iTunes Unlikely To Change Pricing; Apple Q2 Numbers Up

Solid Q2 Reported

APPLE INC. CEO STEVE JOBS indicated on WEDNESDAY to REUTERS that he is unlikely to give in to calls from the music industry to add a subscription-based model to APPLE's ITUNES online music store.

"Never say never, but customers don't seem to be interested in it," JOBS said. "The subscription model has failed so far."

His comments come as the company he co-founded gears up for contract renewal negotiations with the major record labels over the next month. Since APPLE launched ITUNES in 2003, it has sold more than 2.5 billion songs and now offers increasing numbers of television shows and movies. 

Never say never, but customers don't seem to be interested in it.

Many in the music industry hope ITUNES will ultimately start, in effect, renting music online, so record companies can make more money from recurring income. But JOBS said he had seen little consumer demand for that.

"People want to own their music," he said.

In FEBRUARY, JOBS urged all four major record labels to drop DRM, a move that some observers at the time said was sparked by the pressure APPLE faces from EUROPEAN regulators to open the IPOD/ITUNES family to other technology platforms.

Already APPLE has cut an early deal with EMI GROUP to sell music without copy protection software. "There are a lot of people in the other music companies who are very intrigued by it," JOBS said of the move to sell songs without copy-protection software. "They're thinking very hard about it right now. We've said by the end of this year, over half of the songs we offer on ITUNES we believe will be in DRM-free versions. I think we're going to achieve that."

Second Quarter A Hit

APPLE said second-quarter profit rose 88% because of growing consumer demand for its IPOD media players and MACINTOSH computers. Shares surged in extended trading. Net income increased for the three months ended MARCH 31 to $770 million, or 87 cents, from $410 million, or 47 cents, a year earlier.

Sales rose 21% to $5.26 billion, compared with analysts' estimate of $5.16 billion. APPLE sold 10.5 million IPODS and 1.52 million MACS in the quarter. IPOD shipments fell compared with the holiday period, when sales fueled record revenue and profit.

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