(cf. Paul Brindley’s latest post, here)

While we agree on a lot of issues, on this one we are diametrically opposed. The success of the subscription model isn’t a possibility, it’s an inevitability. Access trumps ownership and the economics are irrefutable. For $12 a month, do you want to buy 12 tracks on iTunes or have unlimited access to over 3 million songs, along with recommendations, personalised radio, playlists and community.

iTunes is not enough for the avid music fan, subscription done right delivers an immersive, emotional experience at a great value. What has failed so far is the messaging, which is aptly illustrated in the way Paul presents the model: music rental. The experience isn’t rental, it’s access. The reality is that if Steve Jobs had introduced an iTunes subscription service at MacWorld yesterday, the discussion would be moot. Overnight, subscription would be cool and millions of iPod users would be loading thousand of tracks to take with them everywhere.

And people would be wondering, why didn’t anyone else think of this before??

Try Rhapsody, it will change your life.

On another topic, I’m still looking for topics to discuss on my user-curated Midemnet panel on Sunday the 27th, as well as looking for a panelist passionate about a topic/issue.

Let your voice be heard!!


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  1. iTunes may not be a one stop shop but remember they were the first to offer to the bulk of the globe in an easy, safe consistent way (pricing etc) the bulk of catalogs of all major labels – the first company to do so I believe. You’re right, it’s not enough for an avid music fan, I add into my iTunes bits and pieces from other places but as a one stop legal shop it’s still the best.
    re rental – I don’t want the Universal catalog on a Nokia – I’d want ALL catalogs on a Nokia. How am I to know if an artist is on Universal or EMI etc.? Do I add in my EMI, Sony, indie etc. songs?
    And I suspect there is the human love of ownership to contend with. I’d prefer to spend $12 on iTunes than a sub. And a sub would get with my existing collection – what do I own and what isn’t mine?
    Is Rhapsody global?
    best wishes and cheers

  2. Ted, millions of iPod users are already loading thousands of tracks to take with them everywhere – this we all know. Access to music is a problem that is easily solved with technology. If you can hear it you can capture and share a digital copy. So I’ll take your access and raise you to ‘service’.
    Because access is not the endgame for music service development. There are an extraordinary number of ways innovators can build consumer value around access to music. That’s what defines ‘service’ and that’s what will ensure that the consumer value is properly managed back down the supply chain.
    To capture this value you can gatekeeper the service without gatekeepering the music. It’s a sophisticated point, but one which anyone who has competed for recurring revenues from consumers will recognise.

  3. I agree with Paul , and do believe that new services (or existing services switched to a digital way) can bring something else than a privilegied access to multimedia contents under an individual download platform or an all-inclusive sub access. Did Emusic do the same since a few years ? Is this one of the multiple forms of “long tail” economic model ?
    Clearly, there are innovative ways to create and to discover, to respond to other needs than fill and fill your tiny red Ipod or your one billion Giga hard-drive .
    local or www self broadcasting, recommandation, social sharing, live streaming from stages, games, collaborative webradio, etc.. there are so many choices. Now we have to know, guess which ones are serious and relevant business issues for these new uses

  4. Ted:
    Your comment about Rhapsody and “access” highlights the need for more examination of the substitution/promotion argument that typically characterizes the battle between owners/artists and content users.
    For over 80 years U.S. broadcasters have been able to use sound recordings without compensating the owner or recording artist. They continue to claim that our industry shouldn’t be compensated for airplay, because each play is a three minute commercial which helps sell the recording. They use record company promotion department budgets as proof that record labels want the promotion more than radio wants the recordings.
    For too many years our industry was so enamored of the sales model that we didn’t have the stomach to take on the broadcasters to make them pay for a product they used to earn billions in advertising revenue. We allowed them to use the sales generated by airplay for radio’s active music customers to excuse the substitutional nature of their service for the vast majority of their listeners, who when questioned, answer, “I don’t buy more CD’s because I hear enough music on the radio.”
    Recent studies showing Satellite Radio customers buying 2.6 fewer CD’s per year amplify this point. We are undergoing a seismic shift in the way music is consumed: the consumption IS the listen.

  5. The problem with your post is that you are only talking about what you call an “avid music fan.” Through all of the different subscription based music services history, it seems plainly evident that the typical music fan sees no value in the subscription model.
    In your system, I pay $144 dollars a year for my subscription. That is roughly what I spend a year buying any song that interests me from iTMS. The difference is that if I decide to stop my subscription service after that year, I am left with nothing. From itunes, I have added 150 songs that I enjoy to my growing library of music.
    For most of us, there just isn’t enough great new music, or enough time to listen to all of it to waste our hard earned cash on a subscription model.

