Apple Mulls Flat-Rate "Unlimited Music" Option

Mike writes "Apple is in discussions with the big music companies about an 'all you can eat' model for buying music that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices. Finally, it looks like the industry (or at least Apple) is 'getting it'. The real question is not whether the big music companies will go for it, but rather, who will be the first one to get smart and agree to offer it?"

As long as

my purchase does not "expire". I want to own my music. And if it doesn't expire and I can get unlimited songs, just how expensive would this premium be? I expect it would be significant.

Re:As long as

If you RTFA, the fee Apple is pushing is $20 and you keep the music as long as you keep the device. No word on CDs but I would expect that music would continue to play through iTunes, even if you sold the device.

Re:As long as

The article is poorly worded but they aren't talking about charging the consumer $20. The $20 is what Apple wants to pay the record companies per device. It's not clear what they have in mind for the consumer. In any event, they aren't getting any bites because Nokia already pays $80 for the same priviledge.

Mind you, you can already get this feature from Rhapsody To Go for $14.99/mo for unlimited access to ~4.5 million songs. They've had this feature for quite a while now.

Re:As long as

There is nothing illegal with having a monopoly; it is, as I said earlier, only illegal when you engage in anticompetitive behavior when you have a monopoly.

In the first case, Apple may have a monopoly in MP3 players. However they have done nothing anticompetitive (again, the example where Microsoft threatened to terminate Windows licenses to Compaq because they bundled Netscape). Anticompetitive means it hurts Apple but it hurts their competitors more. Anticompetitive would be withholding iPods from WalMart until WalMart stops selling Sony.

Offering a subscription service to iPod owners is not anticompetitive because it does not prevent the competition from responding in like, nor from competing.

Microsoft terminating Windows licenses from Compaq is anticompetitive because it stops Compaq from bundling Netscape; stopping the competition by manipulating their monopoly in Windows licenses.

So, again, how is offering a subscription service for iPods and iPhones anticompetitive? It doesn't stop Amazon from offering DRM free MP3s, it doesn't stop Microsoft from releasing their own subscriptions, it doesn't stop Sony from partnering with Rhapsody for a similar service.

Re:As long as

All right, here is a list of common anticompetitive practices culled from Wiki:
* Dumping, where products are sold into a market at a low price which renders competition impossible, in order to wipe out competitors.
This might be dumping if Apple did not "pass on" the price to consumers. Given the initial up-front fee, however, the consumer appears to be paying fairly for this service.

* Exclusive dealing, where a retailer or wholesaler is 'tied' to purchase from a supplier.
This isn't exclusive dealing because the consumer can still buy music from Amazon, WalMart, Best Buy, etc and use it on the iPod. Likewise the music distributors are free to continue selling CDs and license to Amazon.

* Barriers to entry (to an industry) designed to avoid the competition that new entrants would bring.
Apple has established no barrier to prevent others from entering the market; witness Amazon's MP3 store

* Price fixing, where companies collude to set prices, effectively dismantling the free market.
This would be the case if Apple were colluding with Microsoft and Nokia so all paid the same price for licenses. This is not happening.

* Refusal to deal, e.g., two companies agree not to use a certain vendor
This would be the case if Apple were colluding with Microsoft and Nokia to lock out a certain vendor. This is not happening.

* Dividing territories, e.g., you get everything west of the Mississippi, we take everything east
This would be the case if Apple were colluding with Microsoft and Nokia for different regional markets. This is not happening.

* Limit Pricing, where the price is set by a monopolist to discourage economic entry into a market.
If we argue that Apple is a monopoly in MP3 players, this would only be applicable if they set the price of iPods low enough to prevent competitors; since this doesn't apply to the music store, nor is Apple charging too low a price, this doesn't apply.

* Product tying, where products that aren't naturally related must be bought together; this prevents consumer choice.
This would apply if the products weren't actually related; iPods play music, so purchasing a music subscription with your iPod actually makes sense. This also does not prevent consumer choice because consumers would have the option of not buying into the subscription.

* Resale price maintenance, where resellers are not allowed to set prices independently.
Resellers are free to raise prices; lowering prices would lead to losses and that is not illegal nor prohibited by Apple either.

* Coercive monopoly - all potential competition is barred from entering the market
This is what Microsoft practiced, using it's monopoly to prevent Netscape from gaining traction. Apple has not practiced that here, either.

Re:As long as

Which is identical to Microsoft maintaining their monopoly by making the next version of Direct3d Windows only, or Nintendo by only releasing Pokemon on the DS.

There is nothing wrong with an iPod only deal if they aren't actively hurting competitors; again, the example of raising iPod prices for people who own Creatives would be anticompetitive. So would denying sale of iPods to WalMart for supporting PlaysForSure or Zune, or to Amazon for running an MP3 store.

And this doesn't hurt consumers because consumers benefit from this deal (if they buy it). And consumers who don't buy it aren't hurt, at all. The absence of benefit is not harm.

Re:As long as

I want to own my music.

Then stick to CDs or unencumbered MP3s. The idea of a subscription service is that you keep paying for it to hear all the music you want. You would end up canceling your subscription the moment you downloaded as much music as your hard drive could hold and that would be the end of it.

As an Ipod owner

..who has never paid for any music from iTunes, this is one hook that I would consider biting (besides the hardware I'm already stuck with)

Free?

"free access to its entire iTunes music library in exchange for paying"

You keep using that word. I do not think it means what you think it means.

Re:Free?

it's free 'as in freedom', not 'as in beer'

Are you on crack? DRMd music is not free as in freedom.

