“The idea that a credible rival to iTunes could appear from nowhere and compete head-to-head with Apple (as Microsoft has clearly failed to do) seems far fetched to say the least. But never mind, it’s happening,” Robin Bloor writes for IT-Director.
MacDailyNews Take: No, it’s not.
Bloor continues, “The company that is presumptuous enough to believe it can do this is Omnifone and, given the reports that emerged from the recent 3GSM conference in Barcelona, the press believes it too.”
MacDailyNews Take: Because most of them can barely read press releases, much less analyze what’s in them.
Bloor continues, “Omnifone has already sewn up deals with 23 mobile network operators, that have subscribers in 40 countries, giving it a total customer base of 690m subscribers. That’s a potential customer base of course—not all of those subscribers will choose to use Omnifone…”
MacDailyNews Take: Hardly any subscribers will choose to use Omnifone.
Bloor continues, “You can do a blow-by-blow comparison of iTunes and [Omnifone’s] MusicStation, but no matter how you toss it up and catch it, it is difficult to believe that MusicStation isn’t going to take a big share of the digital music download market.”
MacDailyNews Take: MusicStation isn’t going to take a big share of the digital music download market. Believe it.
Bloor continues, “A big reason why the Music industry is backing Omnifone is the music by subscription model it operates. The idea is that you pay a regular subscription charge as part of your phone bill and you can have ‘all you can eat’ in terms of music. (The initial roll out will offer 1.2 million songs). The music companies tend to think like this: With iTunes the average user buys around 20 tracks a year—equivalent to maybe 2 or 3 CDs and generating $20 in revenue. With a subscription model at, say, $3.50 per month, the revenues per person will above $40 (twice as much).”
Full article here.
[Thanks to MacDailyNews Reader “nerdbrain” for the heads up.]
MacDailyNews Take: The music by subscription model is a proven failure. People want to own their music, not rent it. Stop paying Omnifone and you’ll have nothing. Additionally, Bloor’s numbers do not even come close to adding up. Let’s do something interesting and look at the actual facts: Omnifone’s subscription service will be £1.99 (US$3.90) per week, not month. So, it actually costs US$16.90 per month on average or $202.80 per year. In other words, Omnifone is 70% more per month than the beleaguered Napster subscription failure that currently charges (US$9.95/month).
The mobile phone networks are suckers because they, like every iTunes Store victim on the planet, want to control the customer instead of giving customers the control they want — even to the point of stupidly buying into this repackaged, over-priced, proven failure that’s called “Omnifone” this time instead of “Napster.”
Apple gives customers what they want while other outfits want so badly to reap a weekly/monthly payment ad infinitum that they keep trying to ignore reality. The mobile phone companies are deluding themselves with visions of recurring weekly charges that simply aren’t going to exist in worthwhile numbers because people don’t want what they’re trying to sell no matter how badly they dream of selling it.
Related articles:
BBC incorrectly reports Omnifone music subscription price (plus: why the phone networks are suckers) – February 13, 2007
Omnifone to challenge Apple’s iPhone, iTunes Store – February 12, 2007
Beleaguered Napster hires UBS to evaluate possible company sale – September 18, 2006
Beleaguered Napster circles bowl, subscribers drop 7 percent, Gorog won’t rule out sale of company – August 03, 2006
Free, legal and ignored: Mac- and iPod-incompatible beleaguered Napster dying at colleges – July 06, 2006
Napster does the math: layoffs commence with 10-percent of workforce lopped off – January 25, 2006
EMI Music Chairman: Music subscription services like Napster and Rhapsody haven’t beeen huge – January 23, 2006
Report: Napster executives do the math, consider selling or shutting down, layoffs imminent – January 16, 2006
Do the math: Napster posts $13.6 million second-quarter loss – November 02, 2005
Napster: the only thing missing is the sock puppet – August 04, 2005
Napster, other Windows Media-based music services ‘chasing a niche opportunity’ – June 29, 2005
SmartMoney: Napster is a snooze, gushing money and renting music is un-American anyway – July 06, 2005
Napster To Go Soon? Reports $24.3 million net loss on $17.4 million net revenue – May 11, 2005
Napster is a joke – April 05, 2005
Users thwart Napster To Go’s copy protection; do the music labels realize the piracy potential? – February 15, 2005
Why ‘Napster To Go’ will flop – February 03, 2005
The de facto standard for legal digital online music files: Apple’s protected MPEG-4 Audio (.m4p) – December 15, 2004
Napster 2.0 posts US$15 million relaunch loss – February 08, 2004
@ Bonesy
Doesn’t matter how many phones get “shipped” by this company or that company – if the feature they’re hoping to sell is too cumbersome to use with any great effectivness or is too costly to the pocketbook for the average joe, then it’s more likely that average joe won’t use it in great numbers, and it won’t make the companies the kind of money they were expecting. Huge potential doesn’t equal guaranteed results – not even for Apple. Seems pretty simple to me.
