“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.
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.
An additional $80 to access the ENTIRE library? Do I get to keep the music that I download?
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.)
@R
Is that you Rip?
Edgecliffe-Johnson…..isn’t he from near Peter’s Canyon?
Sounds like an absolutely shit deal for musicians. What, for example, would a musician’s 0.000000001% share of @20 buy? A couple of milliseconds of studio time? A few bytes of music software?
Ummm, that should read “$20”, not “@20”.
@Des Gusting,
Agreed..
Of course, like MDN said, we need more details.. But I sure hope this isn’t Apple grasping at straws trying to keep iPod numbers up..
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.
It’s the Celestial Jukebox at last. Crazy s-o-b is really gonna do it.
“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
Sounds like choice
All you can eat
subscription,
purchase
I don’t see how this could work. How exactly would the record labels make more money this way?
@TowerTone: LOL!
Better check for patent infringements first…
why are they visiting this rental model again? it has never worked.
as for the entire library of music, sounds good, but who gets payed with a scheme like this? how are musicians compensated? additionally, does driving up the price of an ipod by 80.00 ( ie. nokia) make sense to Apple when they create a new device? $320 instead of $240, $129 instead of $49? And how do you account for families with multiple ipods? Will there be a special serial number that makes itunes access a whole library only if the new device is in or will Apple charge its customers the $80 or $20 additional due to the infamous “ACCOUNTING RULES,” to get everyone up to speed?
Interesting.
I’d pay so that I could stop the rap-crap and hip hop rubbish that might be included.
hmmm…if I spend 80 bucks buying 80 songs and then drop my iPhone in a bathtub, I still have my 80 songs. If I spend $80 (added to the price of my iPhone) and lose the phone, what do I have…besides a big hole in my wall that will also need to be fixed?
The article says Apple “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,”
Why the iPhone only subscriptions? I have a Netflix subscription that has no hardware tie in and they seem to be able to get my money just fine. They have my payment info and each month they deduct the subscription amount. Apple could do the same. They already have my payment info for iTunes purchases as it is.
This is rubbish.
It WONT work – music isnt a ‘commodity’ like pork bellies or orange juice – its much more personal and comes in many different packages and delivery systems.
The music biz hit the high point of their existence a while back – its all downhill for them from here. Their model is dead/dying.
Also, in case anyone hadnt noticed, there is a limited number of songs/melodies that can be used before we get blatant plagiarism of music (actually thats already happening).
Music is limited, and eventually will decline somewhat.
Listening to music is at a peak – in the 1950’s people simply didnt listen to as much music as they do today.
There is so much of it out there, especially if you have any friends(!), you could listen to a ton of stuff without ever buying or downloading any more at all.
Families are a great source of music – kids can play their parents CD’s or even records. No sale for the music biz there.
Anyway, no matter what the biz model, the iPod will be the player to listen to it on.
Why should Apple care if music is sold in different ways – what you going to play it on – a zune?
Didnt think so.
$20 per iPhone & iPod touch for unlimited tunes for the device’s life. I’d buy that. The Labels get $20 X 20 million sold per year = $400 million, very conservatively speaking. It would probably be closer to $1 Billion per year.
As far as I know artists get nothing on rentals or radio play. Not in their contracts.
@ bollocks
Loads of good points. What is missing is how to hear new music.
Point in case. I’m bored with my current library. I would like to hear / explore new stuff. Most CDs that I buy have few good songs on them. I want to be able to hear new music and buy stuff I like.
Best place to hear is the radio. But most stations plays the same stuff all the time. Even the new music alternative stations plays stuff I know and heard of.
HD tagging obviously make sense, but it has to go hand in hand with stations playing new music not just the same stuff for years.
There are thousand of songs that I would like. I just need the right medium to hear them. iTunes / streaming / tagging makes the best approach to provide open access to new music.
“As far as I know artists get nothing on rentals or radio play. Not in their contracts.”
————
That is completely false. An artist gets paid EVERY SINGLE TIME their song is played on the radio, television, cable, etc.. Of course, that is assuming that the artist wrote the song and has not sold off their publishing rights.
The song play activity is tracked by BMI and ASCAP, which in turn collect the money for the artist and pay them their royalties quarterly.
@ MikeK
I beleive Big Al is half right. The artists do not get paid for rentals nor ring tones. This fight is just getting started.
Des Gusting’s comment is right on: subscription music is a bad deal for the artists.
iTunes pays the artist 70 cents of each 99-cent download. The subscription models pay 1 cent per downstream or 2 cents per download. I would have to get 70 times the subscription listeners to equal Apple’s royalty.
Jim Swan
“None-Too-Great Hits”