Rivals Hope to Sink IPod With Rented Music


macrumors Penryn
Original poster
Jul 11, 2003
I say bring it on. Apple should get ads ready that crucify renting music.

By Alex Veiga, AP Business Writer
Apple Rivals Are Hoping to Sink IPod With New Portable Players Full of Rented Music

LOS ANGELES (AP) -- Is music something you own or something you rent?
How music fans answer that question in coming months will help determine the viability of a new slate of online music services that offer to fill portable music players with an unlimited number of songs for a monthly fee.

While the music subscription approach has grown in recent years, far more music fans have opted to buy songs by the track, a business model popularized by Apple Computer Inc.'s iTunes Music Store and its hugely successful iPod portable player.

But the release late last year of new copy-protection software from Microsoft Corp. may begin to change that. The software frees subscribers to move their rented tracks from their computers to certain portable music players.

The system works by essentially putting a timer on the tracks loaded on the player. Every time the user connects the player to the PC and the music service, the player automatically checks whether the user's subscription is still in effect. Songs stop playing if the subscription has lapsed. If the user doesn't regularly synch up the player with the service, the songs go dead as well.

"This is potentially the first serious challenge that the iPod is going to face," said Phil Leigh, president of Tampa, Fla.-based Inside Digital Media. "What these devices are going to be able to do is attack iPod where it's weak."

Several online music purveyors see portability as selling point that can lure consumers to their subscription services. Forrester Research projects music subscription revenues will more than double this year to $240 million, largely because of portability.

RealNetworks, MusicNow and MusicNet, which distributes its service through brands like America Online and Cdigix, all have plans to launch portable subscription services this year or early 2006 at the latest.

Napster LLC and F.Y.E., another MusicNet distributor, began offering portable subscriptions late last year through the Windows Media Player software, code named Janus.

Napster plans to turn up the heat on Apple with a $30 million advertising campaign debuting during Sunday's Super Bowl to promote a relaunch of its portable subscription service, dubbed Napster To Go.

"This is really the first subscription service supporting Janus that's going out in a big way," said Josh Bernoff, an analyst with Forrester Research. "Napster is charging a lot harder than the rest of them."

Napster's service is $14.95 a month -- about $5 more than a non-portable subscription. F.Y.E's service is also $14.95.

Chris Gorog, Napster's chairman and chief executive, said the new service should boost its subscriber numbers, which stood at 270,000 as of December.

Marketing will be crucial to persuading consumers accustomed to buying CDs or owning digital music tracks purchased online to switch to paying a monthly fee for music, like they might do for cable television programming.

"There's going to have to be some education in the marketplace," said Michael Gartenberg, vice president and research director for Jupiter Research in New York. "There's some stuff that consumers watch over the air and on cable but don't actually own and some DVDs consumers actually go out and buy. There's going to be some coexistence here as well."

Alan McGlade, president and chief executive of MusicNet, said consumers will see the value in being able to rent music.

"When you think about it, you can log on Tuesday when the new records are in the stores and download whatever new albums are out," McGlade said. "If you have to pay a la carte, then you have to make a buying decision."

Not everyone is convinced.

Apple has said it has no plans to offer a music subscription service. The iPod players don't support the Janus format.

Microsoft's own music service, MSN Music, has yet to offer any services beyond pay-per-track downloads.

Doubts also linger over whether consumers will be happy with the crop of portable music players that can support portable subscription services.

So far only a handful of players -- including ones from Creative, Dell and iRiver -- are on the market, although analysts say their number should increase this year.

And then there's the iPod factor.

"The problem is that in the current state of the market, vendors at best have been offering technical equivalents of the iPod, and the iPod itself has transcended from a consumer electronics item to cultural icon," Gartenberg said.

Portable music subscriptions may be a milestone, Gartenberg said, "but it's not something that is likely to displace Apple in the short-term."

Blue Velvet

Moderator emeritus
Jul 4, 2004
rdowns said:
"There's going to have to be some education in the marketplace," said Michael Gartenberg, vice president and research director for Jupiter Research in New York."

Why? Because consumers don't quite get it?