This scheme is nothing more than a pay-up-front subscription service - one copied from Nokia at that.

Big companies are the supplier...

The real question is not whether the big music companies will go for it, but rather, who will be the first to one get smart and agree to offer it?

I disagree. Big companies still supply the music. The ITunes store would go out of business overnight of all of the labels pulled their songs from it. There are still some indie bands out there, but in terms of sheer scale, the big companies still hold many of the cards. Granted, it would be foolish of them to cut up a revenue stream, but the big companies still have the product to sell, and their input should not be dismissed.

Never going to happen with me, friend

I will NEVER give any one company the power to switch off my entire music or movie collection with the push of a button, or because of a computer error, or because their company went bankrupt or got sold.

Re:Never going to happen with me, friend

If you had read the article, then you would know that what Apple is proposing, is unlimited physical downloads that never expire. That means they cannot switch off your access, and if your hard drive crashed and killed everything on it, you could simply re-download your whole collection. If the company went bankrupt or sold, then as long as you still have the software or the device that can play the file format, then you are fine. This is not the same as other subscription services like Napster.

"Getting it"?

You can use that term when they have DRM free content.

What?!

"Finally, it looks like the industry (or at least Apple) is 'getting it'"

Apple has the most successful internet music distribution system available. From the millions of iPods sold to the billions of songs sold on iTunes. And needless to say, everyone else who has tried the "all you can eat" music pricing model has failed.

So please inform me exactly what Apple is finally getting! Thanks. I won't be holding my breath.

Re:What?!

Given that Apple doesn't talk about things like this, if they are in negotiations with the record companies then it must be the record companies who are leaking this information.

Which is probably why the rumors are heavy on the fairy-tale customer-facing product and the investor-pleasing record-company-facing revenues, and really light on the implicit restrictions and technical questions. I'd imagine the RIAA simply figured out that while $x/mo doesn't work for consumers, "$Y for as long as you own the device" does. (even when device turnover rates are used to ensure mathematical equivalence)

The only thing Apple seems to be 'getting', is pushed by the record companies to offer some of those seductive 'recurring revenues' that Napster/MS/et al keep promising.

The first line in the article contains a key word

that got dropped out of the summary, "may". Its still rumor at this point, maybe you shouldn't be trying to pass it off as fact.

I think someone's a bit naive here...

Since the average iPod owner buys about 20 tracks from the iTunes, Apple wants to make the premium about $20, arguing that it should cover the average consumer's downloads.

I think this is a bit naive (and I don't think it's Steve Jobs): people tend to eat more at a smorgasbord than if they have to pay for each entree, and this effect would be even greater when they have room for thousands of entrees in their digital stomachs. :)

Sweetness

I never saw the big deal about not "owning" your music. As long as I get to listen to the music I want to when I want to, I don't care who owns or doesn't own it, so I'm perfectly happy with my unlimited subscription to Napster. That's the one thing that's always kept me from buying an iPod- I like to be legal about things, but I don't want to pay $.99 a song to do it. If they were to offer a subscription or even a one-time pay $100-$200 thing for unlimited music forever, I know I'd be all over that, and I'd be purchasing my very first Apple product.

Music Industry feels "Entitled"...

The other side to this that News.com is reporting [news.com] is that the music industry feels entitled to a cut of iPod sales. The key piece from that article is as follows:

At this stage in the game, the music industry feels it is entitled to something.

Entitled to something!? Are you kidding me? Entitled to a middle finger up their ass maybe. Certainly not entitled to stealing the profits of another company's successful product.

I'm not sure it's Apple that's thinking about this but rather the Music companies trying to push this on Apple. What they'd really want is a monthly fee from you every month of every year for the rest of your life. Oh and if you decide to stop paying, well then you're shit out of luck. Thanks, but no thanks. I'll stick with paying for the music I want once and keeping it forever.

Hey Apple, ask EMusic before you try this

Years ago EMusic had an unlimited download model. It almost destroyed them.

The problem is that once you make it unlimited, a small but not insignificant percentage of users will immediately attempt to download the entire iTunes library. Hey, disk space is cheap, why not try, if there's no additional charge per track?

The only way this might work is if Apple doesn't have to pay even 1 cent to the record companies per download for people who download tracks under the unlimited plan. At least that way their only cost bandwidth.

Welcome to eMusic, circa 1999

Does anyone else remember when eMusic offered a flat-rate all-you-can-eat service? I found myself listening to a huge variety of music I'd ordinarily avoid, like jazz and blues. It's a very nice way to sample a lot of music and honestly a 30 second clip *is not* a reliable way to review unfamiliar music (or genres).

Re:Why should I care?

Spoiler: There will be stories that appear on Slashdot that you do not care about. Not everything will apply to you, you egomaniac!

Re:This is just Subscription model 2.0

Yeah, Napster [napster.co.uk] offers this service already. For £10/month you get unlimited access to their song library - so long as you don't mind the Windows Media DRM and total lack of support for non-Windows platforms. So Apple shouldn't have too much difficulty in their negotiations, since Napster has already paved the way. It'll be the same service, plus support for Macs and iPods. This is hardly a revolutionary new idea.

With this kind of service, DRM is a big turnoff. But I am not sure how this service could possibly be offered without DRM. The need for a special client program is also a turnoff: why not just provide the catalogue on a website and rely on the media player for DRM authentication?

Re:Silly Apple...

I only pay a monthly fee for broadband, which allows me unfettered access to ANY song I could ever hope to have... I have yet to see any DRM on it either!

So, you don't have Comcast?