Labels to ask Apple for music subscription model on iTunes - report

Posted:
in iPod + iTunes + AppleTV edited January 2014
The world's largest music labels are expected to ask Apple to add a music subscription service to its iTunes Store as part of negotiations to renew their licensing agreements with the iPod maker, The Financial Times is reporting.



Those discussions are set to begin next week when Universal, the largest of the labels, sits down with Apple to pound out the terms of its renewal contract, the paper said. It cited "people close to the matter" as saying that Universal's competitors, Sony-BMG, Warner Music and EMI, have either commenced talks with Apple already or are poised to do so.



Weighing on the labels is an ongoing decline in sales of compact discs and the simultaneous proliferation of illegal music downloads through peer-to-peer file sharing networks.



Executives for the big four music companies reportedly believe a subscription service could prove more lucrative for them than Apple's current 99 cent a-la-carte and $9.99 album download model, as it would increase the consumption of music and allow them to reap monthly payments in addition to small licensing fees each time songs are played.



"The record industry, in particular, has long been frustrated that Apple has reaped most of the profits of the burgeoning online music market through sales of its iPod player," the Financial Times wrote in its report. "By contrast, they have earned only modest royalties from digital music sales because most of the songs on iPods and other devices result from illegal download."



For the most part, the labels have been forced to place their gripes aside and conform to terms set forth by Apple chief executive Steve Jobs, as iTunes dominates the legal download market in the U.S. with a more than 85 percent share.



One music executive familiar with the latest round of discussions with Apple told the Financial Times that music execs are "desperate for an iPod killer so that they won't be beholden to Steve Jobs."



Reports that Apple would adopt a subscription model on its iTunes Store have been making the rounds over the last two years but have never proved substantial. The most recent of those reports surfaced this past Wednesday, when CNN's Media Biz website cited an industry executive as saying he believed the iPod maker would oblige the music industry within the next six months.
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Comments

  • Reply 1 of 76
    hmurchisonhmurchison Posts: 12,125member
    I don't have a problem with music subscriptions as an addendum to the current a la carte options.
  • Reply 2 of 76
    tbagginstbaggins Posts: 2,306member
    Offering subscriptions alongside the current iTunes buying model would be a very smart move for Apple.



    It would essentially knock Microsoft out of the music market, as MS's last best hope for the Zune revolves around a 'cellular carrier' type of model where someone would sign up for a 1- or 2-year subscription for Zune Marketplace, and in return would receive a 'FREE' or steeply-discounted Zune. The hardware is in effect subsidized by the service fees over the length of the contract.



    Has worked great for the wireless carriers for a long time now- that 'FREE' cellphone you got likely costs $200+ retail...



    Apple would improve its relations with the record companies, offer increased consumer choice AND kick the last leg out from under Microsoft's music efforts all with one fell swoop by offering subscriptions (along with free or cheap iPods for long-term contracted subscribers). Seems like a win-win-win situation all the way around, so long as they don't stop offering 99 cent downloads... and it's highly doubtful they'd do that.



    .
  • Reply 3 of 76
    Did the Music studios get a percentage of record player sales? No.

    It seems to me that they are complaining that Apple gets too much money from ipod sales.

    ipods have nothing to do with piracy. If there were no ipods, there would still be piracy (see cassettes).

    What if they sold music for what it's worth? What if they started to promote live music (not just the BIG names on tour, but anyone who wants to perform and can draw a reasonable crowd at a reasonable price)?

    What if they started respecting musicians as something more than money?
  • Reply 4 of 76
    northgatenorthgate Posts: 4,461member
    Screw subscriptions. I want to own the music I spend my money on. Period.
  • Reply 5 of 76
    Suppose someone signs up with Apple iTunes subscription service for 1-3 months, then downloads as many songs as they want.



    Then they download software that rips the DRM from the song.



    3 months of subscription fees results in 100s or 1000s of songs for a mere pittance compared to .99 per track, and $9.99 per album.



    Are the labels sticking it to themselves again?
  • Reply 6 of 76
    tbagginstbaggins Posts: 2,306member
    Quote:
    Originally Posted by studiomusic View Post


    Did the Music studios get a percentage of record player sales? No.

