Paying $1 per song on iTunes is starting to get old. And Apple knows it. It made sense to start with something simple to establish the legal digital music market. But now consumers are ready for more sophisticated offerings. That is why Apple is exploring ways to bundle an unlimited amount of music into the iPod/iPhone, according to the Financial Times.
The two options are either to charge maybe $100 more for an iPod and split the extra amount with the music labels, or charge a monthly subscription fee (which would work only for the iPhone at this point). Adding $100 to the price of an iPod and shipping it pre-loaded with music and the ability to access any song on iTunes would definitely keep the iPod money machine chugging along for Apple. But would the music labels go for it? That is the equivalent of only ten full-length albums on iTunes at today’s prices. I’d pay more than that for an iPod that comes with as much music as I can ever listen to. I’d pay maybe as much as $200 above the price of an iPod, which starts at $50 for the Shuffle and goes up to $500 for an iPhone or top-of-the-line iPod Touch.
But would the music labels go for it? Most people don’t buy ten albums a year, and people will upgrade their iPods every few years. Every time they do, they will presumably have to fork over another $100 or $200 for the unlimited music option. The question is, how often will people upgrade and what percentage of the extra price will Apple share with the music companies? Nokia is offering the music labels $80 per cell phone for a similar unlimited music service, but Apple is reportedly only offering $20. If that’s true, I don’t see the music labels signing on.
The other option is to go the subscription route. That would probably come to about $7 or $8 per month for the iPhone, and would be added to your monthly bill. At that price, it would take a little over a year to recoup the $100, and then everything beyond that is gravy. A recurring revenue model is much more attractive to the music labels, but paying once up front is more attractive to consumers (at least so far).
If the iPod/iPhone came with unlimited music it would create an even stronger bond between Apple and its consumers. It would turn iTunes into a true universal jukebox that people would connect to on a constant basis to update their playlist, discover new music, and treat as an online radio. It would become a daily habit instead of the place you go to on the odd occasion when you actually want to buy music (something that is happening less and less these days with the proliferation of free music elsewhere). Bands would then use iTunes to connect with fans much like they do today on MySpace or iLike, and Apple would be able to insert itself even deeper into the lives of its customers.
That would be worth a lot more than whatever extra margin it can squeeze out of the music companies.
Where is the option for I wouldn’t buy an iPod with unlimited music? I want to own my music not to be renting it from the record labels.
Interesting one. The one-off fee idea would probably appeal more to consumers, but with Apple’s fairly short product lifespan it might work out almost as profitable as a subscription-based model.
Say people upgrade their iPods every two years (no idea if this is accurate) - $200 every two years is equivalent to about $8 a month subscription.
Personally I wouldn’t go for it, but then I buy far more than ten albums a year and I’m old-fashioned enough to like CDs and the buying ritual that goes with them.
So where’s the incentive for Apple to keep iTunes up to date?
It’s bad enough at the moment - the UK iTunes is hugely ignored in favour of the American market - we’re expected to buy iPods for more money, but iTunes doesn’t let us buy movies, rent movies, or even develop apps for the iPhone! The range of TV shows is awful! Why?
iTunes is a nasty app anyway. Once the EU have stomped on that lockin and forced Apple to open iTunes to other stores, we’ll all be a lot happier.
Go EU!
I think the monthly fee option is probably the more likely one that will be adapted by Apple. It seems easier to implement as well as offer a steady discernible income to the record labels.
$100 tacked on to the price tag would be great, but I don’t see it happening.
I pay $35/year for Pandora (early on because I thought it was so cool that they deserved my money, but now I think they might make more from the CPM advertising, but oh well).
So… to make that mobile is worth $65, sure. Pandora’s recurring, true, but I can’t lose it, and I’ve already lost a Shuffle this month… so there you have it.
I’d rather see Apple suck it up and take that $100 and put it into hardware that can run Flash, then I’d HAVE Pandora mobile.
I just can’t see Apple doing this at all. There is no reason for them to do this. They have now moved to the number two spot for retail distribution, why would they cut away all that passive income by going an all-in package. It just doesn’t make any sense to me and I don’t think that is very Apple like.
Best idea they EVER had….. BRILLIANT!!
Your poll needs a $0 or a “less than $5 / month” option.
hmmmm…looks like apple seriously needs money before recession hits hard.
http://www.sweetsted.com/
I ditched my Ipod years ago for Rhapsody. All you can eat music music makes a lot more sense than a la carte.
