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Jobs bets Yahoo! will raise prices in 5 months

updated 09:20 pm EDT, Tue May 24, 2005

Yahoo music price hike?

Steve Jobs is betting that on its online music service launched earlier this month. In early May, Yahoo! debuted a new subscription music service which starts at $60 per year for unlimited music service, which "rents" an unlimited number of songs to users as long as they pay their monthly subscription fee. According to The Wall Street Journal, Jobs said that Yahoo is charging "substantially" below its costs and will likely increase the price in the coming months. "Mr. Jobs then claimed Apple employees had a betting pool on when Yahoo would raise the $5-a-month rate, with Mr. Jobs putting his money on five months....Mr. Jobs proclaimed himself a solid believer in the 'halo effect' of iPod sales fueling Mac sales, pointing to strong growth in recent quarters. Asked when Apple would reach a 10% market share - up from the low single digits -- he said he didn't know. But he added that 'it's possible ... if people learn about our products, many of them choose them.'" [subscription required]




by MacNN Staff

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  1. klinux

    Joined: Dec 1969

    0

    hmm...

    Yahoo! is also flush with cash too and is eager to move into multimedia (note its hiring of TV veterans; Terry Semel himself is a Hollywood exec for 25 years).

    Just because Job said that, I am willing to put money down that Yahoo! will not raise price but in the next 5 months.

  1. l008com

    Joined: Dec 1969

    0

    huh

    so are you saying they will raise their price or they wont?

  1. klinux

    Joined: Dec 1969

    0

    IMHO

    I am saying that Yahoo! will not raise its price in the next 5 months, especially after Job's comment. Beyond that, hard to say but my guess is not likely.

    Here's why: logically, Y! should raise its price after it crushes the likes of Napster. I mean, what does Napster (and its ilks) offer that Y! does not? Bigger library? Better quality of audio? Integration into Yahoo? Superior application (written from scratch, support AAC, MP3, WMA, FLAC, etc? None of the above.

    Factors against Y! raising its price: iTunes is still the #1 music store. Google will come onto the music scene sooner or later. No point in raising its price, then Google comes in, and then having to lower it to compete. Y! may bundle it into the SBC plan, for example, giving it control of the pipeline and the content.

    Too many factors to call it one way or another for now.

  1. spacefreak

    Joined: Dec 1969

    0

    Fear

    Sure sounds like Jobs is scared, so much so that he is resorting to spreading his "Yahoo will raise their price in a few months" diversion through the press.

  1. dennis

    Joined: Dec 1969

    0

    Important Message

    Attention: The preceding statement by Apple CEO Steven P. Jobs was mentioned in the context of a "bet." In no way should this statement be construed as a "promise" that Yahoo will raise prices within the next five months. Should Mr. Jobs' prediction not come to fruition, Mac users and/or their antagonists should in no way feel entitled to any of the following actions: (1) whining; (2) bitching; (3) moaning.

  1. aristotles

    Joined: Dec 1969

    0

    Fear? Yeah right

    They sold more iPods in the last two quarter than they did the entire time before that. iTMS is not a money maker, the iPods are.

    Remember how you guys were saying that Apple is doomed and that they need to open up Fairplay to survive two quarters ago? Don't quit your day jobs as you guys make lousy fortune tellers.

  1. scotty321

    Joined: Dec 1969

    0

    Arrogance?

    Am I the only one that thinks that Steve Jobs seems to be getting a little arrogant here? He shouldn't let his arrogance blind him.

  1. klinux

    Joined: Dec 1969

    0

    Pot and kettle

    "you guys make lousy fortune tellers."

    So was Steve and so are you too.

  1. climacs

    Joined: Dec 1969

    0

    betting pool

    I'm starting a betting pool on when Apple starts offering subscriptions for iTMS.

    My money says five months ;)

  1. kw99

    Joined: Dec 1969

    0

    Re: Arrogance

    Steve Jobs has never lacked in the "arrogance" department. So what else is new?

    Apple would be worried if iTunes Music Store was actually playing by the same rules as its so-called "competition." It's not. iTunes has a lock on its users because its users use iPods.

    Apple will only care if users start to buy non-iPod devices just so they can use these subscription services. And amazingly enough, most consumers base their music player buying decision on the quality of the music player, not on which music download service is compatible.

    That means that Yahoo! (and Napster and Real) are depending more on Creative and the other non-iPod makers being successful against Apple's iPod than on any imagined direct competition with iTunes Music Store. And that, is called being in a bad position.

    On the other hand, Apple controls its own success when it comes to music. I think Steve Jobs has earned to right to show some "arrogance" (or perhaps "pride" would be a better word) regarding what Apple has accomplished here.

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