Chicago (IL) - A dramatic shift in the way you will be consuming and paying for music on your iPod or iPhone could be in the making, according to an article published by the Financial Times. Instead of shelling out $1 for each track, the iPod maker apparently is aiming for an upfront payment in exchange for access to a complete music library over a certain period of time.

The idea is not entirely new. Some readers may remember the announcement of Nokia’s "Comes with Music" service, which allows users to download an unlimited amount of music for free for 12 months. Announced in December of last year, the Financial Times said that Nokia may be paying its flagship partner up to $80 per device for this program, but market research indicates that this investment is apparently paying off.

The newspaper said that Apple has been in negotiations to close a similar deal, but the company isn’t willing to pay as high as a premium as Nokia and has put a limit on $20 so far. Interestingly, the Financial Times quotes market research that has shown that consumers could be convinced to spend more than $100 for unlimited access to music over the lifetime of a device, or up to $8 per month as a subscription service.

An all-you-can-eat music subscription model could be very lucrative for Apple, since it is generally believed that the company is not exactly making a killing on music sales through its iTunes store: Instead, Apple is using the service as a marketing vehicle to promote its iPod and iPhone products (which usually have huge profit margins between 33 and 50%).

The music industry could profit as well: In February of last year, Apple CEO Steve Jobs noted that iPod owners had purchased only 22 songs from iTunes for their iPods, translating into less than $22 in iTunes revenue from each iPod owner.

That trend appears to continue as iTunes currently sales stand at about 4 billion and iPod unit sales at about 160 million – which translates to an average of 25 song purchases per iPod sold (leaving the iPhone as well as iPod replacement sales out of consideration). However, Apple noted in its most recent 10Q filing with the SEC that iTunes sales are accelerating not just because of the growth in the iPod installed base, but also because of “heightened consumer interest in downloading digital content, as well as the expansion of third-party audio and video content” – which indicates that people are downloading more content for their iPods than they did a few years ago.

There may be a big question mark behind the growth variable, but at least from the perspective of average unit sales, any subscription model or lifetime access premium payment in excess of $30 could even make sense for the music industry and not just Apple.         

hmm

Mar 19, 2008 12:52     

idk if I'm happy or worried. on the one hand i can replace the music that isn't the best quality(downloaded elsewhere) and replace them with this option. bad news is, DRM. not to mention itunes songs only work on ipods.
john report abuse vote down vote up Votes: +0

doubtful

Mar 19, 2008 16:39     

I really doubt they will allow you pay a price of 2 cd and get all you can download songs. I mean most people download songs...but still tons of suckers buy cd....if now they can get a ipod 20$ and all you can get...who else is going to pay for CD? plus who is paying for future songs released? I think it's more like the line of $20 a month.
yo report abuse vote down vote up Votes: +0

Piracy "killer"

Mar 19, 2008 19:24     

Ok, it won't kill piracy, but an "all you can eat" option would at least be an incentive to come in from the cold for some. My concern is that sooner or later, they start injecting commercials into the music you're getting just like you pay through the nose for cable then suffer through more and more commercials.
Jim L report abuse vote down vote up Votes: +0

too late

Mar 19, 2008 21:57     

If i knew something like this were going to happen with iTunes i might have kept my iPod instead of selling it to buy a Zune. oh well im enjoying Zune marketplace now instead of in an unknown amount of time.
Colin report abuse vote down vote up Votes: +0

Finally - Great!!

Mar 20, 2008 13:16     

Wow thats a bold move from Apple that could keep us all from downloading music illegally, especially if we only have to pay about $8 per month to listen to a few songs every other day This is very realistic and great for consumers since we dont have to pay per album, and it makes financial sense for both Apple and SONY BMG for us consumers its a way to legalize our music downloads
Tom report abuse vote down vote up Votes: +0

Maybe

Mar 20, 2008 14:22     

If the price is reasonable (no more than $20 a month and even that's high) and I can keep whatever I download even if I cancel (NO DRM), I would consider it. Otherwise, what advantage does this have over free ("illegal") downloads? Sorry, but it's going to take a lot for me give any money to those greedy f'ers at the RIAA.
Barry report abuse vote down vote up Votes: +0