Merrill Lynch analyst: Apple could ‘flick the switch on a music subscription model’

“In a research note released to clients on Thursday, Merrill Lynch analyst Steve Milunovich said the current weakness in Apple’s stock represents a buying opportunity. The analyst acknowledges that the news flow over the past week has opposed Apple, but said his firm maintains a long-term bullish outlook for the company,” Kasper Jade reports for AppleInsider. “In regards to the pressure from Yahoo, Apple could ‘flick the switch on a subscription model,’ Milunovich believes. He says Apple could debut an iTunes subscription model later this year if it experiences any share loss as a result of Yahoo! Music and similar subscription services. To date, subscription services account for a mere 15% of the digital music download market while iTunes boasts an over 70% share.

Jade reports, “Additionally, Milunovich noted that number of song downloads from Apple’s iTunes are actually accelerating… In the eyes of Merrill Lynch, the Apple story is about more than iPods. ‘Although we think the iPod franchise is safe for at least the next year, the driver of the stock increasingly will be Mac sales,’ Milunovich wrote on behalf of the firm. ‘Management sees more evidence of the halo effect. We model a conservative 15-20% sustainable growth rate for Mac revenue.'”

Full article here.

Related MacDailyNews articles:
Analyst: Yahoo’s music entry threatens Napster and RealNetworks more than Apple – May 12, 2005
Yahoo’s music play hurts Napster, RealNetworks; may force Apple to offer iTunes subscription service – May 12, 2005
Napster To Go Soon? Reports $24.3 million net loss on $17.4 million net revenue – May 12, 2005
J.P. Morgan: Yahoo music service ‘does little to break Apple’s tight grip’ on digital music market – May 11, 2005
Yahoo launches Napster To Go, Rhapsody To Go killer (takes aim at Apple’s iTunes Music Store?) – May 11, 2005
RealNetworks drops 21%, Napster plummets 30% on Yahoo music news – May 11, 2005
Apple debuts iTunes Music Store in Denmark, Norway, Sweden, Switzerland; over 400,000,000 songs sold – May 10, 2005

13 Comments

  1. JanKo – so correct. But DAMN, I wish I had some available cash to buy more shares right now. ” width=”19″ height=”19″ alt=”cool grin” style=”border:0;” />

  2. <i>To date, subscription services account for a mere 15% of the digital music download market while iTunes boasts an over 70% share.</i>

    Wait a minute…

    If iTunes has roughly over a 70% share and subscription services has a 15% share, then where does the other 15% go to?

  3. If iTunes has roughly over a 70% share and subscription services has a 15% share, then where does the other 15% go to?

    scratches head.. why are you comparing/adding subscription marketshare and download marketshare..?

  4. It said over 70 is iTunes, 15 is subscription. Don’t forget, Walmart, Napster, etc. still have single downloads too. They would probably be that other 15 percent.

  5. how come everyone wants different sale models? What about increasing the quality of the music? double the rate, add liner notes, trash all the stupid “best of” compilations and bring in the original albums (including the original release year!!!) Also neat would be for garageband remixes to be put online…(like that NIN track). Make a Celebrity mix-box or whatever for people to abuse…non commercial that is. Now that would add some heat on the competition.

  6. Even though they push subscriptions, you can also purchase songs from Napster and Rhapsody, so maybe that’s what the 15 percent refers to. The remaining 15 percent market share would be the rest of the also-rans: Yahoo, Wal-Mart, MSN, yada yada…

  7. why doesnt Richard James have a celeb playlist, say? i just gotta see that one. Josef Zawinul, Prince and Claus Ogerman as well ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

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