[sjohnson11]

So what are the margins on the shuffle?

[shetline]

In reply to:

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Peter, you make a good point here. I contend that DRM in all its forms runs counter to the spirit of the doctrine of fair use.

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Here's where my biggest problem is with Napster's Music to Go or the like. I'm not against it simply because the idea doesn't appeal to me as a product I want to buy. If it weren't for DRM issues, then fine, let the marketplace sort it out, and such services will fail or succeed on their own merits.
BUT... the success of the subscription model depends on the success of the DRM. I most assuredly do not want to see any DRM succeed to the degree it would have to in order for Napster to be successful with this particular business model. I dearly hope someone cracks the WMA/Janus DRM right away and people start downloading 10,000 songs they can play forever after paying $14.95 once and only once. I want Napster to learn quickly, and painfully if need be, that it's a bad idea to try to control the flow of binary data as if it were a physical object attached to a long chain -- a chain they want to be able to yank at any time.
There are trivial ways to capture any music playing on your computer in real-time, in such a way that you'll be able to burn a CD as good as the Napster downloads or, with a little second-generation compression loss, create DRM-free MP3 files. Someone will also, sooner or later, crack the WMA/Janus DRM and extract unfettered audio data, in its original compressed form, and have nice, small, DRM-free songs as good as the original downloads -- for a fraction of a penny apiece.
So, what can't be accomplished by technology will be accomplished by ridiculous laws. Already the penalties for cracking the DRM on a single song are much worse than what you'd get for stealing a whole handful of physical CDs from a brick-and-mortar store. But it will take many more laws, intrusive laws, to force PC manufacturers and home electronics manufactures to manufacture compliant hardware. Companies which receive no benefit at all from DRM-enforced control of media will, regardless, be forced to comply with what the media companies want for the protection of their DRM-dependent business models.
Why do you think Microsoft is pushing Windows Media formats so hard? They want to be in the driver's seat when everyone is forced by law to comply to their standards. Once all of new computers and home entertainment are built to enforce DRM, that DRM will be applied to software and documents too (see Palladium). Want to actually BUY music or software or movies? You won't be able to. As time goes on in the world of Microsoft's dreams, only rented, tethered-to-the-megacorp-who-rented-it-to-you, pay-per-use software and media will be available.

[iBS]

Just to play devils advocate here . . .
I own a 10GB iPod. Of that 10GB, roughly 8GB reamins the same while the rest of it changes depending on mood/purpose/location, etc. Using Apple's calculation of ~250 songs per GB, that's 2000 songs I would likely buy. At $1 per song, I'm out $2000. Dividing that by the $15 per month subscription fee, that results in roughly 134 monthly payments -- approximately 11 years.
At the advertised $10,000 for 10,000 songs, that works out to 55 years. If I'm spending the $10,000 either way, a subscription plan makes sense because now, in addition to the stuff I really like and would own otherwise, I can download other stuff for those odd situations (downloading kids music for the little ones, for example). Plus, it can continually update so that when you finally outgrow that obsession with, say, Britney Spears, you can replace with something new at no additional cost to you.
Now, I still do not think its the right business model (at least right now) for two reasons:
1. Uncertainty regarding the future existence and cost. Returning to the 8 GB example above, until I reach that 11 year mark, I lose money if the price of the subscription goes up or if the subscription service goes out of business. At 40GB ($10,000 ~ 55 years), that's a long time to risk it.
2. The inability to transfer to other media. For example, I cannot burn a CD so I can play it in the car. This is really more of a short-term problem. Most cars within the next year or so will have audio inputs for iPods, etc. Within a few years after that, I think you'll start to see cars that can download music from these types of sources using wireless broadband. Thus, as long as you have the subscription that allows transfers to the entire family's music plasyer, you're good to go. If, on the other hand, you need four subscriptions for the four family members, that adds a whole new level of financial considerations.

[jmincey]

What an excellent post and different perspective. Thank you for this.

[mac_the_knife]

In reply to:

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I haven't seen what the net profit for Apple has been from the iTMS recently. I just remember reading that the 99 cent price model is below cost.

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Here's where I read about iTMS being profitable, right at maccentral, back in July:
http://www.macworld....mbers/index.php
"Apple's iTunes Music Store turned in $73 million in revenue for the quarter, and also generated a small profit for the company, according to CFO Peter Oppenheimer, though he did not elaborate."
Now, my recollection is that music was intially priced below cost. Obviously, the more songs people buy off of iTMS, Apple's fixed costs become more and more minimal, to the point where added downloads bring the online store into the black. Perhaps we have passed that point, and while the profit margin isn't huge... neither are traditional retail margins. From what I remember, one indy label owner told me that Apple keeps like 30 cents out of every dollar, which is pretty close to what brick and mortar stores get.

[Skillz]

In reply to:

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Please explain to me, other than the immense guilability of the American consumer, why anyone would pick a subscription service over a retail iTunes model. Maybe I'm missing something.

