Apple’s Steve Jobs, perhaps the most important person in the music industry today, says again that Apple is not planning on selling music via a subscription model like many of his competitors.
The strategy certainly makes sense as long as as Jobs continues to win territory in his war against DRM, and the subscription music services fail to lure a critical mass of consumers.
More than 2.5 billion songs have now been purchased from iTunes and they control 85% or so of the download music market. DRM free songs on iTunes cost 30 cents more, almost certainly creating greater margin for Apple per song.
The subscription music services are highly competitive, leaving little profit for the providers. As long as Apple can keep selling tracks for a dollar or more per track, they’ll resist entering this market.
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Apple is making a lot of money, but is beginnig to lose a lot of their good image… and for the future this is very bad!
It’s not necessary to own something in order to access it. I’ve stopped buying DVDs thanks to services like Netflix. With the Apple model, the best you can do is 2,000 songs in your pocket. With a subscription model, you can have 2,000,000 songs in your pocket.
What a load of old rubbish:
> Apple is making a lot of money, but is beginning to lose a lot of their good image.
Says you. I say different and apparently so do the customers that made their last quarter a record one.
> It’s not necessary to own something in order to access it. I’ve stopped
> buying DVDs thanks to services like Netflix.
but how many times do you watch a movie (assuming you’re not a young child or Rain Man)?
Music is different. I have 6000 tracks and I don’t think I’ve listened to any more than 1000 of them in the past 6 months. People like to listen to stuff they like over and over. So you can have 2 million songs, but there are only half a million minutes in the year so, assuming each song is 3mins long it’s going to take you 12 years to listen to all that (maybe you’ll need to eat, sleep, bathe and work also).
Apple can afford to appear magnanimous about music sales and the music industry. They make profits by selling iPods for high prices at high margins. Margins on music retail are always low, and as long as roughly ITMS breaks even, they don’t really care.
I wonder if ITMS has its own marketing budget, or does it piggyback on the iPod marketing budget?
“Steve Jobs, perhaps the most important person in the music industry today”
While he may be notable, he is a small insignificant part of it. Please put down the apple cob pipe.
I wonder if - ITMS needs a marketing budget - when buying an Ipod - it almost automatic you will be using Itunes
- Oh wait, isn’t it almost impossible not to use itunes (atleast for uploading content to Ipod?)
- Oh wait again , isnt that kinda monopolistic? …hmmmm
Hmm… i’d sign up for a iTunes subscription service in a heartbeat. I guess i’n not a person.
Who cares about owning the actual mp3 files, I just want to be able to listen to them. I’ve never purchased anything on iTunes because I don’t feel like paying $1 per track.
But if I could pay $10 a month and listen to anything I wanted and download all I want… I would.
Forgot to mention in my above post that I am an iPod owner (I own multiple) and an Apple user. I know there are other services out there that let you rent music, but i’m not going to switch from the iPod to do so.
I subscribe to Yahoo’s Music Engine. Count me in to the crowd that would sign up for a subscription-based iTunes in a heartbeat. I think Mr. Jobs is wrong on this subject. I love being able to put on one of the YME radio stations (”80’s rock” station any one?) while I’m at work and not have to worry about listening to the same songs over and over that I’ve purchased at iTunes. Heck, I can’t even count the number of times I’ve made a purchase at iTunes after I’ve heard a song on YME.
Give me all I can get with YME plus the ability to add the tracks to my Nano and I’ll be one happy boy!
I have a Rhapsody account. I’ve had it for quite some time now.
I agree w/ no rentals for music - but movies, on the other hand…
It really upsets me when people say that renting music is BAD and they don’t want it. FINE, but what’s wrong with offering it as an option to those of us who don’t care? I couldn’t care less about “owning” my music. Nor do I care that I wouldn’t have access to my music anymore if I stopped subscribing, because I *wouldn’t* stop subscribing. I don’t have a ton of money to blow on music, but I do have $10 or $15/month to spend on it if Apple would just let me do it.
Like another commenter, I subscribe to Yahoo Music as well, which is only $5/month. I love it, except that the program itself is pretty crappy, and of course I can’t put the music on the ‘pod. Apple would have my business no question, if only they wanted it.