Music subscription services are the future, but not until Apple makes it happen. Don’t get tunnel vision. Right now buying your music is the prefered method, but that’s only because we have been conditioned to this from the past. The temptation is to think this will continue unabated in the future, but here is why you would be wrong.
A revolution is taking place in online media purchases and iTunes is leading the way. iTunes is going beyond online distribution models like Amazon because it’s using rich client software to create added benefits, like iPod syncing and content control (customization). It started with music, but iTunes now has TV, movies, books on tape, pod casts, music videos, and more is coming.
Now, if you buy into this (no pun intended), soon you will have quite a large quantity of data that needs to be backed up. Terabytes worth, once you start adding HD content. How will you manage this? Buying external hard drives is an option, but too complex for most people. Besides, if your house burns down you will loose it all.
Enter Time Machine. Time Machine will allow you to back up all your iTunes media using your .Mac account on Apple’s servers. Apple will just create a list of pointers to their mega database and if you loose your data you can just download it again. Soon, .Mac will become an annual service that will include many features, but off-site backup will be one the big ones.
Now, soon iTunes movies will be 1080p, but downloading and amassing a large library of 1080p content is impractical, and add to that the fact that most people don’t want to own movies they only watch once. Downloaded movies right now is just a otpional way of consuming media, and it’s being sold as low quality resolution limits the way you can consume it. Apple will eventually offer a download subscription service for renting movies. Netflix and Blockbuster will force them to do this, otherwise downloading movies on iTunes will have a very limited reach. This subscription service will be tied into your .Mac account, which you will be paying for as an annual fee.
Soon, people will be canceling their satalite and cable services in favor of the download model. Your monthly cable bill will be replaced by a monthly .Mac bill. Apple will become the new media distribution model. Are you starting to get it? You will accept this because it’s cost effective and convienent. Apple will eventually allow you to consume the whole iTunes library for a monthy fee and that will include music.
So, right now your purchasing music, but in a few years you will be renting it because it will be cheaper. Apple will offer the flat out best media consumption model bar none. You will be able to watch or listen to whatever you want, whenever you want, and wherever you want.
Still don’t understand this whole “iTunes DRM locks you into iPods, unplayable on other players, blah blah….” Why doen’t anybody understand it’s JUST LIKE BUYING A CD! You simply rip a CD, then rip it back in as whatever you want. I’ve bought 100 or so iTunes songs the past 2 years, and own ZERO AAC files. All high quality MP3’s. Spread all over the shared macs and pc’s at work, 4 ipods, and several macs at home. Is the general public really this stupid/paranoid/biased..? Or is it a combo of that and the fact that Apple won’t, (or can’t due to it’s agreements w/ the RIAA) advertise this fact better.
Too right I will. Million plus songs on the one device I have with me all the time. Access new music wherever I am, share music instantly with my friends wherever they are. £1.99 is much less than a pack of cigarettes. No brainer. iPods are outdated and get left in the drawer. The iPhone isn’t available and even so you can only get new music in your home and you have to pay for it before you know if you like it. I want it all and I want it now. Thats our generation buddie – it’s a comms revolution!
“Is it possible to crash before you launch? Let’s watch…”
Joe Biden sure tried…
OK, this is really disturbing. Sure, I probably read it wrong, but it sounds like the music subscription is just folded up into the service contract, and you pay whether you use any music, or not.
Its also unclear just how easy the UI is to navigate and master. Meaning even if someone wanted to use the music feature, it may not be that easy to get to. The record labels will laugh all the way to the bank on that one… People roped into paying a subcription fee, no way to opt out, and most won’t even use it. And since ringtones weren’t even mentioned, you can bet they will cost big bucks for each one, not included on the subscription price plan of course. Oh well, plenty of windows sheep will flock, as will some of the rabid anti apple people.
Sounds like a zuney deal to me
MacMental has it mostly right. Paying to own a single digital track is a hang up from the days of physical media. Physical music products like albums were an optimal use of the music rendering platform – the record player. Same with CDs. However, as far as music on the move is concerned, the pay per track model does not optimise the capabilties of the music rendering platform – the mobile phone (something even Apple agrees with). The platform can access all the music wherever you are. BTW Omnifone say that the playlists, music, friends, news etc on the phone is merely a local cache of the master copy on the server. Sounds like they got there first MacMental – isn’t that cool?
Do you think that’s the reason for Apple’s iPhone with iTunes and internet connectivity? Do you think that Apple wants to expand the iTunes business model to the mobile consumer?
Regardless of the technically mundane methods of transferring music, it’s the fact that consumers want to own their music that makes iTunes more successful than the subscription model. I think that you have purposely ignored the most important part of digital music services and that is providing the individual consumer products at a fair price when they want it and where they want it.
