CNN dusts off iTunes subscription service rumor

[AppleInsider]

Though the rumors have never come to pass, CNN through its Media Biz website on Wednesday raised new evidence in revisiting the prospect that Apple may soon announce a monthly subscription service for digital music downloads through iTunes.

The media outlet cited Les Ottolenghi, chief executive of INTENT MediaWorks, a digital distribution system that works with peer-to-peer networks, as saying that he’s had meetings with people from Apple and believes the company will announce a subscription service for iTunes within the next six months.

"I think Apple is seriously considering a subscription offering right now even though they will probably tell you otherwise," he said.

While subscription services from iTunes rivals Napster, Real and Yahoo have done little garner interest, Ottolenghi argues that consumers aren't necessarily averse to paying monthly subscriptions. Instead, he claims music fans haven’t embraced the model because Apple doesn't offer it as an option.

Phil Leigh, a senior analyst with Inside Digital Media, seconded the notion. He claims the number one factor retarding the acceptance of the subscription model is the sheer dominance of the industry by Apple.

"Record labels would like a subscription service. They, like anyone else, like recurring revenue. Ringing the cash register every month is a beautiful way to run a business," the analyst told CNN. “But I don’t think they are going to do it because Jobs has said he’s against it and I believe that most of the time we should take people at face value unless we have compelling evidence not to."

Still, Ottolenghi is reportedly high in his convictions that Apple will eventually offer a monthly subscription model alongside its a-la-carte and album sales models, if only to increase iTunes usage amongst illegal file-sharing dwellers.

"With peer-to-peer, there are 2.5 billion downloads per month compared to Apple taking three years to sell 1 billion songs on iTunes," he said. "That’s a big difference."

[ View this article at AppleInsider.com ]


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[BlackSummerNight]

I'm not a fan boy or anything like that, but if they do this I think they are going to kill off the so called competition. I love movies, but I don't like buying dvd's, I just watch them once.

[josephwinters]

I don't think this has anything to do with the music side, I think quite possibly they will use subscription in the video side.

I would rather own my music than the movies.

[Ireland]

Originally Posted by josephwinters

I don't think this has anything to do with the music side, I think quite possibly they will use subscription in the video side.

I would rather own my music than the movies.

You're not alone in that regard by any means. I and many many many other people don't like to be tied to a subscription to listen to music. How many songs does one actually need, that and most of the songs people have are from CD's anyway. iTunes works cause people can pick and chose when they want to buy. Movies are a slightly different matter, but this could also be a subscritption service for TV Shows for an iTunes iPTV service.

Personally I rather own my movies too, although I have rented on occasion. In an ideal iTunes world this is what I would like:
1. Buy songs
2. Buy Movies
3. Rent Movie option
4. Subscription TV Shows service with some live news and sports content (not that I'm a big sport or news guy, I just think it couldn't replace cable or satellite otherwise).

Besides I'd rather support a company I like, and the service would probably be pretty good too.

[SpamSandwich]

Baloney. If iTunes were to start to see real competition, they'd change. Not now. Not in six months.

[mrjoec123]

There's no way Apple can do this on the music side without altering the way Fairplay fundamentally works. Right now, iPod and Apple TV don't handle DRM at all—only iTunes does. A rental model would force Apple to move DRM functionality onto the iPod and Apple TV. Thus, I don't see it happening.

Not to mention that every attempt to do this in the history of digital music has been a complete flop. It makes no business sense.

Video is another story, but even that would introduce unneeded complexity that would confuse and frustrate users whenever it malfunctioned. Who wants files that are timebombs, ready to self-destruct from the moment you start watching them? This is the major flaw of pay-per-view and onDemand services. I often start a movie on one day, and then not get back to finish it until a few days later.

The only way to make it work would be to set it up like Netflix, where there was no timelimit on a file, but rather a maximum number of files you could "rent" at a time. "Turn in" one file, and you'd be granted access to another. All for a monthly fee. But again, you'd have to have some way for the iPod and Apple TV to be aware immediately whenever you turned in a file. Otherwise, it would continue to be available until you synched again.

