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Since Apple (AAPL) launched its wildly successful iTunes music store back in 2003, CEO Steve Jobs has adamantly refused to offer a monthly subscription service. If you want to buy music from iTunes, you do it either by the single or the album, that’s it. But that could soon change.

Les Ottolenghi, CEO of INTENT MediaWorks, a digital distribution system that works with peer-to-peer networks, said he’s had meetings with people from Apple and he 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. Spokespeople for Apple were not immediately available for comment.

So far though, it appears that Apple has made the right decision to spurn the subscription model. Rival online music stores, such as Napster (NAPS), RealNetworks’ (RNWK) Rhapsody and Yahoo’s (YHOO) Y! Music Unlimited, that offer monthly subscriptions have failed to attract a lot of interest. In fact, I wrote yesterday about how teens widely prefer iTunes to subscription-based music stores.

But Ottolenghi said that even though music subscription services have struggled against iTunes so far, he doesn’t think consumers are necessarily averse to paying monthly subscriptions. He argues that because Apple doesn’t offer a subscription product, that’s why music fans haven’t embraced the model.

Phil Leigh, a senior analyst with Inside Digital Media, an independent research firm based in Tampa, agrees with that assessment.

“The number one factor retarding the acceptance of the subscription model is the dominance of Apple. The idea of subscribing to music is new to most consumers so when the dominant player doesn’t talk about it, the idea seems out of the mainstream for most consumers,” Leigh said.

And as someone who buys from iTunes pretty frequently, I’d support a subscription model. For $15 a month, all I’d need to do is buy two albums a month to justify a subscription. I think many consumers would be amenable to paying a flat fee for unlimited downloads on iTunes.

That said, Leigh isn’t so sure that Apple is willing to do an about-face on subscriptions just yet…even though the record labels clearly would be overjoyed if Apple did begin to offer a monthly iTunes plan.

“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,” Leigh said. “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.”

Plus, chatter about an iTunes subscription service is hardly new. BusinessWeek wrote about the possibility of a subscription model in August 2005 and CNET revisited the speculation last May.

Still, Ottolenghi was fairly confident that Apple will soon reveal an iTunes subscription service. He thinks Apple realizes that in order to attract more customers, particularly those that are using peer-to-peer file sharing services, Apple has to be more flexible.

“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. That’s a big difference,” he said.

So maybe, just maybe, Steve Jobs will introduce an “all you can eat” iTunes 8.0 in the near future.

Posted by Paul R. La Monica 10:19 am 28 Comments comment | Add a comment

I see a lot of really dumb comments here so I’m compelled to correct some of the misperceptions.

It’s not a rent or buy debate. It’s both. Napster, Yahoo, etc. all offer the ability to do both. Apple alreadys owns most of the market. They could dominate it almost entirely with the ADDITION of subscription to purchasing.

And it is NOT giving in to Microsoft. They may have developed a particular DRM solution but they don’t dictate what DRM solution can be implemented. I’m quite certain that Apple would implement their own indepdendent DRM similar to what they’ve done with AAC.

Finally, I see a lot of Steve-Jobs-say-peop-want-to-own-their-music comments here. I’m 36 and I’ll tell you this, my kids and the generation only 5-7 years younger than me could CARE LESS about owning music. We as an older generation may be stuck on owning but our kids don’t care about whether they can OWN IT and burn it to CD. In the coming years, portable music players will be the dominant music playing device in the home and on the road.

Wake up and smell the future. Apple has done wonderful things with portable music and how it’s consumed. But don’t think for a second that subscription-based music won’t be a dominant force as we move forward.

Posted By CB, Dallas, TX : September 12, 2007 6:36 pm

I think people don’t buy into the subscription trend because first you can only play it on a limited number of inferior devices, second when ever you want a song that very popular you can’t get it because its only for sale, if that. If itunes offered that service with all the tracks and bumped them up to 256 quality people would go for it. Imagine how many more songs you would be attracted to if you could here them without knowing that you had to pay for something you might not like. Music takes more then a 30 second sample to take a liking to.

Posted By Frank, Miami FL : April 26, 2007 11:56 am

guys a monthly music subscription is never goin to happen, remember record labels and itunes are still responsible for royalties to the artist, and athough they dont get much, a monthly subscription will not cover it, i can see them doing it for movies though but not music, itunes will stay that way, the only way i see it changing is when artist start getting a flat contract if there music goes big or not and i dont see that hapening soon because everyone wants money

Posted By Abel,paterson,nj : April 13, 2007 12:43 pm

First off, I don’t think Apple is trying to eliminate DRM. Offering DRM Free content at a higher price is not “pushing” for a DRM-free world, it seems almost to be a strategy by which they can say “hey, people aren’t buying the DRM free stuff, which shows that they don’t care about DRM”. It’s just like what they did with the first generation of MP3 phones in North America, which were completely useless, but let Apple say “see, people don’t want mp3 phones, they still want dedicated music playing devices (ie. iPods).”