Err Nokia is doing this with ‘Comes With Music’ which is coming sometime late this summer… The move to a subscription model seems inevitable.
The service should be a monthly subscription where you can dowload as much as you want but you don’t ‘own’ the music. If you think about the cost of a monthly subscription, it doesn’t make sense for someone who may only download a ‘baseline’ collection of music and then not really download new music regularly. Over time, they would pay more for that music then if they would have just bought it and ended up owning it. For someone like me who downloads new music everyday, keeps a regularly updated ‘baseline’ and then keeps a good amount of music I’m purely ‘checking out’, a subscription saves me tons of money.
Personally I am a Zune user and they do have a pass subscription service. I LOVE my Zune pass that I’ve had for 4 months now - $14.99 a month for unlimited downloads. There are surely drawbacks to a subscription model but they are far outweighed by the fact that I can, at any time, go find a new artist or song that I wanted to hear and get it right away, on my computer and Zune without spending money. The monthly fee is small compared to the benefits I get by having music at my fingertips. Plus, one subscription can be used on three computers and two zune’s so you get even more bang for your buck. I can live without the option to burn a CD of the music or ‘own it’ and take it with me to other players and devices.
Interesting concept. I think I’d pay the $100 if this same plan was offered on iphone. With the iphone, I don’t carry my ipod anymore. Too many gadgets!
Wonder how the pricing scheme between Apple and the studios would go, since paying them a flat rate would completely destroy any incentive to improve or even produce more music/new artists then necessary. A flat rate would mean a dark age for the music industry and they would never go for it.
I would never subscribe to a monthly music service, for two reasons:
1. As soon as you stop paying, your music is gone. Thanks, but no. I have enough bills, I don’t need another one.
2. You can’t have a subscription service without DRM, to enable the above. That’s backwards progress, since Apple has already started the no-DRM movement.
I might be willing to pay an extra $100 or something for an iPod that comes with unlimited downloads, but they need to continue selling iPods without music, because I don’t want to get dinged with that fee every time.
Sticking with the current system, I think, is the best option. Otherwise I’ll start buying my music, 100% unencumbered, from Amazon.
I see (and understand) the assumptions, but is there any indication that the up-front payment scheme necessarily means the music will be rented? I would pay no more than $25 a year for a service where I don’t own the music if i decide to terminate my subscription. I would easily pay $100 a device to have unlimited, perpetual, access to songs.
I own 4 ipods and an AppleTV. If I buy a $1 song today, it is legally playable on all of these devices at no additional charge. How does it benefit me to pay an additional $100 per device?
Hi,
How is it possible to write for the premier tech. blog and not know about Nokia’s “Comes with Music” and Omnifone’s “Musicstation” -both by companies that aren’t U.S.-based, and for markets that are far in advance of it.
Yours kindly,
Shakir Razak
I have been waiting for this model since the early days of Napster. Problem will end up being music labels are to greedy.
As a previous poster mentioned, there will have to be some incentive to keep Apple updating iTunes which the monthly subscription would provide - they stop updating, people stop paying.
I would be happy to pay $5 a month for legal music downloads.
I’d be willing to bet that Apple already did a survey like this. That’s probably where the two options came from.
I have a hard time justifying a monthly music subscription without actually getting to own anything. I like having a music library. I suppose I wouldn’t be as bothered by a subscription to their video catalog though, because it’d probably be cheaper than cable, and I typically don’t re-watch tv shows.
Get a Zune
Wow! This is the greatest idea ever. How come no one has ever thought of a music subscription service before?
Oh, wait…
Never worked in the past, doesn’t work now, won’t work in the future.
I smell a rat in all this - Apple has historically said that subscription models don’t work and that people want to own their music. I reckon the music industry have intentionally leaked these “talks” when all it amounts to is the music industry saying to Apple “hey, charge $x amount more for your iPods and give us the money”.
If would expect Apple’s response to be something like “er, how about no?”
I would have voted on the poll if you had a $0 option.
I wouldn’t pay apple anything. But I wold pay Last.fm
– Paying $1 per song on iTunes is starting to get old. –
Not for me. And seeing how iTunes is #2 and closing on #1 Walmart it doesn’t appear to be getting old to very many.
I’m with Alex. The Apple message has been own - good, DRM - bad. To see them switch course to advocate DRM-laden renting after crushing the people in that space seems unlikely. Damn, even Napster went looking for a new business model.
