 Computerworld is New Zealand's only specialised information systems fortnightly.
Subscribe now for $97.50 (24 issues) and save more than 37% off the cover price!
 Get the latest news from Computerworld delivered via email.
Sign up now
 Subscribe to Computerworld's
RSS newsfeed here and get news stories as they break.
Apple is talking with major record labels about offering unlimited access to the iTunes music collection for a flat fee paid when purchasing a new iPod, or as a monthly subscription fee, the Financial Times reports.
The move would be a dramatic change from Apple's current business model, under which the company profits from sales of its iPod music players but essentially breaks even on the 99 cents per track charge customers pay to download music from iTunes.
"Rumours of Apple doing a subscription music service are as old as ... well, as old as the iPod itself," says Michael Gartenberg, analyst with JupiterResearch, in a post to his blog. "But a new report [is] that Apple will be doing exactly that. It appears there are two models under discussion, a traditional rental service with a monthly fee and a model tied to the life of a specific device with a single up-front payment, similar to Nokia's "Comes With Music."
According to the Financial Times, the discussions involve both a one-time fee as well as possible subscription models. In the former, Apple could add as much as US$100 to the price of its iPod and iPhone devices in exchange for unlimited access to iTunes for the life of the hardware, sources told the newspaper. The company is also talking with record companies about subscription plans that would run US$7-$8 per month.
Several services, including RealNetworks' Rhapsody, use the "all-you-can-eat" subscription model, but charge considerably more each month. Rhapsody's fees, for example, run US$12.99 per month for unlimited access from a computer, or US$14.99 per month to load selected music players with any tracks from the service's library.
Ezra Gottheil, analyst with Technical Business Research, is somewhat skeptical that Apple will change its music model, but notes that the company's been having trouble pushing iPods. "Jobs has been quoted several times as saying 'people don't want to rent their music, they want to buy it'," says Gottheil. "But they may be considering this to fill a place in their portfolio for those who do want to rent music."
Such talks, if they are indeed taking place, could have been prompted by the slow-down in iPod sales. "The fourth quarter was essentially flat [in iPod unit sales], which is pretty darn bad, and they've dropped considerably since then," Gottheil says. "We've read it, and others have read it, as a saturation of the high-end music player business. There's a finite world-wide demand for something that just plays music."
Apple has seen iPod unit sales go up, but the average sales price (ASP) go down, he adds, noting that the shift in buying patterns favoured the less-expensive iPod shuffle and iPod nano. "Then the shuffle began to erode as attractive alternatives hit the market," says Gottheil. "Apple even lowered the price of the shuffle to keep it going."
A month ago, Apple slashed iPod shuffle prices by 38%.
It appears that Apple's now positioning the iPod touch, the device that resembles the popular iPhone smart phone, as the future of its player line, Gottheil continued. "This is a new market for them, a device that goes well beyond playing content."
Notably, Apple's top-of-the-line player can download movie rentals, the new iTunes service that CEO Steve Jobs introduced in mid-January. It's also the only iPod that can now download iTunes music via a wi-fi connection.
Gartenberg notes the connection between the existing movie rentals and the talk of unlimited access to iTunes music. "With the latest changes to the Fair Play DRM [digital rights management] to support movie rentals, the technology now would also be able to support a subscription service as well," says Gartenberg.
Apple officials were not available for comment.
|