As far as subscription services go, the argument about people wanting to own their music doesn’t hold much water. If you had a cel. phone with a high speed internet connection and a subscription to a digital music service, then you have every song you could ever want available to you pretty much instantly. I also think that for most people, if they have a cel. phone now, then they’ll probably continue having a cel. phone for the foreseeable future. So therefore, what is the difference in owning the song and having instant access to it wherever you are on your cel. phone? I don’t think the difference there is enough to be used as an argument against subscription models.

Posted By Jordan, Montreal, QC, Canada : April 13, 2007 11:59 am

> As Steve has long said, people want to buy music, they tend to want to rent movies because most only want to see a movie once.
Posted By C, Grand Rapids, MI

That’s a great point. Given the current dificulties downloading HD content, renting the movies from the Apple store would make a lot more sense. But you can be sure when the next gen compression technologies allow it, Apple will sell the higher quality movies for ownership.

Posted By Doug Pasnak, Edmonton AB : April 13, 2007 11:52 am

Comments that “people don’t want to rent music” are crazy. I’ve been using subscription services for 3 years (Yahoo, Rhapsody, and now Urge). For $10 a month, if I like a band, I download their entire stock of albums. That can cost anywhere between $10 - $100 per band on iTunes. Yes, some people will not do it b/c they won’t “own these songs for life.” But many, once they figure out that for $100 / year, they can stop worrying about costs and just download whatever they want legally, they’ll switch. There’s not much downside - EXCEPT that you can’t put the music on your iPod, which finally would be solved in iTunes came out with subscription. The day they do that, I’ll buy my first iPod and switch to “iTunes Subscribe.”

Posted By Joe, New York, New York : April 13, 2007 10:18 am

I think this man’s point about “Since Apple doesn’t offer it most consumers view it as outside the mainstream” is made very well by all of the previous posts.

I am a Napster to-go subscriber and I cannot for the life of me figure out why all you guys are buying songs at $0.99 apiece. I download 30 or 40 new songs at a time, listen to many of them less then once (i.e. “Yuck, skip that one!” ;) and delete those.

Through this service I have currently got over 1500 songs that I have rated at 3 or more stars. It would take me 8.33 YEARS at $14.99/month to purchase that through ITunes, not to mention the 100s of songs I’ve gotten that I DIDN’T rate at 3 or more stars.

I’m currently suffering through a Creative Zen Vision:M rather than the superior interface of the Apple just because Apple doesn’t offer this type of service. If they’d switch, so would I.

Posted By Bill Lee, Atlanta, GA : April 13, 2007 8:07 am

I honestly could never see Apple offering a subscription service, consider they are trying to rid their music of DRM technology. However, the movie service idea is actually a good one, and I would use it over a conventional service. This may be off topic, but it would be nice to see Apple create a Web Interface for it’s store, or atleast make it’s DRM playback more cross platform friendly. I mean Windows isn’t the entire world.

Posted By Michael, Broadway, VA : April 12, 2007 8:58 pm

After spending $10-$20 per month to buy CDs for my iPod, I decided to try Yahoo! subscription for $10/month. Man, what a difference it’s made. I have more music than I can listen to know. You name it, I can download it. Plus, on iTunes I used to debate whether to buy an album or not b/c I could only listen to 30 second clips. Now I just download the whole CD and delete a song if I don’t like it! Doesn’t cost me a dime extra. I really love subscribing to music and I haven’t bought a song from iTunes in two months now (although I have over 50 new CDs now).

Posted By Brian B, San Diego, CA : April 12, 2007 7:04 pm

Go to http://www.musicmatch.com. Download the player, give it a trial run at low bandwidth if you must–but I’ve been very happy with my subscription for streaming music. The bit extra for “On Demand” where you get even more control over the track selection is well worth it.

Posted By Alan Peery, London, England : April 12, 2007 6:24 pm

Should a differentiation be made between “rental” subscription services like Napster and “ownership” subscription services like eMusic?

Posted By Alex, Atlanta, GA : April 12, 2007 1:38 pm

That’s a dirty stinking lie! Steve would never do that- its against his whole philosophy of sticking it to Microsoft by being way way way cooler than them. Long live Steve!

Posted By Matt,Losangeles,CA : April 12, 2007 1:26 pm

A quick comment about subscriptions - remember that not all sub services are geared towards renting. eMusic, for instance, is a subscription service geared towards downloading, and is currently the 2nd most popular download service.

I’d love to see this for movies too, but if Apple could offer a sub service that involves downloading I’d be very happy.

Posted By Paul, LA, CA : April 12, 2007 5:45 am

Why should we believe Ottolenghi? Anyone who does business with Apple knows that shutting up one’s mouth is the number 1 rule. There were many examples when Apple went with the competitors because someone couldn’t shut his mouth about Apple’s plans.