There's no reason why Netflix and iTunes can't co-exist. When I want to buy a movie that I know I'll watch many times, I buy it on iTunes. When I want to rent a movie for a single viewing, I use Netflix. It's no different from what I've always done.

It's a slippery DRM slope, moving into the rental space. I think digital files are best left for purchase only.

[JeffDM]

I wonder if the aversion to music subscription / renting is cultural. People don't have an aversion to renting movies or subscribing to videos, those models have been around for a couple decades now, but there has been no subscription music service that's been around for a long time.

People say that they watch movies only once but listen to music multiple times, but I think that maybe someone that's grown up with the subscription music idea might only listen to most tracks once when they have access to millions of tracks.

[salmonstk]

Originally Posted by mrjoec123

There's no way Apple can do this on the music side without altering the way Fairplay fundamentally works. Right now, iPod and Apple TV don't handle DRM at all—only iTunes does. A rental model would force Apple to move DRM functionality onto the iPod and Apple TV. Thus, I don't see it happening.

Not to mention that every attempt to do this in the history of digital music has been a complete flop. It makes no business sense.

Video is another story, but even that would introduce unneeded complexity that would confuse and frustrate users whenever it malfunctioned. Who wants files that are timebombs, ready to self-destruct from the moment you start watching them? This is the major flaw of pay-per-view and onDemand services. I often start a movie on one day, and then not get back to finish it until a few days later.

The only way to make it work would be to set it up like Netflix, where there was no timelimit on a file, but rather a maximum number of files you could "rent" at a time. "Turn in" one file, and you'd be granted access to another. All for a monthly fee. But again, you'd have to have some way for the iPod and Apple TV to be aware immediately whenever you turned in a file. Otherwise, it would continue to be available until you synched again.

It's a slippery DRM slope, moving into the rental space. I think digital files are best left for purchase only.

Maybe Apple is thinking of Music Subscript just to pacify the labels in the negotiations. i.e. offer subscript if the labels agree to keep the uniform price model.

[ferris13]

I agree, I would never want to "rent" music. My listen habits are a lot different from my viewing habits. But it would be great if they had a subscription service for TV and movies. Goodbye comast, hello apple. Oh wait, I would still have to pay comcast for the internet part and it costs the same to internet allow as it does to have internet and cable.

hum.

[ChevalierMalFet]

A Movie/TV subscription service would definitely address the NetFlix/Blockbuster/Cable competitors, and I could see Apple getting into this. But at the same time... isn't that basically what "buy this season" passes are? And you keep the content. I was under the impression that the market was moving away from Cable-like subscriptions and towards more flexible venues like seasons on DVD. Would it make sense for Apple to regress rather than follow the market?

The statement really smells like "we really really want a subscription model and we're trying to talk Apple into it" rather than any real incite into Apple's plans.

Not to mention his arguments for subscription model either show insane levels of ignorance or he's lying through his teeth.,

[JeffDM]

Originally Posted by mrjoec123

There's no way Apple can do this on the music side without altering the way Fairplay fundamentally works. Right now, iPod and Apple TV don't handle DRM at all—only iTunes does. A rental model would force Apple to move DRM functionality onto the iPod and Apple TV.

This paragraph is probably completely wrong.

Automatic rights revocation already exists in iPods for "Fairplay" media. Use an iPod for a month without docking it to a computer and you'll find that you won't be able to play your protected tracks. My sister went a long time between docks, using a wall charger instead of letting the computer charge the iPod, and this has happened to her several times.

[bdj21ya]

Originally Posted by mrjoec123

There's no way Apple can do this on the music side without altering the way Fairplay fundamentally works. Right now, iPod and Apple TV don't handle DRM at all—only iTunes does. A rental model would force Apple to move DRM functionality onto the iPod and Apple TV. Thus, I don't see it happening.

