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iTunes subscription service needed for Apple to stay on top?

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By Dennis Lloyd

Publisher, iLounge
Published: Tuesday, June 1, 2004
News Categories: iTunes

“What should Apple do to stay on top? Plenty. For starters, it needs to embrace the new ways consumers want to buy music. While the iTunes store offers 99 cents downloads, Apple has yet to provide a subscription service for folks who want to listen to whatever they want for a monthly fee. To stare down a raft of new music players, Apple needs to broaden its product line. It should consider forming partnerships to add iPod technology to cell phones and other futuristic devices. And it needs to address nagging quality problems, such as scratchy-sounding headphones and disappointing battery life. While most buyers love their iPods, Apple has to hit a higher standard to keep its market share, premium prices, and good buzz it has with buyers.”

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Comments

21

Subscription is not what anyone I know wants.  We collect our music like some people collect coins or stamps.  As for “Sharecroppers” comments, while the technical may be right, that also all we paid for when we bought 8 tracks, cassettes and CDs.  Those mediums were merely packaging for transmital of the material licensed.  As for bequething them, very simple, burn them and you are set.  As for “Profits” comments, Rhapsody most likely pays a licensing fee that is equal to or greater than Apples and one loses the rights to use the service once one stops payment.  Neither is perfect but I do not want a fancy radio station.  I want a collection that I can call up and use when and where I want. 

Posted by daspiz on June 1, 2004 at 4:46 PM (PDT)

22

Like it or not guys… subscription services make the most sense.

Physical media becomes obsolete rather quickly nowadays.  It’s the content that we want.  Some of us have albums that we bought as vinyl, cassette, CD and now downloads.

Why not pay $120 a year and get all the songs you want?

The thing holding it back right now is the integration into the iPod… that’s what’s at the heart of everyone’s complaints here.

When Apple launches a sub service that allows you to transfer your songs to your iPod… all of you will praise Jobs as if he had the idea.

Your license for using your iTMS songs has already been downgraded… what about when it gets downgraded further… what about when you can play the music on one computer and burn it once… then will you admit that iTMS i nothing more than a sub service?

Come on, you know if Apple said $9.95mo. for unlimited streams you guys would be all over it!

The fanboys here are just mad that someone is challenging Apple’s strategy… isn’t it Apple that says Think Different?

Posted by Big Sid on June 1, 2004 at 5:31 PM (PDT)

23

“that also all we paid for when we bought 8 tracks, cassettes and CDs. Those mediums were merely packaging for transmital of the material licensed.”

That’s not true. It’s about ownership. When I buy physical recordings of tracks I get the right of resale. Once I have finished with the media I can sell it or give it away. I can then use the proceeds to buy other media, or cocaine.

I can’t do that with FairPlay AACs.

“Rhapsody most likely pays a licensing fee that is equal to or greater than Apples”

That’s obviously not true because the an average Rhapsody listener can listen to hundreds or thousands of songs per month. If each song cost Rhapsody the same as it costs Apple then they would be bankrupt within a month or two. But they are not. I suspect they pay more along a radio broadcast license rate - fractions of pennies per song.

“one loses the rights to use the service once one stops payment.”

Kind of like what happens to you when and if you one day decide not to replace a worn-out iPod or keep using iTunes. No pay (to Apple), no FairPlay AAC play!

That’s why stuff like PlayFair/Hymn is so important!

Posted by Digital Rights on June 1, 2004 at 7:35 PM (PDT)

24

Subscription services could definitely become reality.  I don’t believe online purchasing in going to be the only way to access music on demand just because that’s all people are comfortabe with right now or because Jobs or someone else doesn’t have enough vision to think outside the box a bit more.  I don’t believe it’s just going to be one or the other.  I believe we’ll have both subscription based services and downloadable music providers.  I believe in both.  There’s room for both in the market place.

If I could access whatever music I wanted, from any device (portable device, computer, home stereo, car stereo), anywhere I was, for a small flat fee each month, this would, in effect, be like owning every CD out there providing the subscription service provider had a very deep and broad collection.  It would be like XM or Sirius, but on demand, and accessbile anywhere and on many different devices.

This would demand that quite a few things be in place and would more than likely take a while to implement, but it’s absolutely possible and I know I’m not the only one who would love to have access to so much music at every given moment.

Keep in mind, a subscription service wouldn’t mean you could no longer buy CD’s or music online.  It would just compliment everything.  I’d love to be able to access any album or song I wanted from any genre and any artist, wirelessly, from my car stereo, home stereo, handheld player, or laptop, wherever I was.  That, IMO, would be awesome.  I can’t understand why anyone wouldn’t love to have access to that.  People act as though a service like this would prevent them from ever buying a CD or online music ever again.  Not so.

