“CNN Money has a fairly thin story about how the CEO of INTENT MediaWorks believes Apple is preparing to offer a subscription music service within the next six months,” Blackfriars Communications’ Carl Howe writes for SeekingAlpha.
“I think the real motivation behind the subscription idea isn’t Apple, but the record companies,” Howe writes.
Howe writes, “The concept of subscriptions on iTunes appears about as perennially as weeds. But while some consumers may find the concept attractive in theory, for Apple, this strategy just doesn’t work for three reasons:”
1. Subscriptions require Digital Rights Management [DRM] that turns off consumers
2. Labels would have little incentive to create good products
3. iTunes’ existing subscriptions create more satisfaction
Howe writes, “In addition to the three reasons I listed above, Apple’s iTunes has about two billion revenue reasons this year to pursue its own course in music subscriptions and to reject ‘me too’ rental services. Perhaps that’s reason enough.”
More in the full article, including discussion of the three points above, here.
[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
Related article:
Music labels to ask Apple to add subscription service to iTunes Store – April 13, 2007
renting music if for idiots
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Why change a process that works? Apple should just keep on doing what they’re doing…right? Seems logical.
1: Rent all the music iTMS has to offer.
2: Set up a Mac Octo Pro to strip off the DRM.
3: Sell the Octo Pro.
4: Sell the music and the Octo Pro.
5: PROFIT $$$$$$$
…and I’m tellin’ ya, eMusic is a great little music service too. You do need a subscription, but the prices are reasonable and the service is geared toward independent labels, but also has major labels/artists. I like it.
4. Not too mention the heavy bandwidth costs involved that would be laboured on Apple
Be some time before DRM’d subscriptions recover any legitimacy.
I hope Jobs tells them -publicly – to stuff the idea back from wherever it came from.
proofreading if for idiots
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I already have a Octo Pro, so in theory I would be selling two of them and retiring on the cash from selling all that DRM free music.
Anyway it was just a idea what people could do with subscriptions.
Rent, the musical is for idiots?
So it’s not La Bohème but that’s a bit harsh.
No DRM + Subscription service = NOT GOING TO HAPPEN.
MDN magic word: ‘parts’ as in buy your music in parts.
I like to own my music so a subscription is out of the question. The option I would like to see is a movie RENTAL option.
I wouldn’t mind renting audiobooks.
Yes and subsriptions have worked so well up to this point! Of course the greedy SOBs figure it will work better if they can latch onto the most popular player to do them with. Because the real reason the iPod is so popular has nothing to do with the fact that you own, not rent, what is on it.
Man these guys are idiots. I would like to know how you get to be the big CEO with the big Paycheque and still be so effing dense! Cause I can play dense if I need to, and come up with half-assed ideas as well. Where do I send my resume? This working hard and being held accountable for my performance, for puny pay, is starting to wear a little thin.
MW: help, as in will someone help these nutjobs get a clue
I agreed that it did not make sense till i saw the statement on this site the other day saying “maybe not music but movies.” Apple could become the ultimate alternative to blockbuster and netflicks.
I pay $20 a month for a subscription to blockbusters so I can stop and get movies on the way home and hold onto them till i finish them. I skipped Netflicks for this reason alone – I never know what i want to watch till the last minute. Apple can let me start watching my show in minutes.
I would drop blockbuster like a bad habit. I still would buy DVD’s for keepers, but I would never rent another one if I could do it from an Apple TV instead.
macaholic: “Yes and subsriptions have worked so well up to this point!”
– Irrelevant.
“Because the real reason the iPod is so popular has nothing to do with the fact that you own, not rent, what is on it.”
– This statement is more true than I think you realize. The success of the iPod does in fact have little to do with how people acquire their music.
I can’t believe the music executives would be so stupid to insist on a subscription option.
Why? Ok, Let’s say I subscribe to the iTunes Subscription model, and I also buy a license to use Audio Hijack. I start downloading all the music I could possibly want, use Audio Hijack to convert it to whichever format I want. Cancel the subscription.
Basically, the entire recording industry has hosed themselves no matter what they do.
Decades of charging people full CD prices for one, two, perhaps three good songs and the rest of the album is filler material, playing the “Let’s switch formats on them, again”: 78’s, 45’s/LP’s, 8-Track, Cassette, CD’s, etc., calling their customers thieves and crooks, suing old-ladies and 10-years old has pushed the buying public to have little sympathy for a bunch of no-talent hacks who owe their position and lively hood to the skills, talents and creativity of musicians who they routinely screw out of fruits of their labor.
Reference:
http://en.wikipedia.org/wiki/Badfinger#Death_and_decline
The thing that will lead to the music executives downfall?
Their own greed and entitlement mindset [namely that the music buying public owes them their livelyhood].
Don’t let the door hit your collective arses on the way out fellas. [Not that we’re worried about your posterior mind you, but we don’t want to have to replace the door!]
Hano
Subsription service is fine as an option but not as the only option. It would be rent or buy type system. If it is changed to rent only Apple would lose millions and it would be back to P2P for most everyone who wants to own there music without having to pay for it over and over again for the rest of there life like they were being hounded by the mafia or something. I’m sure the greedy as record companies like Universal would like nothing more than to have people pay for something for the rest of there lives. Easy cash into the greedy VP’s of the record companies like Universal.
Hanover, I agree with some of your sentiment, but most of your arguments are pretty empty.
“Decades of charging people full CD prices for one, two, perhaps three good songs and the rest of the album is filler material”
– Hmm, the albums that I buy seem to have a lot more than one or two good songs. Perhaps you should stop listening to crappy music. If the price was too high, people wouldn’t be paying it. The market tends to work these things out.
