“Reports that Apple is discussing an ‘all-you-can-eat’ subscription music service with major record labels are overblown, say people in a position to know,” Arik Hesseldahl reports.
“According to a story in the Financial Times, Apple would charge enough for iPod and iPhone devices to cover the cost of licensing entire music collections. It would use that premium to create a pool of revenue, a portion of which would be divided among the major music labels, the newspaper said,” Hesseldahl reports.
“Trouble is, no such talks are under way, according to people familiar with Apple’s plans. An Apple spokesperson declined to comment. Insiders at major music labels were similarly dismissive. One person familiar with the matter said the idea of subscription plan has been “kicked around” for about a year, but said there have been “no meaningful discussions” on the subject,” Hesseldahl reports.
Hesseldahl thinks that “giving customers access to the entire iTunes catalog in exchange for a premium on iPod music players isn’t a bad idea—and it’s one Apple may need to consider,” because “growth in sales of the iPod is slowing. Despite having sold a record 22.1 million units in the quarter ended Dec. 29, the year-on-year growth rate was 5%, compared with 50% a year earlier. A new iTunes business model might appeal to a new batch of customers who have passed on the iPod-iTunes combo as currently offered.”
Full article here.
iPod sales might be slowing, but what Hesseldahl fails to even mention is that the old “iPod” is the walking dead. Apple is currently transitioning the old iPod model to an OS X-based, multi-touch-capable mobile WiFi platform. iPod touch. Higher margins from a vastly more capable device. While Apple may see a dip in the number of units sold year-over-year during the early stages of the transition (which hasn’t yet happened, by the way), the company is paving the way towards owning the mobile computing market while reaping strong margins along the way. People who fixate on iPod unit sales numbers are missing the real story.
As for Apple offering “all-you-cat-eat” iTunes service, 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.
As we’ve said all along about subscriptions, “Apple should offer it – if it makes business sense.”