*************************

Here’s an interesting thread about subscription services and downloadable music.  A bit of a long read, but to get the most out of it, read the whole thread.

http://www.digitalmediathoughts.com/forums/viewtopic.php?t=5159&highlight;=&sid=18736ec205530d2df87eb541bc203bb1

Posted by Z on June 2, 2004 at 12:31 AM (PDT)

25

Although I like the idea of being able to buy and download music, right now, investing in low bitrate encoded AAC’s from iTunes is a waste of money.  Anyone would be better off going out and buying CD’s so that they could encode them to whatever bitrates and formats they want.

Until Apple offers at least a few different bitrates so that customers can choose what quality they want and at the very least appease those with more discriminating hearing, and until they offer more than just the AAC format to get people with other players over to their store (a lot of people won’t buy an Ipod just to buy from iTunes), the iTunes music store is facing without a doubt, a limited lifespan.  At the very least, they’ll become another version of “Sony and its Memory Stick”, but they’ll suffer from low and limited market share at some point - just like their computers.

The low bitrate that Apple encodes its music at for sale on iTunes is enough to indicate purchasing from there is a waste of money for many, but on top of that, virtually nobody supports AAC except for Apple, and unless you’re planning on never listening to your music on anything but your computer and an Ipod, you’re wasting your money by buying from iTunes.

For now I’m sticking with ripping and enoding my own CD’s, the MP3 format, and a high bitrate.

Oh yeah, and I still love my Ipod. smile  (If it didn’t at least support MP3, I wouldn’t).

Posted by Z on June 2, 2004 at 12:32 AM (PDT)

26

There has been a lot of speculation about variable pricing as an alternative to (or to work in concert with) current pricing models and/or subscriptions. (I think subscription is lame personally, I’ve never wanted to pay for a realpass or whatever).

I think that $.99 should be the ceiling, and that the variable options should be SOUTH of that number. I mean I’d buy a lot more retro & oldie stuff off of iTunes for nostalgic reasons if they were all of a sudden “50% off” ($.50 or less).

Now that Apple has proven the model, they have to discount older items. I mean go into a major music chain and you can find a bargain bin. I can get a best-of disc by “The Who” for $5-7 that has 12 songs. So the online price should be lower IMHO.

Volume! there’s no production cost per purchase here like w. CDs. They’ve already made the major investment by digitizing the content and adding it to the iTMS catalog, so the best thing to do is move as many copies of a songs as possible. If double the sales in older songs at a discount price only leads to the revenue that it would’ve generated at half the sales, so what - who says they’d even approach that theoretical half at $.99/song?

related: http://www.businessweek.com/technology/content/mar2003/tc20030312_9271_tc056.htm

Posted by J. on June 2, 2004 at 3:32 AM (PDT)

27

Sorry to correct this but the 1984 thing is:
Reminds of of 1984: “Eastasia is our friend! EURASIA is our enemy!... Eastasia is our enemy, EURASIA is our friend, EURASIA has always been our friend!”
Winston (the main guy) lives in Pacifica. Sorry just finished the book for a school project.

Posted by Andy on June 2, 2004 at 4:44 AM (PDT)

28

I find it interesting that you feel that you don’t own your music.  I burned a cd that i bought from iTunes.  I then ripped it to MP3 and ACC in iTunes without any problems.  Now I am able to freely distrubute my purchased songs with full ID tags in any form i see fit, whether it is MP3, ACC, or CD.  If i were able to do the same with a subscription service, that would be great.  But in order to “keep” the music, dont you have to pay above and beyond the monthly fee?  Also, isn’t a subscription service more suited to someone who is at a desk all day with 1 computer?  And not the iPod carrying, mobile users that 95% of us are?

Posted by Matt on June 2, 2004 at 5:18 AM (PDT)

29

“Now I am able to freely distrubute my purchased songs with full ID tags in any form i see fit, whether it is MP3, ACC, or CD.”

If you are distributing those CD backups of your iTMS tracks then you are illegally violating their copyright - just as much as someone who rips a regular CD then uploads the rip to Kazaa.

So the only difference I can see is that I can get higher-quality, higher-bitrate rips straight from p2p networks instead of settling for Apple’s lo-fidelity expensive rips.

“isn’t a subscription service more suited to someone who is at a desk all day with 1 computer?”

Japan just tested a 300Mbps wireless service.

In 120 years the notion that people spent ever more money on expensive, fragile hard disks to try to carry as much music as possible will seem quaint. We will be surrounded and permeated by high-capacity wireless networks that will deliver audio and video on-demand.

Posted by Lawbreaker on June 2, 2004 at 6:08 AM (PDT)

30

“In 120 years”

Maybe in 10-12 years even!

Posted by Sooner on June 2, 2004 at 6:09 AM (PDT)

31

A subscription service now that sounds a nice idea…i think i have a bettter one though. A service in Europe which does something else than tell us we need to have a US billing address.