I disagree with your conclusion. People want to sync their iPods and Apple TV's, upon which the files which have "expired" could easily be removed. I don't think Apple or record companies would be too worried about the infrequent "rogue" iPod or Apple TV that was not being connected back to iTunes.

However, I do agree that Apple has no reason to move into subscription music, it's not what people want, and it's not where the profit is. I agree that it would be much more likely for them to move into a "Netflix style" model where you can only have a certain number of movie(s) rented out at a time. I would be fine with a rental model for movies as well. Subscription or rental, and you've certainly got my dollars committed. As it is I just don't see the point of iTS movies. At the current price-point and quality, the only thing it makes sense to purchase is kids movies. (kids care a lot less about HD, or decent compression algorithms, AND they're a lot more likely to watch a movie more than once/damage any physical media).

[running]

I don't believe CNN a word about this thing. It's maybe possible with films (movie rental), but really not with music. Steve said it million times, that people want to OWN the music, as they own the physical CD. And I hate the idea "you don't pay, so everything dissapears".

Anyway, in Czech there is no iTunes music store, so what

[sandau]

for my iPod, I don't see renting music, but for Apple TV, --IF-- I could browse the store through the Apple TV and select tracks live - I'd pay $20 a month every month and be very very happy with that..

hell yes. iTunes Store on demand. Bring it to Apple TV.

[tundraboy]

The two words from Apple that will kill Netflix (and a few others): Now Renting.

Provided it's 720P, the seamless operation that iTunes-AppleTV offers cannot be matched by any kludgy cobbled-up Windows-based multi-manufacturer mosaic.

The future of the living room is getting clearer.

[nagromme]

Originally Posted by ferris13

I agree, I would never want to "rent" music. My listen habits are a lot different from my viewing habits. But it would be great if they had a subscription service for TV and movies.

Me three... er, eleven!

The desire to buy and STORE movies/TV shows is rare for me. Music I want to listen to again and again, but with video, I'd rather rent--and therefore pay less.

[JeffDM]

Originally Posted by running

I don't believe CNN a word about this thing. It's maybe possible with films (movie rental), but really not with music. Steve said it million times, that people want to OWN the music,

Two things to keep in mind are that CNN rarely dips its toes into Apple rumor mongering, and there are times that Steve said Apple would never do something and later actually do it. Those two things don't mean that this is true, just that I wouldn't rule it out. If Digitimes said something, then I would ignore it.

[solipsism]

Originally Posted by JeffDM

Automatic rights revocation already exists in iPods for "Fairplay" media.

Can you point me to some sites that explain that? My understanding that FairPlay does not have any time-limiting features.

[Cleverboy]

I don't know why people insist on being WEIRD about this. The subscription service will likely HAPPEN, and it will likely be similar to:

1. Season Pass "subscriptions" for TV shows
2. eMusic Service
3. Music Clubs - except, online

It will NOT be similar to:

1. Napster
2. Yahoo Unlimited
3. Other piddly "RENTAL" services

You will OWN your music for cheaper, discounted prices.

What, are people high? I blame media outlets for pretending a controversy exists that doesn't exist, just to have something to talk about before adding the uncontroversial points in fine print at the end of the article. Certified lame.

[MarsMan]

Apple could go for the eMusic.com approach, which is a fixed monthly subscription for a set number of tracks to keep forever. Though the price paid per track is lower, Apple and the record companies may be willing to reduce margin in return for the steady income flow.

[solipsism]

Originally Posted by Cleverboy

I don't know why people insist on being WEIRD about this. The subscription service will likely HAPPEN, and it will likely be similar to:

1. Season Pass "subscriptions" for TV shows
2. eMusic Service
3. Music Clubs - except, online

It will NOT be similar to:

1. Napster
2. Yahoo Unlimited
3. Other piddly "RENTAL" services

You will OWN your music for cheaper, discounted prices.

