According to FT.com, Apple is in discussions with the major labels regarding a bundle service that would entail a one-time fee for unlimited access to the iTunes library. This would mean each iPod/iPhone you buy would give you access to the millions of songs offered on iTunes without having to pay for each song individually. You would just pay an additional $100 or so for your iPod/iPhone. Apple is also said to be considering a subscription option for the iPhone that would entail a $7-$8 per month fee and would be charged through your monthly phone bill.
I personally like the bundle, one-time fee for unlimited access model over the subscription model. A one-time fee seems more like a value and does not lock the consumer into any contracts or confusing options in terms of service offering. One fee, one-time, all the music you want. It simple, it easy to understand, and it seems like a great value.
Well, what does all this mean for consumers? Two things. One, it’s another option for consumers to evaluate and choose. Don’t get me wrong, I am all about consumer choice and having options but with all of the music services in the marketplace, it’s overwhelming for most consumers. You have to choose from monthly subscription or yearly, streaming or pay per track, compatible or not compatible, mobile or not, burning or not, and on and on and on and on and on. I see why most consumers just chose iTunes and an iPod. It’s too much work to really explore anything else. Go with what everyone else is doing.
There is just a lot services in the marketplace and everyday another one launches. LimeWire, the infamous file sharing company, just launched their own “legal” download service. The service will not raise any eyebrows in my opinion but again, it’s yet another option for consumers.
And secondly, Apple entering the bundle or subscription market is not going to solve all of the issues currently affecting the music industry. If anything, it may make things worse as Apple has tremendous pricing power with their iPod and iTunes market share. I truly think Apple, with its obvious product muscle has the best chance of owning the bundle and/or subscription music market as iPod users seem to be very loyal. With the many many million of iPods in the marketplace and soon to be many many millions of iPhones, it’s inevitable that Apple will control a very large percentage of what music model they decide to go with. The question becomes will Apple risk cannibalizing their existing model for a model that may or may not work?
Will the record labels like Apple dominating yet another music business model? Of course not. I personally believe that over time, if the labels really want to stop the dominance of Apple, they need to just take away their music catalogs. As long as Apple has the content, there is not much the record labels can do given Apple's power and product penetration. Apple can’t sell what they don’t have. That’s a drastic move but sometimes drastic situations call for drastic measures. If record label survival is dependent on Apple, then the labels might as well fold now and save themselves from the embarrassment. Apple is going to do what’s in their shareholders’ best interest and that’s to make more money for themselves by selling Mac computers, iPods and iPhones. Digital music is just a marketing trick to increase those revenue streams.
With all that said, we will keep you posted on the iTunes subscription service as more info becomes available.
