Will subscription-based music services trump iTunes?
This question was a hot topic at the Music 2.0 conference in L.A. this week. Everyone from record labels to online
retailers is gushing
over Apple’s success - and predicting its demise.
The strongest argument in favor of subscription-based services is that they provide access to a greater variety of
tracks and artists for a low monthly fee. While this may be true, the major drawback remains portability - you can
stream as much music as you want from your Mac (*if* the services even decide to support us!), but your subscription is
useless when in your car, out on the town, or anywhere that is not right on front of your computer.
What do you think - will the iTMS ever gravitate towards a subscription-based model? Will subscription services begin
taking market share away from the iTMS? It seems to me there is likely room the growing market of digital downloads for
both approaches. Perhaps Apple could take advantage of both worlds, and offer a subscription service in addition to its
standard a la carte downloads. I know I would sign up.
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Reader Comments (Page 1 of 1)
Mikey T said 4:14PM on 6-16-2005
I think people are forgetting what the market was like before iTunes Music Store ...
They were all pretty much subscription-based services and none of them were available for the Mac. And they all did miserably. It wasn't until Apple came along with their download service that legal music downloading started to become a real market. And it was soon after that all the other services began their own pay-per-download model. and subscription based services slowly died off.
Now for some reason, these people believe subscriptions will take off. Well what has changed in the passed 18 months since iTunes? Nothing. Except iTunes continues to grow faster than all the others. They are all just trying to find a "gimmick" to lure customers to their service... they'll die again.
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Al said 4:14PM on 6-16-2005
You rent movies because, with a few exceptions, you only want to see them once or twice in a lifetime. You buy music because you want to listen to it forever and renting it forever is just a big waste of money.
I am 60 years old and I have some music on my iPod that I first heard 50 years ago and some that I first heard last week. Good music lasts a lifetime.
A subscription service let's you try all music for a while and if you are smart you buy the tunes you like. Radio does the same thing for free.
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Dwight James said 4:14PM on 6-16-2005
Subscription base service is not new, it was around long before the iTunes music store came along (introduced April 23, 2003). Subscription based service is a business model that looks great on paper. The reality is subscription services appeal to the record labels and the companies that provide the service, not the consumer.
Subscription services will overtake iTunes, that is a possibility. If you look at the history of the iTunes music store and subscription services you would more than likely disagree with the overtake theory.
The iTunes music store started 20 months ago it now commands more than 70% of all the paid downloads of music. The power of giving people what they want! I'm of the opinion, subscriptions are not what people want, the numbers speak for themselves.
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Andrew said 12:03PM on 11-26-2005
I think both have a place but if I can't burn it, I don't want it. Others may feel differently. I agree with the previous poster, online music was floundering until the ITMS came along. It's all about control. iTunes gave the consumer a small amount of control, and the rest is history.
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Jeremy said 1:56PM on 7-25-2005
As a consumer, I see absolutely no point in a subscription service, and am just not interested.
The benefit of a subscription service would be having access to lots of music that you wouldn't have ever heard before to think to buy it. But having access to a bunch of songs just means you end up clicking random links to find something, and that doesn't work. You need a "program director" to pick out stuff and expose it to you. And at that point, you have -- XM Satellite Radio, which already exists (but which would be great to have in an iPod, and would probably get me to buy an iPod).
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jbelkin800 said 4:14PM on 6-16-2005
The MASS MARKET success of the ipod is its simplicity - the bulk of the people buying ipods are not buying it because it's the cheapest solution or some arcane reason (versus the several hundred buyers of some mp3 players because its Linux).
The only people who are subscribers to online music services are hardcore music geeks who are willing to put up some inconvience in order to have access to most amount of music they can stream and grab as mp3 tracks.
To load ipod - click and drop - it syncs automatically.
To load a online subscxription, you have to calculate how much room to devote to mp3 tracks versus the subscription block. You have to hook it up - does it download the stream in real time or digitally? Then when listening, you have to be ready to fast forward because there might be one/two or DOZENS of songs you might not care for so all and all - then do record over that stream, keep part of it, add to it? Or can you only a new one? You have to do a lot of "pre-listening" with your computer to decide which to keep, add or delete? A LOT more work for song(s) you DO NOT get to keep (when you stop subscribing).
It's like 15 years ago and popping in a cassette to record a radio show - what % of music listeners actively did that?
Yes, there's an audience for it but basically all these companies are going to build this whole structure for a potential subscriber base of about 1.5 million people in the US. Sounds like a lot but remember there are no contracts - people can drop out at anytime and right now, probably 50% of the stated audience are captive ones like the university deals where students may be paying for it but not actually using it.
ESpecially since after they capture the streams, these hardcore users are just going to then move onto to the hundreds of free or lower cost streams (like at 365live.com).
And of course, the biggest threat to online subscription is really satellite radio. SAtellite radio is the CONVENIENT choice of streams (not to mention you don't need a computer to launch the stream for loading) and unlike online streams, if you decide to listen to merengue, just switch over - you don't have to go home and load the tracks onto your storage-limited device (and delete salsa).