It seems that Apple’s competitors are compelled not to copy the iTunes model even though the subscription model has not shown to be commercial successful (e.g. Napster). Maybe Omniphone fears the public ridicule of mimicking Apple more than the desire to generate a handsome profit.
Well, Bonsey, how exactly do you enjoy digital music?
@ darknite – you want to see the interface take a look at the demos on http://www.omnifone.com
I think Napster rocks, but I would prefer it on the phone! Logic states that I get a MUCH BETTER music experience than you cos I can listen to anything anytime and immediately I think of it or see it. KILLER! Check mate. Pay per track is for record player owners. Get with the comms generation dude.
All these reports of the service costing $3.50 per MONTH reminds me of this story about Verizon:
http://consumerist.com/consumer/asinine/transcript-verizon-doesnt-know-how-to-count-220723.php
Or check it out here
Ownership a thing of the past? It’s called human nature and basic economics. Do you rent or prefer to rent your clothes, car, bicycle, house, shoes, appliances, computer, iPod, tools, furniture? If you do, you’re an idiot and a lonesome idiot, to boot! Ownership gives you financial control of the things you want and it is often much less expensive to own than to rent.
Even if you archived your music at a remote site you would still own it. Also, people who use a personal computer to purchase online music stores are quite capable of archiving their music files at home, if they choose, whether they use magnetic or optical media. I suspect as long-term storage become less expensive the practical use of “remote archival services” will lose usefulness and popularity.
@ Bonesy
1 million songs at an average 3 mins per song is 5.7 years of non-stop music. 3/4 I maybe don’t want to hear.
Makes perfect sense to me if you don’t have a life…
I would rather buy my music on cd, rip it to iTunes and play it through a set of powered reference speakers and shuffle it because I KNOW i like everything I will hear. I don’t have an iPod and I don’t buy music online cause the fidelity sucks… You can’t beat a cd. But I’m a purist.
You say iPod sales thus far is small potatoes compared to Nokia cell phones… Who gives a sh$t.
Wander arould any major city and you will still notice the white earbuds and wires before you’ll ever notice the cellphone by brand. They are all me-too products that offer little differentiation.
Anything Apple does gets great press lately because people are finding out now that when products are made with the end-user-experience as the driving force, you end up with a truely enjoyable product that makes your life simpler. KISS
Over-complicated gadgets that are designed to protect the content-providers profit will never create a buzz because the end-user will feel exploited. Is it no wonder the Labels love the subscription model… Profit Profit Profit. And all the user ever gets is an invoice every month FOREVER assuring more profit profit profit. And when you end your subscription… POOF oops where did all my stuff go…. Apple understands this one fact… People love their stuff… buy it, insure it, and buy some more of it.
Just My thoughts on Music… Macintosh Rules!!!
The Omnifone interface sucks compare to iPhone. Looks like your ship is sunk before its maiden voyage.
..unbelievable but true……..a group of small people have published a common revelation today:
“Dear populace. I just want you all to know I’m an assclown.” Robin Bloor, February 15, 2007
“To all… I just want you to know I’m an assclown, too, and I’m sorry for being a hit whore.” Rob Enderle, February 15, 2007
“May God help me. I’m an assclown, a worthless prick, faux-analyst and a hit whore.” John Dvorak, February 15, 2007
“I’m an assclown..Bills flunky and Steves monkey.” Dave Fester, February 15, 2007
I think, now, the world may be coming to an end. I’ve already kissed my own ass goodbye.
If you like Napster so much, why don’t you BUY it? Or do you prefer to RENT it?
There are a lot of younger people who don’t have any problem with renting, leasing, subscriptions etc. as long as they can ‘make the monthly payment’. This is why there is so much credit card dept in America.
Both. Prefer to rent though for community, discovery and instant gratification.
Heed the advice of Joe Blow, otherwise exist in perpetual state of indentured servitude and penury. It’s obvious that you have some serious emotional and maturity issues if you are willing to sacrifice long-term independence and freedom for immediate gratification.
Pay per view has been around for some time and I do think a percentage of people will subscribe.
I think most people prefer to buy and the success of iTunes has proven this in music.
Everytime I’m at Best Buy or Walmart there are tons of people going through the DVD’s looking to buy.
I personally have over 250 movies on DVD for my family and buy a couple a month. Beside the value of owning
there is something to be said about people wanting to collect their favorite movies and music.
My kids and I have usually watched each movie 2 to 3 times over the years sometimes more.
Video game sales have always also dwarfed over rentals.
The used movie and game market has taken off and places like EB Games and eBay are evident of this.
People also like to give games and movies as gifts, I guess you could buy someone a rental gift certificate but
it doesn’t have the impact.
I thnk subscription models are just niches.
