people would connect to on a constant basis to update their playlist, discover new music, and treat as an online radio."
Between the Lines: "Apple has what it takes to make music subscriptions the norm. In fact, Apple can make music subscriptions palatable to the masses. Music is perfect for the subscription model if done well (and Apple can do it well)."
