“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.
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