Steve Job’s fight against DRM seems just to be a media spinner to me.
We have seen very little action and when Steve was asked about DRM in video he said it is a different model and can’t go without DRM. He pretty much has the power at Disney to remove DRM if he really wanted.
I could be wrong but it seems like the only reason Jobs said this is because EMI wanted DRM free music:
http://www.webtvwire.com/apple.....downloads/
So he just comes out and says he doesn’t like DRM, complies with EMI to remove DRM, and doesn’t look like the bad guy.
Just a crazy theory of mine but worth thinking about.
Job will probably have to change his tune on this.
To violate the first rule of market analysis (never view the world from your own shoes), I have 11,000 songs on a NAS, and it’s easier for me to listen to the same music via Rhapsody. And I can discover new music on Rhapsody, more easily (and enjoyably) than I can with iTunes. But Rhapsody still has a couple of gaps:
* Some music is missing, mostly brand new stuff and a bit from hold-out artists and labels. That’s OK, I can fill in the gaps.
* A solid and well-integrated portable player (Sansa reviews were poor). This is more of a pain, but someone will get it right soon.
Anyway, Didn’t Jobs take the buttons off the iPhone to make it a wireless media bridge? And wouldn’t that make much more sense with a subscription service?
People want both apparently (I also like my Launch player), and are resistant to DRM-tracks. People can get non DRM music easily anyway, so they pretty much had no choice, especially today with all of the new private and encrypted file sharing apps like GigaTribe ( http://www.gigatribe.com ). $1.30/song is a bit steep though!
Nice analysis David. I agree with Jobs, but I wish Apple would rent movies instead of only selling them. I never watch a movie more than once, but Netflix is getting tiresome — especially the queue. I would prefer on-demand rentals via iTunes.
Why rent music when you can own? The average music listener over 30 has limited their music tastes to select favorites (100 tracks at most) and so renting music in the long run makes no sense for the consumer.
What gets me are people who rent and buy DVDs. Has anyone ever tried PeerFlix? And if yes, why?
The idea for even paying for music will someday go away. The record companies and the distributors of course don’t want this to happen, but it will. This system is broke. Someone needs to fix it. They need to figure out a different way to make money. Selling “records” isn’t going to work anymore. Selling them one song at a time won’t last forever.
“Why rent music when you can own?” - Well the obvious next question is Why buy music when you can get it for free?
How much do bands make from CD’s/mp3’s? Really? The record companies are the ones making the cash there. Bands have started selling them on their own and record companies are scrambling to make sure they still get their cut.
If anyone out there has any ideas as to how this can be done..I would LOVE to be part of it. Even you Mr. Arrington!
I am a music LOVER but I am NOT going to pay a buck for ONE song!
I remember back in the day when stereo’s started integrating cassette players into them and record companies were pissed because people could record the radio. And everyone did!
C’mon Mr. Arrington! Get a hold of me so we can talk about this.
I am not sure if we can post our email addresses here so I will post one that I will only use for this -
Get a hold of me at elliotgreenwood@yahoo.com
This is the start of something……………
I can see how subscription is attractive. I buy from iTunes and subscribe to Yahoo. Curiously, I almost never use Yahoo.
However, Apple *must* change its model for TV and movies. The vast majority of people watch the vast majority of TV/Movies precisely once. There is only a small handful of titles that warrant ownership. Apple has to offer movie/tv rentals.
With all due respect to all of you, I think you are not taking into consideration the economics of the business. People that need to make money:
- Artists
- Labels
- Service providers
So far Apple’s strategy has brought the $$$ home and for as pissed as the labels are iTunes provides them with a viable business if they changed some of their “expectations” and practices. I also think that Apple needs to adapt more to the needs and practices and structures of the music industry.
Now … all of these changes if the artists can make a business outside of the recording industry. What was the name of the English band that did it without a record label?
I want to own my music, but what about a subscription service that lets me own my music? eMusic is one such example.
I prefer owning my own music.
@ Jason:
What about artists that don’t necessarily perform live?
