Universal CEO Doug Morris is looking to partner with Sony BMG and Warner to develop "a new music subscription service that will try to loosen Apple’s grip on the online music market."
"The music industry is understood to be widely dissatisfied with the terms that Apple imposes for its iTunes store. Apple has insisted on selling all tracks at a uniform price, for example, while the labels would like to charge different prices for new and older music."
Okay, fair enough. And not a bad idea, by the way. That’s how it works in CD stores, if you remember what those are. Old CDs are sold for around $9.99 or so and new ones go for more. But to compete with iTunes, you’d have to make the new stuff $10 an album and the old stuff even less, which might be tough for the labels to swallow. But you’re planning a subscription model. So the variable music pricing thing is a moot point.
And how will this pricing structure work?
"Morris is looking to wrest some control back from Apple and change the way digital music is sold with a new service called Total Music, according to BusinessWeek. The plan is to get hardware makers to absorb the cost of a $5 monthly subscription, so that consumers would get their music essentially for free when they buy a new player, and the hardware industry would be compensated by selling many more devices."
Sorry. Not gonna work. You’re going to get the hardware manufactures to pick up a $5 per month tab for every device they sell and justify it by assuming they’d sell more devices? There’s not enough margin on a digital music player to cover it. The math doesn’t work. That’s $60 per year, per player. The only way to cover that is to exponentially raise the price of music players and, newsflash, not everyone wants to listen to the bands on your labels.