What, are people high? I blame media outlets for pretending a controversy exists that doesn't exist, just to have something to talk about before adding the uncontroversial points in fine print at the end of the article. Certified lame.

I love a detailed and simplified explanation of how this would work. I know, I'm obviously "weird" and "high".

I'm not familiar with eMusic subscriptions or music clubs. THe only music subs I know of are rentals only. I reallly don't see how you can have a subscription to digital online music and at the same time own it.

[pt123]

Originally Posted by tundraboy

The two words from Apple that will kill Netflix (and a few others): Now Renting.

Provided it's 720P, the seamless operation that iTunes-AppleTV offers cannot be matched by any kludgy cobbled-up Windows-based multi-manufacturer mosaic.

The future of the living room is getting clearer.

I don't think a rental from Apple will kill off Netflix. People with Netflix already have DVD players so they can rent without having to buy any new hardware, play it in the living room, bedroom, and in the car.

It may kill off Netflix for those that can't wait a whole day for the movie to get there and $300 (+ tax) to spend for each TV in the house.

Renting from itunes would be nice if I was stuck at an airport or somewhere away from home.

[pt123]

Originally Posted by nagromme

Me three... er, eleven!

The desire to buy and STORE movies/TV shows is rare for me. Music I want to listen to again and again, but with video, I'd rather rent--and therefore pay less.

Yeah, and I have a Macbook with 60GB of hard disk filling up fast. If I buy a movie from itunes, I would have to find a place to store it, like burn it on a DVD. Burn it on a DVD and not be able to watch it on my DVD player, hmm, I think I will just buy the DVD.

[Mr. H]

I wish people would stop referring to the service that Napster and the like offer as "subscription". It is not. It is rental, and the two are very different. For a true subscription service, see eMusic.

I still don't expect iTunes to offer rental on the music side, because there doesn't seem to be the demand. Movies and TV shows, on the other hand? I think there's definitely a possibility that Apple will offer a rental option in the future.

[Mr. H]

Originally Posted by solipsism

I reallly don't see how you can have a subscription to digital online music and at the same time own it.

Subscription != rental.

If you subsribe to a magazine for 12 months, then end the subscription, do you have to give those magazines back? No - you just don't get any more.

The eMusic service works like this: you pay eMusic a set amount each month, and this gives you the right to download a certain number of tracks in each month. Tracks that you download are yours to keep. So, the closer you get to your maximum allowance, the cheaper each track is. You do not get to roll over unused downloads from month to month.

[solipsism]

Originally Posted by Mr. H

Subscription ? rental.

If you subsribe to a magazine for 12 months, then end the subscription, do you have to give those magazines back? No - you just don't get any more.

I did say "subscription to digital online music" so an analogy about magazines isn't really congruous.

The eMusic service works like this: you pay eMusic a set amount each month, and this gives you the right to download a certain number of tracks in each month. Tracks that you download are yours to keep. So, the closer you get to your maximum allowance, the cheaper each track is. You do not get to roll over unused downloads from month to month.

I like that idea, but it's not for me. Any info on how successful this eMusic subscription service is?

[addabox]

Well, if nothing else we know that given this:

The media outlet cited Les Ottolenghi, chief executive of INTENT MediaWorks, a digital distribution system that works with peer-to-peer networks, as saying that he’s had meetings with people from Apple and believes the company will announce a subscription service for iTunes within the next six months.

"I think Apple is seriously considering a subscription offering right now even though they will probably tell you otherwise," he said.

INTENT MediaWorks is now likely out of the picture. Somebody should have told ole Les that his Steveness is not a huge fan of loose lips, and he has shown himself more than happy to sink your ship.

[tundraboy]

Originally Posted by pt123

I don't think a rental from Apple will kill off Netflix. People with Netflix already have DVD players so they can rent without having to buy any new hardware, play it in the living room, bedroom, and in the car.