Like… alot of electronic music artists? I mean, they may DJ or something, but not all do, nor are all of them performing artists. How do they make a career out of music?
Seems so much a part of human nature to prefer ownership.
The idea that one “owns” DRM-encrypted music is ridiculous. Unless you burn the song to a CD (and lose fidelity in the process), the purchaser will only be able to listen to the music so long as iTunes keeps working and Apple doesn’t lose the keys. Somehow I doubt that will be “forever.”
Subscription services like Napster are promoted to music fans as the most cost effective way to enjoy an unlimited amount of music for a flat monthly fee. When the subscriber stops paying the monthly fee, the tracks that the subscriber has collected or bookmarked are no longer available to the user (deleted) until the user reinstates his commitment to pay the continuous fee.
There are two problems with subscription services. The first problem is this: these services may be priced to make consumers happy, but they under compensate the community that makes music. Sure, someone can probably assert a theoretical case whereby if fifty percent of the human population were using a subscription service, every decent contributing artist would make a generous living. However, this best-case scenario is based upon assumptions that are absolutely unobtainable. The reason that this scenario will never come close to realization is due to the second major problem with music subscription services.
The second serious problem with music subscription services is the failure of these services to account for the total end-user cost of obtaining a single track. The real cost of obtaining a track is not the pennies that subscription services charge, or the .99 cents that download services like iTunes charge. The real cost of obtaining a track is the value of the time it takes to discover a new track plus the purchase price of the track.
The value of the time it takes to find a new song that you like is actually more valuable to most consumers than the retail cost of the track. This explains why a far greater percentage of the population prefers to own the music they consume. The retail cost of loosing your music is one thing, but the time value of loosing the collection you amassed during so many music safaris is priceless.
It seems like the best solution to the collection-disappearance problem would be to offer a bookmarking service that enables any subscriber to easily move his song collection to any other music platform in the marketplace. After all, nobody wants their song collection inescapably tied to one company. The music subscription service providers only have to look at how phone number portability in the telecom industry has helped ease consumer concerns, as well as to drive new service activations. It should be clear that a similar service for songs would benefit everyone.
Why is it every single poster [except one] on this thread is assuming that subscription = rental?
eMusic, people! I pay $10/mo for 30 drm-free mp3’s. Bjork, Arcade Fire, Miles Davis, etc.
This is the future. All you can eat/own for a flat fee per month.
If they are smart enough to do it, the major labels will go for this eventually. The average person spends barely $50/yr on recorded music.
Who WOULDN’T go for all the music you can download for a $10/mo fee?
KISS
Jobs is a scumbag. Maczealots are like Jehowah’s Witnesses.
i sure like to buy and own my music, but it is like all those books that pile up and wonder if i can ever read them more than once. on the other hand, listening to a radio that is playing songs of my choice is obviously preferable.
pandora is my favorite. it features like allowing users to vote on the songs and create/refine the channels are awesome.
-Chris,
The “DJ’s” or anyone else who isn’t performing live needs to find other ways to generate income. They can sell their own recordings online rather than rely on record companies.
-Fabian,
Labels (record companies) need to start coming up with better ways to make money if they are going to stay in business.
Do record companies worry about people buying CD’s and then burning them and selling them? Do they worry about people borrowing their CD’s to friends and them burning their own copies? They seem to be focused on the downloading aspect while there are many ways to get the music you want and not pay for it.
Everyone is so worried about getting paid. If your main concern with making music is making money than you shouldn’t get started in this industry to begin with. The record companies and agents will make more than you.
I haven’t heard any ideas as to how we can start this revolution. Anyone?
@Jason: Why should artists have to rely on other ways to make money? That’s not fair! They SHOULD be able to make money from their creative work via their albums! Sheesh!
Subscriptions services work for some, ownership works for others. Personally I much prefer ownership. But true ownership means non-DRM music. I’ve used iTunes in the past but I’m tired of dealing with DRM issues. Until Apple makes its music DRM free I will continue using allofmp3.com.
When it comes to artists that I really love and respect, the CD is the only way to go for me.