  6. From the artist’s perspective there is a super opportunity to use the new age of the Internet as a competitive advantage over less technically inclined emerging artists.
    There needs to be a new strategy for Internet radio that will ’empower the artist and indie internet broadcaster’ to keep the music content at a level of ‘realness’.
    As smaller ‘niche’ communities grow around independent online internet communities, there will be an advertising opportunity that could help fund the new talent and new ‘a&r’ type people that are really just DJs similar to the early radio years where they could play what they liked.
    It will be interesting to see where this all goes and what ideas will be implemented by new artists seeking smart ways to promote their releases to MILLIONS not thousands, online.
    -Aaron Kronis (aaronkronis.com)

  7. Dear Ted,
    On sunday the 27th I will be doing a Q&A session at MidemNet, together with Bernie Resnick who is an American attorney. I am a Dutch entertainment lawyer. We will discuss New Models and New Contracts in this IAEL legal workshop from 11.15 – 12.30.
    My point is this: I really want Rhapsody, Napster or similar services to change my life, and many Europeans with me. However, this subscription model is available to US customers only. Last year, services like Pandora radio became inaccessible too for all Europeans. I believe rental subscriptions CAN be very succesful, but then they have to grant access to all Europeans too. After all, the internet is supposed to be a worldwide medium. If this problem is not fixed very soon, then I am afraid it will be too late to convince the Europeans of the great music experience a rental model can give them and the Europeans will be lost for the subscription model forever. Because these differences start to get very annoying!

  8. Ted,
    I think Steve Jobs says it best, “People want to own their music, not rent it.” Subscription models for music will continue to fail because they’re not what most of us want out of our listening experience. I have a sizable music library (close to 60 GB of digital content), and I own every last bit of it, and people understand the value of having a music collection. I have music that I’ve been listening to since high school back in the 80’s, and I still listen to it!
    So why on earth would I or anyone else pay some content provider (new euphemism for record company) a monthly fee to rent music when I can buy the music and have it pay for itself in the long run (if I wanted to look at my music collection as a long term investment, which in reality, it is) — purchased/owned music gives the listener a better ROI, because with any subscription model, there is no ROI. The moment you stop paying, you’re out of luck and out of music too! And just think, you could have bought a ton of great music with all that cash you forked over to rent your content.
    We listen to our favorite songs hundreds of times in our lifetimes, and I think people grasp the concept that with a subscription model all it means is the record companies are selling us the same content over and over again and bilking the consumer.
    You talk about all these intangibles like recommendations, radio, playlists, community, etc. — have you been to the iTunes store lately? I can get all of that, plus take my social with me in the real world. You ask the question — “For $12 a month, do you want to buy 12 tracks on iTunes or have unlimited access to over 3 million songs, along with recommendations, personalised radio, playlists and community.”
    Answer: The whole album from iTunes for 9.99 (often with more than just 10 tracks), with the digital booklet and a couple of single tracks, which I will always have with me on my iPod whenever the urge strikes to listen to them.
    The only people who really want music subscriptions are record company executives looking to make up some loss they believe they’ve endured from piracy in the digital era, which to be fair, they have endured some losses, but if they had embraced the digital revolution instead of having to be dragged into it kicking and screaming, well, then these record companies would be in a much better position today.
    It’s a simple problem Ted with a simple answer; give the people what they want, which Apple and iTunes does, very effectively and efficiently.
    There’s a reason they’ve sold 4 BN songs.

  9. Philippe Thorel on

    I agree but renting will be only one of the new services that digital distribution can provide to consumers.
    The value is no more located in the music file (MP3 or other formats) but in the service that allow you to access to it easily.
    Question: can legal services be more sexy than pirate ones?
    I strongly believe yes if all parts interested in such a challenge really want to cooperate this way.
    Have a good Midem,

  10. Dear ted
    I should be on you panel.On behalf of the indie sector. The subscription model I agree its great value for the customer but how exactly do you expect the income generated from a subscription model to fund the production of music in the independent sector.
    The return indies are getting from subscription services are pittyful. Not everyone wants back catalog and I think we are starting to see labels now thinking of these “low income” model as damaging to the potential revenues they have from actual sales.
    Many labels therein are with holding content from subscription service, internet radio and advertising revue base free download models until they have had a chance to sell it for a year or so on CD and as downloads. “Content is Key” i am sure you will agree, and subscription just doesn’t pay the bills.
    Also in my view the service that exist to actually sell your music have a terrible return averaging about 50% of RRP return for the labels. This two has to change.
    Music retail services needs to be much more efficient on behalf of the labels and artist they serve, there are too many people trying to make a quick dot com million and two few actually thinking about the effects squeezing the artist is having on the supply chain.
    If they are not careful download music service and middle men will be bypassed completely and the best content will go straight from label to customer.

  11. I’ve never understood this “ownership” fetish especially when it’s largely a myth. The record labels disagree with the premise that you own an album when you download it from iTunes. Also, if buy a CD, you own the plastic, you don’t “own” the music on it. Ask a label’s attorney if it’s legal for you to copy your purchased CD to your iPod and he or she will say no. (Shocking, isn’t it?)
    I’ve used Rhapsody for the last two years. It is a great service and in my opinion is so much better than iTunes. Three weeks ago I loaded about 15 albums that had made critics’ best-of-2007 lists. I didn’t like more than half of the albums and deleted them. This week I loaded three playlists of over 200 songs. You can’t do that on iTunes without investing a ton of money. Sure, I could have stuck with my iPod and listened to the same crap day after day, adding a song or two a week. But I could bore myself for free by listening to terrestrial radio.

