Music Subscription Services

[ScottW]

Today in the news Napster & Yahoo! pointed out that people would much rather pay $180 per year for unlimited music to fill their ipods than purchase 10,000 songs for $10,000. Although, at first blush, the idea of downloading ANYTHING you want legally, kinda like the old Napster (only it wasn't legal), sounds like an awesome idea.

But, when I think about it, do I spend $180 a year on music? No. In the odd chance I'd actually buy 180 songs, I then can listen to them year after year. It doesn't become another 180 the next year, and another 180 the next year, just to keep those songs. I think those who go for that subscription, will, through novelity, download as many songs as they can and say... I have 10,000 songs in my pocket, litterally, but the reality is... who says it will be $180 next year? Subscriptions usually go up. What if it's $240 next year, $300 the next year?

Think about NetFlix. Awesome service... *IF* you rent 5 or more DVD's per month on a regular basis. Back when I had more time, it was great. But at some point I thought, Im watching 3 movies a month, it's not worth it, so I cancelled it. What about the people who spent $15 per month and 8 months into it, they think, oh crap, either I lost my job and I can't afford to continue the subscription, or they think... man, I just am sick of it all. They have now spent $120 and have nothing to show for it. While the same person could have had 120 songs to keep. How many songs does a person REALLY listen too? Yea, I have my whole CD library from my past ion my iPod, but on rare days do I dig into the old and play any of them. But, I am not your typical music buff either. So, what do I know?

Once the novelity wears off, music subscription services will be no more.

[chevy]

Different people... different expectations... different markets... diversity is what makes the world interesting and what makes life for a 5% marketshare PC company money.

I am sure there is a market for unlimited music subscription. As there is a market for legal download. As there is a market for real CDs. And a "market" for illegal download. It's up to the music companies to move as many customers as possible to the "right" markets. Not because it's good for the karma... just because it's good for their money.

Somewhere it's funny. Apple decided to sell the music support and the music itself separately ! This was the revolution. Imagine you go to Walmart, buy a plastic CD, and then select the music to be burned on it. But if you buy the music song by song at $1, you buy CD plastics in lots of 1'000 for $500 ! Nobody would believe one can do money with _that_. Apple does.

So maybe someone else will do money by selling download time at $180/year.

[fryke]

I'm sure I'd soon have spent 180$, would iTMS at all _be_ here in Switzerland. I certainly do spend some money on CDs now, and iTMS would just make it easier for me to spend money on music.

Now: Apple could at some point introduce a monthly subscription service, should that really become an interesting market. (i.e. pay them a certain amount of money and download what you want for a month.) But I really don't see that model harming iTMS' current model just yet. I guess Apple has to look at the numbers. Does their progress go as expected? Do they keep/enlargen the market share? Do they have to react? You know, they never were in this scenario before, really. Being the market leader and all...

[evildan]

I keep finding myself thinking back to what my wise ol' boss said to me one night while we were working late one night. It was one of those nights where I found myself behind his desk helping him out with his computer and he found himself behind a cigar spouting off the latest business ideas with me.

He said that from a money making standpoint, the future of business commerce lies in subscriptions. The focus of consumers tends to be on price which they associate with value. That is the primary drive to consume; value vs. price.

He went on to say that some subscription businesses could actually charge 1/3 the previous price of their products because subscriptions are generally abused by consumers. Meaning, that consumers are generally interested in the subscription at first then they have a tendency to not use it anymore. If your company has a perishable or renewing items (food, rentals) your in the best spot. By having subscribers that don't use the product, it means free money for your company.

Yes, most subscribers generally lose interest in their subscriptions, and end up buying something they really don't want in order to maintain what they believe to be a value.

The problem with subscriptions, as I see it, is you're taking the consuming power away from the consumer. Think about it. How many subscriptions do you have? Think of them all...

Internet, phone, .Mac, Magazines, Newspappers, Special interest clubs, Health clubs, Car Insurance, Home (Renter's) insurance, Life insurance, book clubs, shopping co-ops, Health insurance, 401K, AAA, Cable (Satellite) TV, cell phone... and let's not forget the biggest subscription of them all... federal and state taxes.

My belief is that for the most part, I am better off not subscribing. How many times do I find myself in need of a tow for my car? In the last 13 years, that would be 0. How much does a tow cost? Probably about $100, but let's go crazy and say it's $500. I would still be coming out a head if I took the money I spent for that option on my car insurance (roughly $50/year x 13 years = $650) and saved it for a rainy day. If I just parked that money in a savings account I could be making an additional 3% a year on it.

How much money do I really spend in music? I don't know for a while there it seemed like I was spending quite a bit, but when I did the math, it wasn't anywhere near $180... (7 songs @ /99¢ per month for 8 months = $55.44). I kind of like the idea of having that power of deciding when to buy and how much to buy. I'm big enough to take a look at my consuming and decide if it's not worth it for me. Oh and by the way, I own all of those 56 songs. I can take them home with me... put them on my iPod, take them wherever I go. When someone asks me where I got the song, I can say... "hmm, not sure... probably iTunes Music Store." I don't have to worry about renewing anything to anyone... it is good old purchasing power.

Not all subscriptions are evil, of course... but they all share some common traits.
1. Easy to subscribe to; not so easy to unsubscribe
2. Tend to alter consumer buying pattern (i.e. NetFlix's limiting number of movies you can have at one time)
3. Very little, if any attention, to the subscriber. (helps promote drop off in interest)
4. Massive amount of attention before renewal time.

Despite what most consumers think, subscriptions favor the business, not the consumer. In most cases the consumer would be better off buying rather then subscribing.

[fryke]

... which'd still mean that the subscription model would be the way to go for businesses, right? Hmm...

[evildan]

yeah, absolutely... for businesses it's great.

The problem becomes, like in anything else, when the company chooses to abuse it's subscribers. Lackluster customer support, etc....

Subscriptions promote this type of business practice, since it becomes in the best interest of the company to try to limit time spent on its customers.