Apple, music labels discuss ‘all-you-can-eat’ iTunes with premium-priced iPods, iPhones

“Apple is in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices,” Andrew Edgecliffe-Johnson reports for The Financial Times.

“The ‘all you can eat’ model, a replica of Nokia’s ‘comes with music’ deal with Universal Music last December, could provide the struggling recorded music industry with a much-needed fillip, and drive demand for a new generation of Apple’s hardware,” Edgecliffe-Johnson reports.

“Apple would not comment on the plan, but executives familiar with the negotiations said they hinged on a dispute over the price the computer maker would be willing to pay for access to the labels’ libraries,” Edgecliffe-Johnson reports.

“Nokia is understood to be offering almost $80 per handset to music industry partners, to be divided according to their share of the market. However, Apple has so far offered only about $20 per device, two executives said. ‘It’s who blinks first, and whether or not anyone does blink,’ one executive said,” Edgecliffe-Johnson reports.

Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales, is also understood to be examining a subscription model [which] would work only for its iPhone devices, where it has a monthly billing relationship with customers through the mobile phone operators offering the device, while the ‘comes with music’ model would work with iPhones and with iPods,” Edgecliffe-Johnson reports.

Full article here.

Obviously, we need more details, but our initial response is that if it’s optional, we’re all for it. If it’s not, meaning that everyone who buys an iPod and/or iPhone must pay the premium, regardless of whether or not they will ever listen to music from the participating labels (or even listen to music at all – believe it or not, some people use, for example, iPod touch, sans music, for things like email, surfing the ‘Net, TV shows, etc.), then we’d be markedly less enthusiastic.

45 Comments

  1. I’m personally not that big on a subscription service at the moment, but I’ve always seen the biggest hurdle as the emotional angst people have in not owning/continually paying for things that they’re used to owning. If the psychological hurdle can be overcome– which I believe to be, in part, made up of fear that the service people use will go out of business right away– music rentals have a place because it’s really not that different from subscription satellite radio. And now that the iPod touch and iPhone have access to the store without being tethered to a computer, it’s not that much different at all.

    That said, I can’t yet get myself to pay for radio either. Geez, city water bills even bother me. Who the hell put government in charge?!!

    Damn kids– get off my lawn!!!! Ahem… have a good evening. That’ll be all.

  2. I just heard that iTunes has sold something like 4 Billion songs. Made me think of that first Billion and how they gave some guy a $10,000 iTunes gift card.

    I was thinking how cool it would be to be able to download that much music…

    This would be cool.

    (PS — A similar for rentals would be killer, but I’m sure  folks know that.)

  3. Shogun – Apple announced the 4B point in Jan at MacWorld.

    I guess the number is more like 4.5 by now.

    If you do look at the rate of iTunes sales, the yearly rate has stabilized to around 2B / year. Obviously way better than anyone else, but the interesting thing is that the rate has not increased since 4/07. Note this is taking the figures and dates provided by Apple so the specific time points may be off.

    So what may be happening is that although a lot of people are buying iPods they (like me) are filling them with their existing music or buying CDs and ripping them.

    I, for one, would consider paying 80 bucks to have access to whole catalogs, IF, that is for the life of the unit. I’m getting bored of what I have, am frustrated with paying $6 or more for a CD and not liking what is on it bar one song. Whilst I would prefer higher bit rate songs (192-256) I really want to discover new music and CDs are like playing roulette. If this is a yearly fee then the offering must be broad and all my iPods and Macs should be able to access the music.

  4. “believe it or not, some people use, for example, iPod touch, sans music…:”

    My 30Gig iPod has only videos on it (I am a video producer, so it contains demo materials) and has never even had a song on it.

    My shuffle has only audio books

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