Apple’s subscription model: The Spotify Block

12 Oct

Today, I read an interesting article on Hypebot.com. I love the fact that Apple is desperately clinging on to any arguement to stop Spotify coming in to America. Read on for the full article about how Apple are considering a subscription based model:

Apple is in serious talks about a music subscription service and once again the major label heads appear ready to do whatever Cupertino asks them to do. iTunes head Eddy Cue has recently been in touch with label execs to “figure out how the partners can move forward,” according to the NY Post.  The new music service would reportedly be priced in the $10 – $15 range depending access and portability.  Subscriptions could be tied to an iTunes in the cloud service, but at least one report suggests that Apple’s desire to add subscription music has more to do with stopping a Spotify entry into the U.S.

Major Labels Fall Under Apple’s Spell Again:

Music subscriptions are not new. Rhapsody, Napster and others have been offering them for years with only moderate success. But an iTune’s music subscription service appears to sound new and sexy to the struggling labels.

So when Apple also recently told label heads that they were having serious doubts about whether Spotify could ever deliver serious revenue; the profits Apple was really worried about were their own. According to CNet, Apple reminded the labels that it’s hard to to sell something that someone else – like ad supported Spotify – is giving away. An industry insider told CNet’s Greg Sandoval that it’s “only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.”

There are at least two major problems with Apple’s hypothesis that the labels are choosing to ignore. While single tracks sales are flat, Nielson and many others project continued album download growth. As for Spotify hurting music sales – the old “why pay for the cow when you can get the milk for free?” argument – most surveys show that Spotify increases download sales while also fighting piracy.

Apple has always been a very aggressive competitor and with Google, Spotify and others preparing to chip away at it’s supremacy in the music space, Jobs & Co. appears anxious to crush or at least stall any competition that in can.

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