The problem is... is that they do understand. Quite clearly... and are voting with their feet and wallets.


macrumors 68000
Mar 29, 2003
rdowns said:
"What these devices are going to be able to do is attack iPod where it's weak."
What is this weakness? Having your songs as long as you want? Being able to burn your songs or using them for a DVD? This doesn't make sense.


macrumors G4
I've been pondering this since my immediate reaction was to say 'nope, I don't get it' but as I've thought about it, I get it a little more.

If you only listen to current music, or are happy tying yourself into a monetary commitment, or like exploring lots of different genres/new artists - then I can see the appeal of paying a fixed amount and having as much music as you want. It just depends on whether you are willing to keep paying indefinitely - and what would happen if the company stopped offering that service (a definite possibility in these still relatively early music download days)

I suppose they mean educating consumers to see music as a service rather than a commodity; and like most services, some will find it better value than others. I wonder, if they succeed, whether Apple will reverse turn and create subscriptions.

I've almost talked myself into thinking it's a good idea. In a year, for $180 you could have listened to thousands of albums, extended your musical tastes but have no choice but to continue your subscription if you want to hear your favourites again. And if the standard bit rate goes up, your songs switch to that format. Or for $180 you could have bought 18 albums which you can do what you want with.

Blue Velvet

Moderator emeritus
Jul 4, 2004
Applespider said:
In a year, for $180 you could have listened to thousands of albums, extended your musical tastes but have no choice but to continue your subscription if you want to hear your favourites again.
But not on an iPod or a Shuffle. :)

Sounds like you have been 're-educated' :D


macrumors regular
Jan 23, 2004
Chico, Ca
I actually find this possibly useful. I don't know if I'd pay $15 a month, but a little less of a monthy fee to try out any music out there would be great. I listen to a lot of music and would love the opportunity to hear a full album before buying.

So if Napster wants to charge me $7.50 a month to rent an album for a few spins, I say fine. If I like the music, I'll go do what I do now and buy it from iTunes or my record store.

For me, there would be either savings in the long run (by not purchasing something) or I'd end up with more music that I like (through more experimenting).

Fifteen bucks a month is too much, though. And I'm certainly not the consumer Napster is aiming at. Now if iTunes would offer a 50 cent rental of an album....


macrumors 601
It seems to me that with a music subscription fee, the artist is likely to get an even smaller share of money for their work. At least with a la carte method you know that the artist gets some quantifiable share. If you pay $15 a month and download 250 tracks, that's about 6 cents a song, and I'm guessing that the recording industry is going to grab the lion's share of that.


macrumors 604
Jan 20, 2005
iTunes could easily roll out a subscription service if it ever sees a threat, and with 70% marketshare, doing so would utterly crush Napster and all the other desperate online stores.


macrumors 68040
Apr 3, 2003
it's such a blatant violation of consumer expectation. the music will stop playing if you don't sync your portable player once in a while? who are they to tell paying consumers when they can and cannot listen to music?

if i rent a dvd, i watch it under my own terms. it does not stop playing if i wait a bit.

i predict utter failure. when they say "consumers need to be re-educated" they really mean "we are gonna try to shove this idea down your throat and we are telling you you are gonna like it." :rolleyes:


macrumors 601
Apr 8, 2004
i think rented music would only work with Audio Books 3 Books a month for £4.99 $9.99 would be ok hell once you have read one book you put it down and then read it years later right?

Music rented ??? no chance


macrumors 603
Jun 25, 2002
LaLaLand, CA
Consumers are willing to put up with some things, like some DRM. But this system is doomed to failure for so many reasons. I'm sure some people will want to do it, but it will not be very profitable. And if you think about it, what happens if a company goes under? You lose all your music? I don't think so. The best thing about iTunes, is that you can just go and buy a single track if you want. Pay $0.99. If you get a good job, buy a couple of Albums. Import your existing collection. Get laid off... you still have your music, and you're not paying $15 for something you only use once in awhile. Especially, if they decide to raise the price on you.


macrumors 604
Jan 14, 2005
visiting from downstream
neoelectronaut said:
People tried something similar before.

Remember DIVX?

Nope, I don't either.

DIVX is the reason I still don't shop at Circuit City. (And I hate that someone reused that name for a video codec.)

As I've said before, I don't buy (or rent) bits. I buy containers that happen to be full of bits... CDs, DVDs, actual books.
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