Posted By Sharpe, Foster City, CA : April 11, 2007 11:07 pm

Adding a subscription service will allow you to listen to millions of songs on your computer, rather than just a 30 second preview. I would not be opposed to paying $15.00 a month for that feature alone. I cannot tell you the amount of disappointing albums I have downloaded in the past. A subscription service would change that and allow you only to purchase music to your hard drive AFTER you have listened to it in it’s entirety.

Posted By Raymond, Cherry Hill, NJ : April 11, 2007 9:15 pm

Guess we better buy all the music we can now, to keep music ours when we buy it we’ll have to start buying CDs again if this goes through.

Posted By Albuquerque, NM : April 11, 2007 6:57 pm

Though I think Apple going the full blow subscription music route is unlikely it would cool if Apple did offer a variation of the subscription model like a refillable compilation album. 20 songs, 20 bucks per month, exchange them as many times as you want. Buy the ones you like exchange the rest. Instead of the all you can eat Napster mess a feature like this would actually foster new music purchases.

Posted By Jason, Indianapolis, IN : April 11, 2007 4:57 pm

As everyone says here, and as more and more movie rental media comes out that requires Windows for rental, Apple will do a rental model for movies simply to stave of competition from Microsoft. Apple can’t wait - products like Zuedo, with contracts with multiple movie studios and TV networks, offering rentals but only with Windows PCs, are going to seriously hurt Apple if Apple does not wake up to this quickly.
Music is for buying DRM free. Music is for renting DRM Laden.

Posted By Eytan, Seattle WA : April 11, 2007 3:50 pm

The beauty of subscription that all seem to have overlooked is the ability to lease a song or album for a short time, find out which songs you like, buy them and dump the rest. You actually open up your buying market by allowing people to get a taste before purchase.

Posted By Rex, Fayetteville AR. : April 11, 2007 2:56 pm

iTunes movie rentals makes much more sense than music. For me the primary issue with subscription based music is that it puts more restraints on a consumer than does DRM’s. Once you stop paying the subscription you lose your entire library but one advantage i like to the subscription service is the ability to discover new music at a flat rate. So a combination of the two works for me.

Posted By Fabian Edmonds Washington : April 11, 2007 2:16 pm

Your comment that record labels would appreciate a subscription service demonstrates how clueless you are. I represent record labels, and they make far more through a la carte services like iTunes than they do through any existing subscription service, even when the download numbers are far higher with subscription services. Do your homework

Posted By Arthur Owens, Brooklyn NY : April 11, 2007 1:00 pm

Jobs has publicly stated that he would like to see DRM eliminated from music. EMI has already agreed to this. You can’t have subscriptions without DRM. They’re actually moving farther away from a subscription model, not closer.

Posted By John, Halifax NS : April 11, 2007 12:31 pm

I concur with C from Grand Rapids. the subsciption model is for the movies.

Posted By G, Boston : April 11, 2007 12:16 pm

Its seems that you have confused the two different models. The subscription services do not allow you to keep the songs indefinitely; while the current itunes lets you actually purchase songs. If there was a service that let you download unlimited songs for 15 bucks a month and keep them, people would only occasionally sign up and download a bunch of songs for a month..

Posted By Nate, Los Angeles, CA : April 11, 2007 12:07 pm

You’re missing the point. Most people do not want to rent music, just like people don’t want to rent CDs. They want to own them and do what they want to with them. “Thinking” that Apple is sabotaging music subscription services becuase it doesn’t offer one and will soon offer one is strange reason. In order to have a subscription service where songs will no longer be available for play after a certain requires DRM. Isn’t DRM something that Steve Jobs wants to get rid of? Are you sure you’re not a salesman masquerading as a journalist?….

Posted By Mark Garvey, Brooklyn New York : April 11, 2007 11:43 am

I don’t see Steve Jobs doing an about face with music. I don’t know anybody whose ever “rented” music before Yahoo and Napster rolled-out their offerings. Movies, on the otherhand, have been rented since the dawn of man (okay not that long). I could see Steve Jobs rolling out a rental movie platform within iTunes to compete with Netflix and Blockbuster.

Posted By Alan, Denver, CO : April 11, 2007 11:19 am

I think you’re missing what’s really happening. Apple won’t offer subscriptions for music. It will offer a Netflix-like rental download system for movies to work in conjunction with Apple TV. As Steve has long said, people want to buy music, they tend to want to rent movies because most only want to see a movie once.

Posted By C, Grand Rapids, MI : April 11, 2007 10:43 am

You do realize that you cannot run a subscription service with the current implementations of IPOD. (They do not have a secure clock, and the DRM wouldn’t work).

Posted By Jay Dunst, Mulkilteo Washington : April 11, 2007 10:38 am

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