Jobs Puts the Kabosh on iTunes Subscriptions

[Jeremy Charette]

<div class='os_post_top_link'><a href='http://arstechnica.com/journals/apple.ars/2007/04/26/jobs-puts-the-kabosh-on-itunes-subscriptions' target='_blank'>http://arstechnica.com/journals/apple.ars/2007/04/26/jobs-puts-the-kabosh-on-itunes-subscriptions</a><br /><br /></div><i>"As you may or may not know, Apple will be renewing its iTunes contracts with the major music labels over the next few months. The music companies, always anxious for extra revenue, are hoping that iTunes will introduce a subscription model similar to that of Rhapsody or Napster. This would allow them to "rent" music for a monthly fee, and would lead to revenue boost due to the recurring subscription charges. Despite recent rumors, Steve Jobs isn't having it. He has said that "the subscription model has failed so far," and has suggested that customers generally prefer the iTunes sale model to any type of subscription service."</i><br /><br /> <img src="http://www.digitalmediathoughts.com/images/itunes-v7-icon.jpg" /> <br /><br />Why would Apple <i>not</i> offer a music subscription service? I suspect the reason is that Apple's already thin margins on music sales would go right down the tubes if they "rented" songs in bulk to users for a flat monthly fee. The bandwidth costs alone would be staggering. Now, if they would just do as Cringely has suggested, and use P2P networking to re-distribute song files, they just might be able to eek out a small profit from a subscription scheme. Then again, Jobs has been known to surprise us before...

[Vincent Ferrari]

Heh... Jobs also said there would never be a video iPod, an Apple Phone, or Windows on a Mac.

As you said, he has surprised us before.

And as for Cringely, even a broken clock is right twice a day.

[Felix Torres]

I'd take him at his word.
Don't need to read any tea leaves here.
Because he's right; Apple customers are exactly the kind of people that prefer to buy 128Kbps AAC songs at a buck-a-pop rather than pay $15 a month for access to 2 million-plus songs. (And they will happily pay $600 and sign up for a two-year contract for what the iPhone has to offer.)
That is what makes them Apple customers and that is the way he likes it. There apparently are enough of those peple around to keep his business afloat so he sees no reason change.
Until the business model stops working he *shouldn't* change it.
Makes perfect sense.

[Vincent Ferrari]

What exactly are "those people" Felix?

[Felix Torres]

What exactly are "those people" Felix?

Apple customers, of course.
You want a profile? I'm not Mandy Patinkin but I can take a crack at it...

Affluent, to start with.
Highly value style and image.
Functionality and flexibility is secondary to simplicity.
Would rather buy pre-ripped lossy tracks than a lossless CD to rip from.
Truly believe that less is more.
Color tastes vary from year to year.
Very vocal.
Identify with their product purchases.
Somewhat thin-skinned with non-mainstream sense of humor; laugh at product libel but can't really take a joke.

Except the ones who review products and analyze digital media on the web. 8)

No offense intended; I merely pointed out that Jobs knows his customers better than they do themselves. He knows what buttons to push to get them to buy his stuff, whatever he happens to be peddling.

First rule of salesmanship is to know your customer base.

For another, non-Apple example of this principle, take a look at the listing of the movies MS carries on Video Marketplace (XBOX.COM has a list, I believe). It has a rather amusing slant that matches the primary target audience of affluent males 18-25. Where else would you find Beerfest and skateboard documentaries next to Akira Kurasawa and Blood Diamond? Or SuperFly and The Lake House? At first glance, its not a logical pairing, is it? But it makes its own sense if you stop to think about it.

Ditto with the thought processes of the Pod people.
There is room for all kinds as long as there is room for humor.