For crying outloud Steve, when is this gonna happen? First we were told a month or so after the US release, then it was April 2004, now we are told sometime in 2004! Great, we might have then iTunes music store sometime before 2008! (not that im keeping my fingers crossed).

At the moment Apple really need to get their act together because the current online music stores in the UK (not mentioning Europe) are crap.

Posted by Tim on June 2, 2004 at 7:39 AM (PDT)

32

Lawbreaker… I do not distribute my music to others.  And if i did, it is illegal only if i profit from the venture.  Otherwise, i wouldn’t purchase music on iTunes or buys cd’s.  Secondly, ACC has proven to be a better compression format than MP3, and produces smaller files. (read: more room for songs)  And besides, the quality is only as good as the weakest link, likely your headphones/speakers.  In addition, i could buy and fill an entire iPod for the cost of a settlement if i were busted by the RIAA.  Hardly worth the risk….  And lastly, while i think that a wireless network is a great idea.  I enjoy the fact that i have my music with me at all times, my playlists, my preferences and dont have to plug into a network to access them.

Posted by Matt on June 2, 2004 at 7:54 AM (PDT)

33

“I do not distribute my music to others. And if i did, it is illegal only if i profit from the venture.”

You said:
“I burned a cd that i bought from iTunes. I then ripped it to MP3 and ACC in iTunes without any problems. Now I am able to freely distrubute my purchased songs with full ID tags in any form i see fit”

So you see you are wrong. You purchased a license to listen to some music, and to make backup copies of that music. But you do not have a mechanical reproduction right to make further copies of that music. The “defense” of saying “but I never made profit” has been tried by several thousand defendants against the RIAA so far, and has never worked.

“ACC has proven to be a better compression format than MP3, and produces smaller files.”

128 Kb AAC tied in third place with Lame VBR MP3 in the most recent qualitative listening tests. Although both AAC and Lame VBR perform well, they are no match for current champion of medium-bitrate lossy encoding, Ogg Vorbis.

http://www.rjamorim.com/test/multiformat128/results.html

Vorbis aoTuV is tied to Musepack at first place, Lame MP3 is tied to iTunes AAC at second place, WMA Standard is in third place and Atrac3 gets last place.

If you are really concerned with quality then I suggest using a service like AllOfMp3.com.

http://www.allofmp3.com/index2.shtml

There you can select a track, choose a compression format and bitrate quality, and download it. Although 128Kb AAC sounds reasonably good, it cannot compare to ~250Kb Ogg Vorbis, or 250Kb AAC for that matter!

Posted by Judge Dredd on June 2, 2004 at 12:19 PM (PDT)

34

http://www.rjamorim.com/test/multiformat128/plot18z.png

Posted by Listening Tests on June 2, 2004 at 12:21 PM (PDT)

35

Why does everyone argue one vs. the other? Does it occur to anyone that both sales models will survive? I mean do you really want one company doing both anyhow? Do you want NBC/ABC/CBS to run the store where you buy your DVDs?

Posted by Joe Shmoe on June 3, 2004 at 5:22 AM (PDT)

36

Think about the numbers.  Suppose you bought 10,000 tracks, enough to fill a 40 GB ipod.  from itunes, that sets you back 9,900 dollars, or lets say even around 8,000 if you buy a lot of whole albums.  From a record store, to get all the copyright and quality some people want, it would cost you probably around $12,500 at an average of 12 tracks per disk with each disk costing $15.  So the cheapest case scenario is the $8,000 you spend from itunes.  For that price, you could get rhapsody for 800 months, or around 67 years.  For the price of getting the cds, that would be 1,251 months or 104 years.  So basically for the price of a 10,000 song collection, you could get a lifetime subscription of rhapsody, where you would probably wind up listening to an even wider variety than your permanent collection.  Of course there are a lot of variables involved, like would rhapsody even be around for ever(or something like it in the future where you could continue streaming your music), do you want to pass on your music to future generations, etc.  For instance, suppose you rented rhapsody for 10 years, it went out of business and nothing like it succeeded it.  you’d basically be out $1,200 with nothing to show for it.  But if they implemented a fully mobile system like rhapsody that was gauranteed to be around a long time, it would prolly be worth it.

Posted by dx2j in Gainesville, FL on June 7, 2004 at 10:10 AM (PDT)

37

So the cheapest case scenario is the $8,000 you spend from itunes.

The cheapest option is AllOfMP3.com, which will cost around $450 to fill a 40GB iPod.

Posted by Cheapest on June 7, 2004 at 10:15 AM (PDT)

38

If you could explain more about allofmp3.com i would appreciate it it sounds cool, but i went there and it was all in russian or something so i couldn’t really figure it out.

Posted by dx2j in Gainesville, FL on June 7, 2004 at 12:31 PM (PDT)

39

nm i see theres an english version i dont know why it took me to the russian one before

Posted by dx2j in Gainesville, FL on June 7, 2004 at 12:32 PM (PDT)

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