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Music labels want iTunes subscription service

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By LC Angell

Contributing Editor
Published: Friday, April 13, 2007
News Categories: iTunes

The four major record labels are expected to ask Apple to launch an iTunes music subscription service during negotiations to renew their resale agreements with Apple. The discussions will reportedly begin next week when Universal Music, the largest record company, meets with Apple. Marketwatch reports: “Executives at Universal and other labels believe a subscription service could prove more lucrative for them than iTunes’ prevailing model of charging consumers 99 cents per track because it would increase consumption of music. It would also entitle the labels to a share of monthly payments, in addition to small licensing fees each time their songs are played.”

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Comments

1

You want your subscription service, you have to keep the ala cart, keep things at .99 cents, give us the chance to buy DRM free tracks outright, then you can have your subscription service.

Posted by studogvetmed in Loveland, CO on April 13, 2007 at 7:25 AM (PDT)

2

i don’t understand how charging me $20 a month to download 50 or a 100 songs is more lucrative than charging me $50 or $100 for the same songs. and if they go the route of EMI (props to them) and charge me $130 per month, even more money is coming in. can someone explain this reasoning?

Posted by jeremy i on April 13, 2007 at 7:33 AM (PDT)

3

I hope someone at these record companies is paying attention.

If this happens, the iTunes Store will fall victim to the same failure as all the PlayForSure based subscription services. Fairplay will quickly get hacked and stripped off iTMS purchases.  The consumers will rush to subscribe for a month and download hundreds if not thousands of songs within that month. After stripping the DRM to keep the songs forever, they’ll simply cancel the subscription causing an ENOURMOUS drop in sales of both single purchases and subscriptions.

It’s a no brainer… SUBSCRIPTION SERVICES OF DIGITAL CONTENT CAN AND WILL CAUSE A QUICK END TO THE SERVICE PROVIDER!!

Posted by iScott on April 13, 2007 at 7:50 AM (PDT)

4

Monthly subscriptions are money in the bank. They would love nothing more than to lock 15-20% of consumers into a monthly fee.

Yes, some people will scam the system, iScott. They always have, and they always will. But many more people will think they are saving money when they aren’t. They’ll get lazy and stop downloading new tracks, or just forget that $15 a month is being charged to their credit card.

A $15 subscription works out to $180 a year. The average consumer spends far less than that on music, and there are very few people who spend that much or more. If they can get people thinking this is “average,” then they’ve already won.

Posted by BJ Nemeth on April 13, 2007 at 8:09 AM (PDT)

5

If Apple allows these labels to dictate how they do business, Steve Jobs should fire himself.  Not to mention that I send by iPod back to Apple in pieces.  iTunes works because of the way it is modeled.  I don’t want to pay a montly subscription, I only want to pay when I download an album or song.  These labels are greedy and they will kill iTunes with a subscription service.  Don’t do it Apple, tell them to stick it where the sun doesn’t shine.

Posted by drew on April 13, 2007 at 8:30 AM (PDT)

6

Jeremy i, it’s $20/MONTH as opposed to the ONE-TIME fee of $50-$100. After six months they’ve made at least $20 more off of you. That’s how subscriptions are more lucrative for the seller.

Posted by urbanslaughter on April 13, 2007 at 8:36 AM (PDT)

7

Since when have online subscription services worked, ever?  They always fail because nobody with 2 brain cells to rub together wants to keep paying for the same track over and over and over and over again. 

This is just more typical record industry greed.  And I thought EMI were finally starting to “get” it too.

Posted by phennphawcks on April 13, 2007 at 8:47 AM (PDT)

8

i understand the part of locking you in so that they have money in the bank. i understand what they are trying to do as far as making sure they maintain a certain constant cash flow. i just think that they would find that it won’t be enough cash flow in the end. and certainly not anywhere near as much as an ala cart service. when people get tired of haivng to re-download everything because you forget to renew your contract/service. the subscription number will wean as it has for all other services of this type, beside eMusic.

Posted by jeremy i on April 13, 2007 at 8:51 AM (PDT)

9

Subs are more lucrative because the consumer doesn’t think about the cost or tradeoffs AND they generate further sales unlike Apple’s model.

For the whopping $72 a year I pay Yahoo!, I am not at all concerned about the fact that the music is lossy, or that I have to use Tunebite to get it on my iPod. All I care about is that for the cost of a decent hamburger, I have a try before you buy system that works better than P2P.

So, Yahoo!, and the labels it works with, get $72 annually plus revenue from whatever new CDs I buy motivated by what I found with my super-legal-download-on-demand service (and that comes to hundreds of dollars a year) versus Apple’s current model: $0/year and not one generated CD sale to date.

I spend a lot on music, probably too much, but I don’t even blink at what my sub costs me annually. Yet, I would NEVER spend $0.99 for a single in 128 kbps DRM-laden form.