It may kill off Netflix for those that can't wait a whole day for the movie to get there and $300 (+ tax) to spend for each TV in the house.

Renting from itunes would be nice if I was stuck at an airport or somewhere away from home.

Sorry, I wasn't clear, I meant Netflix's download rental service. Their DVD mail service remains viable until bandwidth and economics tilt towards downloads, at which point if Apple is already doing download rentals, Netflix's growth path runs into a brick wall.

Whatever, if you're seen to hit a dead end three, five years down the road, without the prospect of future earnings, your stock price will be as good as dead today.

[TBaggins]

Originally Posted by BlackSummerNight

I'm not a fan boy or anything like that, but if they do this I think they are going to kill off the so called competition. I love movies, but I don't like buying dvd's, I just watch them once.

I agree. The primary reason for Apple to do subscription is to kick the last leg out from under the Zune/Zune Marketplace, and bury Microsoft's music efforts so deep that they won't be able to compete for many years.

Basically, Apple has Microsoft backed into a corner, and MS knows it. Hard-drive based Zunes aren't doing that well, and will be blown out of the water by the 6G touchscreen iPod arriving later this year. Flash-based Zunes will show up, but will be 'Nano wannabees' at best. Wi-fi and 'the social' aren't differentiating the Zune the way MS had hoped.

And since MS backstabbed its former PlaysForSure partners with the Zune and Zune Marketplace, while Apple meanwhile decided to open up the iTunes Store with DRM-free music, you may soon see the likes of Creative, SanDisk, Samsung, etc. advertising their next generation of players as being 'iTunes Compatible' as soon as they get AAC support.

So what can MS do, now that it's all turning to sheeite for them? Basically give away Zunes, that's about it. How do you do that profitably? The same way cellphone makers do... make people contract for a term of service, and then use that to subsidize the hardware, making it cheap or free. Something like a 'FREE (flash) Zune' with a 2-year subscription to the Zune Marketplace is probably Microsoft's last best hope in this space.

Given that, what happens if Apple does the exact same thing too, and offers subscriptions & subsidized iPods in addition to its current offerings? Would there then be any remaining compelling reason to go with the Zune or Zune Marketplace? Uhh... no, not really, unless you're a member of the increasingly tiny 'Microsoft fanboi/anyone but Apple' clique, in which case you may be able to hold the Zune's marketshare steady at 'diddly squat'.

I don't think Jobs likes subscriptions on general principle, but body-slamming what's left of Microsoft's music ambitions is something he can definitely get behind. We should know soon, because MS is running screaming towards the 'subscribe-and-subsidize' model as we speak.



.

[Mr. H]

Originally Posted by solipsism

I did say "subscription to digital online music" so an analogy about magazines isn't really congruous.

Well, actually, I think it's the perfect example to explain why people shouldn't use "subscription" to describe a rental service.

[solipsism]

Originally Posted by Mr. H

Well, actually, I think it's the perfect example to explain why people shouldn't use "subscription" to describe a rental service.

Okay, do I use a "Well well, actually" or a "Well, actually actually" here?

New Oxford American Dictionary, 2nd Edition
sub•scrip•tion |səbˈskrip sh ən|
noun
• the action of making or agreeing to make an advance payment in order to receive or participate in something
• an arrangement by which access is granted to an online service

I don't think it's beyond the scope of the definition, nor do I think that it can't be both a subscription and rental service, such as Netflix.

[EagerDragon]

I agree with several of you, most people want to own music and want to rent movies.

This would be good for movies.

[Mr. H]

Originally Posted by solipsism

I don't think it's beyond the scope of the definition, nor do I think that it can't be both a subscription and rental service, such as Netflix.

Strictly speaking, yes. But to refer to a rental service just as "subscription" with no other qualification causes problems. For example, when one refers to both Napster and eMusic as "subscription" and that's it, even though the two are very different. On the whole, people traditionally understand subscription to be a service along the lines of eMusic or a physical magazine subscription. And everyone understands what rental means.

