iTunes subscription service expected

13 Apr 2007

Major record companies are expected to ask Apple iTunes to change their 99c-per-song download model to a subscription-based service, according to industry insiders.

At talks to be held next week, Apple will be negotiating with music label Universal and has reportedly already began talks with Sony-BMG, Warner Music and EMI to renew contracts for iTunes content.

Amid industry fears that music sales are steadily falling, media labels are said to be looking to negotiate a more lucrative business model with iTunes, where labels would take a share of monthly subscription payments.

Media technology research company Enders Analysis predicted that global music sales could fall to US$23bn in 2009, in contrast to the reported peak of US$45bn in 1997.

Meanwhile, iTunes account for more than 85pc of legal music downloads in the US, according to its latest fiscal report, and contains more than four million songs for download.

Although rumours of a subscription service have been circulating for the past few years, insiders say it is far more likely now in light of Apple’s DRM (digital rights management)-free deal with EMI.

These talks follow the recent DRM-free move in which all DRM free music available from iTunes now costs €1.29, as opposed to the old 99c model.

The major record companies are also reported to suggest variable pricing for individual songs and albums in an effort to boost profits from digital sales.

Following the settlement of a royalties dispute yesterday, iTunes also look set to negotiate with EMI for sale of the Beatles’ music on their store for the first time.

By Marie Boran