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  #1  
Old 04-27-2007, 05:24 AM
David Tucker
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Default Jobs Says No One Wants a Subscription

<p><em>&quot;Never say never, but customers don't seem to be interested in it,&quot; Jobs told Reuters in an interview after Apple reported blow-out quarterly results. &quot;The subscription model has failed so far.&quot;</em></p><p>Statements like that take me back to the heady days right at the turn of the new millennium.<span style="mso-spacerun: yes">&nbsp; </span>There was a company called Palm that made all sorts of claims about what the customers did and did not want.<span style="mso-spacerun: yes">&nbsp; </span>The customers amazingly never wanted what the company didn't offer.<span style="mso-spacerun: yes">&nbsp; </span>I see a parallel here.<span style="mso-spacerun: yes">&nbsp; </span>Everyone says Microsoft can't beat Apple at this game and Apple is invincible.<span style="mso-spacerun: yes">&nbsp; </span>No, they're not.</p><p class="MsoNormal">Two of the largest services, <a href="http://www.geek.com/news/geeknews/2007Apr/gee20070405004034.htm">Napster</a> and <a href="http://www.realnetworks.com/company/press/releases/2006/q405results_8r16Js.html">Rhapsody</a>, lay claim to nearly 2.3 million subscribers.<span style="mso-spacerun: yes">&nbsp; </span>Yahoo doesn't release their numbers and I could find no information about what the Zune subsciber base is.<span style="mso-spacerun: yes">&nbsp; </span>The estimated number of people who own an MP3 player in the United States is about <a href="http://www.ipsos-na.com/news/pressrelease.cfm?id=3124">60 million</a>.<span style="mso-spacerun: yes">&nbsp; </span>About <a href="http://www.roughlydrafted.com/RD/RDM.Tech.Q1.07/FFE4A8E2-9816-4344-9FB0-61BED246674C.html">45 million</a> people own an iPod.<span style="mso-spacerun: yes">&nbsp; </span>That leaves us with a mere 15 million people who own something else.<span style="mso-spacerun: yes">&nbsp; </span>For the time being, I'm going to pretend that only Napster and Rhapsody exist since I have no other numbers.<span style="mso-spacerun: yes">&nbsp; </span>That means that at least 15% of non-iPod owners have a subscription service.</p><p class="MsoNormal">I wouldn't be surprised if the actual number was closer to 20%.<span style="mso-spacerun: yes">&nbsp; </span>So does no one want a subscription service?<span style="mso-spacerun: yes">&nbsp; </span>Hardly.<span style="mso-spacerun: yes">&nbsp; </span>I think so many people have bought into the &quot;me-too&quot; craze of owning an iPod that they've totally missed out on subscriptions simply because they don't have it available.</p>
 
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Old 04-27-2007, 06:16 AM
Alber1690
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Default Completely Agree

Your last sentence says it all.
 
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Old 04-27-2007, 06:53 AM
tbird
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I will second that!
 
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Old 04-27-2007, 02:25 PM
DesertLarry
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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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Old 04-27-2007, 03:16 PM
Vincent M Ferrari
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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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Old 04-27-2007, 03:27 PM
David Tucker
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Quote:
Originally Posted by Vincent M Ferrari View Post
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.
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.
That was my argument
 
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Old 04-27-2007, 05:13 PM
Damion Chaplin
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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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Old 04-27-2007, 08:33 PM
David Tucker
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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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Old 04-27-2007, 08:36 PM
dp
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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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Old 04-27-2007, 09:22 PM
David Tucker
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Quote:
Originally Posted by dp View Post
Proclaiming they are missing out on something at this point, when it universally loses money, is silly.
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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