Apple's iTunes pricing scheme will never happen

In a report that has sent shock waves throughout the entire Apple community, the Financial Times is reporting that Steve Jobs and company may be trying to coax record labels into allowing the firm to sell an unlimited number of iTunes songs as long as consumers pay a premium on iPods and iPhones. And while that may sound great to some (myself included), it'll never happen.

Unfortunately, we are currently limping through an era where common sense is always a second thought and record labels will do anything they can to ensure consumers are kept under their thumbs.

Sure, the idea of unlimited iTunes music downloads sounds great and it would probably ensure that Amazon and other services would die a slow and agonizing death, but common sense must prevail in this discussion and as far as I can tell, there's no chance any such a deal can be struck between record labels and Apple.

And here's why.

Simply put, the record labels hate Apple. In fact, the companies hate Apple so much, they snubbed Steve Jobs in his attempt to get DRM-free music on iTunes and followed Amazon down the path first. Aside from that, they've consistently rebuffed his attempts to lower song prices to a more suitable level and they've done all they can to ensure that Apple's power doesn't allow it to control their every move.

All the while, the record labels have single-handedly shown the world that they don't care about consumers and they most certainly couldn't care less about the artists. Aside from that, these record labels have consistently gone out of their way to solidify themselves as the very lowest of the low in their inexorable drive for greater profits at the expense of you and I.

Realizing this, why would any record label agree to a deal that would give Apple unlimited access to its library and receive only a set fee from the premium consumers pay for the devices?

Of course, those close to the negotiations have said that Apple and the record labels can't come to a deal because of the former's worries over exactly how much it would be forced to pay for a library of songs. Gee, you think?

Chances are, the record labels and Apple are sitting in a room somewhere and each time Apple throws out a figure, the record labels double it. Yep, that sounds about right.

More than likely, the result of these negotiations will have nothing to do with unlimited access to the iTunes store after paying a premium on hardware. If anything, Apple will probably strike a deal where consumers will be forced to pay a monthly subscription fee for unlimited downloads to be more competitive in the market.

That said, Apple is currently in talks with record labels over that as well. And according to those close to the proceedings, the record labels and Apple have only come to an agreement that customers can keep 40-50 tracks per year and would be willing to pay no more than $7-$8 per month for the subscription service.

What a crock. If true, look for a mass upheaval from serious music lovers who look at that and say, "what if I want 51 songs?"

Suffice it to say, none of these plans are worthwhile and the chances of either of them happening are slim. But in the slight chance that one slips through the cracks, look for the service to be locked down to an untenable level and the record labels to be laughing all the way to the bank.

The problem here is not Apple; I truly believe the company wants what's best for consumers as long as it can turn a profit. The real problem here is the record labels and they will continue to make our lives far more difficult than they should be because of their insatiable desire to limit our chances of getting what we want, how we want, when we want.

It's a sad day for the music industry and it looks like things will only get worse.

[cp4eva]

It continues to amaze me that these lables just don't get it. Or it could be that they see they writing on the wall, i.e. their impending demise and want to milk what's left of their failing business model for every red cent they can.

[dougjake]

These record label executives remind me of a line from "Guess Who's Coming to Dinner?". Not until their entire generation lays down and dies will the dead weight of them be off our backs.

[greggeaton]

Apple wants what's best for consumers? Seems a little fanboy to me. If they did they wouldn't have stuck their nose up to a subscription option this long. Up until now they refused to consider for a simple reason - they didn't have to! $$ was flowing in on $.99 downloads.

Consumers want the all-you-can-eat option and will flock to a subscription option. Music is the ultimate opportunity to explore and we all want the ability to sample music. Rhapsody is probably holding a vigil right now because they know they're done if Apple goes with a similar option.

[sleepy7]

Apple may not be the problem here but they really aren't much different than the record labels. Their hardware is priced a bit high. Their memory is insanely high for their computers. I don't think Apple always wants what is best for their customers as long as they can make a profit. I think they may as long as it's a major profit.

[sammyeye]

I doubt Apple is being beat over the head with the subscription model. After selling a bazillion songs I think it has proven that many people prefer to own the music. I think what we are looking at is a mature product that the company is looking to find an additional revenue stream and want to attract customers who find the subscription model attractive. That is not Apple fanboy ranting but appropriate product development. Every company on the planet (At least the good ones) is always looking to increase revenue and add customers. Apple is simply doing due diligence for their iTunes business model.