Let me clarify. I believe at some point in the future Apple will offer unlimited access to all iTunes media content on a per montly basis. It will be an option, but for those who prefer to own, they will be able to do that too. I just beleive the cost benefit will be with the subscription model, and since most people will want this model for movies and TV shows, adding music will just be a value add.
Once people start accepting this, the whole “own” your media paradigm will change. There will be really no reason to own it. Your doing it already, you just dont think of it that way. Every month you pay a cable or satalite bill for rented media. You move to another city and you sign up for another service. You do it without really thinking about it. It’s just a utility bill like your gas or electricity. Apple will replace cable and satalite for access to media using .Mac, and this will also include your phone service. At some point your .Mac subscription will be just a monthly bill and Apple will include iTunes music access as a value add to keep your business. Music will just naturally blend into this and you won’t think twice about it.
Right now media consumption is fractured. For example, you might get TV from Time Warner, movies from Netflix, cell phone from Cingular, and music from iTunes. If Apple were to offer you a way to consoldate all of these into one monthly bill that was cheaper than all combined, would you go for it? So, if you are paying a single monthly bill for TV, movies, and phone service, why not add music too?
Something else to consider. Why is Apple against DRM? Because it will make this model so much more appealing because you can load your iTunes media on any device, take it with you wherever, consume it however, and whenever you want. No limitations. Apple will be making their money off of .Mac subscriptions not just the hardware as they are now.
Apple will still make awesome integrated hardware, but they will want your subscription money and DRM will work againt them with this.
Oh, about being deranged. I do rent my house and my car! It’s called a rental and a lease. As for everything else on your list, I own everything else because it’s disposable. Cloths and shoes wear out, computers become obsolete, ect. There is a fine line between owning a thing and renting a thing, and it’s usually cost.
A car is a perfect example. So you buy it or lease it. What’s the difference? If you buy it, by the time you finish paying for it your ready to sell it and get another one. So the only difference is when you buy you can customize it if you want and drive it more, but you pay for this freedom. If you lease it you pay less, get another car sooner, but have to drive it less and maintain it. These are trade offs depending on your needs. But the point is, whether it’s a lease payment or a car payment, you are still making monthly payments on a car for the rest of your life, unless your stinking rich and buy outright or flithy poor and drive something until it wont work anymore.
Your argument about music is that you own it to control it. And if you subscribe to music, and you stop the subscription you loose it all the argument goes; but you will just sign up somewhere else and get it all back! That’s why those who favor a subscription model believe they will succeed. Once people figure this out a subscription service actually makes sense. The problem with all these other services is they have no way of demonstrating this, Apple on the other hand is uniquely positioned to help people out of their “ownage” mentaltiy for reasons I stated earlier.
My argument basically boils down to this. Apple will get you into a subscription model because you already accept this with TV service, movie rental, and phone service. But since you will be using iTunes for all of these, music will just naturally flow into it. People are conditioned to own music right now and Apple is capitalizing on this, but soon that will change, and they will convince you renting it is better.
Hmmmm… sounds interesting…. I might use Omniphone 1 week a year…. for $3.90 I can listen to all the music I want in full tracks – then of course, I would stop paying after a week and buy all the ones I want from the iTunes store… I would never rent music except to try before I buy…. If I own it, I control it.
$3.90 a week? Over $200 a year? Just how long are people willing to pay that amount? I can buy about a CD a month at that rate, and I get to listen to it and rip tracks to whatever device I want for as long as there are drives capable or reading CD’s. Plus, I can give them away, lone them to friends, whatever. Way more flexibility than renting music. As soon as you stop paying, you lose access to everything.
I guess that’s okay if you’ve got the money to burn. Me, I’d rather own just about anything versus rent it. In almost every case I’ve come across so far, it costs less over the long run.
Just a quick comparison on a car (2007 Acura TSX 6-speed):
$32,564.40 to finance 100% at 5% interest for a 5 year loan
$27,267.00 for a 5 year lease
Now, if you plan on changing cars every five years and don’t go over the mileage limits, leasing may be a better option. If you keep the car for just one more year, though, purchasing it is a better deal. Keeping a car for any longer than that is even better, and this assumes the car has zero value when you’re done with it. If you keep the car in good shape, you’re probably better off purchasing it even if you only keep it for 5 years.
Or how about renting vs. owning your home:
Rent is gone, no tax deduction, nothing to show for it once you move.
Purchasing, any interest you pay is tax deductible, and generally speaking, your home value doesn’t go down. If you buy a $200,000 house, it’s usually worth more than what you paid for it after a few years. Vary rarely will you lose money on a home, where your rent is lost the moment you pay it, every time. On top of that, many times a mortgage is no more expensive than rent! I just don’t get why so many people piss away their money on rent when they can *own* a place for a lower monthly expense!