October 8, 2010
Apple is reportedly in discussions with a number of music executives about bringing a music subscription service to iTunes. According to AppleInsider, iTunes boss Eddy Cue is personally calling key people to try to get a deal done. In the past, the music industry has rejected Apple’s attempts to bring a subscription service to the popular iTunes application. However, it appears that this time the industry is listening, in the hopes of reigniting sales of digital music. Right now, customers download songs or albums from within iTunes, which then reside on a user’s Mac or PC. From there, these files are synced with the iPhone/iPod touch or iPad. A possible subscription service brings up many questions which, so far, don't have answers. For one: what would it mean to the existing buy-and-play model long used by Apple? Also, what happens to the songs downloaded as part of the subscription service if a user decides to cancel? And, of course: what would the subscription service cost per month, and what would be its limitations? These, and other questions are surely on the minds of both Apple and music executives as they attempt to find some common ground on a possible iTunes music subscription service. One concern for Apple is the possible 2011 launch of Europe’s popular Spotify music service in the United States. Available only in Sweden, Spain, Norway, Finland, France, Netherlands and the UK, Spotify too has been talking to music executives about bringing its service stateside next year. Apple believes that the Spotify business model is flawed and won’t work in the U.S. Apple is sharing this opinion with music executives too. Founded in Stockholm in 2006, Spotify is an online streaming music service, which already has a Spotify app available in the App Store. Of course, it only is available in the countries listed above. According to CNET:
In meetings in Los Angeles recently, Apple executives told their music industry counterparts that they had serious doubts about whether Spotify's business model could ever generate significant revenues or profits, according to two sources with knowledge of the discussions.
But, Apple executives are worried about the effects a free music service might have on the rest of the market. They noted that it's tough to sell something that someone else is giving away, the sources said. One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue producers like Apple and Amazon.Whatever happens between Apple and key music executives (in talks about a possible iTunes subscription service) will include discussions on whether or not Spotify will come to the U.S. I believe that a subscription service is inevitable. However, the details will determine whether customers will like it.