So, I just think it makes things much more obvious if you refer to a rental service as a rental service, not a subscription.

[vinney57]

I imagine Apple's music and video business model is under constant internal review.

[teejaysplace24]

"The subscription services are not succeeding...People want to own their music, not rent it."

- Steve Jobs, iTMS Press Conference (5/28/04)

I think music rental is contrary to the entire iTunes mantra and, while Apple does roll out new products and solutions, they seldom turn their backs on their fundamental philosophies. At the same conference, Mr. Jobs downplayed the importance of video, likely due to the lack of an effective distribution system. When the video iPod was released; however, the business model was patterned after the iPod; therefore, while the technology had been updated, the basic philosophy remained the same.

In that vein, SJ also never said that people want to own their video. Temporary video downloads, therefore, make much, much more sense. Moreso, perhaps, than the current purchase/download/own model. To quote him further, "Purchasing music is an ingrained thing." Similary, renting movies is very much an "ingrained thing" and I think such a model could seriously help move units of the Apple TV. Without such a rental service, I think Apple will struggle to afford the Apple TV and iTunes Movie Store the same commanding market lead that their music-only siblings have enjoyed.

[starrius]

Don't know how successful they've been, but I didn't find their selection to be all that great. Lots of independent labels; musicians, songs and albums I've never heard of. Did actually find some fairly cool stuff you may not find on iTunes.

Originally Posted by solipsism

I did say "subscription to digital online music" so an analogy about magazines isn't really congruous.


I like that idea, but it's not for me. Any info on how successful this eMusic subscription service is?

[JeffDM]

Originally Posted by solipsism

Can you point me to some sites that explain that? My understanding that FairPlay does not have any time-limiting features.

I've never really really looked for references. All I'm saying is that I've seen this happen with my sister's iPod a few times. It would be about thirty days after the last dock and the iPod would refuse to play a protected track. Dock it and then it will play a protected track. It's probably a very rare thing for people to run into. Her computer was so old, and she had internet connectivity problems that she never wanted to use it.

[solipsism]

Originally Posted by JeffDM

I've never really really looked for references. All I'm saying is that I've seen this happen with my sister's iPod a few times. It would be about thirty days after the last dock and the iPod would refuse to play a protected track. Dock it and then it will play a protected track. It's probably a very rare thing for people to run into. Her computer was so old, and she had internet connectivity problems that she never wanted to use it.

I'm not saying you are incorrect, but the issue could lie somewhere besides FairPlay. For instance, what if the iPod's OS will auto-deny any Protected-AAC audio if the iPod has not been synced within 30 days.

Also, I know for certain this doesn't occur when an iTunes account on a computer hasn't had access to the internet in over 30 days.

[Mr. H]

I don't really get the point of the discussion about FairPlay. DRM suitable for rental is possible. If FairPlay as it is currently structured won't work, Apple can implement a version that will.

As FairPlay stands at the moment, iTunes does validate content every so often. That's how Apple can provide the "de-authorise all" button in iTunes Store accounts. The button is there in case people forget to de-authorise machines before selling them, formatting them etc. etc. If you press the button, previously authorised copies of iTunes will continue to play protected content, but will at some point stop playing said content.

[solipsism]

Originally Posted by Mr. H

I don't really get the point of the discussion about FairPlay. DRM suitable for rental is possible. If FairPlay as it is currently structured won't work, Apple can implement a version that will.

As FairPlay stands at the moment, iTunes does validate content every so often. That's how Apple can provide the "de-authorise all" button in iTunes Store accounts. The button is there in case people forget to de-authorise machines before selling them, formatting them etc. etc. If you press the button, previously authorised copies of iTunes will continue to play protected content, but will at some point stop playing said content.

I'm under the impression that it de-authorizes your iTunes certificate. Nothing specifically invalidates the FairPlay tracks.

If there is a timeout period, I'm very interested to know what it is.