[mcooper13]

I agree with sleepy7. Around the time of Christmas 2007, upping the amount of RAM on the MacBook Pro from 2GB to 4GB was $700. Conservatively, this actually cost them $100. Considering it takes at most 10 minutes to complete, they were charging $3600 an hour to upgrade RAM. Yeah, Apple really cares about its customers.

Apple is just trying to stay relevant. The writing is on the wall with regards to DRM. I also hate the recording industry but it's refreshing to see Apple getting a beat down.

[DigZiggy]

"Really BIG Computers (And More) Mega Corporation", and the "We Rule The World) Record Industry" got Married. They'd like to Control The Universe, but instead they will now begin their Plan to Attain A Complete Music Monopoly. They acquire songs and musical compositions in untold numbers' . They Gobbled and Stuffed themselves with TASTY TUNES until they could Eat No More. Fueled by their Insatiable Addiction To ( and) Their Lust For POWER, combined with their Complete Greed and their Toxic Ego(s) ... they have stomped and kicked and crushed any and all that dared get in their way. When they were through smashing and bashing about ...and... When they were finished sucking down every song morsel ... they BRAGGED to the World about All They Controlled and All They Consumed. They Orate Orally about the Enormity of their Lip Smacking Musical Kingdom. . They Preened and Admired Themselves in their Castle of Mirrors and their Narcissism grew Very Large, indeed. For while they enjoyed Their Zealous Conquest of 'The Good Note", the world had grown silent. How long before everyone knew....they had crushed every singer, songwriter, musician and all creators of music under their boots....and if any remained, they would soon starve to death. For they had squeezed every last penny .... they'd taken it all. The Gluttonous Geniuses with Toxic Egos, who could sing not ONE note, who could write not one song didn't care ,because NOW they owned it ALL. And somewhere in the distance, and on a Different Hill .... the brew from mugs flowed like a river of tar down the sidewalks, no one could be bothered. Because all the creators and players of music and all of our music was gone.. Finally in the End, Free Music Freed us from having any music at all.

[maneeshpan]

Online music subscriptions it has been proven before just don't work. Steve Jobs knows it and most consumers know it. The reason he has refused to allow music rentals via Apple's iTunes Store this long -- and the resistance to music rentals has succeeded in creating a huge market share for the iTunes music business is because most consumers rightly want to own their music. They listen to their favorite songs over and over again. With movies a consumer will watch a movie once or twice. If it is their favorite movie it might even be 3-4 times but no more than that usually.

Owning music is more economical that renting it. Renting movies though is more economical that buying movies.

Ever since the iTunes Store launched in 2003 for both Mac and Windows users Steve Jobs has maintained that people want to own their music not rent it. Even while he was opposed to digital distribution/delivery of video (legal video download store/services) saying playing video on an iPod would not be good because iPod has too small a screen and then he later brought video to iTunes and iPods (then made Apple TV and iPhone) it was because conditions changed with video in a way they could improve the user experience and they were just waiting for the right time till technology for digital video advanced further enough for them to feel it was the right time to start offering it.

However, even after launching iTunes 6, and then iTunes 7 with TV Shows, Movies, Music and more Apple maintained that their 99 cent legal music downloads were good enough for music fans. They also launched iTunes Plus with DRM free legal music downloads which was originally priced a little higher at $1.29 a download but once Amazon MP3 came out they brought iTunes Plus prices down to the same 99 cents for DRMed iTunes music.

However, even when launching iTunes movie rentals in January 2008 Steve Jobs about 6 years after starting the iTunes music revolution (and probably 2-3 years since expanding into video) maintained at MacWorld 2008 that consumers want to rent movies but not music. They only want to own music and the online music subscription market has started to decline more and more over time because of iTunes (we see that Jobs was right all along -- thus far about music subscriptions) unless something changes that makes him think music subscriptions are worth getting into that's not likely to happen.

Yahoo! already disbanded their online music rental service -- while maintaining the Yahoo Music site and Launch-Cast streaming player and a number of other music rental services have shuttered as well as this business model for delivering music has failed.

