How an Apple Subscription Model Could Damn Streaming Services [Updated]

iTunes

In what could prove to be a major game changer for the world of online music, Apple may be looking to offer a subscription music service. Record label sources confirm to Fast Company the chatter picked up by the New York Post today. According to the Post, Eddy Cue of Apple iTunes was recently making phone calls to higher-ups in the music industry to see how the idea might be advanced. According one of the Post's unnamed sources, Apple might offer various service plans, ranging from $10 to $15 per month for unlimited on-demand access to music.

Who stands to lose if Apple enters the subscription music market? Rhapsody, for one. The leading subscription service now offers streaming subscription plans for about $10 per month. With Apple's vast iTunes user base--200 million of them, according to one analyst and a $1 billion operation just to run--and its legions of customers who are used to paying for music in its iTunes store, an Apple subscription service could push Rhapsody to the margins.

Rhapsody, however, welcomes the rivalry. "I would say we're not really concerned," Rhapsody spokeswoman Jaimee Steele tells Fast Company. "There's going to be room for a few players. We've been around for a long time. We have experience with the model. We have agreements with the labels ... Rhapsody has become integrated into many people's lives."

Apple's entry into the subscription service would truly drive a rusty shiv into the spine of Spotify, the Swedish music streaming service that is wildly popular in Europe. It has already missed two eagerly anticipated US launch dates. More difficult, though, is its ad-based music model, which has the music industry skeptical. "Free streaming services are clearly not net positive for the industry," Warner Music chief Edgar Bronfman Jr. recently said. Music labels would prefer to keep customers in the habit for paying directly for music; according to CNet, Apple has been signaling to record labels its belief that Spotify's presence in the U.S. could eat into the music download market.

Further complicating the landscape is Google, which has previously not been a major playor in the music market. But Google has steadily been building its own music service, according to reports, which might easily be integrated with its Android phones. If there's a forthcoming clash of the Titans between Google and Apple, players like Rhapsody and Spotify might be little more than spectators.

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  • Alicia Gonzales

    How will this move affect artists? If iTunes users switch to a subscription, does that mean that they'll no longer have to purchase full-length versions of songs and albums?