Posted by Code Monkey in Midstate New York on April 13, 2007 at 8:57 AM (PDT)

10

“Each time their songs are played.”  This goes back to something that shouldn’t be happening, that record companies consider buying music not actually buying it.  They want subscription so they can be lazy and know what money’s coming in without making any good music.

Posted by _Ethan on April 13, 2007 at 9:47 AM (PDT)

11

“They want subscription so they can be lazy and know what money’s coming in without making any good music.”

This does not follow at all.

Quite the opposite. They want to know what music IS considered good music by the consumer and compensate the contracted parties accordingly while not paying out for those who’s music is not downloaded at all, or downloaded and never played.

It’s actually a system that would give them direct feedback at the popularity and longevity of music rather than the current flash in the pan disposable model. With music you buy upfront they have no incentive to do more than entice that sale. With something more akin to radio, they need to get you to keep playing the music, not just download it, listen to it once, and delete it.

Posted by Code Monkey in Midstate New York on April 13, 2007 at 11:18 AM (PDT)

12

Subscriptions are good for movies (see: netflix), but bad for music (see: the _new_ napster).

Posted by Jim on April 13, 2007 at 12:07 PM (PDT)

13

“Subscriptions are good for movies (see: netflix), but bad for music (see: the _new_ napster).”

That’s the odd thing in yours and others’ perceptions: they’re precisely the same thing. If there’s any difference, it’s that the music subs are far more economical because you can keep as much as you want as long as you want. You never have to return anything. It’s like if you could just have netflix send you as many movies as you wanted for $20/month until you stopped the service and then you’d have to send them back.

Oddly, I think it’s the same people with their $90/month cable package, $75/month cell phone package, and $25/month for satellite radio who then go, “$12/month to download terrabytes of music on demand but they take it back if I stop paying?!?! RIDICULOUS”

Posted by Code Monkey in Midstate New York on April 13, 2007 at 1:21 PM (PDT)

14

I think some of us are slightly brainwashed by Steve Jobs when it comes to a subscription service.

I really do think that a subscription service for music is a viable and good system for a population of people. Even Leo Leporte, who thought that subscription service for music was a joke had to take it all back when he experienced it while reviewing the Zune.

There is a place for a subscription music service and they could do well if supported appropriately. There are people out there who WOULD take on a subscription service, without it, it is an untapped revenue stream.

As long as the ala-cart and digital buying model is not erased in favor for subscription, there is absolutely nothing wrong with having subscription for those people who want it.

I wouldn’t mind having a “cheap” subscription that would limit the number of downloads I had. I’d pay maybe $5 a month to have a limited access to songs I could move in and off my iPod, this could help me tailor in my actual purchase of music and I’d get more bang for my buck on big purchases. I don’t really need a $15-25$ subscription/month to do this, I’d rather have a cheap, limited subscription to help expand my tastes.

In this McDonald’s society, there are many people who would be better off payingn $15/month for unlimited downloads for the rest of their lives and get rid of things as they become tired of it.

If anyone is going to make subscriptions a popular thing, it will be Apple and iTunes, and if it fails there, perhaps this will finally be a wake up call for the labels to realize maybe it really isn’t what people want.

The only caveat is, they have to keep the ala-cart model. I think some people are under an impression that a subscription on iTunes means no more ala-cart, but I doubt that’s what it means.

Look at Rhapsody subscriptions. This is a thing that works it seems. It’s a popular service. If iTunes got into that market, I can see a lucrative profit for people involved.

If you don’t like it, don’t use it, but there are people out there that would do it.

What I’d like to see if a “discount” on ala-cart purchases if you have been a subscriber for a period. That would be a sweet deal to pull in subscribers.

Posted by studogvetmed in Loveland, CO on April 13, 2007 at 1:33 PM (PDT)

15

studogvetmed, codemonkey, subscription services for music are bogus.

I don’t want to rent my music.

I want to buy my music, so that I can pull it out of my collection 6 months, or two years, or 5 years down the line when I feel like listening to it again without having to pay for it all over again. The same way I can with my CDs at home.

Why should digital music be any different?

Music subscription services are so ridiculous.

Ever since iTunes has been available in Canada (about 2 years I think), I have used iTunes to buy music exclusively, because of the convenience and quite frankly because of the price. $9.99 a CD is better than 14 - 20 bucks for a CD in the store.

If iTunes turns into a subscription service, then I will never use iTunes to pay for music again.