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I don't like the idea of subscription service either, but I can setup a hypothetical situation where I could subscribe to a service.
1. Say I don't know much about jazz but want to "get into it".
2. I don't know which songs I like or even what they're called so I want to listen to a wide range of jazz pieces but don't want to buy stuff I might not like.
3. I want whole songs, not 30 second previews.
4. I want to listen while at work where I don't get radio reception.
5. I want control over the songs I can listen to so free streaming services won't do.
Solution: I do a crash course in Jazz Appreciation by joining a subscription service that has a good jazz catalogue for 1 or 2 months. After listening to a few hundred songs I narrow down ones I like and buy them from a pay-per-song service.
For a real-world long term subscription the only thing that comes to mind right now is that a few colleges have arranged for subscription services so that their students can access music. Colleges are already providing cable TV to their students so why not subscription music?

[blucaso]

One point I think everyone is missing in doing these "subscription" comparisons:
HBO, XM Satellite, etc. offer something UNIQUE for your subscription - CONTENT you can't get anywhere else. Have you noticed that HBO over the years has developed more and more new original content? That's right... because people weren't willing to pay a premium to see the same old movies they could see on any pay channel, or rent at the video store.
The difference with the Napster subscription model is that they are (presumably) going to be offering more or (perhaps) less the same songs by the same artists that you can get in 15 other ways, from illegal downloads to iTMS to Wal-Mart. There is (at least not as announced) no "premium" or "unique" content to the service.
This doesn't nullify some of the arguments as to its ability to capture some market share, but I think it radically alters the comparison to these other "premium subscription" services such as HBO, XM, etc. Even the Wall Street Journal! You're not subscribing to the Wall Street Journal so you can read the daily AP Wire, content which is available in any daily newspaper. You want to read the specific, unique content in the WSJ. Hence, it's worth it to you to pay for it.
As to all these other thoughts, I tend to agree that the Napster Subscription model would be a plausible way to offer music IN ADDITION to the iTMS model. If they make a go of it, who's to say Apple couldn't do something similar in the future? Why would both models be mutually exclusive? They each appeal to different markets. If you need the feeling of "ownership" or need to burn CD's of your tunes, then the iTMS is preferable to you. If you just love to experiment with music and listen to it on the go, maybe the Napster model is for you. The market will determine which succeeds and to what degree.
Cheers!
- Bob

[jmincey]

Yes, HBO now offers more original or unique content, (such as it is) and Napster doesn't. But at any given time an HBO channel offers one thing and one thing only. Napster offers its full music library at all times.
So as I have said this all comes down to trade-offs and usage and consumer preferences. There's just no escaping that. Meantime, we ought not to delude ourselves about iTMS and the purchase model. For all its strengths, it has some shortcomings as well.

[Nobody]

In reply to:

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People should choose the song-acquisition model, store, and player they prefer on the basis of merit and not because of artificial tactics to enforce lock-in.

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Hang on, isn't lock-in one of the "merits" you should decide on? You are not going to get a music store without DRM. Apple offers less lock-in than Napster, so it seems consumers are choosing on the merits.
Consumers do have a choice - Windows Media, or AAC. It's not Apple's fault that the Windows media players are crappy.

[robertRoss]

In reply to:

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antenna was for getting programming off the radio waves, and cable delivered it via cabling...antenna vs. cable was just the medium in which the programming was delivered, it had nothing to do with owning vs. subscription. Cable was a pay service and off-the-air was usually advertising based or in the case of PBS based on donations or government subsidies...again, how you are making a corallary, boggles the mind.

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I had TV with an antenna on it. We got television stations broadcast from broadcast towers. We had to pay for the television. Nothing else. Sometimes, I was at cottage with large antenna towers on the roof or alongside the building. It recieved television broadcasts over the airwaves. We did not have to subscribe to get the channels.
Then cable came along, and more recently, specialty cable channels and digital cable. In each case, the cable company offers various subscription packages at various prices. Choice is still somewhat limited, particularly in time, some services now offer subscriptions to channels that are somewhat more interactive. I hear they're popular. How you can't see any similarity boggles the mind.
And guess what. People still pay for this subscription service, some even for movie channels and still they buy DVDs and get this, television shows on DVD, even though they've already seen it on TV, I've done this myself!

[Nobody]

In reply to:

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Ask Blockbuster
Ask The Wall Street Journal, for cryin' out loud
LOL...you just don't get it. But that's OK...you will. Eventually.

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The difference is that Blockbuster doesn't allow you to own their entire video collection for $14.95 by hacking into Blockbuster. I'd say the record labels will ban subscription services once they realize how much free material they would be giving away.

[robertRoss]

In reply to:

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or cry me an iRiver POS player

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I know many people who have iRiver and they all love them. I know many people with iPods and they all love them. None of them use iTunes or any other service. I'm curious, since we all get along too despite owning different players why is the iRiver a POS? Or is it only because it's not what you like? I'm concerned for my fellow iRiver owners. Is there trouble ahead?

[Nobody]

In reply to:

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Or do you find fault with an orange because it doesn't have the attributes of an apple?

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No, it's more like calling a lemon a lemon, because it is. Has nothing to do with Apple. It's just a bad business decision that has many technical problems as well as business problems. When they come up with a more workable model then it might work.

[robertRoss]

In reply to:

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Main difference between your examples and the Napster model is that you can record and save the "cable" & "satellite" offerings and they are yours to keep until the media you saved it on dies, not when HBO et al decides. And that's a H U G E difference.

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It sure is. Strangely enough though, I see many HBO shows, movies, etc. for sale at local retailers in this format called DVD. And get this, people are buying them despite paying a subscription to view them over a broadcast. I've done it myself and am the proud owner of the first season of Sanford and Son.