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Apple CEO: iTunes subscriptions unlikely

updated 12:25 am EDT, Thu April 26, 2007

No iTunes subscriptions?

Ahead of final negotiations with the big four music labels, Apple CEO Steve Jobs on Wednesday said that he is unlikely to give in to calls from the music industry to add a subscription-based model to Apple's iTunes store, despite comments by analysts to the contrary. "Never say never, but customers don't seem to be interested in it," Jobs told Reuters in an interview after Apple reported record March quarter profits of $770 million. "The subscription model has failed so far.... People want to own their music."

The industry leading online music destination has sold more than 2.5 billion songs since it was launched and continues to expand its film offerings. During the conference call yesterday, iTunes said that has over 5 million songs, 350 television shows, and 500 movies and that iTunes accounts for over 85 percent of legal music downloads in the United States (Nielsen SoundScan numbers).

A recent revolutionary agreement with EMI for DRM-free music -- which will be available at premium in May -- puts the other labels at a disadvantage, according to previous reports. "EMI struck a deal that puts all of us at a disadvantage," said an anonymous music executive. EMI, however, defended its position, saying that consumers were frustrated with DRM protection.

The remaining labels -- Sony BMG, Universal, and Warner -- are expected to drive contract renewal negotiations with Apple toward variable song pricing, a subscription service for iTunes, and bundling more music alongside other features into digital packages.

Last week, industry executives and analysts told Reuters that they expect Jobs, following his open letter calling for DRM-free music, to push for further concessions from record companies on selling music without copy-protection.

"There are a lot of people in the other music companies who are very intrigued by it," Jobs said in the interview. "They're thinking very hard about it right now.... We've said by the end of this year, over half of the songs we offer on iTunes we believe will be in DRM-free versions," Jobs said. "I think we're going to achieve that."




by MacNN Staff

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Comments

  1. elroth

    Joined: Dec 1969

    0

    independents?

    Jobs hasn't mentioned the independent labels, but I'm assuming their songs will be offered in higher quality (and DRM-free) at some point - I hope it's soon. I'm interested to see how 256 kbps compares to lossless. I might start buying tunes if it's good enough quality.

  1. testudo

    Joined: Dec 1969

    0

    subscriptions

    Let's be real here. The reason Apple doesn't want to do subscriptions is the cost involved. From updating Fairplay, to providing updates to all the ipods, to the cost of the extra bandwidth of people downloading tons of music they want to try, to the fees paid to the labels (remember that subscriptions pay a set fee for each song played, so there is a break-even point where the subscription fee doesn't cover Apple's costs).

    Not that its a bad reason, just don't blame it on "People want to own their music". Maybe people want a subscription service that works well. People have actually signed up for other subscription services, so there must be some out there who don't mind 'not owning' their music.

    Then again, just the fact that the labels are requesting it is reason enough not to want it.

  1. nativeNYer

    Joined: Dec 1969

    0

    movies, TV shows

    I've said this before and I'll say it again, we need subscription or more preferably, a rental system, for movies and TV shows from iTS. Owning these types of media is not something most consumers really want to do. I can almost guarantee you a large number of those who have purchased TV shows or movies from iTS have done so because they wanted to watch it, and buying was the only option they are given, not because it's their preference.

    But Steve probably won't do that, because it will open the floodgates to music subscription, which he doesn't believe in. The music labels will hammer him on why he's allowing it for TV shows and movies and not for music, even though the reasons would be logical. Logic doesn't exist in the music execs worlds, only profit.

  1. Guest

    Joined: Dec 1969

    0

    Jobs tweaks iTMS model

    two reasons to reject subscriptions (for now): keep the model simple for better for bargaining with the labels; keep one iron on the stove only (DRMless music) to keep from upsetting their business model

  1. vasic

    Joined: Dec 1969

    0

    Subscriptions are dead

    This ain't happening. End of discussion.

    Now, as for the negotiations over the terms, it looks like SJ has got hand here (or, to quote a character from the 'Seinfeld' sitcom in the US: "I've got so much hand, it's coming out of my glove!"). Labels will be forced to capitulate to the will of Apple. After reporting record profits and growth, it is clear that Apple is unstoppable. It is also clear that, four years later, Apple is the only game in Downloadtown. If labels want to sell downloads, they'll have to ask (politely) Apple do do it for them. Now, if SJ manages to strongarm another label (say, Universal) to sell its ctalogue DRM-free, this will be a watershed moment. It will symbolise capitulation of record labels to the might of Apple's iTunes juggernaut.

    As for video downloads, rental model would be an excellent idea down the road. Fortunately, it is a separate deal, not involving record labels, but movie studios, so it could be negotiated independently.

    Good times are coming for the consumers...

  1. JohnnyFive

    Joined: Dec 1969

    0

    re: subscriptions

    "Not that its a bad reason, just don't blame it on 'People want to own their music.'"

    it's not a blame. it's a matter-of-fact statement. subscriptions haven't exactly made a good financial impact to the bottom line of companies that offer them. and the reason? the market is simply not interested at the moment.

    i should reiterate this time and time again: the non-smokers in my city who said they'd go to bars more often if the city banned smoking in bars didn't exactly show up in droves when the city imposed the ban. same goes for music subscriptions.

  1. brainiac_7

    Joined: Dec 1969

    0

    Thank you

    I have no interest in subscriptions to music. Period.

    I'm grateful to Apple for repeatedly being the sole sane voice in trying to make the best of what's happened in the music biz.

  1. ClevelandAdv

    Joined: Dec 1969

    0

    Subscriptions? Why?

    Why subscribe to iTunes or any other service I can just subscribe to XM and get more content - If I got to iTunes I am buying. Subscriptions are idiotic.

  1. resuna

    Joined: Dec 1969

    0

    subscriptions = drm

    You can't have subscriptions and DRM-free music. DRM doesn't work, long term, and Apple has *always* been reluctant to use it (yes, really, Jobs was dissing DRM back when the iTMS opened).

    The number of people who actually want DRM can be counted on the fingers of one hand. A lot of people think it's necessary, but Jobs doesn't and he's the one who matters here.

  1. Fast iBook

    Joined: Dec 1969

    0

    Testudo...

    Testudo again gets it wrong. I would never in my life pay for something that was not mine just to see it go away if i stopped paying. This is true for every single person i've ever talked to about digital music. I want to purchase music, not rent it. Why pay -just- to have the music sit on your computer wether you get more or not? DRM free non-subscription music is how it needs to get and stay for the digital music market to stay alive. Steve gets this, now if only testudo could understand....

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