What's the Harm In An iTunes Subscription Plan?
Wednesday, May 13, 2009 at 8:36AM 
Microsoft recently went after the iPod, by saying it would cost $30,000 to fill the iPod with music, but the magical Zune is only $15 / month for as much music as you want. This isn't the first time someone has used that $30k number before.
It all leads us to ask the same question we asked last June: What's the harm in an iTunes subscription plan? From our numbers at that time:
Today there are roughly 175 million iPods and iPhones sold. Let's say 150 million are still in use. Now let's assume 40% of those iPod/iPhone owners would be interested in a $15/mo rental program. $15/mo x 90 million would give Apple revenue of $1.25 billion per month.
There are a lot of unknowns here, so let's take a look at far more conservative numbers. Perhaps as few as 5%, or 7.5 million ipods/users would subscribe to the service. That would still mean more than $112 million in revenue each month, or $1.34billion per year. It would take less than four years to match the per song revenue.
It's still a valid question: What's the harm in adding a subscription? Give people the choice, and see what the market does. The only possible concern would be the royalties to the labels outpacing the rental income. If you don't like the rental plan, you simply don't use it. what are we missing?
Reader Comments (1)
A subscription model will need to be added at some point in the future despite Apple's claim that people want to own their music. Sure you and I grew up on buying CD's, but think of the 10 year old kid five years from now who is not going to know what a CD or record store is. The only way he will know how to acquire a song is through a computer. If he can only purchase songs through iTunes where is the incentive to buy an 32GB iPod for $250 over a $50 shuffle. He could never realistically fill either of them unless there is an "all you can eat" model for $15 a month.