Majors And Apple Looking To Open An All-You-Can-Hear Buffet

Mar 19th, 2008 // 8 Comments

jobslego.jpgThe Financial Times is reporting that Apple has been talking to the major labels about bundling unlimited music into iPhones and iPods, although the deal hasn’t yet been done because of the amount of money Apple is willing to pay the majors for access to their catalogs. (The Cupertino device maker wants to give the labels $20 per device sold; in comparison, Nokia pays out $80 to labels for each device sold with its Comes With Music subscription plan.) The plan would tack $100 onto the cost of each iPod and $7-$8 onto each iPhone user’s monthly bill, but apparently the majors are also lobbying for a clampdown on the number of tracks consumers can keep, with the desired provision allowing “customers to keep up to 40 or 50 tracks a year, which they would retain even if they changed their device or their subscription lapsed.” I’m pretty skeptical about the whole idea–for reasons involving interoperability of the “all you can eat” catalog and previously owned music, the limitations of what the store will actually have if it ever launches, and the probably-inevitable DRM that will force the tracks to disappear once consumers stop ponying up money–but I’m always open to a second opinion, so after the jump, a few industry observers weigh in.

• “However creative label lawyers may be, how can this model fit with past or current recording and publishing contracts or government mandated royalty payments? Who will decide how the money is divided and when it is paid?… Instead of offering music as “pay once and hit the buffet table as often as you’d like forever”, there other avenues that deserve serious exploration. Ad-supported music may be part of the answer. More broadly, better serving the consumer (aka fan) is central to the industry’s future. Marketer Seth Godin wrote about artists building and monetizing their “music tribes” and models like Trent Reznor’s multi-tiered pricing and Radiohead’s “pay what you want” release have produced impressive results. Just as foodies skip the buffet and pay premium for gourmet, real music fans will support their pleasures with their wallets if they are offered to them properly. Until the industry understands and respects the bond that music creates with fans, no price will be too low.” [Hypebot]

• “Apple gets to rejuvenate its slowing iPod line, and makes the iPhone even sexier. The flailing music labels get a slice of guaranteed income, bolstered by the world’s most inventive consumer electronics company. And their belated embrace of the MP3 format means they’re not locked into Apple for all their music sales: If they want a different deal with Amazon or anyone else, they can do so — the music they sell will work on iPods and iPhones. Is this trickier than it looks? A little. Current music subscription services have a complicated per-stream license structure, and that could get in the way. There are still debates about how to pay music acts and songwriters for digital sales. Etc. Whatever. If there’s anything the music industry has learned in the last decade, it’s that it has to move quickly, leave the lawyering for later, and make sure it gives consumers a better option than stealing. And this one, hypothetical as it may be, sure sounds like one to us.” [Silicon Alley Insider]

• “Getting $20 from Apple per device will net the labels more than the $80 per device from Nokia because they don’t move even half as much as Apple does.” [Universal Indie Records/Coolfer commenter]

• “What this may mean for us as consumers, at least, would be that Apple is planning to bring the iTunes Wi-Fi Music Store to even more devices in the iPod line (or at least expand the capacity of the iPod touch to hold a subscription collection like this). If Apple really is planning to open up their library to a subscription, they should make it as easy as possible to obtain the music on demand.” [The Unofficial Apple Weblog]

Apple in talks to sell iPod and iPhone with unlimited music [FT]

  1. Dead Air ummm Dead Air

    Now, I’m no audio-phile, but I would like to know the quality of the files in these all you can hear sub services. Because although they may offer a good deal, nothing will ever beat the “free” of the P2P services. The labels need to offer tangible goods to reconnect with the audience. High quality streams coupled with a high quality headphones given out with the subscription would be a start.

    Am I asking for too much? Absolutly. But the audience has decided that music is a monotarily valueless commodity, so any price tag is essentially “too much.” The audience needs to be reminded why they in fact love music and it all starts with the quality of the product.

  2. Chris Molanphy

    Coolfer commenter FTW.

  3. Anonymous

    With regards to royalties, what about monthly subscription fees with limitless consumer access to as many songs as they want….then paying out artists a quarterly fee based on the # of times their song is downloaded in that quarter?

  4. sparkletone

    rejuvenate its slowing iPod line

    Yes. This slowing of sales just needs to be stopped right this second or DOOOM.

    Oh, Silicon Valley Insider, you cards.

    The only thing slowing is the rate of growth because of market saturation. Apple still sells an ungodly number of these things every quarter, and there’s no sign of that changing any time soon.

  5. JDel

    I think it’s a novel idea actually. Apple is continually selling new iPods, and they will continue to do so as long as people keep buying them. I, for one, have bought 3 different iPods over the last 5 years. I will likely buy another one soon. This isn’t mega bucks for record companies, but it is a steady flow of income. Record companies haven’t heard that term since the 90′s, so I’m sure they’ll eventually bite.

  6. The Dewd

    @JDel: I shall also keep buying unnecessary iPods! Steve Jobs is rich and should be compensated thusly!

  7. PerpetualCarouse

    So Doug Morris and Apple make more money, and artists still won’t get paid.

  8. Apple sets their prices high because they dictate some trends and a lot of people treat Apple as a some kind of trends oracle…

Leave A Comment