Subscription Model Killing iTunes? Yawn.

by Hadley Stern Feb 03, 2005

With yellow bottle caps making their way across the country and fairly awful SuperBowl ads showing up online it’s easy to think that iTunes is nigh unstoppable. In fact, with 70% of the market and over 250 million songs sold it is hard to argue otherwise. Still there are a group of folks that honestly believe the marginalization of iTunes is just around the corner.

This is not an entirely new phenomenon. When a competitor rolled out their Tommy Lee ads and cut rate pricing many folks assumed that iTunes was going to get hammered. When Wal-Mart started offering cheaper downloads plenty of industry observers thought that people would opt for Wal-Mart’s catalogue even if the process were as unpleasant as going to an actual Wal-Mart. In fact the number of companies that have tried to take a chunk of digital music downloads away from iTunes and failed has more than a few recognizable names. A great example is Sony. Got the big name, did the cross promotion with McDonalds and then�flopped. Of course all these places were attempting to do exactly the same thing as Apple: sell songs one at a time for reasonable price. Therefore it is small wonder that these efforts failed to gain any real traction, you don’t gain market share by “me tooing” already happy customers.

This time, the industry is sure, the outcome will be different. Instead of going the “me too” route they are coming armed with a subscription model (cue scary music). The idea being that you pay a monthly fee and get to listen to unlimited music of your choosing. You can immediately see the appeal to the people selling the subscriptions: a steady monthly income and low maintenance clients. There is also, so the industry would have you believe, a huge benefit to consumers. That benefit, as previously mentioned, is being able to download all the music your bandwidth can handle for one monthly fee. When the subscription model really gets rolling presumably you’ll be able to play the songs on your digital music players and perform a variety of other useful machinations with your rented music.

I’ll admit this has some allure. Imagine you’re half drunk in front of your computer one bleary Friday evening and decide you want The Complete U2. You blearily hit the “buy album” button in iTunes and awake the next morning to find that the inside of your mouth tastes like something you’d put rubber gloves on to touch and that you’re $150 poorer. On the bright side you do own a whole bunch of decidedly average pop music. With the subscription based model you wouldn’t have that worry. Any drunken downloads don’t add to the cost of the service, you just keep paying your monthly fee and everything stays the same. The other tidbit the industry types like to point out is the cost issue. The will earnestly tell you that it will cost $5,000 to fill your 20GB with legally downloaded music from iTunes whereas a for a small monthly fee they’ll keep your device full.

For all the supposed virtues and money savings to be had by going with a subscription I don’t think iTunes will suffer too badly once the subscription model matures. First off you have the monthly obligation. Sure it won’t bother a lot of people but one more bill is something I can do without. More importantly you don’t own the music. That means if times become tight and you stop paying for the subscription the music stops playing, you only keep the fond memories. But the biggest thing that is going to hold the subscription service back is iPod compatibility. None of the places running headlong towards the subscription model plays with the iPod and if you’re product isn’t iPod compatible you’re subscriptions are going to be next to useless to anyone who owns an iPod and the iPod, it hardly needs to be noted, is the biggest market out there. Oh, and the $5,000 dollar price tag to fill up your digital music player? Perhaps the subscription pushers should remember that most people already have a fairly substantial music collection on things called CDs. Turns out with a little effort you can store those things on your iPod so you don’t have to re purchase every piece of music you’ve ever owned. So yet another iTunes killer will come and go probably without too much fanfare or notice. On the bright side it will be interesting to see what they come up with next time.

Comments

  • I would like to see faces in ‘industry’ when Janus will be cracked and people start to fill their libraries with tens of thousands of free tracks they will OWN - something not possible with iTunes model.

    peterisp had this to say on Feb 03, 2005 Posts: 2
  • so… what you’re saying is, with the subscription model you have to pay *for the rest of your life* or you lose the ability to play the songs you’ve downloaded?

    So… if you’re 15 you’re looking at (if $15/mth and living to 85ish) maybe about $13,000. That’s okay if you’re a music junkie, but if you’re the average person who only buys 3 or 4 CDs per year AND as you grow older you buy less but still like to listen to your older ones, then subscription becomes a very expensive way to have gotten your music.

    Let’s say you are the average and download approx 100 songs (currently equivalent to 4 to 6 CDs) per year between ages 15 and 30 but then on average only 15/yr (about 1 CD) for the next 50 years, that’s a total of songs.

    From iTMS, that’s $2250.  From subscription, that’s $13000.

    I guess if you are going to sign up for subscription, you have to ask yourself how many years you will want to listen to music…
    If you are a music junkie now who buys a new CD every week, maybe it will be worth it for you… but you will be paying for it for the rest of your life.