Posted by Fink on April 13, 2007 at 2:15 PM (PDT)

16

You pin the point and it’s showing on this forum. I think most ipod users don’t have an idea about monthely subscription service. They it will for everybody who must have to subscribefor that. Which not true it’s more like option for those who want to subscribe and even want to buy indivual tracks, album or not. So itune buy track, album service will still stay remain but adding more option for itune+ ipod users. I will subscribe because iam victim of ala-cart service. Once i loose my whole liberary and it won’t happen again even it’s drive failure or virus or whatever. I will buy those only tracks, album which i like most and 30sec preview doesn’t work for me and for many out there. Thanks to record labels if they push to Apple for offering this awesome service. Which bring more choice and option for consumers. Iam pretty sure millions willbe subscribes to that service.

Posted by SHEHZAD on April 13, 2007 at 2:24 PM (PDT)

17

Fink, you don’t get it, you probably never will. First, if you have any kind of cable or satellite service, you are a hypocrite and brainwashed to boot, or do you only buy *all* your television and movies to own permanently as well?

Second, although this is not what their main appeal is, for a certain population of consumers, they are far cheaper than buying even projected over their entire lives. Not that I would be happy with their lossy quality longterm, but I’d be tens of thousands of dollars ahead already in my lifetime if I’d just started off with a sub plan in my teens (and with the caveat that my entire music collection was paid for by me, on which I take the 5th wink )

Third, and what you can’t seem to get through your head, is that it’s not about ownership, it’s about convenience and better value. I have downloaded, listened to, and *deleted* thousands of song files over the past two and a half years; not dozens, not hundreds, THOUSANDS. In the same span that I spent less than $200 to try out and discover that, no, I really didn’t much care for that album, people like you think I should have just bought thousands of dollars worth of CDs or iTunes tracks. Now, that would be bogus.

I spend hundreds of dollars a year on music, it’s not like the sub stops me from buying CDs. OTOH, I can’t think of the last time I bought a CD that didn’t become a permanent part of my music rotation because I had already listened to it enough to know that I wanted to pay for it.

The only “good” argument against subscription plans is that it’s cheaper to just use P2P, but that’s not much of an argument, particularly considering the 24/7 availability of millions of songs on demand, which P2P can’t even come close to matching.

Posted by Code Monkey in Midstate New York on April 13, 2007 at 2:38 PM (PDT)

18

Here’s a prediction:

I don’t think Steve will allow a subscription/rental plan unless *all* songs qualify. None of this all-songs-except-for-a-few crap that is currently offered on the Zune Marketplace.

Regardless of the final result, Steve Jobs is smart to drag his feet on this, and he’s smart to bad talk subscription/rental services in the media. It gives him leverage. And so far, in the music space, Steve Jobs has used that leverage for the good of the consumer. (Which, not coincidentally, is also good for iPod sales.)

Jobs won’t give them the subscription services *they* want unless they also make some concessions that *he* wants. Perhaps it will be DRM-free music like EMI, or perhaps it will be something else. But Jobs won’t give those frigtards something for nothing.

Posted by BJ Nemeth on April 13, 2007 at 2:48 PM (PDT)

19

“None of this all-songs-except-for-a-few crap that is currently offered on the Zune Marketplace.”

You mean like all the partial albums that infest the iTunes store as well? Jobs can no more fix this for a sub than he can fix it for the iTunes store. Sometimes even if the artist and label is cool with digital distribution, the songwriter may not be, so a particular song or three isn’t available.

Oddly, on Yahoo, I sometimes run into tracks where the rights are cleared for subscription and streaming but NOT sale. It goes both ways, go figure.

Posted by Code Monkey in Midstate New York on April 13, 2007 at 3:07 PM (PDT)

20

Code Monkey,

First, no-one has EVER purchased their TV shows from a cable service, and I doubt they would ever want to. Different product, different expectation of use, not even a comparison.

Secondly, “tens of thousands of dollars”? Must be nice to even think you could have spent that much money on music. Not all of us are so lucky. Either youre very rich or perhaps you have a compulsion to buying every piece of music out there. Personally, I was able to make it through to my 33rd year without spending tens of thousands of dollars purchasing music.

Third, “I have downloaded, listened to, and *deleted* thousands of song files over the past two and a half years; not dozens, not hundreds, THOUSANDS” (I like the use of caps in this point). Assuming you actually paid for all that stuff you donwloaded, then please, see the “second” point above. It’s impressive that you have so much time and money to devote to music. I sincerely hope you are inthe industry.

“I can’t think of the last time I bought a CD that didn’t become a permanent part of my music rotation” Do you seriously want me to believe that you listen to, on a PERMANENT ROTATION mind you, every single CD that you have ever bought? How much time does that take? Especially if you are listening to music on the rate of “not dozens, not hundreds, THOUSANDS”.

There is no “good” argument for subscription music services. Never has been, and there never will be.

I win. Don’t feel bad.

But get this, the grapevine has it that people will be able to choose BETWEEN (hey, all-caps rocks) subscription services and purchasing services. So you’ll still be able to rent your music.

Posted by FInk on April 13, 2007 at 3:11 PM (PDT)

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