Apple is in discussions with the big record labels about a possible deal that would allow iPod purchasers free access to the entire iTunes catalog the Financial Times reports. This would mark a drastic change from the 99 cent-a-song model that Apple has had since the service’s inception.
Such a deal is said to work by Apple raising the price of the iPod players — one executive told the Financial Times that the price of iPod could go up as much as $100 per unit. Another option would be to charge a monthly rate of $7 to $8 for a new subscription-based service — something which Apple has shied away from in the past.
This report is especially interesting because it brings up the question of why Apple would mess with a system that has worked so well for them? It’s true that they don’t make much profit off of the individual songs sold, but those might as well be considered loss-leaders for moving the profitable iPods hardware units.
With sales figures for the iPod reportedly slowing down, would Apple really want to add a premium on top of the devices?
Another question is if Apple really wants to complicate the store known for its simplicity?
If consumers who bought these ‘unlimited’ iPods have access to all the music for free, they’ll still have to pay for all video content presumably. Also, what happens if someone doesn’t want to go out and buy a new iPod to get this deal, do they opt-in by paying Apple $100? The FT report also suggests that a subscription package may only work with the iPhone and that such a deal would simply be added on to a user’s monthly AT&T bill — so what about those users without iPhones?
This sentence in the report muddles up things even worse:
“The subscription models under discussion in the music industry include the provision for customers to keep up to 40 or 50 tracks a year, which they would retain even if they changed their device or their subscription lapses.”
If you add all of that up, you have a store and a service that seems overly complicated — much more so than many of Apple’s chief competitors.
update: The New York Times Bits blog has confirmed that there is truth to the Financial Times report. An executive who requested to remain anonymous says that negotiations are ongoing between Apple and his company (presumably one of the major record labels).
[photo: flickr/tanais]
Tags: co:Apple15 Comments
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Jeffrey said:
This sounds like an outstanding deal for people with more money than brains.
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Kevin said:
As a Rhapsody subscriber, I’d consider switching to an Apple service as long as they offer streaming as well as download ‘n go.
I like Rhapsody, but it crashes both my iMac and my Tivo. The only decent option is through their downloadable player - but it’s not as easy to use as iTMS.
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Kevin said:
As a Rhapsody subscriber, I’d consider switching to an Apple service as long as they offer streaming as well as download ‘n go.
I like Rhapsody, but it crashes both my iMac and my Tivo. The only decent option is through their downloadable player for the PC- but it’s not as easy to use as iTMS.
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MG Siegler said:
@Kevin - I think that is one of the keys “it’s not as easy to use as iTunes”. I’m worried a subscription or ‘all-you-can’ eat would deviate too much from the ease of use.
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Paul said:
MG, very well said. Add to this that it would require more DRM and it seems to take Apple in the opposite direction in which they were heading (more rules, more complexity, …)
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Tony Leach said:
This has to be pure speculation.
That said - why would a subscription model be more complicated? If anything, it’d be less complicated - no need for paying!
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sjk said:
Let’s compare…
~$8/month for unlimited access to previously purchase-only music on the iTunes Store vs. paying the same amount to purchase ~8 tracks/month, with some getting less or no listening time relatively soon even if eventually played again later.
That’s a no-brainer for me. I’d easily get plenty of value from the former, without eliminating the option to purchase for more frequent and unrestricted listening. Balancing purchases with a subscription service would be more satisfying and cost-effective than purchases alone. It’s doesn’t have to be an either/or proposition, which many people like to argue it as.
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MG Siegler said:
@Paul - great point. Reworked DRM would almost for sure have to be used.
@Tony - because it would fragment the store. Apple would have to keep pay areas for those who don’t have this new ‘unlimited’ service.
One of their biggest assets has always been the standard 99 cent price for all music - look at what happened when they launched iTunes Plus at $1.29 - soon it was right back to 99 cents across the board. Apple has in fact been fighting with the record labels almost non-stop the past few years to keep this singular price intact, now it all could be for naught.
As someone who reads quite a bit of Apple speculation, I wouldn’t be surprised at all to see something like this come to fruition eventually.
@sjk - true, it doesn’t have to be either/or, but once again that adds to the complication of the iTunes store. It also adds quite a bit of complication to the iPod lineup, presumably only some would work with this new system, and that whole thing about being allowed to keep 40 or 50 tracks for yourself. It gives me a headache.
I have faith that Apple would come up with something so it’s not a complete mess, but it’s going to be very hard to keep the simplicity appeal intact.
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dukeoconnor said:
@MG Siegler
I suppose it would work the way downloading free iTunes works now. You choose the free song in exactly the same way you’d choose a $.99 song and you’re charged $0.00. iTunes would know who has paid for the subscription and would just handle it that way. I don’t see how that complicates things as nothing would change but the price of the purchase. As for the subscription hindering iPod sales, I don’t see that happening either. If anything, it will just make the non-subscription iPod seem cheaper in comparison. I see no downside whatsoever for Apple if they do this.
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Aboud said:
Have Apple forgotten that the iTunes service isnt even available in most parts of the world? Outside of certain countries, users dont have the option of buying music from the iTunes store. So what sense does it make for those people to pay an extra $100 for an iPod?
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Matt_ said:
The one thing missing from iTunes is a All you can eat subscription and I would buy a iPod in a heartbeat if Apple offered it and get rid of my Windows devices that do the same thing,
If they offer their music for 99c without DRM even better .
And if you can keep a certain amount of music per month this will totally destroy the Windows plays for Sure market . -
Kevin said:
@MG
The world is becoming increasingly DRM-free (’bout time) and I would hope Apple would embrace that reality with an all-you-can-eat service.
Not sure I agree that it would complicate iTMS -
1) create account
2) choose pay as you go or all you can eat
3) find music and downloadThe only question is whether you get .mp3s that you can move to another machine/device in the home. Or are you stuck in the .aac/Apple world. My guess is the latter, but again - still beats buggy Real players and proprietary devices.
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sjk said:
@MG,
> but once again that adds to the complication of the iTunes store.
Insignificantly, if similar to what Kevin’s response suggests. Doesn’t seem more complicated than other iTS changes, e.g. recently added video rentals. Heck, aren’t the rent vs. own issues for Apple TV content already confusing? :)
> It also adds quite a bit of complication to the iPod lineup, presumably only some would work with this new system, and that whole thing about being allowed to keep 40 or 50 tracks for yourself.
My original reply intentionally ignored the iPod factor, which I agree could be confusing. I’m mostly interested in the “unlimited” download element, regardless of the destination device(s). And I don’t quite understand how purchasing an “unlimited iPod” would work if content has to first be downloaded into iTunes (e.g. not directly to a Touch or iPhone) does that mean iTunes inherits unlimited privileges even if you never sync with an iPod? Sorry if that’s not too clear… forced to post this now and handle an interruption.
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MG Siegler said:
@duke - again, I’d just say that making a more complicated ecosystem for the iPod and iTunes is the downside. it likely won’t work the same at the free downloads now because those are free for you to own - this new service would be more like free for you to rent - new DRM would be required.
@Aboud - yeah, I assume Apple would keep cheaper iPod where the iTunes store isn’t available or that would make no sense. Again, speaking to the complexity issue.
@Matt - I’m sure that’s exactly what Apple wants to hear and why they are thinking about going this direction.
@Kevin - For music-only, yes fair enough, but when you add in video which you’ll have to pay for, music you already own, if you have multiple iPods (may not all are all-you-can eat), it gets complex.
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englandgoogl said:
for a while, plants I’d surprise knew up across and we exploring often years later. we just and one day, is still I go back
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