Not counting Microsoft's Zune music subscription offerings there are only 2 other remaining music rental options on the US market at least 1) is RealNetwork's Rhapsody and 2) Napster 2 Go.

Universal Music Group was in talks with a few other music studios to establish a new label owned music rental service called Total Music but that has since led them to be investigated for antitrust concerns by the US Federal Communications Commission (and/or other US federal agencies involved in regulating markets) and the service is yet to be launched if ever.

If Apple ultimately adds music subscriptions because of saturation and maturation of its iPod players -- if the market continues maturing and growth slows down they look for innovative new ways to encourage new sales growth and inspire customers to buy new products that is possible. One reason for low iPod sales would probably be a weak economy if the US economy is dropping again there were some concerns of that this year. More people are saving money and less are spending this year -- the fact their low end model the iPod Shuffle is being sold even at incredibly cheap prices now like at $49 is affordable and attractive for the saver who is willing to spend a little money for nice things but is trying to buy more neccessary goods and less commodities and luxury goods that are priced higher up.

So buying and renting movies makes sense. Buying music makes sense but so far renting music is nonsense to most consumers and Steve Jobs unless the market dynamics change in a profound way that Jobs changes his mind and more consumers start insisting on music subscriptions -- and music subscription companies stop going out of business it is not likely for music rentals via iTunes till then to ever happen.

[maneeshpan]

Sorry for the double post but I just wanted to add for those interested in discovering new music with unattractive music subscriptions -- the best and only option would be to have some form of radio. Either use satellite radio and get a receiver that works with Sirius or XM (whatever your service provider is -- note: there has been talk that the two might merge but that hasn't happened yet), use regular terrestrial radio with an analog/standard radio/alarm clock (even if the clock tells digital time what I mean by analog is the transmission of the audio could be analog not digital) or even using the radio tuner in iTunes, use Internet radio services (ever use the AOL Radio client software/service?) or Yahoo Radio etc? or even smaller Internet radio outfits), the Radio tuner in iTunes, even using an FM radio tuner in your mp3 player (some come with a built-in tuner already but with iPods you have to buy an accessory separately that plugs into the iPod to provide radio on the go.

So radio for fans wanting to discover new music is the way to go. Music subscriptions though still not worthwhile and might never be. Own your music or listen to it on radio -- either terrestrial radio with commercials or satellite radio that is commercial free but as satellite radio is a premium type of radio service you subscribe to you have to pay the provider a monthly fee.

[galonso84]

I have to say I agree with greggeaton - this article seems a bit like an apple fan ranting. From what I read last week (on this very site, no less), it was Universal Music that approached Apple about this "subscription" idea. And it was never meant to open unlimited access to the label's library. A premium would be paid for an iPod, giving access to all songs in iTunes for something like 12 months, after which the buyer would have to roll these things into a monthly subscription fee.

If Apple truly wanted what's best for consumers, it would lower the humongous profits it makes on every iPod, open up its DRM-system to other device manufacturers, and offer the option of a monthly subscription to iTunes (and let's be clear, it's Jobs that keeps saying we don't want a subscription service - the big labels have been on Rhapsody and Napster for a few years now).

@maneeshpan: "So radio for fans wanting to discover new music is the way to go."
Gee, thanks for letting me know what the way to go is for me.
I'm sorry, but your incredibly long and winded rant makes so many jumps in its logic, that I can't even begin to argue against it. I have a subscription to Napster, and have been very happy with it. I listen to songs on a whim, songs I would never buy. And I can discover new music, and listen to a song twenty times in a week at my convenience, and then forget about it forever because it may not have been that good, or save it to my library along with the 40 other songs I kept this month - without having to pay 99 cents for each. A subscription service is definitely not for everyone, but I, for one, absolutely love and swear by it.

[The_Dude7]

I'm sorry Mr. Don you could not be any more wrong with this. When the iTunes Music Store first came out all the music was DRM Free. The record labels asked Apple to put the DRM on there for control so that people can not keep copying it. I am glad Apple has DRM. It controls stealing music. The price Apple charges is great. No I am not a fanboy but a techie that actually keeps his head and thinks realistically.