By John Gruber
Ordoro — Ecommerce operations platform for growing businesses.
Q: With Napster’s $30 million ad campaign promoting their new “Napster To Go” plan launching today during the Super Bowl, I suppose we’re going to hear quite bit in the media during the next few weeks regarding subscription-based music services.
A: YOU MAY RELY ON IT.
Q: And each such article, I suppose, will specifically mention that these subscription-based services are squaring off directly against Apple’s pay-per-download iTunes Music Store.
A: IT IS CERTAIN.
Q: Doesn’t this whole thing strike you as similar to the way that Real Networks created a temporary flurry of attention when they announced “Harmony” — their reverse-engineered means of getting their DRM-protected music files to play on iPods without Apple’s cooperation — back in July? The primary similarity being that these companies are going out of their way to draw unrealistic comparisons to the iPod and iTunes, and the mainstream media are giving them play not because they really pose a credible threat to Apple, but just because it’s an easy way to write a story?
A: AS I SEE IT, YES.
Q: The problem with Real’s Harmony propaganda was that it was based on the idea that the only way to get music onto an iPod was to buy proprietary DRM music from the iTunes Music Store, ignoring the fact that the iPod and iTunes easily work with unprotected music ripped from CDs.
A: CANNOT PREDICT NOW.
Q: That wasn’t a question. My question is, isn’t Napster doing the same thing, with its silly “Do the math” claim that it would cost $10,000 to “fill” an iPod? I mean, yes, if you wanted to fill a 40 GB iPod only using songs purchased from iTMS, yes, it would cost $10,000. But it’s a ridiculous comparison, because no one is doing that.
A: YES DEFINITELY.
Q: That’s not to say there isn’t a certain appeal to subscription services. It’s true that you could install 10,000 songs on a Napster-compatible music player for only $15 a month. You can access more songs per dollar spent with a subscription service than you can with a pay-per-download service, or by buying CDs. But $15 a month is $180 per year. That’s a lot more than most people spend on music, isn’t it?
A: MOST LIKELY.
Q: E.g., according to Apple, to date they’ve sold over 10 million iPods, and over 250 million songs have been downloaded from iTMS (which is not to say they’ve sold 250 million songs). That averages out to about 25 iTMS songs per iPod. It’s hard to extrapolate much from that, however, because many iPod owners don’t download any songs at all from iTMS, and also, some number of iTMS users don’t own iPods. And most of those iPods were sold within the last few months. But, still, the basic math indicates that most iPod owners are spending well under $100 per year at the iTMS, far less than the $180 annual cost of a Napster To Go subscription.
A: CONCENTRATE AND ASK AGAIN.
Q: Sorry — again, I haven’t gotten to the question yet. My question is, isn’t this an ill-considered marketing campaign? Because no one believes iPod owners are spending $10,000 to purchase music, and, conversely, most people realize that $15 per month is a lot more than what they’re spending now. And the people who do spend hundreds of dollars per year on music are still buying CDs.
A: YOU MAY RELY ON IT.
Q: Plus, even if subscription-based services take off and become popular — which I think is a big “if” — Apple could easily jump right in and launch their own iTunes subscription service, no? They’d just make it simpler, and perhaps even cheaper, than everyone else’s, and then Steve Jobs would annoy the hell out of the entire rest of the industry by declaring it a “brand-new” and “innovative” way to listen to music.
A: OUTLOOK GOOD.
Q: Glad you agree. Because with a pay-per-download service like iTMS, the more customers spend, the less likely they are to switch to another service. Sure, Apple lets you burn your iTMS downloads to regular audio CDs, which you can then re-encode as unprotected files. And there are projects such as Hymn, which attempt to strip the DRM protection from your iTMS downloads. But so while “lock-in” is too strong a word to describe Apple’s iTMS strategy, there are certainly a few barriers to overcome if you want to switch to another music platform and take the music you bought from iTMS with you. Whereas with subscription services, there’s very little barrier to switching from one service to another. In short, a popular pay-per-download service seems like a better long-term business than a popular subscription service, right?
Q: Unless you can offer something unique with your subscription service, like, say, the ability to work with iPods. Which, of course, Napster can’t do. And that’s pretty much the nut of it — so long as the iPod continues to dominate the digital player market, the iTunes Music Store is going to dominate the downloadable music market. It’s an advantageous loop (for Apple): the popularity of the iPod and iTunes has led to the success of the iTunes Music Store; and the more songs people purchase from iTMS, the more likely they are to stick with the iPod and iTunes. There’s nothing that a company like Napster can do that Apple can’t match, and there’s little Napster can offer to appeal to the customers Apple already has. It must be frustrating.
A: YES — DEFINITELY.
Q: So Napster’s move toward emphasizing their subscription model, even though they also offer pay-per-download (which even subscribers still have to use to burn their Napster downloads to audio CDs), is an indication that they’ve pretty much given up on competing with Apple for the pay-per-download market.
A: MOST LIKELY.
Q: Before I let you go, one last question on a different topic. The mainstream media coverage of the Mac Mini frequently emphasizes that security issues — spyware, malware, adware, etc. — are leading Windows users to consider switching to the Mac. It’s little wonder why Windows users are frustrated — even their email clients are infected by viruses. Any thoughts on this?
A: OUTLOOK NOT SO GOOD.