    It seems to me that they are complaining that Apple gets too much money from ipod sales.

    ipods have nothing to do with piracy. If there were no ipods, there would still be piracy (see cassettes).

    What if they sold music for what it's worth? What if they started to promote live music (not just the BIG names on tour, but anyone who wants to perform and can draw a reasonable crowd at a reasonable price)?

    What if they started respecting musicians as something more than money?



    What if they released CDs that had more than one or two good tracks on them, so you wouldn't be tempted to cherry pick songs on iTunes instead of buying the entire album? What if they signed artists who were capable of making an entire GOOD album, rather than one overproduced overhyped track and bunch of sheeite filler?

    What if they reduced CD prices to something reasonable to spur sales?

    What if they actually developed and nurtured artists over the long-term?

    What if the music industry suits actually had a clue?



    .
  • Reply 7 of 76
    chuckerchucker Posts: 5,089member
    Quote:
    Originally Posted by backcheck View Post


    Suppose someone signs up with Apple iTunes subscription service for 1-3 months, then downloads as many songs as they want.



    Then they download software that rips the DRM from the song.



    3 months of subscription fees results in 100s or 1000s of songs for a mere pittance compared to .99 per track, and $9.99 per album.



    Are the labels sticking it to themselves again?



    If they intended to pirate the songs, why would they buy a subscription to begin with?
  • Reply 8 of 76
    boogabooga Posts: 1,073member
    Quote:
    Originally Posted by Northgate View Post


    Screw subscriptions. I want to own the music I spend my money on. Period.



    You never will. The iTunes Music Store lets you license the music for a flat rate, but you certainly don't own anything when you buy from it. You still have to comply with the iTunes user agreement or you're breaking the law, and whether your license is transferable is still up to the licensor. That people buying from the iTMS music store feel they own something is a nice myth.



    When you buy a CD, you only own the physical plastic and metal substrate, by the way. The pattern of 1's and 0's is still owned by the record labels and licensed to you for home use.
  • Reply 9 of 76
    i think a subscription model in addition to their current structure make sense. while i prefer to buy my music there have been times where i've looked at the subscription model as interesting. i'd be more likely to buy one or two months of music to find a bunch of artists i like and then buy their stuff than to keep the subscription going. but that's just me.
  • Reply 10 of 76
    slewisslewis Posts: 2,080member
    I'm all for it as long as Apple can

    1) Shut Up the Niche that cares about Subscription Models

    2) Negotiate all of them into allowing Apple to sell DRM Free Music, and not just a select few Albums, but their entire catalogs that are on iTunes and beyond including Music Video.



    There's no need to hope it makes the Zune look even more like a failure. If Microsoft were to drop off the face of the Earth tomorrow, it couldn't possibly make the Zune look even worst.



    Sebastian
  • Reply 11 of 76
    mr. hmr. h Posts: 4,697member
    Appleinsider, would you please stop using "subscription" when you actually mean "rental". Or do you actually mean subscription not rental? Anyway, some clarification would be nice.
  • Reply 12 of 76
    mr. hmr. h Posts: 4,697member
    Quote:
    Originally Posted by AppleInsider View Post


    most of the songs on iPods … result from illegal download."



    This is incorrect.



    Article 1.



    Article 2.
  • Reply 13 of 76
    Quote:
    Originally Posted by Mr. H View Post


    Appleinsider, would you please stop using "subscription" when you actually mean "rental". Or do you actually mean subscription not rental? Anyway, some clarification would be nice.



    While they're at perhaps they could stop perpetuating the myth that iTunes Store albums are $9.99...some are more, some are less and some are actually $9.99.
  • Reply 14 of 76
    wallywally Posts: 211member
    Quote:
    Originally Posted by AppleInsider View Post


    music execs are "desperate for an iPod killer so that they won't be beholden to Steve Jobs."



    Translation: They've been sticking it to their customers for decades - dictating the price of CD's, interfering with digital copy technology (cd burners), and now they have spent the last 5 years being forced to work with iTunes because it's popular and works and they don't like it.



    These music execs do realize how transparent they are... right?
  • Reply 15 of 76
    mazzymazzy Posts: 53member
    "The record industry, in particular, has long been frustrated that Apple has reaped most of the profits of the burgeoning online music market through sales of its iPod player," the Financial Times wrote in its report. "By contrast, they have earned only modest royalties from digital music sales because most of the songs on iPods and other devices result from illegal download."





