iTunes songs vs subscriptions
With all the debate about Apple having a subscription service, I think it's interesting to see where those services are possibly going.
What most people don't know is that there isn't even ONE service that has signed a contract with the music companies. This is highlighted by Microsoft dropping out of negotiations the other day.
From what I know, none of these companies that have these services has paid even one red cent to the music companies yet. I don't know if they have funds tied up in escrow accounts for that purpose. If they don't, there could be a big splash as the executives junp off the bridge when they get their bills if contracts are signed.
Supposedly, music companies make more money off subscriptions than song sales, though I can't see how, especially if they haven't been paid at all.
I wonder what would happen if the negotiations ever simply broke off because of irreconcilable differences? Would those companies have to pay an arbitrated sum?
What's worse, would they have to shut down? If so, what would happen to all of those customers who are then left with nothing? Would they be allowed to keep some songs?
I was interested in whether any of this is why Apple hasn't instituted a subscription service. Otherwise it seems as though they could get the best of both worlds.
Would it take Apple to commit to this for it to become a done deal? Can anybody other than Apple negotiate for this?
What most people don't know is that there isn't even ONE service that has signed a contract with the music companies. This is highlighted by Microsoft dropping out of negotiations the other day.
From what I know, none of these companies that have these services has paid even one red cent to the music companies yet. I don't know if they have funds tied up in escrow accounts for that purpose. If they don't, there could be a big splash as the executives junp off the bridge when they get their bills if contracts are signed.
Supposedly, music companies make more money off subscriptions than song sales, though I can't see how, especially if they haven't been paid at all.
I wonder what would happen if the negotiations ever simply broke off because of irreconcilable differences? Would those companies have to pay an arbitrated sum?
What's worse, would they have to shut down? If so, what would happen to all of those customers who are then left with nothing? Would they be allowed to keep some songs?
I was interested in whether any of this is why Apple hasn't instituted a subscription service. Otherwise it seems as though they could get the best of both worlds.
Would it take Apple to commit to this for it to become a done deal? Can anybody other than Apple negotiate for this?
Comments
Originally posted by BRussell
I don't get it. You're saying the subscriptions services like Napster are renting this music without permission, or without paying their bills, or what? Do you have a link to some information about this? I've never heard this before and it seems hard to believe that they're currently being allowed to rent this music free of charge.
They've been in negotiations over this for quite a while. They've been given permission to to what they're doing with the understanding that they will come to some agreement. But so far they haven't. I know it seems strange. It seemed that way to me as well. But apparently this isn't the first time it's been done.
There was a preliminary agreement that allowed the services to begin. As I say, I don't know if money is being put into escrow.
I'll try to find an article tomorrow.
Originally posted by melgross
They've been in negotiations over this for quite a while. They've been given permission to to what they're doing with the understanding that they will come to some agreement. But so far they haven't. I know it seems strange. It seemed that way to me as well. But apparently this isn't the first time it's been done.
There was a preliminary agreement that allowed the services to begin. As I say, I don't know if money is being put into escrow.
I'll try to find an article tomorrow.
It's just barely tomorrow. Anyway, here's one article. There are others as well, but this one has the same information. Turns out they are holding the money in escrow. It's not much, and should rise considerably once negotiations finish, if they ever do. Otherwise, it seems like the music companies aren't making very much after all, despite what they say. no wonder they haven't settled, and MS gave up for now.
What I find interesting here is that the info about the MS situation says that they were asking MS for $6-8.5 per subscriber per month. That's more than Yahoo CHARGES!
http://www.techweb.com/wire/ebiz/170100837
Originally posted by Tidelwav
They do make more money off subscriptions for the same reason that cell phones make more money off subscriptions than charging by the minute. Most people won't use up their allotment, and the few that do won't bring up the average enough to matter.
The cell phone companies went to subscriptions because of competition. And they do charge if you go over your minutes. T-Mobile is trying something different because it is by far the smallest and is desperate to bring up its numbers.
Back to the music. It doesn't make sense. If each subscription service is only paying them several thousand a month, that's peanuts.
Apple is selling at least 50 million songs a month by now. That's almost $40 million a month going to the music companies. Other companies are also selling songs for the same price. The total is likely over $50 million a month billed out to the industry. Subscriptions have not grown anywhere close to what they were hoped to.
How can subscriptions compare to that?
If the music industry gets its way and charges $6 per customer as they seem to want to, what happens to the business models these companies rely on? They can't simply go from thousands a month to millions without severely raising prices. Most of these companies are barely surviving now.
The money they put in escrow won't even come close to paying for the new fees.They would need special dispensation for all that went before the new agreements or it would put them out of business immediately.
I think that Apple sees this. That it's one of the reasons why it hasn't been interested. Otherwise they could have come out with their own service and creamed the other players as they've done with iTunes now.