Is Apple about to launch a subscription service?

  April 12 2007

Rumors of an iTunes subscription service have resurfaced. At first I thought that the DRM-free announcement meant a subscription service was less likely, but perhaps the opposite is true.

First of all, album purchases will already be the DRM-free "premium" versions.

As for individual tracks, the new "premium" tracks are competing directly with the DRM-protected tracks. That is, no one is going to buy both - and I fully expect the majority to choose DRM-free even with a 30% premium.

Furthermore, if everything is encumbered with DRM, a subscription service undermines the very profitable individual track purchases. After all, if you're just renting your music anyway, you might as well get it from an all-you-can-eat service at, say, $10 a month instead of paying $1 for each song.

On the other hand, a subscription service with DRM can in fact be complementary to purchasing DRM-free tracks. You rent it and, if you really like it, pay for it and keep it forever. No DRM, no activation, no limitation on how you can use it. I wouldn't be surprised to even seem them offer a "discount" for the premium music if you have a subscription service - i.e., pay $0.99 instead of $1.39. (GameFly does something similar - if you rent a game and decide to keep it, the price is heavily discounted from what it would cost to buy the used game from GameStop).

So perhaps it's logical that they replace the existing DRM offerings with a subscription-based service. In the process, they either sneak in a price increase (via Rob) or get consumers to spend a fixed amount per month and feel like they're getting a good deal. Clever, indeed.


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