Is the Competition Getting to Apple?
If you were to open Google and simply type “Apple subscription model” you would find 195,000 results, almost all of them questioning the future of an iTunes subscription service. The rumors started spreading in 2005, only two years after iTunes launched, each promising a subscription model coming in the next six months. Most recent rumors promise a late October launch of an iTunes $129.99 yearly subscription where users can download 256-Kbps music- a high quality DRM file that will be playable through iTunes, iPods and iPhones.
What is most curious about these rumors is the fact that Steve Jobs has never made any statements alluding to this potential. Jobs has on many different occasions voiced his disinterest in the model because “People want to own their music.” So why are the rumors still circulating? If subscription models such as Rhapsody have never come to forefront of entertainment, why would iTunes change their highly popular model?
It is possible that Rhapsody’s newest business venture with Verizon Wireless brought about these rumors again. Rhapsody has been noted as the only moderately successful subscription model to date but its all-you-can-eat downloads are not playable on the iPod; but on June 30 of this year Verizon announced that customers could pay $14.99 a month to have Rhapsody’s unlimited DRM downloads on their phone or their PC. If customers do not wish to pay for unlimited DRM files, they can continue to pay $1.99 for OTA (over the air) downloads that give the consumer a copy of the song on their phone and on their PC.
Fancy terminology aside, this deal is trying to do for Rhapsody what the iPhone did for iTunes. Instead of being forced to purchase Rhapsody compatible players, users can transfer the songs to their phones. While this saves the customer anywhere from $150 to $300 on a music player, it still does not solve the problem of ownership. At any time the user wishes to end his subscription through rhapsody, all of his music goes away. If a customer chooses the ala carte option of $1.99 for mobile downloads, he is simply choosing to pay more than he would on iTunes for a lower quality version of the song.
In Europe, Nokia is launching a slightly improved version of the cell phone subscription model. According to Nokia, with its ‘Comes with Music’ program the customer will pay for a cell phone that is capable of downloading unlimited DRM files. ‘Comes with Music’ promises the same unlimited PC and mobile phone downloads as V Cast Music. Additionally, ‘Comes with Music’ will also allow for its users to burn CDs at an unspecified additional fee. The subscription price is baked into the cell phone price so that the subscription is ‘free’ for one year.
The twist that Nokia will offer is ownership. If the customer decides not to renew his subscription after a year, his DRM files will continue to play on his phone and PC. The details of the deal have not been released and many bloggers assume that the files will only continue to play on the customer’s cell phone, not PCs. Although this model is slightly improved, even if customers are allowed to keep the music they have downloaded, the fee to burn the files to a CD will likely cost something similar to an iTunes download. It can be expected that more information regarding this subscription system will be available upon its October 17 release.
The problems that both Nokia and Rhapsody face are related to ownership. Since its inception, iTunes has given its users ownership; for one $0.99 fee they can listen on their computers, iPods, car stereos and iPhones. “Never say never, but customers don’t seem to be interested in it,” Jobs told Reuters in 2007. Until subscription models get past the problems of ownership and hidden fees, it does not appear that Steve Jobs will be taking iTunes in the subscription direction.
By Tiffany Peon
