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Music download services feel the squeeze

updated 07:30 am EST, Tue March 23, 2004

Music services squeezed

The Wall Street Journal today takes a look at the as more and more companies join the fray. With heavyweights like Microsoft, Sony, and Yahoo! entering the market later this year, smaller players like MusicNow and Europe's OD2 have been left looking for potential suitors. Similarly, a music service initiative formed by Best Buy and Trans World Entertainment was shelved earlier this year as the companies try to figure out how to distinguish themselves. Most interestingly, the article notes that some Apple competitors have challenged the notion that profits are slim for download services, and say that margins tend to be much higher for subscriptions than for a-la-carte downloads. Apple does not offer a subscription service.




by MacNN Staff

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  1. z10n

    Joined: Dec 1969

    0

    lol

    No s*** the margins for subscriptions are higher! Companies get to charge you over and over and over again, knowing that you'll be reluctant to leave, because then you're left with NOTHING. You leased your music, and now you don't own a single song. The whole thing is a complete ripoff.

    Subscriptions were made for a single purpose- to act as a continuous cash flow for the music providers.

    I'm not saying apple shouldn't find a way to make iTMS more profitable. But it is NOT going to happen by changing it to a subscription service.

  1. cebritt

    Joined: Dec 1969

    0

    Subscriptions

    Oh course monthly subscription fees are more profitable. Ask any health club owner. But do people like them? No.

  1. phillymjs

    Joined: Dec 1969

    0

    Subscription-based...

    ...music services suck. Call me old-fashioned, but I like the notion that once I pay for something, it's mine until I choose to get rid of it.

    And Apple *is* profiting from the iTMS-- it's selling iPods like crazy, and the profit they make on those more than makes up for the pittance they're left with after the greedy record companies take their cut of the $0.99.

  1. rok

    Joined: Dec 1969

    0

    Satchel Paige once said

    "Work like you don't need the money. Love like you've never been hurt. And dance like nobody's watching."

    Apple's selling songs like they don't need the money. One down, two to go... ;-)

  1. LouZer

    Joined: Dec 1969

    0

    Subscriptions

    I can't see how they're more profitable, unless (a) the people who use them don't use them that much - like payiong $20 to Netflix monthly and then renting just 2 movies a month), or (b) they pay less in royalties. I would think if I'm subscribing, I'm listening to more music than my $10 at ITMS would get me, and I can listen/download as much as I want

    (of course, not knowing how the subscription services work probably lead me to my own stupid conclusions...)

  1. VadersCape

    Joined: Dec 1969

    0

    Challenge Away!

    Let them all believe they can make money where all of their like-thinking predecessors failed. Let them all believe that offering the option with the highest profit margin means that sales will skyrocket. Let them all win the business equivalent of the Darwin Award.

  1. z10n

    Joined: Dec 1969

    0

    Exactly that

    They're profitable because most people are not robots who sit down to watch a movie every single night, or download X number of songs a day. People typically have their ups and downs as to what they're interested in.

    In other words, sometimes they'll use the service (good value), and sometimes they won't (bad value). Short term they might use it a lot, because they may be thinking "hey this rocks, I can listen to as much music as I want!" But longterm, it's much more likely they won't utlize the service to it's full capacity.

    It comes down to the subscription running you, instead of you running the subscription. Regardless of your habits, you still pay the same monthly fee. If you underuse a service, then you're losing money. You might even be tempted to OVERUSE a service in an effort to justify the monthly fee that you pay. IMHO, this is just unhealthy. You spend all your time worring about how much you're using the service instead of paying once for the thing that you want and then then being able to enjoy it without the pressure of if you make your next payment or not.

    The music company probably pays a rate which depends on the number of times a song is downloaded or the amount of bandwith used. So if people don't use the service, they make money. And I'm going to take a guess and say that the majority of people don't use the service to the full extent (unless they are obsessed with music or whatever the subscription is for).

  1. Avenir

    Joined: Dec 1969

    0

    WalMart starts Service

    http://money.cnn.com/2004/03/23/technology/walmart_tunes.reut/index.htm

    Wallmart today started its own service and, oh no, an ENTIRE label of country music will only be sold on its site.

    Whew, keep that c*** off iTMS :D Wallmart, low-budget, and country... whoda thunkit

    (oh come on, I'm only kidding)

  1. testudo

    Joined: Dec 1969

    0

    Re: Walmart starts

    Check it out. The picture on CNN's site showing the Walmart service is on the Mac version of IE, and it won't run on a mac...

    Oh, and this quote made me happy:
    Wal-Mart said its site would also carry exclusive songs from artists including Jessica Simpson, Shania Twain and Shakira.

    Another whew for us "keep them away from me" people (i.e. the one's with intelligence).

  1. medmuse

    Joined: Dec 1969

    0

    well,

    personally, I think Shakira was a LOT hotter with dark hair. I'm not sure how this ties in with Mac news or the current thread, but I feel it is important to point out.

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