Apple, a leading producer of portable digital media players, is reportedly in talks with music labels regarding a new business model under which buyers of certain iPod and iPhone devices will get music free-of-charge throughout the whole lifetime of their device. If Apple succeeds, third-party makers of media players as well as music stores will find it tremendously hard to compete against iPod and iTunes.
Financial Times reports that Apple wants to sell its iPod media players and iPhone multimedia cellphones with unlimited access to iTunes music library at a higher price-point. Customers who acquire those devices and pay a premium to Apple will be able to download music from iTunes legally throughout the lifetime of the device without any limits. Another option for unlimited media access is subscription model - end-users have to pay for their downloads a fixed sum each month. The question is how much extra Apple and record companies will charge such music lovers.
The news-paper quotes executives familiar with negotiations as saying that they were they hinged on a dispute over the price the computer maker would be willing to pay for access to the labels' libraries. Last year Apple said that in average only about 22 tracks are purchased for each iPod ever sold, which is not a lot. Apple reportedly offered record labels $20 per device for unlimited subscription to music library, which is also not a lot, but which does reflect the average revenue music industry gets from each iPod owner. However, it is reported that one executive said that a 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.
Nokia, the world's largest maker of cellphones, is also working with record labels to provide lifetime subscription to music libraries with its mobile phones.
While subscription model is hardly new to the music industry, bundling music access with the device is a rather innovative approach that is not only comfortable for end-users, but is also dangerous for pirates and third-party online music stores, as customers with unlimited legal access to media files hardly need to download music from other sources. Moreover, the approach could redefine not only music, but also movie industry, as loads of customers are looking forward movie downloads these days.
Apple did not comment on the news-story.
Related news
- Apple Cuts Production of Music Players, Personal Computers.
Apple Reduces Production of iPod, iPhone - Apple Adds Memory to iPhone, iPod Touch.
Apple Boosts Capacity of Latest iPhone, iPod Devices - Amazon Set to Start Selling DRM-Free Tracks from Sony BMG.
Sony BMG to Sell DRM-Free Tracks via Amazon - Microsoft Set to Start Sales of New Zune Players on Tuesday.
New Microsoft Zune Media Players to Hit the Market on the 13th of November - Apple Expands iTunes Copyright Protection Free Portfolio, Lowers Price.
DRM-Free Tracks Now Available for $0.99 at iTunes - Microsoft Introduces New Zune Digital Media Players.
Microsoft Updates Zune Family, Brings In New Services - Amazon Launches Public Beta Digital Music Store.
Amazon Launches MP3 Music Store: DRM-Free Songs Available for $0.99
