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Why iTunes needs to offer an album-based subscription service

One of the key announcements to come out of Apple's "It's only rock and roll, but I like it" event on September 9th was iTunes LP. As implied in its name, iTunes LP seeks to provide a more rich album experience, something that has taken a backseat given the decline of physical albums.

iTunes LP includes features typically found on physical albums, such as liner notes and photos, as well as exclusive video content. One of the goals of iTunes LP is to resuscitate album sales, which have been struggling in the iTunes age of à la carte individual track sales. While iTunes LP provides a means to resuscitate the album, an album-based subscription service would further this goal even more.

One of the crucial points that Apple -- and Steve Jobs in particular -- had with selling the iTunes Music Store concept (now just called the "iTunes Store") to the music industry was the need for à la carte music sales. That is, rather than selling music on an album-only or selective track, "singles" basis, consumers should be given the choice to purchase any song they wish.

Many in the music industry -- recording artists in particular -- balked at the idea. Their reasoning was that albums are concepts, and as such should be sold as a whole. To them, allowing à la carte sales would be akin to allowing one to purchase selective chapters from a book. That is to say, an album is much more than the sum of its parts. And I agree with this reasoning. I can't imagine listening to the Beatles "A Day in the Life" without listening to all of Sgt. Peppers, or to any song off of Kanye West's "College Dropout" without listening to the rest of the album.

But the music industry acceded to Apple's wishes, due primarily to two reasons. The first is that it needed to present consumers a viable and compelling alternative to P2P file sharing. And the Mac's relatively small footprint in the computing space would serve as a good testbed. If it didn't do well, it was just a small percentage of consumers anyway. And if it proved a successful concept, well, they'd be able to maintain control and steer the ship as they chose given that this was such a small percentage of consumers anyway.

Six years, Windows-compatibility, and several iterations and generations of iPods and iPhones later, iTunes is now the leading music retailer in the U.S.. As a result, Apple is now among the most influential players in the recording industry, with the ability to set the course for how consumers purchase music.

One of the primary arguments that Steve Jobs has made against a subscription model is that consumers want to own their music. But in the digital age, ownership has taken on a significantly different meaning and matters much less than it used to. Consumers today may not be de facto owners of the music they listen to, but enjoy many of the benefits of ownership through other means. Services such as Grooveshark and songza allow consumers to listen to any song by any artist whenever they choose; and even YouTube provides a means to this end.

Back when I was growing up, I had membership to both Columbia House and BMG Music Service, both of which are in many ways are subscription services. Rather than cannibalizing sales, these subscriptions fueled visits to my local Music Plus and Tower Records, where I would purchase even more music. To this end, an album-based subscription model is one that Apple should offer as an option to consumers. Such an offering, coupled with an option to purchase an album at a discount, would not only incentivize album purchases, but also possibly provide the record industry steadier revenue streams. And at the same time, consumers are still afforded the option to purchase tracks à la carte.

To Apple's credit, it has incentivized album purchases with "Complete My Album" as well as favorable pricing. While iTunes LP certainly offers consumers a value proposition, whether or not it's a compelling one that will rejuvenate album sales is very much debatable. The feature, coupled with an album-based subscription service (with iTunes LP goodies as a purchase-only benefit), could provide the winning formula for rejuvenating album sales.



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Analysis / Opinion iTS

One of the key announcements to come out of Apple's "It's only rock and roll, but I like it" event on September 9th was iTunes LP. As...