    So, correct me if I’m wrong, but subscription sounds to me like an expensive lifetime commitment.

    Chris Howard had this to say on Feb 03, 2005 Posts: 1209
  • Excellent analysis Chris. Wish I would’ve put it that way.

    chrisseibold had this to say on Feb 03, 2005 Posts: 48
  • What happens to the songs if you dont pay the monthly fee. We know you wont be able to play them, but would the be ok if you begin paying after a lapse.

    If the Janus approach is to delete or completely disable your downloaded songs if you miss your subscription fee or stay disconnected a month (this can happen -think floods, hurricanes etc.) would you have to find and re-downloaded the songs again? For a few thousand songs this would be an onerous task. Certainly, this would be one way enforce you paying the montly fee. A Playforsure way to make you Payforsure?

    shaitan had this to say on Feb 03, 2005 Posts: 2
  • Is there a way to disable notification about new replies added? (Except this - leaving a new comment with that check-box disabled smile

    peterisp had this to say on Feb 03, 2005 Posts: 2
  • It seems to me that it’s about freedom and control. Is the music you have yours, or does it still belong to the record companies or the band? I’ve always thought that the music was mine and the record companies have thought so, too; that’s why they’ve been pushing us to buy LPs, EPs, tapes, box sets, CDs, DVDs, and so on. Now they want to rent the same stuff they’ve been selling all these years? Screw that. Now maybe this rental concept will work in Europe. I’m seeing a big crash and burn here in the U.S.  Music is a personal thing, not a undifferentiated homogenized commodity like power or light, and the concept of taking away your music is a personal violation and invasion.

    Aurora had this to say on Feb 03, 2005 Posts: 3
  • I would pay for a subscription in conjunction with an AirPort Express. Not to own any music but to be able to stream any album at any time wanted. Like radio but with better quality and complete control over what I listen to.

    Combined with Imixes it could be a hit, at least among some people. 

    Gabe had this to say on Feb 03, 2005 Posts: 1
  • Isn’t this the same old arguement of “Renting vs. Owning”?

    At the end of the deal, I have nothing.

    I’d rather own something. Sure formats change. But that is the way of the beast. All my cassettes are proof of that. But at least I still have them, and players that play them. If I had “rented” them I’d have nothing. I like pulling some of my records out every now and then and look at the ARTWORK, and listen to “hicks & pops” it shows my kids how far we have come. Thank goodness I didn’t rent all my music back then!!

    I’d have nothing…

    wecrosscreek had this to say on Feb 03, 2005 Posts: 1
  • Having just heard about the Napster slogan, if I was Apple, Id’ be the one’s saying “Do the math”

    Chris Howard had this to say on Feb 03, 2005 Posts: 1209
  • Or let’s look at it another way… 6 CDs per year at iTMS = $60.  At Napster $180

    Chris Howard had this to say on Feb 03, 2005 Posts: 1209
  • I see no reason why Apple couldn’t offer both pay structures in the future.  It need not be either/or.  Songs songs are the type you simply want to rent. Others you wish to own.

    $15 a month is too much.  Although I pay $18 for netflix I find the value is much higher personally.

    hmurchison had this to say on Feb 03, 2005 Posts: 145
  • For sure there needs to be a way to listen to songs you don’t want to own, but it’s called radio, not subscriptions. Apple has the ability to reinvent and reinvigorate both radio and peer-to-peer, potentially turning every copy of iTunes into a licensed narrowcast station. Give me the ability to turn these into podcasts for my iPods and subscription is dead as a dodo.

    Robert Sharl had this to say on Feb 04, 2005 Posts: 1
  • I completely agree with hmurchison. I know it’s very American to believe there must be one and only one winner in every contest, but it seems to me a no-brainer that pay-per-download and subscription models can coexist happily side by side, just as they do in many other markets from video to automobiles to living quarters. The “Rent versus Own” argument misses the fact that there are times in one’s life when it makes more sense to rent, and other times when it makes more sense to own - for whatever reason: finance, convenience, etc. Hence, I don’t see too many college kids buying houses, and I know don’t anyone who hasn’t rented a movie.

    I don’t need to own every single track I hear, and quite the opposite. I use several subscription services to get turned onto new music, and use the iTMS to purchase the cream of the crop when funds allow. If the iTMS offered a subscription service, all the easier - I would quite happily use both methods.

    Radio is a good idea, too - but it’s still broadcast-model technology. I would much rather have the option to seek out new artists and give them a ‘test drive’ myself rather than trust some third-party DJ or playlist to have too much insight into my wacky and eclectic musical taste.

    barb dybwad had this to say on Feb 06, 2005 Posts: 1
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