People think that consumers get all gushy about technology (well, maybe in Japan) but here in the US - it's not the cool factor, it's not the cost factor - it's ALWAYS the CONVENIENCE factor. The convenience matrix might replace the previous matrix (Price may push it faster acceptance) but convenience trumps all else.
Subscription internet music is just NOT convenient.
A satellite ipod will wipe all but a few die hard Remondintes bemoaning it's not in WMA - how can anyone use anything not personally okayed by Steve Ballmer's sweat?
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barb dybwad said 4:41PM on 10-07-2005
I subscribe to Rhapsody on the aging PC in my office. I love it, and find it very convenient and intuitive to use. They have extensive metadata-driven navigation that gives me a high probability of stumbling onto something I like fairly quickly, by following links to similar artists, to the artists's influences and followers, to a genre's 'most influential' groups, etc. They also have pretty decent accompanying information about each artist, album, and genre - so I feel like I'm getting a bit of music history education as I surf through the site. I never have trouble finding interesting new music, and I love the playlist management features that make it intuitive and quick to whip up and save playlists.
I hear people saying that if you can't own the music, why bother. I guess that must depend on your music listening habits - do you really have to own every single track you ever hear? I definitely don't. I'm in the same camp with Al - it's good value to me to 'rent' a huge selection of music to discover the (much smaller) subset of it I might actually like to purchase. I love the fact that Rhapsody gives me a chance to try out a new artist or a whole new genre, sample a number of selections, and maybe find a few here and there I actually want to buy. If, like me, you have a wide taste in music and a voracious need to discover new forms of it, a subscription-based service can end up being great value. I pay $10 a month to stream an enormous music library - I use it almost every day and have new music streaming all day long. For the same price I get one album from the iTMS. So for me, $10 is cheap cheap cheap and well worth it for what I get from the service.
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dave said 4:14PM on 6-16-2005
Mikey T said it well: subscription based services have been around for a while, and they all suck. They sucked before, they suck now. They're not popular, and the business model is just silly. Give it up.
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barb dybwad said 4:41PM on 10-07-2005
Actually, the numbers show that a slightly higher percentage of people use subscription services versus per-track downloads...
http://www.itfacts.biz/index.php?id=P2143
Plus I don't buy the argument that because subscription started with a higher market share and fell, that it will never again be a viable business model. You could apply the same argument to Apple and conclude that you may as well cash in and buy a Dell (shudder). Markets are volatile, people are volatile, good ideas get poorly implemented and rescued later... anything can happen. The world is mysterious, my friends. ;)
p.s. a similar thread is going on in parallel over on mark cuban's blog:
http://www.blogmaverick.com/entry/3856521420807387/
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Doug Grissom said 4:14PM on 6-16-2005
Everybody seems to be ignoring the innovation just around the corner - subscription services that let you download songs to your Digital Music Player and you can keep them as long as you maintain your subscription. Yes, you're still "renting" but it's on your own player that you can take anywhere, and so why wouldn't you keep the subscription going? If your Player can hold 10,000 songs - using ITunes, that will cost you $10,000....would you rather pay $10,000 or play $15 a month for music that you can replenish with new stuff whenever you want?
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Alex said 4:14PM on 6-16-2005
This notion when comparing business models that if you want to fill your iPod up it will cost you $10,000 is ludicrous. Most people with iPods do not fill it up with music from the iTunes Music Store. Even if you have an iPod, you don't have to use the store AT ALL. You can fill your iPod with music you already own. The iPod and other players also double as hard disk storage for other files, so why is there this obsession with having to fill the device with music?
I have started converting vinyl that I bought over twenty years ago and a lot of those songs are now on my iPod. Can you imagine how much it would have cost me to rent that music if I had been paying a monthly subscription for over twenty years to maintain access to that music, much of which is linked to great memories? Paying once for music is cheaper in the long run.
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Samuel Kaufman said 4:14PM on 6-16-2005
The subscription-based model is far less attractive to new customers; that's why iTMS did so well. Unlike subscription-based services, people can try it out for $0.99, see they like it, and get hooked. Nobody could do that before iTMS. Now that iTMS has created a market, there might very well be some who move to subscription-based services, but I think most people would rather have the typical money-in-music-out model. I know I would. There's no pressure.
People also overlook the sheer quality of Apple's iPod and iTunes products. They're bug-free, beautiful, and, quite frankly, kick ass.
On the other hand, if you're looking for an analogy: Costco succeeds.
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Don said 4:14PM on 6-16-2005
I think the detractors of Rhapsody and the other subscription services are missing two important points.
1. Musical tastes change. New music is created every day. If you are content to play The Wall or The White Album every day of the rest of your life, then buy it. If you want Nirvana in 1992 and Coldplay today and Idontknowwhat next year, then rent it. And, if you rent Joshua Tree today and love it, then buy it and ask your children to bury you with it.
2. And Rhapsody is a lot of fun. I'm guessing most of the here critics haven't used it.
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