    WHAT!!?? That's BS....Most of the music on iPods are songs from CDs of albums that most of us have purchased over and over and over again. Repackaged, repackaged and so on... I have over 19,500 songs on my iPod. I have purchased about 500 songs from iTunes and over 18,500 are from CDs that I purchased (in some cases several times or repeats from vinyl versions). There are a few hundred from bootlegs....sue me.
  • Reply 16 of 76
    wallywally Posts: 211member
    Quote:
    Originally Posted by AppleInsider View Post


    "The record industry, in particular, has long been frustrated that Apple has reaped most of the profits of the burgeoning online music market through sales of its iPod player," the Financial Times wrote in its report. "By contrast, they have earned only modest royalties from digital music sales because most of the songs on iPods and other devices result from illegal download."



    I am so sick of hearing how these "poor record label execs" are losing money that it makes me wish they could all be disemboweled somehow. (only the greedy ones)
  • Reply 17 of 76
    Quote:
    Originally Posted by Mr.H


    Appleinsider, would you please stop using "subscription" when you actually mean "rental". Or do you actually mean subscription not rental? Anyway, some clarification would be nice.



    Amen over here.

    Quote:
    Originally Posted by caliminius View Post


    While they're at perhaps they could stop perpetuating the myth that iTunes Store albums are $9.99...some are more, some are less and some are actually $9.99.



    Most are $9.99 (the average album you find will be $9.99). Much like their movies. If you notice the ones that cost more actually have more songs than the normal album. You might consider looking closer at pricing. iTunes still beats buying the CD on price, if not quality. I don't see anything in particular to highlight there. I think iTunes movies are more inconsisant on pricing, but I haven't looked for consistancy enough to definitively say. I know there were rules.



    You know... all said... in the previous thread regarding the CNN blog story, I said that Apple would never do a RENTAL model for content. I didn't take into account what they might do if pressured by the music industry in exchange for other things Apple might want to do. Its tough when negotiating. If the music industry is going to seek RENTAL arrangements through iTunes, it's possible Apple might actually find a compromise. I still think its far more likely that they simply do a music/movie club type format, but a RENTAL system is certainly a possibility, as many of Apple's own customers are begging for such a service, even though I strongly disagree that Apple should bother offering it.



    I'll say this much... quite controversially. If Apple DOES decide to offer RENTALs... heh heh heh... that will really be a shot in the back of DRM-free content. I'd say that things would shift RADICALLY towards those of us who would gladly convert DRM tracks to DRM-free tracks and completely undermine Apple's business by just looting the lending library. It's not much different than recording a broadcast from the radio for most people, and no amount of "education" will make most people think its wrong.



    It's quite a recipe for failure considering the amount of people that regularly use Netflix and rip movies on rotation. The regular revenue might be a welcome surge, but it would be a business rife with an increased interest in cracking protection and a bubbling disrespect to content holders.



    Quote:

    "The record industry, in particular, has long been frustrated that Apple has reaped most of the profits of the burgeoning online music market through sales of its iPod player," the Financial Times wrote in its report. "By contrast, they have earned only modest royalties from digital music sales because most of the songs on iPods and other devices result from illegal download."



    That's just pathetic. iPods aren't "mostly filled" with stolen music anymore than vcr's and dvd players are "mostly used" with pirated content. They just can't get off the idea of sticking their hands in Apple's pockets.
  • Reply 18 of 76
    rrfreyrrfrey Posts: 1member
    I am sick of ipods being equated with piracy. I occasionally run into folks that brag about their hard disks full of pirated music. None of them have iPods. Most of them hate ipods.
  • Reply 19 of 76
    tofinotofino Posts: 697member
    I'm not opposed to apple offering music 'rentals'. i personally have never bought music from the online store, i prefer CD's (actually, i STILL miss the larger artwork on LP's, but that's another story), but choice is good, right? it might work for some people. i don't understand the opposition to it, as long as we can still buy our tracks.
  • Reply 20 of 76
    Isn't how they went in to negotiations last time? All full of bluster and what their demands would be? Let's face it, they are screwed yet again. Not that it bothers me at all.
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