“Apple Inc. Chief Executive Steve Jobs indicated on Wednesday he is unlikely to give in to calls from the music industry to add a subscription-based model to Apple’s wildly popular iTunes online music store,” Duncan Martell reports for Reuters.
“‘Never say never, but customers don’t seem to be interested in it,’ Jobs told Reuters in an interview after Apple reported blow-out quarterly results. ‘The subscription model has failed so far.’ His comments come as the company he co-founded gears up for contract renewal negotiations with the major record labels over the next month,” Martell reports.
“Since Apple launched iTunes in 2003, it has sold more than 2.5 billion songs and now offers increasing numbers of television shows and movies,” Martell reports.
Martell reports, “Many in the music industry hope iTunes will ultimately start, in effect, renting music online, so record companies can make more money from recurring income. But Jobs said he had seen little consumer demand for that. ‘People want to own their music,’ he said.”
Full article here.
We’ll reiterate a recent Take on this subject: Business models that fly in the face of human nature are doomed to failure.
Human beings like to listen to favorite songs over and over. They like to own these songs, so that they can play them over and over. They do not want to pay someone an unending monthly rate in order to be allowed to hear their favorite songs.
1,000 excellent songs costs $990 (or $1290 for DRM-free, higher-quality EMI songs) for life, but to listen to them with a $9.99/month subscription plan for 10 years would cost $1199, for 20 years it’d be $2398, $3597 for 30 years, $4796 for 40 years, and so on – and that’s not even taking inflation into account! That subscription rate is going to increase over time, but once you buy a song, you own it for life at the price at which you purchased it — your deal gets better over time, not worse.
Now, for the limited amount of people for which a music subscription service would be welcome, we say, by all means, Apple should offer it – if it makes business sense (i.e. development and operational costs are less than profit potential).
Regardless of what happens, the fact remains: The labels want subscriptions to succeed because they dream of a recurring revenue stream, not because music consumers desire such a service. We can almost hear the greedy bastards in their music cartel boardrooms, “If only we could get them on subscription plans, if only we could get them on subscription plans…” Dreams of easy cash do not a successful business model make.
One more time: Business models that fly in the face of human nature are doomed to failure.
Now, for TV shows and movies, a subscription service makes perfect sense because it better fits the way people consume those types of content than does outright purchasing. Not to mention, where do you store all of that content that you own, but are only going to watch once or twice? Most people can count that number of movies they’ve watched three or more times on their fingers.
We want to buy our music and subscribe to a TV shows and movies plan via Apple’s iTunes Store.