Apple mulls unlimited music bundle

By Andrew Edgecliffe-Johnson in London

Published: March 18 2008 22:01 | Last updated: March 18 2008 22:01
Apple is in discussions with the big music companies about a radical
new business model that would give customers free access to its
entire iTunes music library in exchange for paying a premium for its
iPod and iPhone devices.

The “all you can eat” model, a replica of Nokia’s “comes with music”
deal with Universal Music last December, could provide the struggling
recorded music industry with a much-needed fillip, and drive demand
for a new generation of Apple’s hardware.

Apple would not comment on the plan, but executives familiar with the
negotiations said they hinged on a dispute over the price the
computer maker would be willing to pay for access to the labels’
libraries.

Nokia is understood to be offering almost $80 per handset to music
industry partners, to be divided according to their share of the
market. However, Apple has so far offered only about $20 per device,
two executives said. “It’s who blinks first, and whether or not
anyone does blink,” one executive said.

Detailed market research has shown strong appetite among consumers
for deals bundling music in with the cost of the device, or in
exchange for a monthly subscription, executives said.

One executive said the research had shown that consumers would pay a
premium of up to $100 for unlimited access to music for the lifetime
of the device, or a monthly fee of $7-$8 for a subscription model.

Apple, which is thought to make relatively little money from the
iTunes store compared with its hardware sales, is also understood to
be examining a subscription model.

Subscriptions would work only for its iPhone devices, where it has a
monthly billing relationship with customers through the mobile phone
operators offering the device, while the “comes with music” model
would work with iPhones and with iPods.

The subscription models under discussion in the music industry
include the provision for customers to keep up to 40 or 50 tracks a
year, which they would retain even if they changed their device or
their subscription lapses.

Other music groups are understood to be in talks with Nokia, which is
keen to sign up as many of the major labels as possible before
launching its first “comes with music” devices in the second half of
this year.

Additional reporting by Kevin Allison in San Francisco

They keep beating all around the bush. The answer for downloadable media is to lower the prices for sonically crummy, non-DRM MP3 tracks that I can buy, own, and keep.

The answer for physical media is right in front of their eyes -- the movie industry has been giving the customer more and more for less and less on DVD. You can buy 6-disc season sets of many shows for $30 or less, and movies are generally $5-10 shortly after the initial release. If the music cartel would lower the price of catalog CDs to $5, is it not axiomatic that sales would increase?

The subscription models under discussion in the music industry include the provision for customers to keep up to 40 or 50 tracks a year, which they would retain even if they changed their device or their subscription lapses.

They still believe in DRM.

I think Steve Jobs should lower his offer. $5 a unit and the mp3s are free. The alternative: $0 a unit and close the music store.

The labels have become more trouble than they're worth. Life would be much easier for Apple if they didn't have to waste so much time arguing with record execs.

What's that? The record industry can't afford to lose almost a billion dollars in digital sales each year?

Bummer, dude.

"Detailed market research has shown strong appetite among consumers for deals bundling music in with the cost of the device, or in exchange for a monthly subscription, executives said."

Yeah, right...and we all know how honest and acurate executives and their research can be. Consumers are falling all over themselves to shell out big bucks to rent their music...sure.

"...the movie industry has been giving the customer more and more for less and less on DVD."

I agree with you on this, Auto, with one exception:

New releases of their blockbusters, like the Harry Potter movies, used to include a 2nd DVD with bonus material at the same price as all of the other new releases. Now, to get the same thing, you usually have to shell out between $23 (when first on sale) and $30 for the "Deluxe 2-disc set." Oftentimes, the "bonus materials" on this second disc are so minimal, they could have easily been included with the movie on the 1st disc...a complete ripoff.

Of course, my answer to this is to just buy the single disc version. Most of the time, I'm only interested in watching the movie anyway and rarely watch the bonus materials. Who has time? I'm lucky if I have time to watch the movie to begin with. I may watch the gag reel, but that's about it.

"...or in exchange for a monthly subscription, executives said."

Consumers have always wanted access for a monthly fee. This, of course, would have to be full access, not rental. That's what consumers wanted and would have been willing to pay Napster for. The record execs turned down billions. Makes you wonder why, doesn't it?

"...the movie industry has been giving the customer more and more for less and less on DVD."

Yeah and the record labels have been giving less and less on CD haven't they? Less music, less quality of music, less music even worth listening to.

"...to keep up to 40 or 50 tracks a
year..."

40 to 50 per year? YEAR??

50 albums might spark an interest. But 50 tracks? Yikes!