04-27-2007, 05:24 AM
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Contributing Editor Emeritus
Join Date: Sep 2006
Posts: 1,053
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Jobs Says No One Wants a Subscription
"Never say never, but customers don't seem to be interested in it," Jobs told Reuters in an interview after Apple reported blow-out quarterly results. "The subscription model has failed so far." Statements like that take me back to the heady days right at the turn of the new millennium. There was a company called Palm that made all sorts of claims about what the customers did and did not want. The customers amazingly never wanted what the company didn't offer. I see a parallel here. Everyone says Microsoft can't beat Apple at this game and Apple is invincible. No, they're not. Two of the largest services, Napster and Rhapsody, lay claim to nearly 2.3 million subscribers. Yahoo doesn't release their numbers and I could find no information about what the Zune subsciber base is. The estimated number of people who own an MP3 player in the United States is about 60 million. About 45 million people own an iPod. That leaves us with a mere 15 million people who own something else. For the time being, I'm going to pretend that only Napster and Rhapsody exist since I have no other numbers. That means that at least 15% of non-iPod owners have a subscription service. I wouldn't be surprised if the actual number was closer to 20%. So does no one want a subscription service? Hardly. I think so many people have bought into the "me-too" craze of owning an iPod that they've totally missed out on subscriptions simply because they don't have it available.
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04-27-2007, 06:16 AM
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Intellectual
Join Date: Dec 2006
Posts: 167
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Completely Agree
Your last sentence says it all.
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04-27-2007, 06:53 AM
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Ponderer
Join Date: Mar 2007
Posts: 67
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I will second that!
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04-27-2007, 02:25 PM
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Pupil
Join Date: Oct 2006
Posts: 14
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I have no idea how I could live without my subscription. I have discovered so much music that I never would have listened to before. Also, in the first 3 months of my marketplace subscription I have bought more cd's than I normally buy in a year.
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04-27-2007, 03:16 PM
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Sage
Join Date: Oct 2006
Posts: 797
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Okay whoa, back up.
You don't get to hold 80% of any market by being some "craze" which implies some flash-in-the-pan unexplainable success that's motivated by only peer pressure.
That being said, I think Steve doesn't realize one thing, and that's that his argument is a chicken and egg one. Maybe the reason subscription services like Rhapsody, Napster, and Yahoo! Music haven't taken off is because 80% of the population who owns a portable music player doesn't own one that's compatible.
In other words, if Steve threw down a subscription service tomorrow, you could bet your bottom dollar that they'd be instantly more appealing and a much bigger source of revenue.
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04-27-2007, 03:27 PM
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Contributing Editor Emeritus
Join Date: Sep 2006
Posts: 1,053
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Quote:
Originally Posted by Vincent M Ferrari
Okay whoa, back up.
You don't get to hold 80% of any market by being some "craze" which implies some flash-in-the-pan unexplainable success that's motivated by only peer pressure.
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Not saying the iPod is a bad product. Its a great MP3 player. It is missing things that prevented me from buying one. If Apple offered subscription music then we wouldn't be having this conversation because I'd have purchased a Nano when it came out.
FM is another feature that is a must have for me. If you do any working out in a gym (such as my mom), that's often important so you can listen to the stations they have going in there.
At this point though? Yes, it is a craze. A huge portion of the market is driven by kids who want the iPod because everyone else has them. I read editorials on it all the time. The kids simply have to have an iPod or they're not cool. Ironically I think its that same segment of the market that would benefit the most from subscription music. Its that same group who I think does the most P2P music pirating and cares little for HOW they get their music. If my parents are paying for something, I'm not inclined to care about subscription music.
Quote:
That being said, I think Steve doesn't realize one thing, and that's that his argument is a chicken and egg one. Maybe the reason subscription services like Rhapsody, Napster, and Yahoo! Music haven't taken off is because 80% of the population who owns a portable music player doesn't own one that's compatible.
In other words, if Steve threw down a subscription service tomorrow, you could bet your bottom dollar that they'd be instantly more appealing and a much bigger source of revenue.
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That was my argument 
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04-27-2007, 05:13 PM
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Contributing Editor Emeritus
Join Date: Aug 2006
Posts: 1,097
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Fantastic analysis, David. I agree 100%: subscriptions would be far more popular if the popular player could access them...
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04-27-2007, 08:33 PM
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Contributing Editor Emeritus
Join Date: Sep 2006
Posts: 1,053
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Thanks 
As a side note...I had lunch with my roommate today who has an iPod (it was given to him) and he said that if he were to buy an MP3 player today, he'd get a Zune. Why? Subscription music.
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04-27-2007, 08:36 PM
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Pupil
Join Date: Jan 2007
Posts: 20
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"Fantastic analysis, David. I agree 100%: subscriptions would be far more popular if the popular player could access them..."
The analysis is completely suspect. Apple has sold 100 million ipods. There are at least another 20 million music players. It is estimately that there are more than 2 but less than 3 million music subscribers. Meaning that of all people that can access them, only around 10% have them. Yes, if Apple added 10 million more subscribers that would be a lot to the subscriptions, but it wouldn't be a lot to Apple, it would still be 10%.
Apple can add subscriptions relatively easily whenever they want. When 25-50% of the 20% that don't own iPods subscribe or Apple's iPod market share starts decreasing, then they can do something.
Proclaiming they are missing out on something at this point, when it universally loses money, is silly.
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04-27-2007, 09:22 PM
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Contributing Editor Emeritus
Join Date: Sep 2006
Posts: 1,053
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Quote:
Originally Posted by dp
Proclaiming they are missing out on something at this point, when it universally loses money, is silly.
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Where is your research proving that it loses money? Napster & Rhapsody claim a profit and have the majority of the subscribers. Follow the links...they back up everything I say.
Or don't...I don't care. I have 2+ million tracks I can listen to every day. More than you'll ever have.
***quote trimmed by mod JD***
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