Apple Planning iTunes To Be Free
The catch? The price of iPods and iPhones will soar…it’s not clear whether they can make it work out…
SAN FRANCISCO (AP) - Apple Inc. is mulling a plan to upend its iTunes business by giving people unlimited free access to the music library if they’re willing to pay more for the iPod and iPhone devices they use for playing and storing the digital media, according to a report published Wednesday.
Some analysts threw cold water on the plan outlined in the Financial Times, however, saying Cupertino-based Apple would risk creating an “accounting nightmare” and alienating some artists if it started giving away songs on its iTunes online store.
Rumors have buzzed through the industry for a couple years that Apple might open iTunes for free downloads. Meanwhile, Apple’s rivals are experimenting with new ways to distribute music online—including giving it away.
The newspaper cited unnamed music industry sources in reporting that Apple is negotiating with record labels over a deal to offer a monthly music subscription for the iPhone, as well as an unlimited music bundle for both the iPod and iPhone.
The cheapest iPods—the Shuffle model—currently start at $49, and the cheapest iPhones start at $399.
The Financial Times didn’t say how much the prices of those devices would jump if the proposal were to go through. But it said the sticking point in the discussions how much Apple will pay the labels for access to their music libraries, with Apple currently offering to pay just $20 per device.
Apple did not respond to requests for comment.
Some analysts said the iTunes store is too valuable to Apple for it to give away the music in it.
“I think it’s a little far-fetched at this stage,” said Tim Bajarin, president of technology consulting firm Creative Strategies in Campbell, Calif. “The studios still want to be compensated. And the artists, especially the independent artists, still want to be compensated. I’m skeptical that carte blanche, free access to any music may be in the works.”
Only about 10 percent of Apple’s revenues come through iTunes—about $2.5 billion in 2007. But the store has been a critical tool for driving the more-lucrative iPod sales and helping musicians get paid for their work.
Apple sold $8.3 billion in iPods last year, an 8 percent increase over the year before.
The success of iTunes has helped Apple become one of the world’s biggest music retailers—it’s currently the No. 2 music retailer in the U.S. behind Wal-Mart Stores Inc.
But it’s also exposed Apple to criticism over how the company protects its content and prompted Apple to campaign for new ways to distribute music legally online.
The criticisms center on the inability to play songs bought on iTunes on rival products to the iPod, such as Microsoft Corp.’s Zune player.
To free up online music, Apple CEO Steve Jobs says the major record labels should strip protections known as Digital Rights Management, or DRM, technology, which prevents unauthorized copying, from their songs sold online. Apple, meanwhile, has refused to abandon its own copying protections.
Some of Apple’s rivals are already trying out new approaches.
Nokia Corp., the world’s largest mobile phone maker, announced a deal with Universal Music Group in December that gives buyers of certain Nokia phones unlimited free downloads of songs from the Universal catalog.
Seattle-based RealNetworks Inc. and Redmond, Wash.-based Microsoft both offer music subscriptions that cost $14.99 per month that the companies believe will appeal to customers who are more interested in discovering new music than owning old favorites.
Neil Smith, a vice president of marketing for Rhapsody, said its subscribers delve deeper into back catalogs and check out more independent artists than typical in-person music store shoppers. Subscribers also buy more MP3s than non-subscribers.
“We believe that this kind of approach, where unlimited content can flow seamlessly across different devices and media, is the best thing for the consumer and the industry,” said Microsoft spokesman Jason Reindorp. “It brings the focus back to where it should be—the music.”
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Hate the ipod, hate the iphone, really cool human interfaces and features when they work,
March 19th, 2008 at 6:18 pmoh, and they control access to your legally owned music.
I would like anI iphone but to pay a lot more for access to ton’s of music I don’t care about or have the time to listen to…
March 19th, 2008 at 7:12 pmI like Ipod just the way it is now. If its not broken, don’t change it.
We have (as an extra charge on our cable bill) you can pay extra per month for ANY AMOUNT of downloads. Rhapsody its called. Never tried it. Don’t want it. We pay enough to our cable / phone company per month.
March 19th, 2008 at 8:03 pmI am no fan of Steve Jobs, his face reminds me of a weasel or rat, however, I am guilty of loving his company’s products, with the exception of iTunes. I use the program to organize my music but I don’t buy from them at all.
At first when the iPods were made available for PC I was reluctant to get one, but after having multiple other mp3 players crap out on me within a six month period, I caved and got an iPod, & had no regrets since. I went through and got friends and families purchased CDs, put it on my external hard drive and put it on my iPod, and they have purchased iPods of which I put their music on them for them, plus I have an alternate source for new music other than the iTunes.
I have an iPhone, which I unlocked to keep using my provider, because when you shell out that kind of money you don’t want people telling you how you are going to use your stuff. It is running the latest firmware with no problems at all.
Did I need an iPhone? Errr….No! Believe me I have justified my gadget geekiness over this, but without rambling on more, I stay away from actually logging into iTunes with an account, because I always have a sneaking suspicion that they will be able to see what music you have at some point through sneaky back door litigation.
As for free iTunes I wouldn’t use it even if it were free, there’s probably a catch like linking your music library to their database.
March 20th, 2008 at 6:06 amsounds like the corporation are slowly giving in to the pirates, almost there, but apple needs to abandon this mp4 format nonsense and get compatible before i would consider buying one.
March 20th, 2008 at 6:12 am