Analyst: Apple has good reasons to reject music subscriptions on iTunes Store

Apple Store“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

45 Comments

  1. 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

  2. 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.

  3. 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.

  4. 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

  5. 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.

  6. 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.

  7. 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

  8. 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.

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