Is Apple Considering An iTunes Subscription Model With Premium Devices?
The Financial Times is reporting that Apple is considering an all-you-can-eat subscription music model, where users would receive free access to the entire iTunes library “in exchange for paying a premium for its iPod and iPhone devices.” What exactly does paying a premium for the devices mean? Well according to the Financial Time’s sources, this would mean that Apple would give music labels a kickback from the sale of an iPhone or iPod based on their market share.
Financial Times:
Apple is in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices.
The “all you can eat†model, a replica of Nokia’s “comes with music†deal with Universal Music last December, could provide the struggling recorded music industry with a much-needed fillip, and drive demand for a new generation of Apple’s hardware.
“Nokia is understood to be offering almost $80 per handset to music industry partners, to be divided according to their share of the market. However, Apple has so far offered only about $20 per device, two executives said. ‘It’s who blinks first, and whether or not anyone does blink,’ one executive said.”
If the Financial Time’s story is true, this is a a complete 180° for Apple who has continually waved off the idea of a subscription model. However, the entire endeavor is likely treading on thin ice with Steve Jobs and the music industry rarely seeing eye-to-eye on price points.
The Future: With iPod sales slowing, did Apple have a moment of clarity with their monthly iPhone checks from AT&T? Apple already has the DRM technology to make this happen, but does a subscription service complicate the seamless iTunes experience?
