Should Apple add subscription service to iTunes?

“Apple Computer Inc’s dominance in digital music faces new challenges as online subscription services from Napster and others take off and pressure the iTunes owner to begin ‘renting’ music in addition to selling downloaded tracks, analysts said on Thursday. Apple declined to comment on Thursday, but Chief Executive Officer Steve Jobs has often said subscriptions will not succeed because people want to own music, not rent it. To be sure, several analysts said Napster’s revised revenue forecast was still a drop in the bucket to Apple, which sells an estimated 90 million to 100 million downloads a quarter,” Reuters reports.

“Jupiter Research analyst David Card expects by 2009 that subscriptions will outpace downloads, generating $890 million in revenues versus $800 million for download sales. ‘Subscriptions are a great thing for real fans because you get access to a lot of music. The appeal is it’s on-demand. As long as you keep paying, its all there,’ he said,” Reuters reports. “‘We think many millions of people will be buying 5 to 15 downloads per year versus fewer, a few million, who will spend 10 to 15 dollars a month for subscriptions,’ he said. ‘We’re looking at 100 percent growth rates for the next three or four years in digital music sales and in digital music players,’ said Phil Leigh, analyst with Inside Digital Media. Leigh expects Apple’s dominance will be challenged. ‘Apple sold 8 million iPods in 2004, or 70 percent of the market. They will probably lose some market share over the next few years, but if they offer subscriptions, I think that loss of market share will be less,’ he said.”

‘Many industry watchers believe Jobs would change his stance if Apple’s iTunes download store — which has fueled sales of its iPods — was challenged by subscriptions,” Reuters reports. “‘The only reason they have iTunes is to sell iPods. If it turns out subscription services are important to sell iPods, they’ll probably get into that business,’ said Card.”

Full article here.

MacDailyNews Take: If subscription services prove to be attractive to people, then Steve Jobs will probably flip the iTunes subscription switch to “on,” but not until Napster and the rest pay for educating the public about the subscription model first. And if subscription services flop or make little impact, no problem for Apple. Apple is in a “win, win” situation here, presuming that they’ve already got an iTunes subscription model ready to go if need be. It would be very hard to imagine that Apple doesn’t already have a subscription plan option waiting, just in case.

Related MacDailyNews articles:
Napster’s math does not add up – February 28, 2005
Napster’s dirty little secret: changing subscription services into downloads is easy – February 18, 2005
AOL removes Napster pirate plug-in ‘Output Stacker’ from website – February 17, 2005
Napster feels the heat over flawed copy-protection scheme – February 17, 2005
Apple CEO Steve Jobs warns record industry of Napster To Go’s security gap – February 16, 2005
Users thwart Napster To Go’s copy protection; do the music labels realize the piracy potential? – February 15, 2005
Napster-To-Go’s ‘rental music’ DRM circumvented – February 14, 2005
Napster’s ‘iPodlessness’ doesn’t bode well for its future – February 10, 2005
Analyst: Napster To Go service no threat to Apple’s iTunes Music Store – February 04, 2005
Why ‘Napster To Go’ will flop – February 03, 2005
Apple to add subscription-based option to iTunes Music Store? – December 06, 2004

38 Comments

  1. Subscription will have a market, but I seriously doubt it will overtake purchases. People rent or lease things that are too big to purchase straight out or have a one time value. music is a continuing value, is used constantly and moved alot. I dont want another monthly fee

  2. Idiots.

    Already:

    I pay monthly for gas.
    I pay monthly for water.
    I pay monthly for electricity.
    I pay monthly for mobile phone service.
    I pay monthly for my land line phone service.
    I pay monthly for automobile insurance.
    I pay monthly for some website subscriptions.
    I pay monthly for T E L E V I S I O N.
    I pay monthly for my DSL line.
    I pay monthly for my cable modem line.
    I pay monthly for my mortgage.

    I AM SICK OF PAYING MONTHLY. I will not, ever, pay a montly fee to listen to music. GET THAT THROUGH YOUR STUPID ANALYST HEADS. I AM NOT GOING TO PAY ANYTHING ELSE MONTHLY. I AM SICK OF ADMINISTRIVIA! Gee, which of the music on my iPod is mine. Oh no! I don’t remember what I bought and what I rented. GET REAL.

  3. Really, who cares one way or the other?

    If Apple sees it is in its best interest to offer a subscription it will do so. Until then, go to Napster or do without on iTMS.

    Yawn.

  4. I laugh when I read these analysts saying “Apple MUST offer a subscription option to compete.” That has yet to be determined. Seeing as how these current subscription services like Napster have such a miniscule market share, while iTMS is currently dominating without a subscription service, it’s a bit ridiculous to make a statement like that at this juncture.

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