But, maybe Apple figures the fanboys will snap into line once Steve says, “annoucing the next revolution. you rent movies, now, with itunes you can rent music”
Normally people might not buy 10 albums a year. I’ll bet you their music uptake will triple at least if it becomes ‘free’. They’ll just start downloading anything which they take a fancy to, simply because it’s free.
So Apple spent all this time telling us how great DRM free music is. And now they want to go to a subscription model that will inevitably make all of their music have DRM again? Crazy stuff.
Quick survey of the office here was a resounding YES, even for £100 or £5-10/month. The one off fee makes most sense for the consumer, but the subscription model is the way to go to secure the future of music production.
Not that I own an iPod (and never will), but I’d sign up to a similar less restrictive program with someone else.
I’ve been happy with the Rhapsody model for a few years now. Honestly I don’t see Apply luring me away at this point (my Sansa works great w/Rhapsody). Half the appeal for me is the streaming music since I listen far more at my desk than away from it. I’m sure Rhapsody doesn’t make great financial sense for many but I was buying CDs at a rate of 2-5 per week so I think I’ve saved using Rhapsody over all. Now if they just got EVERYTHING it would be perfect.
What is this rent’a'mp3
As others have mentioned you should include an option for $0 or Not interested in an Ipod with unlimited music. Thats got my vote.
Apple could benefit immensely from adopting Rhapsody’s subscription model. As a longtime Rhapsody customer, I can not only download all the songs I’m interested in, I can also post my playlists on social networking sites for others to listen. It really goes along with the ubiquitous or cloud computing model.
BTW - when is Real.com going to merge with Netflix. It makes perfect sense to me.
I didn’t know people still bought entire albums, i only buy single songs and no more than 2-3 per album. $100 sounds reasonable but not sure if i really bought more than 100 songs last year or not. If i have to fork over another $100-$200 every time i change phones, i’d rather just keep paying the $0.99/song and have full ownership and portability - especially now that iTunes offer some DRM free music…
Subscription: For me, nah. I agree with Steve Jobs. I want to own my music. The upfront cost - either at the point-of-sale or monthly would appeal to me if it means I can keep and USE the songs as I please i.e. own it and DRM-free.
Wow - unlimited music for an upfront cost? It sounds too good to be true which is most likely showing that it WON’T come true. Record labels are already still reeling from the losses of piracy on the net, so going for such an idea probably will not fly and the subscription idea won’t appeal to consumers most likely.
I’ve been an eMusic customer for over a year now and it’s great. You have to subscribe, but prices are low, music is DRM free and you own it. I can move the music to any computer without bothering with validation or worrying about a 5 computer limit, move it to a Nokia N800 and edit tracks to make ringtones etc.
Any plan where the music is gone when I stop paying is pointless unless the cost is extremely low. Unless you want to pay $10/month for the next 40 years to have access to music it’s pointless. There’s too much instability in the market to bank on these “rental” services lasting. I would vote for $5 or less a month, but I think there should be options to purchase drm free tracks as well at a fair (discounted) rate if you subscribe.
People that must have the newest ipod/iphone will want a monthly subscription model (perhaps you would prepay per year). They don’t want to be discouraged from buying the newest device. When you sign a two year contract with Cingular you should be able to buy a 2 year unlimited license that equals the monthly unltd music fee x 24 months less 20%. I don’t think it makes much sense for apple to offer a lifetime license. This puts a clear market cap on the music industry. There are already enough iPhones in production that millions of people could pay a nominal fee to unlock unlimited music forever. These could be used forever to avoid paying more for music and would essentially take those people out of the market for quite some time.
The labels will go for it just as they have with other subscription based music services. But will the consumers go for it? Personally I like the idea of being able to listen to any song on demand simply to learn about new music. I use last.fm and pandora for this purpose. I also like the idea of owning a vault of high quality music that no one else can control…ever. I believe people will be hesitant to abandon their prized music collections. Additionally most digital music owners are avid pirates. Apple must agree with this theory because very few people could legally fill a 160gb iPod or even a 32 gb ipod for that matter. If it becomes a true pain in the ass to steal then maybe this could be an ideal alternative.
I have no doubt that this will be the case with movies at home. VOD will become the new model and people will not care about their silly DVD collections anymore. Music, however is far more portable. We bring it to our home stereo, our car etc… Also, many are experts at obtaining whatever songs they want and toting them wherever they want with or without paying.
it depends i might pay 100 more on a 160 gb ipod but for a nano or touch with only 8 to 32 gb hell no.