“playing the “Let’s switch formats on them, again”: 78’s, 45’s/LP’s, 8-Track, Cassette, CD’s, etc.”
– Incidentally, each format is better than the previous one, and the previously purchased music didn’t stop working once a new format was released. New formats are also not an issue. In fact, it is to be expected.
“calling their customers thieves and crooks, suing old-ladies and 10-years old”
– Of course, the customers that they called thieves and crooks were in fact thieves and crooks. Additionally, ignorance is not a justification for crime.
“a bunch of no-talent hacks who owe their position and lively hood to the skills, talents and creativity of musicians who they routinely screw out of fruits of their labor.”
– And yet those artists that are getting routinely screwed out of fruits of their labor keep signing more contracts and coming back for more.
regarding emusic, last month they paid 12 cents for downloads origination in the UK, iTunes paid 90 cents. and there were many more iTunes downloads than emusic downloads.
for indie artists, emusic = blech
30% price in crease to $1.29 should be reason enough
at 2 billion songs that’s a whole lot you can buy with the 600 million EXTRA in revenue from iTunes….
600 million dollars divided by $15/month = 3.33 million subscribers to equal that in gross sales…not to mention the overhead to support it.
Steve could easily use a subscription model to for the hand of labels to deliver:
– 256 bit encoded music
– DRM-free music
AKA – The EMI deal. Give us that and we’ll give you a subscription service.
Not many current iTunes users would use the service, while it would pull many off of Napster and the like to iTunes and likely iPods – as the subscription service would only work with iPods of course.
In another two years time, when Napster and Rhapsody are gone, and Yahoo has hardly any music users left, Apple can come back to the contract agreements, and put the labels over a barrel and can the subscription service – if Apple so chooses. Apple would do so if the subsription model showed no life whatsoever, and declare to the public how dead a solution that is. the less than 5% of those people can go buy a Zune and use that service… Exactly, those subscribers are going nowhere, and will be buying their music from now on.
I suspect an emusic-type iTunes subscription service would go over quite well. I easily download 70 – 90 tracks for $20 a month at emusic.
Rental, no. I went that route with Yahoo. End the subscription and “poof”, there go your tracks.
Subscription-to-own is the way to go.
Notice that customers are not asking for it. Renting music is a ridiculous idea.
Toby,
Notice that customers were not asking for an iPod. Portable mp3 players was a ridiculous idea.
Also, in order for a subscription model to work, there has to be an additional charge to burn a CD.
That is very un-Apple.
all subscription services breed is piracy.
I bet the last time that Windows Media was cracked you saw a huge increase in the “trial subscriptions”. You can download a lot of music from napster during a trial, in my case, close to 4 gig. All drm free now.
not for music.
but definitely for movies
@Wiseguy
you forgot #6. Go to jail for copyright infringement for selling music you don’t a mechanical license for.
As I said on CNN page, why should we believe the CEO of INTENT Mediawork? The first, second and third rules of negotiating with Apple on any future project are to learn to shut up about it, to learn to keep a secret and to learn to shut up about keeping a secret. Will a CEO involved in potentially multi-million dollar deal be idiotic enough to jeopardize it for a few minute of fame?
I doubt iTunes would use an eMusic subscription model. The model seems geared to small acts that are willing to accept little or no payment per track in order to get their music heard. This is only true of a small portion of acts that distribute via iTS. The majority of them probably are not interested in selling at no profit simply to increase volume. To accomodate this, Apple would have to have a tiered system, which sounds nice from a flexibility standpoint, but is just awkward enough to annoy most consumers. Even if it were a fit for some of the tracks, Apple is all about maintaining simplicity in the price structure.
I do not believe that the a universal rent vs own question is behind the relative lack of success of subscription models. There are people that are fine with not owning. Unfortunately, the majority of those people are also fine with not renting, but rather getting their music from the radio. Of the people that are willing to spend $10+ a month on music, it seems that a large majority of those prefer to own. For those that are willing to rent, at least a portion are spending their entire monthly music budget on subscription. So what if the store in question does not have all the music you want to hear? There are several genres that are not well represented (classical, jazz, experimental, electronic, etc). On the other end of the spectrum are people that spend a lot on music each month. They are more than likely to have a very wide range of musical interests and I doubt that any store that is based mostly on major labels is going to satisfy their tastes. More importantly, this group more than likely are collectors, so owning is probably pretty important to them. Basically, I think that subscriptions have a more limited appeal than the labels think.
…but as many have pointed out, a subscription service on iTS does not preclude the current model. The DRM issues seem like they could be a deal breakers, though, since Apple would like to move away from that. The other option, I guess, is streaming, which does not seem a satisfactory option.
you forgot #6. Go to jail for copyright infringement for selling music you don’t a mechanical license for.
Been there, done that.
With the money I’ll move to Switzerland or cruise the world on yacht , ha-ha.
But I like what artists do, so I won’t.
If Apple is actually working a “subscription” model, it will be for video. Netflix (and copycat Blockbusters) has a popular monthly fee for X number of movies at a time by mail model for rental. Apple could do something similar, except do it 100% online.
Apple business model for music is already working, with great customer satisfaction. There is no need to add a subscription option.
Are any of the current subscription services making any money? If subscriptions are so great for the consumer, how come everybody isn’t flocking to them? Yahoo! Music, BTW, just raised its subscription price. That’ll help.
Seems to me the music exec are trying to do what is done in other internet businesses–its called parity. If they (the music execs) can get the biggest and baddest on the block to join the lame ass subcription idea, this would put them back in charge because now there is no difference between ITMS and the lame ass subscription. Now as soon as they let us rent movies, I will be one happy camper
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