The 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]