Don’t really like paying monthly subscriptions no matter what the price is, i dont like renting stuff. if i cancel i will have to start over again but with the 100 dollars i would already be including that in the purchase price so yes for 100 extra no for subscription
$50 over
I would do it
Why does everyone have the notion that subscription means DRM? If the music industry is willing to allow $5 P2P (which assumably has no DRM), then is it so far off that Apple could provide an $8 subscription without DRM, as well? It sounds like most of the commenters are so entrenched in the idea of per-unit pricing that they are missing the larger possibility of a per-service pricing model. Because of P2P and illegal music, the effective price-per-track of internet-distributed music is probably less than $.01 per track. The music industry realizes this and now is more willing to consider a service-pricing model. This opens the possibility of a $8/month DRM-free service.
The problem for Apple is that iTunes really does not provide enough value-added services over P2P to be able to compete in this new world. Furthermore, monthly subscription fees will more than likely be replaced by free, ad-supported services anyways.
This is something I’ve been thinking about for a long time.
Beyond Apple’s marketing & PR campaign that has become part of America’s cultural fabric (and beyond), none of the subscriptions services out there — Rhapsody, eMusic, Yahoo Music Unlimited, etc.– have ever been able to convince people of the business model. Bottom line… it’s just confusing. Especially for a simple purchase decision.
“Huh? I pay $X/month but I can lose it? But I paid for it!? WTF?”
I would love Apple to come out with a subscription service. But to be successful, they must juice up their creative brains and succeed where nobody else has — convincing LOTS of consumers that music can be just like TV. You get what you pay for. You stop paying for cable, you stop getting cable.
Whoever wins the subscription music battle MUST deal with this fact. In my opinion, Apple is the best suited to explain this tangled issue in the most simple terms.
Thoughts?
I used to subscribe to Rhapsody, but gave it up when I needed to minimize expenses.
Now that money is less tight, I’ve been thinking of getting a Slacker.com player.
The difference is that it’s the “radio” model — you’re listening to a channel either of a specific genre (Bebop Jazz, Techno, Country…) or a channel built around a specific set of musicians (either you pick them all or you pick a few and they supply the rest, pandora-style).
This is great for people like me that want to find new music, but don’t want to have to dig for it — gee, Apples In Stereo is on the Shins channel? Cool, haven’t heard them, they sound good.
This is $200/250/300 for the player (depending on number of channels) and then free for the music content (with a few ads per hour).
The downside is that it is the “radio” model — you can’t choose which song to listen to, only the channel. It’s better than “real” radio in that you can skip a few songs per hour, and ban songs or artists from ever showing up again.
Still can’t decide whether to get it or not
Paying anything for music is such a barrier to entry in discovering new music. There is no way i would spend hundreds of dollars to own the latest and greatest, completely ridiculous! This, like everything else apple does, will work and it will become a complete social sea change for our culture.
“I smell a rat in all this - Apple has historically said that subscription models don’t work and that people want to own their music.”
Well, Apple (and Apple fans) continually derided Intel/X86 technology, claiming it was inferior and they were faster with the powerpc arch and all that, then suddenly they switched. Apple does whatever the hell they want, backtracking whenever it suits them, and they basically get a free pass from 95% of the users out there.
I think this is a terrible idea for the music industry as a whole. I think you’re asking for a lot of chaos within a chaotic industry if artists, writers and publishers all want to get paid. Would Apple be able to show download results for each and every artist?
If the record labels really cared about the music industry, they would not open discussions with Apple until DRM was resolved. It’s pretty bad times when the two dominating forces in the music business landscape do not even give a rat’s ass about the artists that are trying to make a living.
this makes great sense for Apple simply because the average iTunes user does not buy that many different tunes and a year’s subscription revenue at $10/month would easily outstrip the revenue they’re currently getting from iTunes. Like most people reading this post, I currently pirate most of my songs off the internet and it’s inconvenient, but i cannot afford $2000 to buy all my tunes on itunes and few of us do. A subscription model would be much more affordable and more convenient.
Look at Rhapsody, while apple tries to make a fortress around their own world, Rhapsody works well.
If you like to use new music and don’t want it forever, idea of buying all that music is pretty silly. Obviously works for stuff you always leave on your ipod. In addition, if you have any kids and don’t want to spend many dollars on music they will listen to for 4 months it is also good deal.
Also, Rhapsody lets you have 3 devices for 15/mth, so it is pretty cheap. Anyway, while apple tries to make cool little devices, I’m just worrying about what new music I’d like to listen to as affordably as I can.
But, question, can you dare not to have an IPOD? Sounds the same to me when I have tried both.