  12. IFPI just released the 2008 Digital Music Report, which predictably, is more doom and gloom for the music industry. I’m curious how IFPI arrived at the conclusion that 80% of all internet traffic comprises copyright infringement with P2P networks. I’d really like to see the methodology on that one.
    Here’s the real number to look at: According to the report, Napster has a subscriber base of 750K subscribers, which tells the whole story in a nutshell. The consumer doesn’t want subscriptions. The market has clearly chosen the iPod and iTunes as the best delivery/playback system for digital content, so the real question is why haven’t the record companies gone all in with Apple and opened up their entire catalogs to the consumer instead of trying to reinvent the wheel with these subscription models which aren’t going to work anyway? To the consumer, the value is in having their music at their disposal with the ability to move that music to multiple platforms at any time of their choosing; meaning, from the computer, to the iPod, to the burned CD. Yes, the Apple/iTunes model. It works, and works well.
    It was interesting that IFPI now wants to lay the blame for piracy on the ISPs and is now trying to make telecom companies responsible for policing and fixing the problems the record industry brought on itself and continues to make worse. Maybe the problem isn’t the consumer, we already understand the behavior of the music buying public, but maybe the problem are labels trying to make these same consumers, their own customers, jump thru hoops just to buy the content they’re want. A perfect example are the actions of the Universal Group which told Apple to take a hike in favor of going to Amazon because Amazon was more flexible on the wholesale and retail side of the supply chain. Are you kidding me? So, let’s make the consumer jump thru some more hoops when we already know that these customers are only going to import that very same content into iTunes so they can listen to it on their iPods. Let’s make it harder for the customer to buy and enjoy some music, that’ll show ’em.
    Piracy is a real problem, but the way the industry has responded to it is ultimately self defeating. It’s almost like the industry wakes up in the morning with a gun and tries to decide which toe it wants to shoot off its own foot.
    Regarding the comment above where someone questioned the ‘ownership fetish’ — sure if you want to split hairs about the word ownership in the legal sense of the word, but it’s a little silly to make that kind of argument. The consumer views purchased content as theirs and “owned” to them. We’re not talking about someone buying a CD or digital track by Billy Joel and having the right to use it in a commercial.
    The real problem here is the industry itself and how it continues to resist what the market has clearly established as the preferred delivery system for digital music content. If the industry got serious about making legal downloads sexy and appealing when we already understand consumer behavior with this product, many of these problems could be mitigated. Why aren’t the complete catalogs from every label available for legal download yet? Why aren’t there promotions to push new artists with incentives to purchase legal downloads? Why isn’t there a reinvestment in pushing older content which has already paid for itself hundreds of times over? These are all unexploited profit centers which the consumer will happily pay for all day long.
    And let’s talk about pricing and the real reason CD sales are down and piracy is up: does anyone really believe that the public has an appetite to pay $17.99 for the Synchronicity CD by The Police, which was released in 1985, when they can pay Apple $9.99 for the same content? That is one of thousands of titles which the customer views as being overpriced, which leads to either a legal purchase with something like iTunes, or, going to the open sea with a P2P client to get the content from another Police fan. That’s the behavior pattern.

  13. Here in Brazil the only way forward is subscription. My kids don`t have a credit card, will never pay a la carte, download everything illegally and delete after they tire of the song. They don`t want to own the stuff, just access it as quickly as possible and then discard it. Watch the movie, change the channel.

  14. reply to Sender re: “Ask a label’s attorney if it’s legal for you to copy your purchased CD to your iPod and he or she will say no. (Shocking, isn’t it?)”
    In Australia it is legal to do so (hooray! with kudos to Phil Tripp and other lobbyists/lawyers). But I think DRM etc still restricts iTunes downloaded songs to be transferred a max of 3 times.

  15. Respectfully,
    These choices are pretty grim considering how bad music sounds coming from them.
    Rhapsody sounds dreadful
    iTunes files sound small and lifeless.
    “HD” radio, Sirius and XM are even worse.
    Technologies like these have sucked the life out of recorded music.
    FM radio does not sound perfect, but most stations make the music sound exciting.
    One can buy CDs, lossless audio and one can make an iPod sound good by putting lossless audio on it and using peripherals that improve the audio coming out of an iPod.
    Convenience does trump quality to some.
    And I am happy when people buy recorded music.

  16. couldn’t care less about the sound quality really. I listen to music on the move so it competes with the sounds of trucks etc. The people who was sonic clarity are a minor market.
    re subscription models – final word should be that I saw one of the major ones is closing today, so all those consumers who carefully built up their collections on that subscription have now lost them… forever…

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