With new subscription services now challenging Apple’s iTunes, why doesn’t Apple add a subscription service? They’re all the rage, right? Except for one thing. Subscription music services have no future, and Apple does not like losing money.
Almost Free Music
The idea behind music subscription services is compelling. Pay a modest monthly fee, and download and listen to all the music you want. Stop paying, and the music won’t play.
What’s wrong with that? The problem is the music subscription model. When you buy a CD, everyone from store to distributor to recording company to artist gets paid.
When you buy music online (from Apple’s iTunes Music Store), everyone in the chain also gets paid, including the online store.
Apple hasn’t bothered to get into the monthly subscription service for one very good reason. There’s no money in it.
None of the online music subscription services actually makes money for themselves, and makes very little per customer and song for recording companies, artists, and musicians. It’s a flawed model.
All of the music subscription services are in business because of investment capital, not profitability. Each one lives on the hopes that they’ll get bought out by a leader in the music industry, or that licensing fees to distribute the music will be reduced sufficient to reach profitability.
Lucas Mearian has the details on the industry as well as some pie-in-the-sky projections for subscription user growth and the potential of profits when subscribers reach a critical mass of users.
One projection says music subscribers may hit 1.7-billion by 2017, with less than 10-percent of those paying for premium features to help subsidize the subscriptions of all the rest.
That won’t happen. Despite a billion dollars of investment money, and a growing user base, only the recording companies and artists make money, and no one is saying how much when compared to what Apple’s iTunes Music Store does for the industry.
In this case, silence is not golden.
When Apple launches a subscription music service you can be sure the business model is beneficial for all players– distributors, recording companies, artists. Until then, subscription music services are cold blooded animals looked for warmer weather.