Music Labels Ask Apple To Adopt Subscription Model
April 13, 2007 at 5:46 AM (PT)
The world's biggest music companies are expected to ask APPLE to introduce a music subscription service to its ITUNES digital media store as part of negotiations to renew their agreements with the computer company, according to a FINANCIAL TIMES report.
Those discussions will begin in earnest next week when UNIVERSAL MUSIC sits down at the bargaining table with APPLE. UNIVERSAL's competitors, SONY-BMG, WARNER MUSIC and EMI, have either commenced talks with APPLE already or are poised to do so, according to people close to the matter.
Executives at UNIVERSAL and other labels believe a subscription service could prove more lucrative for them than ITUNES' prevailing model of charging consumers 99 cents per track because it would increase consumption of music. It would also entitle the labels to a share of monthly payments, in addition to small licensing fees each time their songs are played.
The negotiations offer another example of the tensions between traditional media companies that create content and the technology groups that distribute it online.
Nonetheless, music companies have largely been forced to accept APPLE's terms as ITUNES accounts for about 75% of online music sales in the U.S. in spite of competition from MICROSOFT's ZUNE and other services.