Steve Jobs vs. Subscriptions

Another important new feature expected in the Microsoft music software will be the ability to play music on portable devices based upon a monthly subscription fee rather than on simpler pay-for-download basis like Apple does. For a monthly fee, subscribers will be able to listen to music available from the Microsoft store not only on their PCs, but on portable music players, selecting what they want, and changing the music they put on their players regularly.

...

Apple Computer has generally dismissed the music subscription model. Chief Executive Steve Jobs has often been heard to say that "people want to own their music," likening the sale of per-song downloads--what the music industry often calls "a la carte"--to traditional sales of music CDs and records. Its iPod player doesn't support files encoded in Microsoft's Windows Media format. [Forbes]

Usually I tend to agree with Steve Jobs, but this is a case where I think he is wrong. In fact, I think it is fairly likely that he doesn't even mean what he's saying in this case, but rather is saying it for tactical reasons. Apple doesn't yet have technology equivalent to Microsoft's ability to transfer music to portable players in such a way that it will only play while a subscription is paid for.

My personal guess is that the major labels are so used to selling music on a item-by-item basis that at the time the iTunes Music Store started, Apple couldn't get the broad range of music it wanted unless it made music available on that basis. So it sells music item-by-item. It isn't really that "people want to own their music," it's that the labels have been most comfortable making their music available that way. But they are coming around and will continue to, as current and coming subscription services, such as MSN's, demonstrate.

Here are some reasons a subscription model is superior:

• With a subscription, you don't end up finding out you don't like something only after you buy it. You can try anything you want, and delete it from your player if you don't like it.

• With a subscription you don't have to worry about technology issues destroying the value in one's collection. For instance, the tracks I've purchased from the iTunes Music Store would become worthless to me if I stopped using an iPod, because those tracks don't work on other players. That's one reason why I mostly still buy music on CD.

• Downloaded tracks don't have the sound quality of CD's because of bandwidth issues. But the sound quality of downloaded tracks can be expected to steadily increase over time. So that a major reason why tracks I buy now will be of less value later; I'll want to download tracks with better quality when they are available. With a subscription, both of these issues disappear, because I just get the tracks I want at the time I want them, in whatever form is most convenient and sounds best at the time.

• This is more important than it may seem at first: with a subscription model, no mental energy need be expended expended deciding what to buy and not to buy. You can focus on enjoying music, without that "tax" on the experience.
  

Overall there's really no contest. Apple should get on the ball here if they want to maintain their lead. I love my iPod, but I found myself today considering getting a non-Apple portable player so that I could benefit from the advantages of a subscription service.

Comments

[Steve Jobs]

And here's one reason it isn't superior: when I stop paying all the music goes away

[Gary Robinson]

But, unless you were planning to stop buying music piece-by-piece, you'll be spending money in the future on music anyway. And I, for one, have no such plans. So, I don't see how the "when I stop paying all the music goes away" has much merit in the real world. But the other arguments I list in my post do have merit in the real world.

[David Cantrell]

Everything I've bought from the iTunes shop will work on every player, because I burnt them all to CD and re-ripped as mp3. Yes, there is a theoretical loss of quality, but when I'm listening through headphones on the bus instead of good quality speakers, it's not noticeable. Headphones and busses won't go away any time soon.

[Benni]

The interesting thing about the world today is that there is a very knowledgeable, somewhat organized group of hackers creating great software to meet the needs where commercial services fail, or otherwise prevent people from doing what they would like. Spend a little more time with Google, or take a peak at the Hymn Project (Hear Your Music Anywhere - http://hymn-project.org/) other than that, your other point about quality - can you _really_ tell the difference between a downloaded track from iTunes and a CD? Have you done an A - B Test, or are you just presuming the quality is crap? Try it, I'm unable to tell the difference on anything short of a $30,000 stereo system. Lastly, the ability to preview 30 seconds of every song allows you to get a pretty good feel for the music, most people know after 30 seconds of listening whether or not the track is worth buying. It's a lot better than just picking up a cd off the shelf . . .

Cheer,

Ben

[Gary Robinson]

I've done A/B tests and I very distinctly tell the difference. And it doesn't remotely take a $30,000 stereo -- all it takes is a decent pair of headphones and a laptop. (In my experience, it is harder to tell the difference between a $3000 stereo and a top-of-the-line stereo than it is to tell the difference between 128kbs and CD quality on a laptop and headphone set.)

That being said, I do think that simply having the music available is a lot more important than perfect sound quality. Casual listeners have never cared much about sound quality in earlier eras and won't now either. But there are also a large number of non-casual listeners who did and do.

I don't think 30 second snippets are much good at helping one understand whether a track is really, really good or not. It tells you something -- it's not valueless -- but often a whole track most be heard several times for the quality to emerge.

Re DRM-breaking stuff like hymn, it's just more awkward (plus it's illegal). Most people don't care about the legality issues so much that they will give up significant convenience factors for them (such as the ability to play music in portable players). But I predict that a time will come when subscriptions will be so much more convenient than those solutions for mainstream users that most mainstream users will buy subscriptions.

[E.T.]

I think it's all about the kind of music you like.

If you like to listen to the current hits, top 10/100/whatever, then a subscription is the way to go; you always stay current and you can safely forget about what was hip one year ago. But can't you already do that by listening to the radio?

I dislike having to care (pay) every month or year about my music subscription, no matter how cheap it is. And in case I stop paying for it, my downloads become useless.

Also, there are DRMs. I disliked the DRMs of iTunes Music Store. Why should I have any restrictions when I buy a song? ...when I buy a CD, I can do whatever I want with it, and it's of great sound quality.

But subscription-based DRMs are far worse. I can't burn a CD, so I'm stuck with my PC and MP3 player in order to listen to my rented music.

In any case, if you want to buy a whole CD it's much better to go and buy an actual CD. You can rip it to any format, re-burn it, and you also get its artwork along (booklet, lyrics, photos...).

[Gary Robinson]

Actually I agree with some of what you say. At this point, I buy the CD more often than I buy from iTunes because of the same reasons you name: I like the superior sounds quality and the flexibility. BUT I think that there will be solutions to those issues in the world of downloadable music in the future -- I don't expect to always be buying a significant amount music in physical form.