“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
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
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.
I agree with Buffy. I do not want another monthly payment OBLIGATION. I have enough bills as it is.
They probably have it working & ready right now, but if it ain’t gonna be used for Music, it’ll be ready for Movies..
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.
dix99,
I like how you think.
how about rent with the option to buy
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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.
NO!
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Without reliable data, I’m just another As_H___ with an opinion.
‘Annon’
There are alot of As_H___ out there.
RJ
I think it makes perfect sense as a way to drive additional sales. Try before you by. It would help me find new music. The random few seconds in the preview clip is fine to validate that it’s the song you already heard and were searching for, but not nearly enough to decide if a new song is something worthwhile.
as long as I don’t have to subscribe to use iTunes, who gives a shit?
Hmmm, the analyst said ” ‘Subscriptions are a great thing for real fans because you get access to a lot of music.” Has he thought this through? What percentage of the market is made up by “real fans”? 15%? 25%? And what percentage of the “real fans” prefer renting over owning? 50% even? Each one of this minority will represent only one subscriber while every “real fan” who prefers buying will spend much more per month than a subscriber. And what about all the “casual fans” who only want to get an occaisional song or album because they really like it? The subscription model is not a good deal for these people. No, I don’t think this guy has thought things thru at all.
With the problems that arose from Napster To Go (downloading songs, converting or burning to another format to keep), I don’t see that this will work as a long-term solution. Thus far, subscription services have not taken off. I would not be surprised if the recording industry steps in and makes the subscription route more expensive.
Please see previous posts in this topic for info on opinions…
The real problem with subscriptions offering tons of music is not so much the money – Americans can always find more money each month even if we have to go into debt no our credit cards. The real issue is time.
I’m still working on getting my friends to rip their physical CD collections into iTunes. If I can’t get them to go digital with the music they already own they are not going to take the time to download and manage music at $15/month.
For me and my friends if we are going to pay for music each month it will be something like Sirius or XM.
If the market is there – why not?
Just keep the ¢99 songs for me
They should have went with n optional subscription service a long time ago. If people are dumb enough to want that, let them have it.
As it stands now, Apple risks letting Naster gain some traction, and then further validating it by launching their own subscription model. Or they could sit by and watch from afar, and risk having no influence in the area.
SHould’ve pulled the trigge earlier on this one boys…
it is nice that this guy knows what is going to happen in 2009! i seriously doubt, though, that he knows what he is going to have for lunch on thursday.
What if there were a rent-to-own model? Granted, I’ve only thought about this for about two minutes, but:
-you download as many songs as you want for maybe 25 cents each for one month of use
-software keeps track of which songs you have, and you can select which songs to renew each month
-songs are automatically renewed unless you specify otherwise
-after a set amount of time–say 6-8 months–a song becomes yours to keep
You end up paying more for the songs you keep, but less for the ones you only use for a short time.
At the end of the day, there are those users who would want to subscribe and those users who don’t. Either way, offering different models to users so the user can make the choice is never a bad thing.
it’s true Cpt. Obvious, why deny people subscriptions while helping napster to develop into a viable contender? simply including this option would decimate any chances that all other services might have. and for some people whose musical tastes are completely tied to what’s on the radio (teenagers), a subscription might actually make sense.
YES!
If Apple adds subs then they can have a dominance in this market too!
Plus think of all the larger iPods Apple would sell….
If people were able to download unlimited songs per month with an iTunes subscription, they would be filling up their mini’s and shuffles in no time. I bet this would really drive sales for the larger iPods which is where the profit margin is much higher.
“iPod mini is full, got to go get the 60gig iPod Photo!”
I cannot believe that the recording industry goes along with the subscription services. In principal, subscription revenue (and a subscription model) would be great, but it’s so damn easy to ripoff the music for pennies per track. Sure it takes a little time, but computers are great for doing repetitive tasks. Steve Jobs must be just beside himself in disbelief.
That said, I could see Apple offering a “Music Discovery Package” that would allow you to download a limited number of lower fidelity or audio watermarked tracks for a fraction of the regular purchase price.
Comment:
From: Jr.
Mar 07, 05 – 12:00 pm
Plus think of all the larger iPods Apple would sell….
If people were able to download unlimited songs per month with an iTunes subscription, they would be filling up their mini’s and shuffles in no time. I bet this would really drive sales for the larger iPods which is where the profit margin is much higher.
“iPod mini is full, got to go get the 60gig iPod Photo!”
Uhhh… yeah.. because I can listen to 60GB of music in a month.