Posted on 01/06/2005 3:32:40 PM PST by nickcarraway
Chris Gorog is convinced that people won't continue to pay $1 a song for online music.
That is despite Apple's string of recent achievements, including 200 million songs sold at its iTunes Music Store, and nearly 4 million iPod digital music players moved into consumers' homes in 2004.
Gorog runs Apple rival Napster (www.napster.com), which offers digital downloads and a music subscription deal. Consumers get unlimited access to listen to 700,000 songs for $9.95 monthly.
The hitch is that to move songs onto a portable digital device or to a CD costs extra: $1 a song. That's one of the reasons digital music fans have not taken to the subscription model -- also offered by Real Networks' Rhapsody -- in a big way.
But Gorog thinks that will change next year. And he has other heavyweights such as Yahoo and Microsoft in his corner.
Microsoft has developed a new copyright protection plan that allows for the transfer of subscription songs to portable players. For $5 more a month, consumers can transfer Napster's entire catalog to their device -- and listen as often as they'd like -- as long as they subscribe.
With the top-of-the-line iPod, "You can fit 10,000 songs on it," Gorog said. But "to do that would cost you $10,000 if you bought the songs from Apple. With our plan, customers can get 10,000 songs on their device for $180 a year. It's an enormous value."
The caveat is that Microsoft's copyright plan doesn't work with iPods, or virtually any player now on the market.
Only a handful of devices, including MP3 players from iRiver and Gateway, work with the subscription plan offered by Napster and by FYE.com. Soon, devices from Virgin, Creative Technology and Rio will offer software upgrades to make their most recent models compatible with Microsoft's technology. Many more devices also are expected to follow this year.
Apple has a 65 percent share of digital music player sales, according to NPD Group. While rivals have been aggressively launching units with slightly lower prices and more features, most critics say iPods are still the easiest to use and the best value.
Apple's rivals argue that in the long run, for-sale downloads are doomed.
"Selling 99-cent singles isn't working as a business model for us or for consumers," said Dave Goldberg, who runs Yahoo's music division. It includes Musicmatch (www.musicmatch.com), which offers downloads and subscriptions.
"We sell hundreds of downloads," Goldberg says. "But we don't make money on them. Subscriptions is a much better business for us."
iPods are a great product and easy to use but are not considered the best value anymore.
I love my iPod, and since I have an extensive CD collection already I don't mind paying $1 a few times a month to download a song from iTunes. I would have no use for a subscription based service since I just don't download enough songs to make it a better value.
Paying $1 for a tune makes sense to me. Most CD's have only 2 or 3 tracks that you really want so when buying CD's the cost per desired songs is much higher than $1.
Gosh, I only posted this idea 3 years ago. Glad Napster finally started reading the FR archives.
I for one, will still be downloading for free. Good luck to you guys though.
Me Too. I know... I know... Flame Away...
Tagline change.
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