Wednesday, April 02, 2008

Apple Mulls Unlimited Music Bundle

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.

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.

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.

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.
I like this idea. I have never been a fan of the piecemeal purchasing of digital music. Instead, charge a fee that allows people to listen to whatever they want and then divide that money up with artists based on how often each song is listened to.

I previously took a look at various models of compensating digital goods producers. This would be moving from selling the digital good directly (iTunes) to an unlimited access subscription plan (similar to Rhapsody) or tying it to a physical good if it is included in the cost of an iPod (similar to how the Canadians add a levy to all blank media like CD and iPods).

Over at TechCrunch they have a poll over what price would be fair with $100 up front being the most popular selection. I think $100 is definitely fair, and maybe even $200. If you own an iPod for 2 years, $200 would be equivalent to $8 a month. $200 would double the price of the $200 8 GB Nano, and add 40% to the $500 iPod Touch raising it to $700. In the first case that would mean 50% of the purchase price would go to artists, while in the second it would be 28%.

Having such a price scheme would also make the amounts that the RIAA are suing for seem ridiculous. Instead of accusing people of stealing millions of dollars of songs based on the number downloaded, now they would only be to sue you for the amount of time you have been listening to music for free (at a price of $8 a month). Regardless of how many songs you have downloaded, if you have been "stealing" them for 2 years, that would mean you have only stole $200 worth of music.

via Financial Times

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